You're The Voice | by Efrat Fenigson - Ep. 82: Caitlin Long - Banking Meets Bitcoin Revolution

Episode Date: June 30, 2025

My guest today is Caitlin Long, Founder and CEO of Custodia Bank, a 22-year Wall Street veteran, and one of the most influential voices in Bitcoin policy and financial regulation. A Harvard-trained lawyer and early Bitcoin advocate, Caitlin played a central role in turning Wyoming into the most crypto-friendly legal jurisdiction in the United States, helping pass over 20 blockchain-enabling laws. In this episode, Caitlin walks us through her ongoing legal battle with the Federal Reserve, the hidden mechanics of Operation Chokepoint 2.0, and why access to a Fed master account is the front line of financial freedom. We discuss the stablecoin wars, the surveillance threats of CBDCs, and how privacy, law, and innovation are colliding inside the US banking system. Above all, this is a conversation about fighting centralized control, defending open access to money, and building the legal rails for a Bitcoin-native financial future.► This episode is part of the "Bitcoin Vegas 2025 Special" in collaboration with Ben Samocha, Founder of Israel’s CryptoJungle and Crypto Talks podcast.► If you got value, please like, comment, share, follow and support my work. Thank you!-- SPONSORS & AFFILIATES --►► Get your TREZOR wallet & accessories, with a 5% discount, using my code at checkout (get my discount code from the episode - yep, you’ll have to watch it): https://affil.trezor.io/SHUn ►► Get 10% off on the Augmented NAC from ZeroSpike, with the code YCXKQDK2 via this link: https://store.augmentednac.com/?via=efrat (Note, this is not medical advice and you should consult your MD)►► Watch “New Totalitarian Order” conference with Prof. Mattias Desmet & Efrat - code EFRAT for 10% off: https://efenigson.gumroad.com/l/desmet_efrat ►► Get a second citizenship and a plan B to relocate to another country with Expat Money, leave your details for a follow up: https://expatmoney.com/efrat ►► Join me in any of these upcoming events: https://www.efrat.blog/p/upcoming-events -- LINKS –Caitlin’s Twitter: https://x.com/CaitlinLong_ Custodia Bank’s Website: https://custodiabank.com/ Efrat's Twitter: https://twitter.com/efenigsonEfrat's Telegram: https://t.me/efenigsonBen's Twitter: https://x.com/bensamocha Ben's LinkedIn:  https://www.linkedin.com/in/ben-samocha-728147153/ Watch/listen on all platforms: https://linktr.ee/yourethevoiceSupport Efrat's work: ⁠https://www.buymeacoffee.com/efenigson   ⁠Support Efrat with Bitcoin: https://geyser.fund/project/efenigson-- CHAPTERS –00:00 Coming Up01:05 Welcome from Bitcoin Vegas & Intro to Caitlin02:05 Vegas, Bitcoin & Fiat04:00 Founding Custodia & Wyoming’s Role08:14 Anti-Bank Bias & Innovation Crackdown12:08 Battling the Fed for a Master Account14:35 Chokepoint 2.0 & Bitcoin’s Resilience17:44 Suing the Fed: Strategy & Stakes24:29 Stablecoins: Banks vs Startups31:12 Outdated US Payment Rails37:54 CBDCs: Privacy & Surveillance42:20 Does Financial Privacy Exist? Coinbase Goes To Court50:55 Stablecoins vs Eurodollar System54:54 LIBOR Ends: US Reclaims Control57:27 Wyoming’s Pro-Bitcoin Laws1:05:45 Remove Taxes on Bitcoin1:09:05 Adoption, Saylor & Market Momentum1:14:01 Final Thoughts & Hope for Bitcoin

The reality is we're all a lot more surveilled than most people realize in the United States. And if the government wants your financial transaction history, they're going to get it. The Strategic Bitcoin Reserve, I'm kind of neutral on it, but I'm much more focused on the bigger, impactful opportunity, which is taking all taxes off Bitcoin. I was working on Wall Street on the trading floor at Morgan Stanley right in Times Square and experienced the bank run. and literally everybody coming back and talking about how there were no hundred dollar bills available in their banks they were they had all been withdrawn literally you can ship goods faster from china to the united states and then you can move money this makes no sense when money is at this point essentially exclusively digital bitcoin it really is anti-fragile and every time someone

attacks it it gets stronger and that's exactly what has happened here there is no taming it Hello and welcome from Bitcoin Vegas 2025. I'm Efrat with You're the Voice. And I'm Ben from CryptoTalks. And we're here today at a collaboration. We're going to interview a series of guests here in Vegas. And we'll introduce each one of them for you. And then we'll roll with the episodes.

The episodes are going to be released on both You're the Voice and CryptoTalks. So make sure you're subscribed to both. Our next guest is Caitlin Long. Caitlin is the founder and CEO of Custodia Bank, a Wyoming-based institution bridging gap between crypto and the U.S. financial system. With over 20 years on Wall Street at firms like Morgan Stanley and Credit Suisse,

Caitlin has become one of the most influential voices in crypto policy and regulation. She also played a key role in transforming Wyoming into one of the most blockchain-friendly states in the U.S. Caitlin Long, thank you so much for agreeing to come on our podcast. It's my pleasure to see you in person. Yes, and to meet you, Ben. Yes, great to be here.

It's beautiful. Thank you so much. So we're in Vegas, Sin City. And that's a place where people gamble and play to earn fiat. Quite a place to run a Bitcoin conference, right? It is. There's better security here. Yes.

A lot of unseen security. so I think actually in some ways it's safer than some of the places we've been but maybe not as easy for folks to travel because from overseas right Miami certainly attracted a lot more of an international attendee group when we had it in Miami so it'll be interesting to see where they where they have it next year absolutely in terms of a place where fiat is being just flowing around like it is air here. What do you think of this contrast of us doing Bitcoin in this place where fiat is so easily being gambled and distributed? Well, you can look at it that way, or you can look at it as this is the ultimate

free market capitalist. I mean, obviously, Vegas has had its history with organized crime and the like. But since then, it literally is anything goes. And it's incredible that this business was built into a desert. It's kind of like Disney World being built into a swamp. It is actually the triumph of capitalism turning nothing into something at the same time. So in some ways it's endemic of both fiat over excess and hardcore capitalism at the same time. And it's like so many things in the world. Very few things are black and white. It has shades of gray for both arguments, for sure. Absolutely. Okay. So let's start with your background, right? So you had a very successful career over Wall Street, and then you pivoted into crypto. And we wanted

to know what interested you in Bitcoin specifically or crypto as a whole. What made you change your whole life and make it about it? Yeah, well, I, after the 2008 financial crisis, got very curious because I was working on Wall Street on the trading floor at Morgan Stanley, right in Times Square and experienced the bank run and literally everybody coming back and talking about how there were no $100 bills available in their banks. They had all been withdrawn. People were panicking and withdrawing cash. And just experiencing that, the strange thing was the explanation that we got from the mainstream media, which is that it was a subprime mortgage crisis. And I had seen an interview with the Treasury Secretary, Tim Geithner, saying interest rates were too low and that's what had caused the crisis.

And then two weeks later on Charlie Rose, he was interviewed again and he said interest rates were too high and needed to be lowered still. And so that disconnect was what got me going down the path of something's very wrong here. The story we're being fed is not making sense. And it was then that I found alternative schools of economic thought. And I went from, I literally went on a journey of self-education for about four years, reading a lot of alternative schools of economic thought between Austrian school on the one hand and modern monetary theory on the other and everything in between, and came down pretty firmly. there were light bulbs going off when I was reading the Austrian school. It seemed to describe it most closely, not perfectly, of course, but most closely what was actually happening. Amazing. All right. What was the vision behind founding CustodiaBank when you did that? And when did

you feel this institution needed to exist? Oh, well, that's easy. It was in 2017 when I tried to donate appreciated Bitcoin to fund an endowment for female engineers at the University of Wyoming, where I had grown up and where I had gone to undergraduate school. And they couldn't accept it because of the bad money transmission statute in Wyoming. So I volunteered to go back to my native state to help fix that law. It was one of three states that had a bad money transmitter law. And I said to the University of Wyoming Foundation, you don't want to miss Bitcoin. This is going to be big. Let's go get this fixed. I will help you. And then it snowballed into something big. But along those lines, we put a call out to the industry in 2017, tell us what

you need. And droves of people showed up. And a lot of entrepreneurs said they needed durable banking services. That was the biggest issue, which is kind of funny, because if you're looking at this from the outside, you think, isn't crypto supposed to be your own bank? Aren't you supposed to be able to solve that? But they still need to pay vendors. They still need to pay rent. They still need to pay employees in fiat. And that was back then the second big wave of debanking that was hitting this industry. We've just, of course, come through the third. And it's just a perpetual problem that access to traditional banking services is restricted. So that was the original goal of creating the new charter was in Washington, D.C., the head of the FDIC, the Federal Deposit

Insurance Corporation, which is the government insurance fund for banks, was adamant. He didn't want new banks at all. And in fact, actually, you may not be aware of this, but since the financial crisis in 2008, there have only been a couple of dozen new banks formed in the United States. It used to be several hundred a year. And in that now, what, 18-year period, There have only been a few dozen ever approved. So there's been a real push not to form new banks. And in fact, actually, to say, no, we don't want any. You know, Marc Andreessen gave a very interesting interview about because it's all endemic of what happened with the anti-technology, anti-innovation wave that hit the United States.

And frankly, it's part of what got Trump elected because Biden, Mark Andreessen said that he had had a meeting with the Biden White House and they told him, don't bother to invest in AI anymore because the government is going to control it. And that the U.S. government had classified whole sections of physics during World War II and that they were going to classify AI as government classified and the government was going to control it. He walked out of that meeting and immediately decided to endorse Trump. Someone asked him why. What does he really think was going on? Why was there this anti-innovation push? It is about control, of course. It is about centralized control and having a very small number of people control the factors of production and control the economic destiny of people and of entire countries. But he got into something a little bit more philosophical about the notion that there are too many humans on the earth and this whole sort of impulse of anti-innovation and wanting to hold back, especially technology, because the pace of change is so great right now. it is bewildering and a lot of the people who were in those positions of power were in their 80s and so they're not exactly tech forward they're not they didn't grow up with the internet they didn't grow up with loot boxes in internet games and being very comfortable with the notion that a digital token can have value and they just don't understand it and so i i think there's a it's

complicated like like so many things as we said earlier shades of gray you know you certainly have some 80-year-olds who are hardcore Bitcoiners and you have some 12-year-olds who will never touch it. But by the same token, there definitely are some generational trends. And I think that was a big part of it. But the mind virus that humanity should stop innovating and should stop trying to advance because they want total control and there are too many humans on the planet, that was what Mark thought underscored all of this. And it's the most cogent argument I've heard for why there was such an anti-innovation trend, an anti-technology trend, especially in financial services. And it was not just the Biden administration. It was also Europe. Yes. Davos.

Davos, yeah. Absolutely. Right. So all connected. I'd claim it's still Europe. Yeah. Well, Absolutely. And now there's this huge pushback against all of it. And the U.S. is taking control back in a lot of things from the global organizations and starting to see, you know, Monroe Doctrine type, America First type policies and other countries are copying that. And so there's this the world sort of splitting off into the factions of those that are staying collectivist and those that are staying, you know, home country first. It's a fascinating trend. And Bitcoin is in the middle of all that. You're the Voice is brought to you by Trezor, the original Bitcoin hardware wallet company pioneering the development of self-custody for crypto assets since 2013, empowering individuals with an open source device, enabling beginners and experts to easily and securely hold their coins. I find my Trezor super easy to use and recommend it to my friends and family. Enjoy my 5% discount on Trezor product by clicking the link in the show notes and using the code FLAT. Definitely winds of change.

Absolutely. And very refreshing to see that, like as someone who's following it for a long time and seeing all this narrowing down of our privacy, our control and all that. So let's go back to Custodia. So you are one of the first crypto native banks that are attempting to connect with the Fed to create a Fed master account. Can you walk us through the journey before it went sideways? We don't have to do the whole thing. I know it's long. Yes.

It's been a winding road. Well, we actually intended to work with the Fed. We thought because I had somebody, I had Wall Street experience. I'd run regulated businesses before, checked a lot of boxes that should have meant that we would be in a friendly position and could help learn and do this very, very carefully and very, very slowly. And that is how it started. And the state of Wyoming was working very closely with the Fed. In fact, actually, the Fed was giving comments on the statute that was drafted

and then on the regulations and the rules that were drafted subsequent to that. The Fed had a seat at the table. And then the first applicants came in, Kraken applied for a bank charter, and then we were second. There were two others after. There are two more on the way that I'm aware of. But long story short, then FTX happened and all of the forward progress just halted. In our lawsuit, we found, and this is all public information, that they were working on a letter listing commitments and conditions for approving us all the way up until three days after FTX filed for bankruptcy. and then the following week, a senior Fed official had a meeting and the first draft of the denial letter appeared.

So it's very obvious what happened. And then now when you put all the Operation Chokepoint 2.0 timeline together, it's very clear that there was a concerted effort to try to just squash this entire industry. And I think, I candidly think that they thought they could kill crypto, which I find is absolutely hilarious. And it just underscores how little they really understand of what this is all about. But now I think they've, after two years of pushing so hard to try to debank the industry en masse and just try to just throw sand in the wheels across the board in the United

States through every governmental agency. It was an all of government approach. It wasn't just the Fed and the banking regulators. It was the securities regulators. It was the energy department on Bitcoin mining. they just tried to throw every obstacle up against this industry that they could, and they couldn't kill us. And so now they're, I think, recognizing that they have to come to the table. And it even made us stronger too. Oh, absolutely. I mean, Bitcoin, it really is

anti-fragile. I love what Nassim Taleb said in the introduction to Seyfedin's book. It is anti-fragile. Even though he stepped away from Bitcoin subsequently, what he said about it was so perfect. Every time someone attacks it, it gets stronger. And that's exactly what has happened here. There is no taming it. All you can do at this point is figure out the optimal way to participate in the network. And anyone who tries to fight it is just going to get crushed, including governments at this point. Absolutely. I love it.

And so you've taken the Fed head on in court. What motivated you to pursue legal action? What have been the key lessons or even costs of challenging the Fed? Well, it's difficult to sue the government anywhere in the world, I'm sure. In the United States, it is supposed to be a right. But the Fed's reaction was to, well, let's put it this way. We know definitively the Fed pressured our partner banks. So when we couldn't get direct access to the Fed, we had to go through a bank that already

had access. So we had to partner with those banks. And we know definitively the Fed pressured our partner banks to close our bank accounts. So they tried to kill us. And that was the retaliation, I guess, that we got for daring to enforce our legal rights in a court of law. We'll see what the outcome is. the court system in the United States. I was just chatting with someone who did not grow up in the

United States, but has moved here now. And he was saying, just watching all the litigation against some of the Bitcoin core developers and the like, and he's participating as a supporter of the industry, trying to support some of those lawsuits and the defense against the Craig Wright lawsuits right so um so he's watching it on and he used to think americans litigated too much uh and and he's now gained respect for the system because especially when you're suing the government that is the way an individual citizen actually has the right to to challenge the government and so um we'll see how the what the outcome is what's the current status we're waiting for the decision on the appeal. So we lost at the district court. There are three lawsuits that are

happening simultaneously. We're the only crypto-focused bank. There are two others in other jurisdictions. What happened is the Fed reinterpreted a statute that was passed in 1980. And for decades, it interpreted it one way, and then it suddenly just changed its interpretation to give itself discretion. And that's why you're starting to see all these lawsuits pop up. And yes, you asked about one of the interesting, one of the learnings. I will point to what one of the Fed attorneys said in a courtroom to a judge while explaining that the Fed had unfettered discretion, the phrase that he used. He said, our motivation doesn't matter.

And so one of the other judges in one of the other cases asked, could the Fed, if they just decided on a whim to cut the entire state of Idaho out of the banking system, could they do that? And of course, he hemmed and hawed and hemmed and hawed. But he didn't say no. Let's put it that way. Right. And so these are fascinating lawsuits that get at the core of what did Congress really mean when it, right, when it created the Federal Reserve. And we have a very different structure of central bank than you have in Israel. There's a centralized central bank in Israel. In the U.S., it was supposed to be decentralized. We have these 12 regional reserve banks, and then there's the Board of Governors in Washington, D.C. That wasn't

created initially. It was created a couple of decades after the Fed was created because there was supposed to be federalism in the Fed. Those 12 regional reserve banks were autonomous. They at one time set their own discount rates. They had their own monetary policy, and they were designed to support the regional economies of the United States. But then, of course, as these things tend to do, they tend to centralize and control. They tend to increase their reach. Their original mission obviously changed drastically. And yeah, it's been a fascinating process suing the government.

And super important for all of us. So thank you for that. Of course. doing what you're doing. You're shedding light on all these things that are supposed to be hidden from us. Yes, and some might call corrupt. So it's kind of a personal question, so don't feel obliged to answer it. But we are confident that there is a lot of pressure to this, right? So you're a company, you have employees, you have to pay their salaries while you are battling the government, which has, as we know, unlimited resources with money painter Goldberg. How did

that go for you? Like, how are you handling it? What lessons can we learn from that? Well, I knew going in that it might end up this way. This was all, we gamed this out from the very beginning. In fact, part of the reason why I thought of creating a uninsured bank charter, because we knew the FDIC was not going to allow new insured banks to be created because, like I said, they've basically clamped down. There have been virtually none. And there are about 10,000 banks. So to have only a couple of dozen in the span of almost 20 years tells you that they just don't want new banks. So we knew that that was a problem we had to solve for. So when we were figuring this out, I knew that there was a court case, the very first court case challenging the

Fed, when they reinterpreted the statute, was a case surrounding a credit union that served the cannabis industry in Colorado. And that went all the way up to, we have three layers of courts in the United States. The Supreme Court is the one that's constitutionally designed. Then we have an appeals court level and a district court level right below that. At the federal court level, there are state courts as well, but we're in federal court. And so the only appellate judge in the United States that had looked at the statutory question was in our district. It's called the Tenth Circuit.

And it was only one judge, so it was what's called a non-binding opinion. But it's the only appellate judge that had interpreted the statute, and he interpreted it our way. So we knew going in that there was a judge in our district, and that's not nothing, even though it's not a binding precedent, that's not nothing. So we knew going in that as we gamed out the possibility that if the Fed decided to turn tail and run and we had to end up in court, we knew exactly what the precedents were. And I had already done an enormous amount of research into the legislative history. It's very clear that the Fed does not have the discretion that it thinks it has at the legislative history.

And indeed, actually, we dug up just a multitude of Federal Reserve documents from their own archives that shows that they did not think they had discretion. The statute says that all eligible depository institutions automatically get access to the central bank. It was a deal that was cut in 1980. For some of your listeners, you'll find this interesting because the U.S. had very high inflation in the 1970s. And the banks were leaving the banking system in droves because they were required to hold reserves, but they couldn't earn interest on them, and short-term interest rates were 22%. And so it was dead capital that had an extraordinary opportunity cost, and so banks were leaving the Fed system in droves. Paul Volcker was the Fed governor at that point in time, Fed chairman, and he cut a deal with Congress. There were two different types of financial institutions.

I'm not sure if you have them in Israel. So often in developed countries, there are mortgage-type lending institutions and then traditional banks. You have them like the building societies in the U.K. alongside the banks. We had those in the United States as well. They were called thrifts. They were mostly mortgage lending operations, and then you had traditional banks. And they were regulated differently, and so they were all fighting with each other. And there was a grand bargain in 1980 to bring them all back into the Fed system.

Every bank had to hold reserves at the Fed. and every thrift got access to the payment system. The banks couldn't hold them out. There was an antitrust investigation because the banks were trying to kill the thrifts by holding them out, blocking them out. Sounds familiar, right? Yeah, of course.

We've seen this before. And the grand bargain was that every financial, every depository institution in the United States automatically got access. And that's exactly what the Fed did for 35 years until it reinterpreted its statute and gave itself the authority to pick and choose. So that's what's under litigation right now.

Incredible. You've spoken out about the Fed's current policy favorite bank issued stablecoins. Can you explain what you mean by that and why it's problematic? Well, this is interesting because stablecoins in the United States, precisely because of the anti-innovation trend, have been a non-bank product, a non-bank financial service. and the banks would love to issue stable coins. To be honest, they recognize in the United States,

our technology is so backwards. I don't know if you have a real-time payment system in Israel, but we don't. We just, the Fed spent billions building something called FedNow. And the clearinghouse has, and nobody uses it, right? The clearinghouse has something called RTP. Not, it's just, it's, these are,

it's just not well integrated into the system. So for the most part, we're using technology from the 1970s in the U.S., in the reserve currency of the world payment system, right? This does not make sense. It's almost like, yeah, I once heard someone explain it's security by obscurity or security by obsolescence, rather, but kind of by design. But you can't, in an Internet-native world, you can't have payments. I mean, literally, you can ship goods faster from China to the United States than you can move money. This makes no sense when money is, at this point, essentially exclusively digital. So we know we've got huge, huge problems.

And so back to your question about bank stablecoins versus non-bank stablecoins, the dollar is inherently a fiat currency, right? It is inherently centralized. You don't need a blockchain-based system for a fiat currency stablecoin. However, stablecoins, it was such an easy playing field because the technology was so backwards in the payment system that they were able to create enormous network effects while the bank regulators were yelling and screaming about it, trying to stop it and not succeeding. So here we have these enormous network effects. I find the whole thing irony, and take my hat off to the Tether folks for inventing it, because necessity was the mother of invention. They kept getting debanked. We're back to the same theme. They kept getting debanked. They couldn't have reliable access to U.S. dollars. The dollars they were trying to move through Fedwire, it wasn't even a very good system for a 24-7, pretty close to real-time crypto market. So they just invented their own payment rail. And now the U.S. government is, you know, is adopting the payment rail.

And we're pretty close to getting stablecoin legislation in the U.S. for the first time. It's going to change the U.S. banking system in really, I think, in profound but positive ways. There will be losers. The losers will be the banks that have rested on their laurels and not upgraded their technology for the last 48 years. Okay. Which is most of them, isn't it? Well, I mean, certainly. I mean, JP Morgan has. They certainly have. The large banks have spent a lot of money upgrading their technology. And certain small banks have. It's the mid-sized banks and sort of, you know, the small banks that just have never invested in the technology. There's going to be a big wave of technology driven. Wiped out or M&As. M&A, exactly. Right. And that was also something, unfortunately, the Biden administration was just, they didn't want new banks, but they didn't want the number of banks to shrink either. They want to keep it at about 10,000, which that's probably coming from Israel. It seems a bit strange that we have that many. Believe it or not, we had 40,000 about 30 years ago, right? So we've had this huge

consolidation. But in the rural parts of America, that's the only place where credit comes from, is from these community banks. And so figuring out how to preserve that while allowing banks to innovate and improve their technology has been, frankly, one of the big challenges for the banking industry as a whole. And to try to preserve those smaller banks on the proverbial street corner of a small town, they have allowed the technology to just atrophy, to just become old. And this is part of the reason why we're using 40-year-old technology across the system. They don't want to mandate anything new and more important. But the financial services industry in so many ways, well, the banking industry specifically, it's one of the last industries that has not yet been disrupted by the Internet.

And so it's finally coming. It's about time. It's long overdue. Right. And the users. The users have started. It's like it's bottom up. It is bottom up.

For sure. And when they see Venmo and they see PayPal and they think, OK, you know, we just split the bill and we did it electronically. They don't understand what's going on. It's a Rube Goldberg machine of complex, you know, piping behind the scenes. And those transactions are all credit transactions. There is no reason in today's day and age why a payment has to be a credit transaction. There's risk in a credit transaction that it might not settle two or three days later. Why?

When we can move to Lynn Alden's point, I love this analogy. You can move data and money at the speed of light now. One of the biggest reasons why the financial system evolved the way that it did is because there was a mismatch, especially when money was physical. You couldn't move money. It moved at the speed of matter, not at the speed of light. But data could move at the speed of light. Exactly. And so for the last 150 years in financial services, we've been abstracting away that fundamental mismatch. And now that mismatch is gone. And we have internet native money. And it is absolutely going to solve a lot of problems. And folks that were protected by regulatory capture, to be precise, are not going to be able to be protected by that anymore. And so that's why I said there will be losers, but there will be a lot of winners, too.

And I'm excited about that. We're partnered with Vantage Bank, which is a community bank in Texas. It's not a large bank, but it is a far bigger bank than you would realize because of where it's located and the amount of business that it does with cross-border payments between the United States and Mexico. Mexico has had a real-time gross payment system for a long time. And the U.S. is sitting there still using, you know, SWIFT, right? It's crazy, right? But so if we can, if we can. Are you going, this is the, Vantage is the entity where you have applied for a stablecoin together?

Yes. Is that the one? Yes. Well, we've issued it. Have you? Yes, we've issued it. We've issued it and transacted with it and then burned it. So it's not outstanding right now.

The reason we're doing that is to go very slowly and meticulously with the regulators. They're watching everything we're doing. So it was like a pilot? Exactly. Well, it's real money, though. When you talk about a fintech doing a proof of concept or an alpha or beta testing, oftentimes you're not moving real money. A bank can't do that. A bank is either in the banking business or it's not.

So we moved real money, $500. These were not large dollar value. But the point is, we actually transacted. And the regulators were aware, including, by the way, the Fed, because the Fed is the regulator of Vantage, one of their two regulators. So they're aware of everything that we're doing. They ask a lot of questions. All the regulators do. They're talking to each other. We put them all in touch with each other so that they can coordinate and they understand what we're doing. And we're just going very slowly and meticulously. This is how it's going to be unveiled in the banking system, is very deliberately and very risk controlled. Tired of feeling like your freedom and future are fading away? Do you live in a country with growing inflation, crazy housing prices, weird culture and a chaotic economy? You're not alone. And my friend Mikel Thorpe and his team at Expat Money can help.

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This masterclass is now recorded and available to watch. The conference explores the psychology behind global mass processes, offering a behind-the-scenes look at science, economics, and human potential. It addresses challenging global agendas, mass formation, transhumanism, consciousness, societal change, and the path to transformation. Click the link in the show notes to access three and a half hours of exclusive presentations, in-depth content, and my fireside chat with Professor Desmet. Use my code AFRAD for 10% off. I hope you find great value in it. So just so I understand, so when the Genius Act is passed, you will bring back the stablecoin and start pushing it forward

in terms of technological advancement, etc.? Yes, but we don't need that. Here's what's interesting, because Vantage has a Fedmaster account, So they have direct access to FedWire. They have the ability to handle clearing and settlement. And we did not get access to that. We got denied membership in the Fed. So the Fed's rules don't apply to us.

So here's the aha. The state of Wyoming allows us to issue a stablecoin, but we need someone to do the clearing for us. Vantage can do the clearing, but the Fed is prohibiting them from issuing their own stablecoin. so when you put the two together you can do we can do it yeah right that's exactly what's happening it's a it's actually now i understand why you collaborated okay absolutely we had to we couldn't have done it on our own neither one of us could have done it on our own and each brought important pieces to the puzzle and um i i'm so happy vantage is a perfect example of a bank that is embracing

new technology and is going to succeed and going to thrive because of that so instead of complaining and trying to, you know, block out competitors and using regulatory capture, the sort of classic innovators dilemma that incumbents will oftentimes pursue. And that is exactly what is happening. The incumbents are not happy, as you know, in the United States. The incumbent banks are not happy about stablecoins getting recognition. But long story short, some community banks don't agree with their peers and are moving forward. And I do believe that they're going to reap the benefits of that. And by the way, this is inevitable anyway.

All they can do is hold it off by a couple of years with regulatory capture. And but I do think when you look down the road at what the U.S. market is going to evolve to, I think the crypto companies will end up getting bank charters. And it all comes down to how close you are to having a clearing account at the central bank. Banks are usually the only ones that have clearing accounts. In certain countries like in England, non-banks can get clearing accounts so they can handle clearing and settlement of pound sterling, whereas in the U.S. you have to be a depository institution. And now you understand why the dispute over, you know, all depository institutions is historically what the Fed, how the Fed behaved after 1980 for almost 40 years until it reinterpreted its statute.

Although, when we dug into the whole Fed thing, coming back to that master account question, there are several holders of Fed master accounts who are not legally eligible. So it's pretty clear that there were shenanigans, shall we say, in who got root access to the central bank. I don't know how it's done in Israel, but having root access means you get direct access into the clearinghouse. In Israel, we just have like eight banks, and most of them are owned by the same banks. And all the payment companies are owned by the same banks also. So it's just essentially two banks controlling the entire banking system. That's what we have in Israel. I want to pull a thread there because what you mentioned about the other crypto potential companies and other financial institutions jumping up the hierarchy and having a Fedmaster account.

How do you see that in comparison to wholesale CBDC? right because we have the anti-cbdc surveillance act yeah which is essentially don't let the fed manage digital dollar but then if you bring all the stable coin issuers back to the fed it's basically the same thing well and that's a very astute question because a lot of folks are worried that the private versions of of money will ultimately be hijacked and i i don't know how it is in israel but you'd be floored at how surveilled everyone is in our financial services purchases um that the the u.s government can get access to all of your transactions through exactly um and banks are not going to um and and by the way nor would we um we're not going to

buck that because it's the law we are required to report suspicious activity whether we agree with the law or not, you know, I mean, technically, it's illegal to jaywalk, you're supposed to walk in a crosswalk, a lot of people will take the shortcut and walk, you know, outside of the crosswalk if there's no traffic coming, right. But that doesn't, so that doesn't mean you agree with the law. But we won't jaywalk, so to speak, we are going to adhere to the law, and every bank will do that. And so unfortunately, that's the reality. And this is not a fight that we're willing to take on. Coinbase, it does look like, is interested in taking that on. They are pursuing that at the court. And I wrote an op-ed in 2017, I believe in Forbes, when a case about privacy

came out where the government had the ability to get access to all of our financial transactions under something called the third party doctrine, which is that when you willingly give up your data to a third party, you have lost your privacy right in it. And the U.S. government doesn't need a, unlike the Fourth Amendment, it doesn't need reasonable, it doesn't need due process in order to go get a warrant where it has to show a probable cause to a judge in order to get access to that information. In fact, they just go get it from third parties. They'll just subpoena the third party. Maybe they don't even have to subpoena. They just ask and they get all the data. So the reality is we're all a lot more surveilled than most people realize in the United States.

And if the government wants your financial transaction history, they're going to get it. That's a more fundamental question. And that's really, I think, what we're getting at with the whole CBDC question is, should you have financial privacy? And should the government have, should they have to go get a warrant, in which case they have to show probable cause that a crime was committed? And that's not the way it works today. Coinbase is, and I salute them, taking this to the Supreme Court. They are challenging, there was a lawsuit over what's called a John Doe summons, where I think it was in 2017, the IRS basically summoned or subpoenaed Coinbase for all of their data to try to see who was skirting the tax laws. and coinbase ultimately they fought it at least initially and then they gave in

but a taxpayer sued and now coinbase is coming back and trying to support that taxpayer in its lawsuit the supreme court i believe will overturn the third party doctrine um because it is an unreasonable search and seizure and now living in the world today yeah um you know with our cell phone location data it's unfortunately very easy for the for for the government to just go and get from data brokers the data that they used to have to go to a court and prove probable cause in order to get a warrant for. And so I think we'll go back to that. And how would you, like privacy is obviously one aspect when we talk about CBDCs, but what would you say if, I don't know, the government suddenly enters a new law that makes stablecoins programmable that you, for example,

have to use carbon credits? Yeah. Well, this is the debanking problem. This is exactly the problem that we created this new charter type to try to solve in 2017 for all the entrepreneurs who came and said this was their number one challenge. They needed durable access to U.S. dollar banking. We're right back to this same question of how do you balance the law enforcement needs of making sure that crimes are not being committed, making sure that that money laundering and terrorism financing, whether you agree with those or not, those are the laws. And how do you balance that with privacy? And right now, it's very clear that there's no privacy functionally in financial services. And so a CBDC is not going to make that worse. That's what I think a lot of

folks misapprehend. They think they have financial privacy right now and that a CBDC would take it away. It's not the case. There is virtually no privacy at all right now if the government decides to target you. And that's the piece, I think, watch that Coinbase case, because the Supreme Court has started to take away, the history is there was a case challenging the Bank Secrecy Act, which ironically, by the way, Republican presidents are the ones that expand the Bank Secrecy Act. It's not Democrats. Nixon is the one who created it in the first place, and it got challenged. And there was a Supreme Court case in 1977 holding that it did not violate the Fourth Amendment. And back then, the Bank Secrecy Act only required the banks to collect

name and address of the account holder. None of this payment tracking, none of this know your source of funds, nothing like that, right? And then it expanded. It expanded a lot after 9-11 under George W. Bush with the Patriot Act. And then it expanded again under Trump's first term. He tried to veto it, but Congress overwrote his veto. So ironically, the perception is that it's under the Democrats that the control has ratcheted down. It's not. It's actually under the Republicans. But there was a case called the Carpenter case in 2017 that the Supreme Court started to roll this back a little bit and say, the government cannot go use cell phone location data that it buys from a data broker to prosecute a criminal. It has to go to a judge and show

probable cause. So I think the door's open for that precedent and this whole concept of the third party doctrine that you lose data privacy, the moment you give it up to a third party, I think that's going to be rolled back. And it'll probably in the next, you know, couple of years, and that'll be really wonderful for privacy advocates. And, and frankly, it'll just, frankly, give the value of Bitcoin even an even bigger boost at that point in time, because the whole question of, of basically turning your financial institution into a law enforcement agency, which is essentially what the Bank Secrecy Act has done since the 1970s. And again, it's the law. Congress, bipartisan, under Republican presidents, has continually

expanded it. But I think they've gone too far. And my guess is that it won't stick when the next Supreme Court case reaches the Supreme Court. I'm just adding one little thing that you made me remember. A few months ago, I don't remember who he was, but I think he's a former FDIC, head of FDIC was sitting at the sorry I don't remember if it was senate or something like that and he was saying I think we need to referring to the stable coin act that is now on the table I think we need to adapt or stretch the bank secrecy act to the stable coin act what he's like calling to put the same measures onto stable coins now right what do you think about well that's what the Democrats held it up. I forget his name. I'm sorry. Yeah. But that's what's interesting is that

we think it's the Democrats that are doing it. And in this time, that has been the case. The Democrats are the ones who are extending it. I think it was Senator Mark Warner from Virginia. But by the way, a Republican from Kansas did the same thing and joined him in saying we need to extend all the Bank Secrecy Act surveillance state to stablecoins. Here's the irony. It's already there it's already ever the law is clear it doesn't need to do what you say well it doesn't i mean it's already extended right technically the bank secrecy act applies to anyone who moves money and crypto movement has been deemed money movement and so they don't need to extend it it's already there what they haven't done is done the level of enforcement of the law um and so i it'll

be fascinating to see what the Trump administration does, because the law applies to everyone. It's just that some have skirted it. And I put out a report working with Wharton a couple of months ago. It hasn't been published yet. Looking at the cycle of Bank Secrecy Act examinations, banks get examined essentially every 12 to 18 months. Broker-dealers get examined. It's risk base, so it can be more frequently, but they get examined every four years. Money transmitters, there's no set schedule, right? So some money transmitters may never get examined. Same thing with trust companies. So that's the biggest difference. The law is universal. It's how much it gets enforced. And then there's a lot of subjectivity to it as well. And this is where

you've seen a lot of the consent orders that came against the banks that were serving this industry. That was designed to pressure, because there is some subjectivity that goes into it. What is risky, right? Like signature. Exactly, right. But some of the others that got consent orders, Cross River, Vast Bank. I mean, there's a whole list that got consent orders for not sufficiently applying the Bank Secrecy Act. It's one of those places that those who hated crypto could ratchet up the pressure on the banks.

And we saw it with Senator Lummis in February when she revealed that the Fed had this secret document that gave itself the authority to close or deny access to banks that engaged in controversial activities or where the leadership had made controversial comments. No one knows what that means, right? Well, yes. But I think we all know that crypto was deemed controversial, so everyone, of course, can conclude that that was indeed the case. But they didn't publish that beforehand, right? So they haven't even told. This is another aspect of due process, that agencies have to say what their standards are. And if they have a secret standard that they never publish, but you start to just watch the outcomes and realize they don't like banks in the crypto industry and they're trying very hard to pressure the banks that serve the crypto industry to just die and go away.

Very clear that that was the case. It's not difficult just from looking at the pattern. But when Senator Lomas revealed that, it all made sense. It was exhibit A that this was exactly what the Fed was doing. whatever controversial means it it had given itself the authority to do whatever it wanted under the guise of controversy yeah and who says what the truth is what controversy is where is the ministry of truth right right but now we're back to it and we were asking these questions are we ever going to solve these problems it is a tough problem to solve and i

was very happy last week, the New York Times, which has not been a pro-crypto newspaper, actually came out and admitted this is a real problem. And there are different standards here and it's an intractable problem. And they're starting to worry about the machinery of government being used against left-wing interests, just as the machinery of government was used against the Trump family, against the crypto industry, against religious organizations. There were allegations right and left that it was very politically motivated.

And based on what I know, I believe it happened. I believe it's true. Yep. So do we. Yeah, of course. So I want to jump to a different topic, which is more of the international stablecoin wars or international dollar wars.

We talked before the recording about your podcast with Tom Longo, which was incredible. And there is this battle going on between the domestic dollar market and the international euro dollar market that we all know, or most of us know, is based in the city of London and a lot of its operation. I'd like for you, if you can, to describe a little bit of what that battle means. Right. So most people don't know how the monetary system works behind the scenes, how the architecture works and how stable coins issued in the U.S. completely changed that. So if you could provide some clearance to that, what's happening, what's going to happen to international dollars and the city of London if the Stable Can Act is going on? Yeah. Well, we don't know, but it seems pretty clear that the current Treasury Secretary, he's predicting $2 trillion of Treasury demand coming from the stablecoin market. The stablecoin market is just a little bit over 10% of that right now, to give you some sense, right? So he's predicting some, you know, a 10x growth in the stablecoin market.

And I actually think that's conservative when you consider the banks are coming and are going to be changing some of the ACH transactions into stablecoin transactions like what we're doing with Vantage. um but uh the the euro dollar market is interesting the history of that is that after the after world war ii russia was concerned when the cold war had begun that it was selling oil in dollars because oil is a global market that trades in dollars and it was being paid dollars but it was afraid the u.s would confiscate the dollars by the way that's what the u.s just did um right And so did Europe as well. So with good reason, they've had a lot of history. There's a lot of water under this proverbial bridge with the U.S. using the banking system as a foreign policy tool.

And so it decided to strike a deal with a Russian-friendly bank in the city of London to accept U.S. dollar deposits. Thus, the euro-dollar market was born in the 1950s. And there was some discussion in the 1960s as to whether the Fed should try to get some sort of control over it. And frankly, they just it sounds like they all just never agreed on whether to get control over it. And it was small enough that they could just ignore it. And they just grew, grew, grew, grew, grew, grew, grew. And now it's bigger than than the onshore U.S. dollar market. So that's the history. There are a lot of U.S. dollar transactions that never touch U.S. banks and never go through the United States, but they're using the dollar as the intermediary currency. And so there are a lot of folks who would look at the world today and say, we're not on a dollar standard, we're on a euro dollar standard, because there's more volume in U.S. dollars happening outside of the domestic U.S. market.

And so who controls the euro dollar? To your point, it's the city of London. And that's not a conspiracy theory. It's easy to point to why. The interest rate on dollars was set under what's called LIBOR, the London Interbank Offer Rate. And the panel of LIBOR setting banks was dominated by London banks. It had the London office of J.P. Morgan as the sole representative of the U.S. banking market. So who controlled the most important interest rate for the U.S. dollar market? London. And so therefore, London really actually controlled the U.S. economy. Right. It was staring us in the face, sitting in plain sight. But I salute the Fed for bringing that control back onto the United States.

there was a multi-year process to take LIBOR down. Some of you might be familiar with the LIBOR pricing scandal. LIBOR was price fixed. And there were big London banks that paid big fines and fired their fixed income traders for price fixing LIBOR to try to make it seem like it was more favorable to them than it actually was. And so what happened is the market migrated to what's called SOFR, the Secured Overnight Funding Rate, that is set in the United States and the security, it's secured. That's why that's the S in SOFR. It's secured by U.S. Treasuries. So it is actually a secured U.S. Treasury borrowing rate. Therefore, the U.S. actually controls it. It's not some panel of 14 random fixed income traders in London, and the U.S.

didn't have any control over them. And that was an unsecured market as well, unsecured rate. therefore more volatile so we've brought it on shore it's secured and it's set in the united states so the u.s now doesn't need london anymore that's that's tom was the one who made me realize all that it was one of those like aha moments of yeah wow you're right london actually sets the most important interest rate that underscores most of the financial markets and that was libor and And the last LIBOR futures contract matured March 31st. So we are out, LIBOR is gone. But we've just had the last vestige of it disappear.

And with basically stablecoin adoption, you see that as much more significant, as in, for example, Israeli banks can now hold dollar deposits in stablecoins instead of having correspondent banking and all this nonsense. Correct. Well, and it's fascinating. talking with a foreign bank today here at the Bitcoin conference. They use Tether. They just don't even bother with Swift anymore. They just use Tether. Yeah. So why go through the correspondent banking system is their philosophy. And again, we talked about earlier that the

invention of a stablecoin was because correspondent banking was so stingy and was not reliable, not durable. And so they just invented their own version. And it's technically required to comply with the same laws, but how many exams has it had? Zero. So there you go. Exactly. You've played a central role. I'm stepping to another topic of blockchain and Wyoming. You've played a central role in turning Wyoming into a blockchain trailblazer. how did that journey begin and why was wyoming uniquely positioned for this uh well it started by when i tried to donate a piece of bitcoin to fund that endowment and the state had a bad money

transmission law and i said we don't want to miss bitcoin it's going to be big let's roll up sleeves and fix this i had been an intern at the wyoming legislature at university so it wasn't a foreign concept to me it was easy for me to just go back home as a volunteer project it was also because I'm not a technologist, something that I felt like I could use my skills to contribute to the industry and help solve an industry problem. So that's how it got started. Why was Wyoming unique? It's an interesting, interesting state. It's kind of located in the in the middle of the United States and in the Great Plains, sparsely populated, high elevation, lots of mountains, cold. I love that. Some folks don't. But the history of it is very independent. And it's

nicknamed the Equality State for a very interesting reason, which is that they didn't have enough population to become a U.S. state. So they let women vote 50 years before women were allowed to vote in the United States. So it was 50 years, huge, like 1869, trailblazer state. And in fact, actually, there's a fun history story. The men decided they needed to have more population. So they let the women vote to qualify to become a state around the same time as other,

like the surrounding states, like Nebraska became states in 1869. And Wyoming was going to go down that same path. And then the federal government said, we'll let you become a state, you're qualified with enough population, but you have to take the vote back from the women. And so they voted to take it back, and the governor vetoed it and the override failed by one vote. And so women got to keep the right to vote in Wyoming, but it was all political. And so we have that history. And then there's another more business-focused history. Wyoming invented the type of business entity form called an LLC, limited liability company. It was a simpler version than a corporation. and Wyoming did the work back in 1977 with the IRS to get it recognized from a tax perspective. And then all 50 states about seven years later adopted the same law. So that's kind of the same thing. Wyoming led the way with women. It took 50 years for women to get the right to vote

in the rest of the United States. We led the way with LLCs. It took seven years. and some of the laws we passed in Wyoming have already started to be adopted in other states for Bitcoin. It almost sounds like it's like the startup of the U.S. Yeah, well, it's very independent and it's interesting. Agile. It is. It's small and that helps that it is small and agile.

But it's just got this history of being a leader of bucking the system. The motto of the University of Wyoming is bucking the system since 1889. Nice. That's the motto of the university. So that tells you a lot about why it was culturally accepted that Bitcoin would... There are a lot of people in Wyoming who understand it. Wyoming was the second state. They just understand it viscerally. They don't understand necessarily the technology, but Wyoming was the second state to recognize gold as legal tender behind Utah. So that kind of gives,

again, some perspective. Why is it that Wyoming embraced this? It was not an accident. That's amazing. So you mentioned there are many crypto friendly laws pushed in Wyoming and successfully with sometimes your help as well. And that they would like to know what are these laws, like the main of them or the most important ones. And what do they mean, like in terms of? Yeah, the first one was fixing that money transmission statute.

But the most important one is really boring. It just recognizes Bitcoin as property, so that if it's stolen, that the theft laws apply. Very simple, but foundational. And then probably the most impactful one was defining Bitcoin under commercial law. That's where I was alluding that other states have followed. Wyoming was the first state to define the rights and obligations under commercial law. And I was working with one of the early Bitcoiners, Trace Mayer, at that time. And he said, we have to make Bitcoin backwards compatible with the legal system.

Otherwise, the courts are going to be attacking us. We don't want the courts to be an attack vector. So let's define the rights and obligations to make the law backwards compatible with the technology. And that's what we did. And it was funny because there was a, we were talking about Davos earlier, there was a collectivist group called the Uniform Law Commission that didn't like what Wyoming was doing and came guns blazing proverbially and just attacked what we were doing, demanded that Wyoming stop changing the commercial law because they want to have it uniform across all 50 states. when that happened the wyoming legislature idea of the united states of course it is but what's funny is that when all the senators received that letter from a law professor yeah demanding that they stop what do you think happened they had the exact opposite reaction they said we're over the target if we got a letter like that we're on to something let's go and that that vote um that particular bill passed the senate 27 to 3 amazing just because they were being ornery yes um so it was great and and but what happened then is afterwards the uniform law commission approached

us and said all right you're on to something believe it or not you know the laws in the united states had only recognized under commercial law had only recognized transactions if they were in writing and there was an addendum passed about 20 years ago to allow for electronic signatures but it was sort of a band-aid over the top of the old 1950s laws when everything was in paper form and all signatures were in ink and so they decided to create a a new article of the uniform commercial code for natively digital assets and wyoming was the one that prompted that and the basics of what wyoming enacted have now been enacted in more than half of the u.s states So we were talking earlier, it took seven years for all the other states to get LLC laws.

This one's happening even faster. Faster, yeah, I'm sure. Is it Missouri that is now considering canceling capital gains tax on Bitcoin? Florida is what I saw, although a lot of folks said Florida didn't have capital gains tax. And someone actually posted that that was more important than the strategic Bitcoin reserve. I agree. I agree, too. Because Bitcoin, part of the problem with gold, after it got demonetized, they treated it as what's called a capital asset. So when you buy and sell it,

you have to pay capital gains taxes. If you take the capital gains taxes off a monetary asset, it can be used as money again. And so there are a lot of folks that have pushed that with gold and silver, and they're now doing that with Bitcoin. I remember asking Nick Szabo back in 2018. What are your ideas? What should we be doing? I was like a hive mind to use Tom Luongo's phrase. I was just the conduit for so many different ideas coming in. But I made a phone call to him to ask him what should we be doing. His first priority was get all taxes off Bitcoin because that's what enables it to be used as a monetary asset. I hope Trump does that. We'll see. I hope so, too. Yeah, that will be the best.

I think that also answers that question. Yes, absolutely. I had to. My turn? Yeah. All right. So essentially what the question was is that if you add a direct line to U.S. lawmakers or the Fed, what's the one message or the one request or the one thing you want them to hear urgently? Remove all taxation from Bitcoin. Yeah, exactly. It is. It is the number one priority. The Strategic Bitcoin Reserve, I'm kind of neutral on it.

Yes. It's a big project of Senator Lummis, and she's been so wonderful. So obviously, I want to support her project, but I'm much more focused on the bigger impactful opportunity, which is taking all taxes off Bitcoin. By the way, even for stable coins in the United States right now, you have to report capital gains and capital losses. And so a very small difference between par. So if you're buying Tether at $0.0000001, you are paying taxes on that $0.0000001, right? So the exchanges will report the stablecoin value out to eight digits, and you're required to pay capital gains tax and to report all of your transactions on stablecoins because they're deemed a capital asset. They're deemed property. They're not deemed money.

So all of this is friction, right? It keeps all of these things from being used. Now, they're going to fix that for stablecoins. They have not decided to fix that yet for Bitcoin. So that's the next frontier, right? Yes, that's what we'll work on. Let's see if Trump decides. I mean, he's certainly been good on certain things for our industry.

So let's see if he goes there. I think I'm hopeful. I think this is going in the right direction and much faster than we had anticipated. Yeah, I mean, if anyone predicted that we would have a stablecoin bill, I mean, I would have thought we would have just quietly been making progress with the regulators behind the scenes. And we were so close to getting there in 2022 before FTX and that, obviously, they overreacted and that set the whole industry back by a couple of years.

But here we are back again. I wouldn't have predicted that Congress would have been passing laws and, frankly, that we have a U.S. president and a vice president and a treasury secretary who's just actively embracing all of this. And I think this is accelerating the whole world switching to the new monetary order, because I think you and I were tweeting each other the other day on X saying they're doing everything they're doing with stablecoins and the ECB is out loud using that as an excuse to expedite their digital euro. Exactly, their CBDC.

So it's as if there's flames and fire everywhere in the world now because of what's going on in the u.s great and i think that that's really really it's intriguing to see what's happening what's rolling out in the next few years yes absolutely two years will be enough all right caitlin you've been fantastic we don't want to take any more of your time we want to end with one of my favorite questions where do you draw hope from oh boy oh it gives you hope Oh, my gosh. Just the adoption that we're seeing, it's happening just so steadily and so slowly. And frankly, it's just all organic. And none of us could have predicted some of the things that have happened. Nobody predicted that Michael Saylor discovering a financial arm, an arbitrage, would draw so many people into Bitcoin. But it has. We all thought, you know, thinking back to the Bitcoin standard that, you know, the dollar would collapse. And by the way, Saifedean has said, and he and I did a podcast on this a while back,

we didn't think it was going to be a destabilizing and fast collapse. We thought it was going to be a slow one. And I think that's right. But this Michael Saylor arbitrage has brought a whole bunch of new adopters into Bitcoin. And it's happening from inside the capital markets. Nobody predicted that. Nobody, not even Michael Saylor predicted that until he discovered the arbitrage. And now we're seeing all these Bitcoin development companies coming forward.

They're not using leverage to fractionally reserve Bitcoin the way that Celsius and BlockFi and that crowd did. And so I think what he's doing is more sustainable because what he's really doing is shorting the U.S. dollar, which is a depreciating currency, against Bitcoin, which is an appreciating currency, and doing it in a leverage-controlled way. I am no fan of leverage. You know that. A fool that has leveraged Bitcoin are soon parted. He is not leveraging Bitcoin with Bitcoin leverage. He is leveraging Bitcoin with U.S. dollar leverage. And there is a difference. And if you're going to provide that kind of strategy, definitely doing it with a depreciating fiat currency is the safer way to go. It may. It may. There are values of Bitcoin at which it does not work. And he is taking that risk. But the reason I brought it up is it's just nobody predicted this, not even him. And here we are bringing, you know, droves of new investors into Bitcoin because he's created an arbitrage that no corporate finance professor ever predicted, much less professional in the world. And all he's doing, it's really simple for those who haven't dug into it. He had a very stable, not very fast growing cash flowing business.

And he added Bitcoin into the treasury, which increased the volatility of the entity. And there's something called monetizing vol. Everybody does it in financial services every day. So he just cranked the volatility of his company up. And he's monetizing that volatility by selling securities cheaply to go buy more Bitcoin, which is increasing the volatility of the company, which allows him to sell securities cheaply to go buy more Bitcoin. And it's right now that is not a perpetual money machine that will stop at some point. And the premiums pretty, pretty hefty right now. But this is not the same as Celsius and BlockFi.

He is not going fractional reserve on his Bitcoin lending. It is different. I'm not saying it's not risky. It is risky, but it is different. And so I just think it's that's the kind of reason that I have hope is it's such an organic thing. Nobody predicted that. We're just going to continue to see more and more and more of those kinds of things popping up as more and more users come into the ecosystem for whatever reason they're coming in. And they're going to be using Bitcoin in ways that none of us could have predicted. And that's fabulous. That's exciting. And just to echo on what you're saying, a year ago, I interviewed him and I asked him, what about other CEOs? Are they approaching you, asking you for your playbook and how you do what you do? And he was like, this was one year ago. Not really, they're starting to, it's only picking up. He knew it would come, but it was only the beginning. It was just one year ago, June last year. And look where we are now. So fast. Right. Well, but it's also it's a momentum thing. Right. I acknowledge. And Nick Carter is a critic of this. They're going to you know, all these Bitcoin development companies are going to puke Bitcoin out at some point. Right. Because they're going to have to unwind some of this leverage at some point. But Michael's been pretty careful about the leverage amount that he has. I think the break even price for Bitcoin is about fifteen thousand dollars right now. So it's pretty low relative to where the Bitcoin price is. Some others are more levered to that and they're going to be more volatile. And Nick is not wrong. There is risk that, you know, you're going to you're going to see some pretty big drawdowns. But Lordy, are we used to that in Bitcoin? 90 percent drawdowns. Like that's just another Monday. Exactly right.

Yeah, indeed. So we've seen Bitcoin volatility go down because of all of the all of these new investors with these new strategies. That's a good thing. But I am not assuming that it's over. And I think we will continue to see those drawdowns. And that, you know, makes Bitcoin even stronger, right? We've got the diamond hands that have been through so many of these. We're just going to be making new diamond hands, I think. Beautiful. Good.

Thank you so much. Please thank her. Yes, I know you are such a big fan. Oh my gosh, thank you. We're both big fans. Oh my gosh, thank you. I really appreciate it. Thank you so much.

During the interview, I had this thought that I can't believe that I'm actually having this conversation i'm such a simple regular person thank you for saying that but no i don't you make a big impact on so many people oh my gosh thank you that's so kind of you to say it reaches all the way across the i i do appreciate that it's nice being among the among my tribe here so to speak um being being with bitcoiners but i also recognize i was looking around this morning and i didn't know most of the people around me in the speakers line it's incredible how many new people have come into the space. And I hope that those who are new will take the time to look back and look at, you know, folks like Trace who started buying it when it was 25 cents. What did

he see? And learn from that and learn about the history so that it's not just a pure, you know, gambling trade to end on that theme. And we're in Sin City where folks are gambling. I think most of the bitcoiners here are not gamblers yeah yeah exactly okay so much thank you so much it was lovely enjoy your rest of your visit here in the united states good luck at the conference yes you too thank you thanks for being with us please take a minute to give this episode a like a comment and subscribe or follow and please share it with your friends so they can also get value and choose to take some positive action in their lives till next time Thank you.