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CAN BTC HIT GOLD'S $12T MARKET CAP BY 2025? #CryptoTownHall
Recorded: July 6, 2023 Duration: 1:14:40Space Recording
Short Summary
The transcript highlights significant developments in the crypto industry, including Larry Fink's bullish stance on Bitcoin and tokenization, which suggests potential growth and innovation. The discussion also touches on the financial struggles of DCG and Genesis, indicating a decline in their stability. The anticipation of Bitcoin ETFs and their impact on market accessibility and institutional adoption is a key theme, reflecting a trend towards mainstream financial integration.
Full Transcription
All right, let's get everyone up.
Good to see you all.
Good to have everyone here.
I'm going to send out the advice and we'll kick off the show.
Yo! How are you, man?
I'm good. How are you, sir?
Good, man. Good. You're seeing all the...
Welcome, everyone.
It's just me here. Just me, man.
Welcome to you, too.
Did you see all the hype around...
Before we're getting to Larry,
did you see all the hype around...
Around threads. Let me see Eugene. Eugene is here before getting into crypto Eugene. Eugene host the AI shows
Eugene what's the what's the how the numbers looking for threads which is a if anyone doesn't know
Threads is a competitor by meta a competitor to Twitter
That launched yesterday how the numbers looking Eugene?
Yeah, the numbers, I mean, preliminarily, I think about 3% of Twitter's users today and projected to be about 10% of Twitter's user base by tomorrow.
And Zuck, of course, as with all...
you know, sort of the apps that he acquires and the efforts he does, you know, he wants to get it to
a billion people. And, you know, he's got the firepower of the engineers. I mean, you know, I used
to work at meta. So he's seen it a bit from the inside. He's tried to make VR into a billion
users. He's still on that path. I think that's gone slower than expected. But, uh, yeah,
I mean, it's a great. Ran, have you, by the way, you got to accept the co-host advice.
Ran, have you looked at threads? Have you had time yet?
No, I haven't looked at it yet. I mean, I have a few thoughts about it. What are your thoughts?
First of it.
So interesting.
First of all, Facebook doesn't really know how to build products.
They know how to buy products.
The only product they've ever built successfully was actually the Facebook platform.
Everything else that they've tried to build has failed badly.
You know, you think they had to buy WhatsApp, they had to buy Instagram.
They tried to build VR that failed, or Metaverse, that failed really badly.
But interesting here is that they're actually launching it on Instagram.
So...
the fact they're launching it on Instagram is the same way that they launched stories on Instagram, which is, you know, like that that actually was a success.
So, you know, it's got that chance.
But, I mean, on my show today, I referenced a tweet.
And I try to find that tweet quickly.
The tweet says it's by a handle called Doge Designer.
Yeah, yeah.
Twitter has no competition.
Yeah, continue.
Yeah.
He says that Twitter favors free speech, meta favor censorship.
Twitter is transparent and open source.
Meads not.
Twitter respects privacy.
Meta sells your privacy.
Twitter has memes.
Meta is a meme.
And yeah, to be honest, I think that, you know, the big revolution in Twitter is the fact that Elon made at this public town hall that's uncensored and that, you know, you kind of feel safer on than when you're, you were on the old Twitter or when you're on YouTube or when you're on Facebook.
And I think that like Zach launching a product like this, for me certainly, that's not why I'm going, that's not why I'm going to Facebook, you know, to Instagram.
I go to Instagram to see my friends that I don't get time to see because I work so hard. That's it.
I think the point that you made is not about functionality, it's more about the concept of free speech and censorship.
So copying Twitter, the functionality of it is not the same as copying Twitter as a platform.
And I think meta is unable to copy what Twitter really stands for.
It's fundamentally different.
The same way I think Twitter is...
cannot really copy what meta is
because meta will have that level of censorship
will be a different experience
because the same way
meta took a step in copying Twitter
Twitter is building the X app
which is kind of the everything app
so they'll be replicating what meta has
they'll be replicating Instagram
they're already looking at TikTok
and they're competing with YouTube
so I think the fundamental difference
Doge designer was here a few weeks
a couple of weeks ago he's here in Dubai with me
The point he made is that the censorship and the free speech aspect of Twitter is what makes it different.
But be interesting to see what happens to threads next.
Why, let's kick off the...
I'm not a big fan.
I'm just not a big Zach fan.
Do you use anything?
Hold on.
Do you use anything meta?
Do you use Facebook or Instagram?
I use Instagram. I use Instagram and I don't post very often. I do enjoy. I must say, I really enjoy the Instagram platform. I enjoy stories. I enjoy using it to keep up with my friends that I don't get to see. What's your handle?
At Crypto Man Run. I'm at Crypto Man Run. Wherever I go. Can't get away from it.
Yeah, I wish to have you look at it now.
Oh, it's just personal, just your family, nothing to do with crypto, or very little crypto.
Yeah, I don't do.
I don't post much crypto.
Cool, cool.
All right, man, let's kick off the show.
How are the markets looking?
Like, his last side looks was pretty bullish, and then I was called with Fred, your boy, Fred.
And he's like, yeah, markets are tanking.
How is everything looking on your end, Ryan?
Markets are, so market.
I would say tanking.
I would say, I rerewer it.
Not tanking, but they kind of dropped a bit.
Yeah, exactly.
I mean...
Yeah, markets were
really doing well.
They were breaking 31,350.
That is after Larry Fink's comments.
And I'm thinking Larry Fink's comments yesterday
were absolutely,
absolutely mind-blowing.
I can't play it now through the phone,
but there was a great interview on Fox
and,
The stuff that Larry Fink said, when you talk about the godfather of institutional money and you talk about probably the most influential person on Wall Street.
And when that person comes out and starts saying things like, number one, Bitcoin is an international asset.
Bitcoin is digital gold.
Bitcoin is hope.
You know, that is not what I'm expecting from the same person who called Bitcoin an index for money laundering a couple of years ago in 2017.
So I think that's big. He also said that they're working very closely with the regulators.
Now, you know, when you and I say, or when the crypto project says they're working with the regulators, you know that's bullshit.
When Larry Fink says he's working with the regulators, I think what he meant to say, but he said it in a very diplomatic way is he said, we are telling the regulators what we need, as opposed to we are working with the regulators.
You know what I mean? So, um,
I think that that was a super interesting turn of events.
And yeah, I think now all eyes are on the Bitcoin ETF.
A reason for the pullback, I just think, you know, hangover from where we've been.
Also, we've been on an app-only market for a long time.
I'll give you a very interesting stat.
I keep saying that we're in a raging bull market.
The S&P has now gone for 28 days without a 1% pullback.
And that's really indicative of a bull market.
Because in a bull market, you don't get big pullbacks.
The S&P hasn't had more than a 1% pullback in over 28 days.
Yeah, I've got a few quotes from the Larry Fick interview.
I'm trying to get the quote when he calls Bitcoin his hope because I was talking to Fred,
and I like how you guys compared it to what Michael Saylor said.
And we'll get to that in a bit.
And then we'll dig into the FOMC minutes as well.
But just kind of focusing on Larry Fink's...
interview on Fox and I think Eleanor,
Eleanor is she on here?
Not yet, we brought Eleanor from Fox as well.
I think she helped organize that interview
to get her thoughts, but I wanna read out one thing
and probably get Bruce's thoughts.
And for the panel, good to have you,
all special sits, good to have you.
I'd love to discuss these,
the FMC minutes with you in a bit as well
and kind of a macro discussion.
But Bruce, are we looking too deep into what Larry said because it does seem very exciting?
I'll read out one point here talking about the tokenization of assets.
We're a believer in digitization of products.
ETFs was a big revolution for the mutual fund industry and it's really taking over the mutual fund industry.
And we do believe that if we can create more tokenization of assets and securities, and that's what Bitcoin is, it could revolutionize again finance.
that's bullishness from one of the most important people in finance.
And I think that the markets are not giving it enough credit.
What are your thoughts, Bruce?
Yeah, I agree.
I think it's a very, very big deal.
People have got to understand just how big and influential BlackRock is.
So, you know, somebody asked me yesterday, they said, do I think there will be a bump in price if the, if the, if the, if the ETF is approved because of the buying of the ETF.
Well, sort of. Yeah. And that's that's important. And it could easily be billions of dollars.
But to me, the much bigger story is the overall size of BlackRock and the influence and how this influences other financial firms and all of the downstream, you know, all their customers, their distribution channels, the family offices, the sovereign funds.
What this means is that is two really, really big things.
One, it means that Bitcoin is officially now on the.
the full global radar of all the serious money managers.
That wasn't the case before this.
And now, so that's a very, very big deal.
So I think that over time, what this will lead to
is a lot more money managers
who are taking a one or two or three or five percent
allocation in Bitcoin.
And that's a really, really, really big deal
when you're talking about, you know,
not just BlackRock's 10 trillion,
which is really, really significant,
but all of the funds and influence that they have.
I mean, if they're going to their...
huge investors, the sovereign funds and the giant family offices and other, you know,
gargantuan financial institutions talking about Bitcoin, that means that it's going to become
a thing that people make allocations to just like they do precious metals or commodities
or other asset classes. And then what you said about securities is a really, really big
deal as well, especially for me because I'm, you know, I'm super passionate about
tokenization of securities. I think I was the first person to be talking about this.
many years ago.
And now it's always been inevitable to me.
You know, the system is old and broken and clunky
and digitizing and tokenizing things
solves a very real problem
of trusted parties in the way Wall Street works.
So it's a super, super big deal.
Yeah, Bruce, one thing I feel like the narrative of tokenizing securities was something everyone was excited about back in there.
I think the previous bull run, I remember it was talked about a lot in 2017.
It kind of died down since.
Do you think were Larry's comments now that will see a resurgence in the tokenization of securities?
And then that's the question number one.
And question number two, is that a hint that he's interested in that could we see Larry, you know, start with Bitcoin?
But is that a hint that he could be interested in Ethereum as well?
Yeah, for sure. I mean, the, you know, the securities is the mother of all industries. You know, it's a multi-deca trillion dollar industry. Everything is basically a security. You know, securities include stock. So if you count stock, that that means, you know, any ownership of any company from your local hot dog stand to the company that owns your favorite building in your favorite city to the hotel to everything.
you name it, your business.
Everything is a security.
Sometimes it's owned by one person, cap tables.
So securities and particularly equities
is a really, really, really big deal.
You know, it's, I would say even more important than cash.
Money is very important.
There's all these other issues around money and fiat
and that kind of thing.
That's sort of a separate discussion.
And Bitcoin is doing.
doing great at, you know, replacing Fiat or becoming a true global money standard.
But there's this whole other issue of securities and stocks and how they work.
And the way they work now is clunky.
You know, they're all siloed by borders and it's really hard to move things around.
You know, why is it that I could send a board, board aft to anybody on here?
but I can't send a share of IBM or a share of Tesla.
You know, we should be able to, and we will be able to,
and it doesn't take that much of a rocket scientist to figure that out.
Certainly somebody as smart and influential as...
Look at this, Bruce, Bruce.
Look at this, just to kind of highlight the shift.
I know, Ryan, you touched on it.
I'm going to mention a few quotes by Larry.
And, you know, we could kind of make comparisons to Michael Saylor and his initial thoughts on Bitcoin and crypto and where he stands today.
But in 2017, on October 2017, so Larry, think at the Institute of International Finance at a meeting then, he said Bitcoin just shows you how much demand for money laundering there is in the world.
And then in 2018, he says cryptocurrencies are not an asset class.
And it continues in 2018, again, we don't see a role for crypto in our client's portfolio.
And then in 2020, it's again, three years ago, cryptocurrencies are a mirage.
And that was at a speech in Wef in Davos.
And then this same person today is saying, and I like how you said, Bruce,
that this is more important, in my opinion, than the ETF itself.
He's talking about democratizing crypto.
He says the attempt in terms of what we're trying to do with cryptos to make it more democratized with all of all the crypto and make it much cheaper for investors.
And they start talking about Bitcoin as gold.
John, Dave, I'd love to get your thoughts on this.
Yeah, I mean, look, I've been talking about this.
You know, you can go on my YouTube channel.
Scott will tell you I've been talking about this on his show for years.
There's a simple point that I made, and I'll encapsulate it in a conversation I have with Larry Tab,
who I don't know how many of you guys know, but he's been a pretty influential trad-fi consultant
and pundit for years, had his own company.
He now works for Bloomberg and heads their research division.
And I basically told him five years ago at breakfast.
I said, listen, the digital asset world will ultimately win,
and all assets are going to trade as digital assets.
At some point in our lifetimes, it's God willing we have the health to see it.
And he looked at me like I had two heads, and I started explaining a lot of what Bruce did.
And the reality is that digitalization has overtaken virtually every industry that it can except for finance.
Right.
Bruce had a great rant last week where he talked about how, and I don't want to reprise it,
but basically talked about how at the core of securities are pieces of paper that have now been digitized in a vault with DTC.
And we've created all these ridiculous conversations, all these ridiculous accommodations using mainframe computers to batch process this crap.
But it's still siloed with, it's not, it's still single currency, it still doesn't allow for self-custody.
It doesn't allow for designated custody, doesn't allow any of those things that crypto does.
Plus the market structure of crypto as well has huge advances in terms of real-time liquidations and engines and risk controls and all sorts of things that we've been developing.
All of that is going to end up in the securities world.
Now, here's one other point of...
Go, I finish off there.
I want to make one other point because it's real, from your perspective, you'll understand it.
The entire world has been chasing the United States in efficiency and finance.
I once talked with the government of Singapore about this and they understand it really well now.
The U.S. because of economies of scale is the cheapest and most efficient capital market in the world to process.
The rest of the world hasn't caught up, but digital technologies will be a quantum leap forward
in that.
You know, all you have to do is look at how cheap it is to process a Bitcoin transaction
of huge size, whereas we can't do that in traditional finance.
And so eventually everything is going to go digital.
The U.S. might be last.
And that's why people like Larry Finker waking up there saying, okay, whoa, whoa, whoa, wait a minute.
We can't lose our advantage.
We have the cost advantage of capital markets now.
We're going to lose it if the rest of the world does this.
That's what's underlying everything.
I think Larry just wants to make fees on the fund.
I mean, I think that's his goal.
I mean, five years ago, Larry calls...
Larry Fink literally called this, you know, a way for people to...
to Grift and it was an area of financial fraud and five years later he changed his mind.
Why?
Because he realizes it's a big asset class that has some lasting power and he wants to earn fees on it.
That's all.
He has, you know, seven, eight trillion dollars and he wants to, you know, he doesn't want to miss out on the wave.
That's an outsider view.
Look, I was in Black Rock's offices in the last two weeks, okay?
I have firsthand information on this, not second.
And I will tell you that there are a lot of people at BlackRock.
who believe as I do that the future finance is digital.
And they have been working up the chain,
admittedly they weren't the senior managers.
But believe me, he's been getting a lot of new information.
And you don't get to his point in the world
without understanding that new information.
Now, there's certainly, you're right.
I mean, obviously they see an opportunity for fees.
But more importantly, they see an opportunity to be at the van.
I hate to use the word vanguard, but if you're BlackRock, that's who you obsess over, to be at the vanguard of what's happening in digitization of the industry.
And that's, by the way, what's driving Fidelity as well.
And once again, firsthand information, lots of people inside Fidelity agree with what I was saying as well.
And those two organizations have made the turn.
There are people at virtually every big bank who believe what I said.
And many of them just get frustrated and leave and have done over the last five years.
But the fact is that there's an undercurrent of this.
You know, there is not enough money in the entire Bitcoin and crypto ecosystem to move the needle at BlackRock the way it is today.
But what will move the needle is if it grows.
That's the thing that people have to understand.
Yeah, I'm trying to make those comparisons.
Not sure, Ryan, are you with me?
I want to make those comparisons to Michael Saylor.
I'm trying to get some quotes up.
You did that on your channel as well.
Yeah, so I did make, I mean, Michael Saylor, Michael Saylor initially, you know, he was quite negative around Bitcoin.
I think you quoted what he said.
And then they both use the word hope.
You know, Larry Fink said, you know, Bitcoin is hope.
BlackRock is hope and Bitcoin is hope.
It's funny because if you look at the BlackRock holdings in micro strategy,
BlackRock, I think, earn 6% of micro strategy or something like that.
Which is quite a strange.
The comparison I want to make, many people don't know this.
And John, I'm going to go to you right after, is that Michael Saylor wasn't always a fan of Bitcoin.
In 2013, he tweeted that Bitcoin was, quote, a worthless digital token that kind of goes to your point, special sits.
A worthless digital token, a solution to search of a problem.
2017, a high, so four years later, a highly speculative asset.
And it was not a good store of value.
And then 2018, he called it a bubble and was headed for crash.
And obviously, the rest is history.
So making those comparisons, John, between Michael Saylor and, you know, what Rand said,
that both Michael Saylor and Larry Fink have called Bitcoin Hope.
And funny enough as well, hope.com is owned by Michael Saylor.
So can you even take it a step further, Michael Saylor is advising Larry Fink on his crypto strategy for BlackRock behind the scenes.
Obviously, it's just me speculating and making shit up.
Yeah, Mario, what we're witnessing is it says Tim Draper was clairvoyant. In 2018, I'm sure people on Twitter have seen it.
Ironically, it was with Gary Gensler, who was at MIT before he was chairman.
And Tim Draper was discussing Bitcoin, and he was discussing crypto and the technology.
And he said, what happens when you have a new technology?
Yeah.
is at first they ignore you, then they laugh at you.
Then when it gets too big, they can't ignore you or laugh at you.
They do what?
They get their incumbents and they get their regulators to sue you and start filing cases.
And then eventually they adopt you and accept you or buy you or start creating their own product.
And that's exactly, you know, it says that the man was clairvoyant in 2018 because that's exactly...
What we've seen and you know I look at it and I know Rand feels the same way when the first
ETFs came out. I said Coinbase could be the biggest winner and you know they seem to be the
biggest winner in the sense that they're the ones that are going to be you know the custodial
exchange and the surveillance agreements with many of them. I've been good.
Black Rock.
I've been pushing that narrative for a long time.
I think you've obviously been listening to me and obviously been watching,
maybe watching the shows,
but I've been pushing that BlackRock narrative since December.
You know, when Coinbase was at 40 bucks,
I was like, guys,
this has got to be the best bet in crypto because they're the most well-funded company
to fight to, if we want someone to fight the SEC and to potentially win,
Corrin Base got $5 billion on their balance sheet.
Yeah.
and the cleanest squeakiest clean people on the you know in the room when it comes to crypto yeah
yeah I said when when Coinbase went under 50 bucks I was with you and said listen you either got to believe
Coinbase is going to zero and crypto is dead or Coinbase could be the biggest steal that there is out there and I know a lot of people are not Coinbase fans
But they are squeaky clean and they have tried to play by the rules.
And I think that when Larry Fink says that he's talking to regulators...
I mean, listen, the last person that said that was Joe Lubin and he's got a pass.
And that's just a fact.
And now you got Larry Fink saying he's talking to regulators.
They own coin base.
But John, my question to you and James, I see you there as well, I want to kind of dig into what that means really for crypto.
What doesn't, even going back to basics, what is an ETF?
Just explaining it for the audience.
But we'll do that right after I'll ask the following question to the panel.
Okay.
The markets are not, you know, they reacted a bit positively, but for me, I see that to be probably one of the most bullish things to happen in crypto for a pretty long time.
Has that already been factored in? Are people not understanding how important this is or are we looking too deep into it?
Because I know Jay wasn't too excited about Larry Fink's words. He said, you know, the guys are just trying to make money?
What are your thoughts, guys, on the market's reaction?
Well, I want to make one point, which is when they first announced the BlackRock ETF, it was a very muted reaction.
It took days for people to start figuring out what it was.
So we were sitting at 25 and yeah, we had the bounce to 27.
But that 27, that 10% move from 27 up to over 30, that was days after.
And that's not difficult here.
But I want to add one thing to what John said because I think it's important.
It doesn't go straight from the fight you and then you win.
The next phase, and if anyone who knows the stages of death and dying, it's important.
It goes, then they negotiate with you, and then you win.
And I've been saying this since the BlackRock ETF announcement and what was going on,
and I'm still willing to put good money on it, anyone who wants to take the other side,
that the SEC is negotiating now on what they can get in order to make this happen.
And...
I think that what you're seeing with Larry Fink coming out in public is his people basically said,
listen, you need to start putting the political pressure and to keep this up, because that's a very big deal.
And I agree with you, by the way, Mario.
I think this is enormously important news because we've been talking about it.
The narrative is what matters.
When Larry Fink is talking and he's changing his tune, it makes the anti-crypto army narrative,
all the fud that we've been constantly dealing with.
get, you know, basically minimized.
And that's not trivial at all.
Is it the anti-crypto or is it just the Bitcoin justification?
Because I will say that, you know, I still have a strong view that 99.99% of the
cryptocurrencies are likely to go to zero.
But does the, you know, does Larry Fink of BlackRock supporting Bitcoin, you know,
just say that he's supporting Bitcoin itself?
No, but he did say, there's one thing he said, Jay, that makes it interesting.
He says we're a believer in digitization of products talking about, where's the other quote?
We do believe that if we can create more tokenization of assets and securities, it could revolutionize, again, finance.
So that's why the argument is that he could be talking about more than just Bitcoin.
It could be hinting at ETH as well.
Well, he's talking about...
I think he's talking about securities in general.
He's talking, and it may or not be on Ethereum.
It could be, you know, they could induce their own chain.
They could use Bitcoin.
They could use Ethereum.
I think that you're going to end up seeing companies like this use multiple chains
because the securities depend on what the issuer decides.
If Elon decides to issue Tesla shares...
on uh doge then that's going to be a security that people are going to want to trade doesn't
matter what the what the chain is but i think what think is talking about or i know what he's talking
about is is overall digitizing uh you know tokenizing shares and and securities bonds and stocks
particularly in mutual funds and things like that but especially equities
And so there's two neat things.
One, they'll all be digitized so that they can trade and settle in Bitcoin and other currencies.
But we also have to have this big conversation, which a lot of us have been having for seven years now about which chain.
Are they going to be ERC 20 tokens?
Are they going to be on many of the projects they're being built on top of Bitcoin now?
side chains, you know, what is going to be the standard?
Will there be a standard?
Or will there be 20 different chains?
Just like there's 20 different jurisdictions.
You know, some companies are domiciled in Delaware and some are in Liechtenstein, you know.
Those are all interesting things.
But the big deal is that this is going to tokenize existing assets.
So there's existing...
trillions of dollars that they're going to talk about.
Bruce, Bruce, let me read out some quotes.
I didn't know about these quotes earlier.
And thank you, Byrd, Google, Bad for getting them so quickly.
Ethereum says Larry Fink in 2022.
He said the following about Ethereum.
Ethereum has the potential to be a more democratized form of finance.
And then again in 2022, same letter to shareholders.
Ethereum could be a more efficient way to trade and settle securities.
And he's talking about exploring the digital asset ecosystem.
And then he also said in that same letter, open to investing in cryptocurrencies if we can find a way to do so in a responsible way.
This allows me to take a step back that Larry's been bullish on crypto and kind of hinted at Ethereum for a while now.
That was back in 2022 and the markets didn't react.
I don't think the market's reacted too strongly to these comments.
Simon and Alex, I'd love to get your thoughts
and what's been said so far in terms of Larry's comments
and you've got two sides to the argument.
You got Bruce and John and Dave on one side and Jay on the other
is how positive is this for the market?
Or are we kind of getting a bit too ahead of ourselves?
Yeah, sure.
I'll start off.
I mean, I think that I've heard a couple of different opinions on this, which is that, number one, you know, BlackRock is being opportunistic.
Maybe they think that the windows finally open for them to launch a product.
And it is a trillion dollar asset class, and Bitcoin is about, you know, 40 to 50% of that.
So if successful, it could be, you know, material to their business.
and compared to, you know, most other ETFs, the fees they could charge, at least initially,
would be a lot higher than the norm.
So like even if they get to 10 bill and they're doing, you know, 50 beats, like that's a lot of money.
So, you know, it's material to their business.
So I think there's part of it is that.
But I was quite taken aback by the language on the...
on the Fox News call.
Like, I don't think you need to go full orange pill in your rhetoric just to get something approved.
Like, why is he going on saying, you know, it's hope and freedom and all,
and an international asset and all the rest of it?
So maybe that's a marketing tactic.
But, you know, you have to wonder, it seems kind of sincere.
So I think part of that, and, you know, I...
If people are inside BlackRock having less conversations and couldn't corroborate that,
then, you know, that's more evidence, right?
So, like, I think that, I think on the last call, we had one of the Bloomberg guys who basically said,
you know, you can take your pick.
It's either the SEC's rejected 33 Bitcoin ETF filings in a row or BlackRock is 501.
And it's in its filings.
And it's like, you know, it's like choose your adventure.
Either is this just another pro, you know,
apart for the course, another rejection, or are we going to get...
Wait, where do you stand on this, Alex?
I'm on the...
I'm on that this is going to get done.
Yeah, me too.
I just don't know why they would go through the motions and everyone else piling on.
And even the way the, like, the SEC's reaction, where they're like, the filing is inadequate.
It reminds me of, like, the...
you know, the, the big muscular doge and the tiny baby doge where it's like when a crypto
native firm puts forth an application, they just rejected completely.
And this time it's like the little baby doge being like, oh, no, it's inadequate, please refile.
Like if they wanted to reject it out of, you know, just like as a matter of course, they would
have just rejected it, I think.
I don't know why they would go back and do this whole, you know, surveillance sharing agreement thing.
So I don't know, I'm of the view that, I mean, I'm of the view I think that a lot of people are that it's an inevitability regardless, but I think that inevitability has been pulled forward really quite, quite dramatically into the present.
And Simon, I kind of add on to what Alex said before giving you the mic, you know, it just is, you know, Larry didn't have to be that bullish, didn't have to say everything he's saying to get approved and to make some money off it.
I think it's a valid point.
Like, I'll read out one thing.
He's comparing Bitcoin to gold.
And maybe Simon, I'd love you to touch on that comparison.
I do believe the role of crypto, again, talking about crypto, is this digitizing gold in many ways.
Again, he said, I do believe the role of crypto instead of Bitcoin here.
Instead of investing in gold as a hedge against inflation, a hedge against the onerous problems of any one country or the devaluation of your currency of whatever country you're in.
Let's be clear.
Bitcoin is an international asset.
It's not based on any one currency.
and so it can represent an asset that people can play as an alternative.
Simon?
Yeah, so Larry's going through the same process that I've seen for thousands and thousands of people over the last 13 years.
And we could speculate on the cause and effects.
Okay, so some people will start pushing the Bitcoin book as soon as they believe that there's a way of making money from it.
And clearly, the ETF is going to be a highly profitable product.
The most important part of the ETF really is that,
it becomes irresponsible for people's portfolio to not have the Bitcoin ETF as a hedge within their portfolio.
So it's the knock-on effect of all the fund managers, the wealth managers, what Bruce was saying.
The responsible fund management, it would be very irresponsible to not have some Bitcoin exposure as part of your geopolitical or, you know, whatever it may be, thesis within the different mutual funds and portfolios.
So that's where it really changes.
But the whole cause and effect with Larry is that I've seen it so many times that.
everybody starts thinking that Bitcoin is a scam.
That's the default position.
Every single one of us,
when we first heard of Bitcoin
thought that it was a scam
or something just ridiculous.
It's not until you actually use it
and you have that first bleep when you realize this money on my phone is mine
and no one can say or do anything unless they confiscate my device or steal my device
or seize it for whatever reason.
And then you have your first experience of sending it from your phone to another device
and realize, holy shit, that happened.
without any kind of censorship in the middle.
Now I create as an immutable record,
so if I'm committing crime with that,
then there's an immutable record there
that may come back to bite me one day.
But I just transacted from person to person in that way.
And he talks about it, like, you know, he starts talking about the benefits of blockchain.
If you have a, I'll read out one of his quotes, if you have a pure blockchain and you have knowledge of who the buyer and sellers are, we don't need custodians anymore.
The whole process of finance, some of the intermediaries are broken down.
So he's talking about the fundamental benefit of an open ledger, obviously, in relation to finance.
I want to shift Simon to James briefly before going to Eugene.
James, let's go back to basics.
What is an ETF?
Are we getting a bit too excited?
What does it mean for crypto?
Is it just a bunch of crypto brawls right now getting excited for something that you guys on the outside are looking at saying, hey, guys, it's not really that big of a deal?
Yeah, so one, I'll answer the second part of that first.
So are you getting, I think it's a very big deal.
It shows a little bit of regulatory acceptance.
However, they end up getting to this point.
I think it's a big deal because it shows what the U.S.
government and the regulators are willing and going to do moving forward, specifically
with regards to Bitcoin.
Yeah.
That said, I think there's a little bit over-excitement.
Like I said, we're some of the most bullish people on this on the Trad-Fi side of things,
and we've even talked to some of these people in the race.
And I've heard people say 80%, 100% chance this thing gets approved.
Some of the people in the race think we're high at 50%.
So just throwing that out there.
That's the one thing where people might be getting overhyped.
And again, I've been saying now recently I'm 51% because 50-50 kind of sounds like a cop-out,
but really all the...
substantial hard evidence is that the SEC should deny this based on everything they've said in the past.
Oh, should, sorry, sorry, sorry. Do you say should deny this?
So based on everything the SEC has said in the past, why they've denied all other applications, they should deny this.
But circumstantial evidence, Larry Fink, BlackRock, Gensler possibly losing this case to grayscale, tons of different other information that we're getting from different people, we think that the odds of them getting proved are pretty high.
But if you look at the reasons for denying these things in the past...
If the SEC just keeps saying the BS they've been saying in the past,
which again has been a bunch of moving of goal posts,
a bunch of not really, like the reasoning doesn't make sense,
which we don't need to get into,
they should and could deny this thing.
That said, we think there's a really good chance,
I would say greater than 50%, slightly greater,
that this does get approved.
So that's where I think there might be a little bit hype here.
So like if this does get denied at some point,
that would be, might be where the hype is going.
But the fact that BlackRock is in here,
the stuff we just talked about Larry Fink being fully on board,
I think everyone's right.
So how to, James, before you continue, like,
how does this compare to other, other ETF applications?
Because in this case, the SEC went back and they haven't made a decision.
So they said it's, they found the application to be inadequate.
Right.
and they've addressed, they've mentioned some concerns that Black Rock is addressing.
How does that compare to previous, because you kind of hinted that it's relatively similar to previous ETF applications.
They've come back and said a few things, a few concerns.
And then when those concerns were addressed, they came back and rejected it.
Are we seeing a similar pattern here, or is there any differences that are worth pointing out?
I mean, the main difference here is one, so the one thing that the SEC has always said,
from 2013 when the Winkleball's first to tried and after 34 other people,
but I don't even know what the number is. It's in the 30s.
So they've always said there was a lot of things that have since been answered, right?
There's a lot of the things that the SEC has required that have been answered by these issuers.
They're knocking them out. They're knocking them out, right?
So there was a list of 37 at one point from Dalia Blast at the SEC.
These are the questions we need answered.
And issue
issuers have answered most of them right the one thing that is always they've always said they
wanted which this kind of answers is they want a surveillance sharing agreement with a regulated
market of significant size now one the SEC can argue that this isn't a market of significant size
i don't think they will this is the largest u.s dollar trading pair if you want to trade bitcoin
in u.s. dollars you're going to use coinbase if you're in the u. if you're in the u.s you're
probably going to use coin base um so i think it satisfies that the problem becomes one we
We don't know.
The SEC has never fully defined what that market of significant size is or what a regulated market is.
Coinbase is regulated by the SEC because they're a public company.
They're regulated as money transmitter.
They're regulated by the NYDFS.
So, but technically, Bitcoin trading is not a regulated market.
But then again, Bitcoin's a commodity, which Gensler has admitted.
And other commodity markets aren't regulated.
So there's basically what this comes down to.
We don't need to spend much more time in this.
If Gensler and the SEC decide that they want to approve this or deny this, they will back into it with reasoning.
Right.
So I think the reasons...
point that they have plenty of reason to approve this.
Gensler can say this is a political win.
He can say that he's brought a huge player in the crypto industry to come under a
surveillance sharing agreement.
He's brought them into be partners with other people around the industry in Tradfai that
are fully rigged by the SEC.
He can pitch this as a win, even though in the past he's completely denied these things.
So all of those reasons, I think the possibility of this getting approved are good.
But it all comes back to what he wants to do.
So James, another question for you is that the narrative right now in crypto is that this
ETF, if approved, it will be the probably the clearest signal that would likely hit bottom
and it could trigger a new bull run.
So my question to you is, why is this so important?
Just for the people that are coming in, they're like, all right, cool, I keep hearing about
the ETF, everyone keeps talking about it, but I don't understand why that's that impactful
for the industry.
Yeah, so institutions that are, there's a lot of institutions out there, pension funds that they have requirements on what they can and cannot hold. A lot of them say specifically they can only hold securities and treasuries. And basically, Bitcoin is not a security.
When it's wrapped in an ETF wrapper, it is a security.
Just same thing with GBTC.
Part of the, some of the demand for GBT is because people wanted exposure and it was the only legal way they could do it.
Like a mutual fund or another ETF, right now an ETF can't hold it because it's against the rules, right?
That's part of the reason why we're going through this process of getting these accepted.
That's why futures are allowed because they're accepted under the current framework.
A spot Bitcoin ETF would be a way to get spot Bitcoin exposure for a lot of institutions, a lot of funds.
And honestly, so that's just like the legal requirements.
The other side of this is that advisors love ETFs, right?
ETFs are their choice investment.
That's the way they want to invest.
They're used to investing in the traditional financial rails, right?
So if you have an advisor and U.S. advisors alone, just U.S.,
You depending on your source, they are they control somewhere between 25 to 30 trillion in assets.
So that's what but but but sorry James. I'm asking you a stupid question like why why are they so excited about an ETF?
An ETF just for anyone that doesn't know essentially it's a basket of of securities in this case.
It's a basket of Bitcoin that trades on an exchange allows to make it a lot more accessible.
So why do advisors love exchange traded funds?
because, you know, based on that, they'll be recommending it,
and that means a lot more liquidity will come into the industry,
but I just don't understand why that's the case.
Yeah, so there's two reasons.
One, we have GBT, which doesn't have the creation redemption process
on an interday basis that ETFs have.
So basically, GBT is broken right now because the nav or the value of the underlying Bitcoin, there's no way to access that.
So what's happening is the shares of GBT are trading at a discount to the underlying value of the Bitcoin it holds.
An ETF came about in the early 90s.
It was basically actually a response to the 1987 crash.
It was actually the SEC put out a letter basically saying they need something similar to this that is physically back.
And what it does is it's like a commodities warehouse.
If you think commodities warehouses were these things were like, you would go and not necessarily gold because gold would go in a vault, but think gold.
You would deposit X number of bars of gold.
And then you would get these papers that say you own whatever.
These papers represent an ownership of X amount of bars of gold or X amount of barrels of oil or wheat or whatever.
Right.
And basically, instead of trading those physical assets,
you would just trade these shares back and forth.
And that's been around for centuries, right?
People would trade those pieces of paper.
That's what an ETF does with basically a basket of ETFs
or actual physical gold.
You're trading those shares that have a claim on the underlying asset.
So basically, when you own a share in ETF,
you own a claim on the underlying asset.
And you can, with the benefit of an ETF, unlike GBTC,
which also has that same claim,
is that you can always redeem or...
or create shares.
So essentially, I can hand over Bitcoin, get shares of the ETF back,
or hand over shares of the ETF and get Bitcoin back.
And what that does is it makes it so there's an arbitrage opportunity
for any Wall Street firm or anyone out there to basically,
if there's a dislocation in those prices,
they can access that dislocation and it will bring the prices back in line.
That's why advisors like it because it's super efficient.
So James, you've kind of given a great overview of what an ETF is and why advisors like it.
I want to move to Eugene and Alex to kind of talk about market reaction.
I was watching a few tweets earlier and Rand was talking about it on his channel
is that a lot of this has already been factored into the market.
A lot of liquidity came in and anticipation for the Black Rock ETF.
Do you think that is the case?
Because, you know, James was saying that he's seeing a 50, just above 50% chance that this is going to get approved.
So people are still split on whether this is going to come through or not.
So if people are not sure, then it wouldn't be factored in.
Alex, Eugene.
Okay.
Yeah, just a couple of points, like just to follow on quickly to what James said.
You know, right now most advisors can't own anything that trades OTC and they can on Bitcoin, like on a spot basis on behalf of clients.
So just having any vehicle that is permitted is going to make it easier for them to get exposure to the asset class.
And I think you have to believe that there's pent up demand.
for something convenient and permissible for advisors to own that will drive assets into whoever
comes first, like almost right away. And then that's going to lead to net buying. And so people
are positioning themselves ahead of that.
And I do believe that there's some truth to that.
I also think like, you know, Bitcoin is,
crypto is sort of a part of the long tail of risk assets.
And right now someone mentioned we're in, you know,
the midst of kind of a raging bull market and, you know,
the NASDAQ and even the S&Ps had 26 days,
about a down day of more than 1%.
But today, that's probably going to change.
But anyway, like,
you know, it's just, it's participating alongside other risk assets, and I think that that's
part of it as well. You know, I've been saying basically since the, the double whammy of like
the finance and coin-based suits, that that was sort of like the peak of uncertainty or the peak
of sort of lack of clarity and therefore bearishness in the market in this sort of cycle. Like,
from here, from there on out, it only gets better in a way.
Even if the outcome is not the one that everyone in crypto wants,
greater clarity is going to put a bit in the market
because it's going to give people comfort.
Alex, I want to ask you one more question
and Eugene, I want you to touch on that same question.
Ram, good to have you because I do want to talk
about the Winklevost twins and Barry,
because they did tweet out, they put out a tweet against Barry
and we were communicating behind the scenes
about doing a space between the Winklewey twins
and Barry Silbert.
So we'll talk about that in a bit, Ram.
I appreciate you coming on.
But Alex, we saw Larry Think compare Bitcoin to gold.
And we're talking about digitizing gold.
Yet gold, it's still 24x the market cap of Bitcoin.
Bitcoin is that half a trillion dollars.
Gold is over $12.5 trillion in terms of market cap.
So my question is, why is there such a big discrepancy in the market cap of Bitcoin relative
to gold when you have people like Think and others make that comparison?
Well, gold is a 10,000 year track record, but then again, so did horses.
But, you know, I think, like, going from zero to five percent of the market value, of a commodity that's acted as a stored value through, like, various civilizations since prehistoric times or whatever, I think is kind of amazing.
I also think that...
Bitcoin is digital gold.
Is there a really convenient narrative to use to describe this to, you know,
mainstream investors who maybe don't have the same level of depth of understanding?
And like to be sure, there's a lot of truth to that.
You know, the idea that you have an asset that has, you know,
constrained supply and grows at only a certain rate, that's declining over time,
which is true of gold as we pull more out of the ground.
It's harder to get new gold out.
That's not controlled by a government that you can custody and hold on your own.
So there's all these properties that are obviously very similar to it.
But, you know, Bitcoin has the potential to be, in my view, actually much more impactful
because it's not only an asset, it's a platform.
It's a technology platform for the digitization of value, right?
It's the new internet of value.
It's the starting, you know, point for that.
And so, you know, it's not just about one single asset.
and having a digital store of value for digital economy,
like we had a physical store of value for an industrial economy,
it's actually about a new platform for value creation.
And I think that that could make it actually much larger
than gold in the long run.
But in the meantime, if you're trying to position this to someone
or say talk to some mainstream investors to say,
look, like the short term opportunity
or the medium term opportunity,
is that we think this will capture value,
capture some share from gold.
My personal view is actually that both can succeed together
because I think like the total size of the pie
for stores of value in a world where, you know,
currency is-
But even if the pie is big, like why would you have both?
If one is better than the other,
eventually the other will become obsolete
because one is a better alternative.
So even if the pie is big, you still, you know,
the pie for communication is massive,
yet no one's using fax machines.
I think it's around correlations, right?
Correlations of asset classes.
So, you know, like basically you have, you know, fund managers trying to optimize the sharp ratios.
And they're trying to get uncorrelated assets.
And, you know, Bitcoin Digital Gold, sure, yeah, I think that narrative actually will hold up over time.
But as the previous speaker said, you need thousands of years of history or even just decades.
to see the correlations and how they're uncorrelated, right?
Having commodities in your basket changes things a lot.
And the other thing about the futures versus the spot ETF,
I think the Bitcoin spot ETF is going to be great at
You know, like access and custody is so difficult for individuals and institutions, right?
So it's going to make it very easy to get access to this.
So say something like 5% of your net worth should be in crypto, probably Bitcoin of some sort.
If you want to optimize, you know, your, you know, your sharp ratio, for example, then a whole lot of other people are going to be able to jump into this.
And I think that's going to be very exciting, right?
Instead of having NIDIG have to have machine guns protecting your private keys, which is what they have, literally.
They have people with machine guns protecting, you know, cold wallet private keys, cold storage private keys.
It's going to be a very different ballgame.
And, yeah.
Go ahead.
Jay, hold on.
I want to see Jay's come back to this because Jay, you always bring balance and I appreciate
it coming on here.
But, and just before I give the mic to Jay to give us another perspective to all this,
because it just seems that Larry, your boy, Larry, is coming to the dark side, Jay.
And crypto seems to be getting more and more adoption.
And we're seeing Wall Street coming to, come, all of them coming to the dark side as
finance and others get butchered.
And do you still think that we're overreacting, Jay?
And what are your thoughts on the market today, the crypto market today?
So while waiting for Jay to respond, assuming he's still here and he's...
Come on, Jay, you can't chicken out now.
We got you in a spot now.
With Larry Fink backing us, there's nothing he can say anymore, Jay.
Just for the audience, make sure you check the pin tweets if you want to come up on the stage.
We don't have a sponsor today.
I think Monday's the next sponsor.
But if you want to sponsor the show or pitch on our Shark Tank or work with our incubator,
pin tweets, email us there or just DM me and Ryan Scott doesn't have DMs.
And you could come up and work with us, have an AMA or...
or chat to the team behind the scenes and see how you can work with us.
So again, any project that wants to sponsor the show or work with the incubator,
hit us up in the comments above.
And while waiting for Jay to stop pretending he's not here.
Can I play Jay?
Yeah.
Yeah, Eugene.
I want someone, I always, you know me, Eugene, like with all our spaces, and again, you host
the AI spaces that we do, we always try to balance it out.
We always try to have two different perspective, both sides of the argument, yeah.
And I feel like we're all, he kind of, in an almost in a circle jerk, you know, kind of,
we saw James balance it out a bit, being a bit, I would say skeptical, but saying, you know,
there's a 50-50 chance of it getting approved or not.
But, you know,
Eugene, like, is this it?
Like, is the herd here,
and we're past the point of no return,
and it's just a matter of time
before we start seeing all-time highs?
Well, yeah, I mean, I thought Jay brought up a very specific, interesting point, which was debated by a lot of people here.
To play aside, he was like, is it about Bitcoin or it's about crypto, right?
And there is some argument to be made that maybe it's just about Bitcoin.
I don't necessarily believe that, by the way.
I hold, you know, a lot of assets across different crypto asset classes have been in Bitcoin for a long time.
The thing about it is, you know, when you see ordinal theory and what's happening there, right, BRC 20 tokens, you know, the new meme coins, right, and BRC 721 and there's so much innovation there, you could put some of these securities onto, I mean, you know, attached to some of these coins because of all the innovation happening just in Bitcoin, let alone elsewhere, right? And it's obviously the Bitcoin dominance is where it is.
So that is something to consider, right?
I mean, obviously the Bitcoin block space is being filled up with memes and stuff, which
the Bitcoin purists are kind of not liking.
But that's kind of interesting, right?
I mean, Tatar Luna, if remember, Doe Kwan was the original one who tried to put Tesla and
Apple shares as securities.
I think Bruce and others talked about putting securities on there.
obviously that didn't work out well,
but what if you can do that with,
you know,
some of the innovations in Bitcoin
that's not a thing to do.
Jay gave you all of them.
Jay gave you 100%.
Jay, were you able to hear me before, Jay?
No, I actually had to use the restroom.
So I was, I was, I was, oh good.
I was trying to make fun of you.
I was just saying like your boy,
and Eugene Jopty, he's like,
hey, let me try to take Jay's position here.
It's like, yeah,
everyone is,
is taking the position that,
you know, Larry think is, is,
is, um,
is, you know, orange-pilled.
He's all in on crypto.
He's talked about Bitcoin.
He's kind of hinted towards ETH, talked about tokenization compared Bitcoin to gold,
talked about the blockchain.
Isn't that what he's supposed to do if he's trying to capture a large market and charge fees to people who are skeptical?
To that extent, though?
But to that extent?
Yeah, absolutely.
I mean, listen, everyone on here is skeptical of trade five.
Okay. I was trading Bitcoin back in 2013-14 because of compliance rules. It was just like something you did.
You know, because you had to get everything else approved and it was something interesting.
And, you know, arguably it didn't hold it until now. So be honest about that.
We traded in 2020. I was an early investor in Mara at a huge Mar-Eleet portfolio just as a hedge, right?
When Mara was at two bucks and that did well. And then I got out of it.
So I trade, you know, I'm a trader.
I'm not, you know, I don't necessarily agree with everything, but I do think that there's a lot of truth to the fact that people are frustrated with the central banks, etc.
I don't have to get into that.
But when you talk about, think...
None of us has spoken to Fink.
Like, listen, I have friends at BlackRock, too.
It's not like none of us here knows exactly what's going on in his mind.
But if I were a marketer at a firm that has seen their assets...
you know, gathering slow down because of the bear market we had last year.
And you went from 10 trillion assets to 8 to 9 trillion of assets.
And they're trying to grow their fees because there's fee competition.
You mentioned Vanguard.
Fees across the ETF space are falling dramatically.
And for people who don't know BlackRock, BlackRock itself is,
It's mostly quantitative trading.
The number of active portfolio managers they have compared to the passive AUM,
that shift is going towards passive,
and they're competing with the vanguard of the world,
and fees are dropping off a cliff.
So they're looking at this asset class,
and there might be some truth to what you guys are saying,
but I'm just providing my own perspective from the TradeFi community part of it.
I do think that it is an area where you could make more money
You could probably make five to 20 times more money in fees with the same size fund if you had an equity fund versus a Bitcoin fund.
So you're saying that everything he's saying is purely for selfish reasons, including using the term hope.
Of course.
I think it is.
I think it's purely for selfish reasons.
He's a CEO.
The first job of a CEO is to be a salesman or a saleswoman.
And he's doing a great job of that.
James, your thoughts on Jay's position?
Yeah, so I think part of it is true.
I mean, you obviously are going to charge higher fees.
He can come in and still undercut everything out there right now in the U.S.
and still make way,
way more money than he does in most of his things but one thing i mean yes granted it's being driven by
by vanguard right now but also black rock is a huge driver of these fees like they are the reason
that fees are coming down they're not necessarily like getting hit from the from the market they're
doing taking this to the market themselves so that's another thing to keep in mind
I do think one, they see crypto and Bitcoin specifically as an area of growth.
They're looking to, everyone's always looking for an area they can grow their business.
I think this fits that.
But I do think for now it's mostly going to be about Bitcoin, which is also part of the reason why I think a Bitcoin ETF could get approved.
I said when I was talking before, the S, like Gensler, the one thing he will say is not a security.
The one thing he will call a commodity is Bitcoin.
You read any of these lawsuits that the SEC has filed, fraud aside that they're claiming in the Biden's case, they're going after them for securities listings and they're naming all these other things.
They're focused on all coins.
The SEC is not going after on Bitcoin.
So even if the SEC is lightning up, I don't think it's going to be like all of a sudden they're going to let all this digitized, securitized assets like in the next year or two.
I do think if they're going to start lightning up.
they're going to start with Bitcoin.
So it'll be Bitcoin first.
But you've got to remember, the SEC just recently in June,
forced a bunch of issuers to withdraw Ethereum futures ETFs
because of the issues that Gensler is citing
around ETH potentially being a security.
We don't need to get into that.
But they are not allowing ETH futures ETF.
We have Bitcoin futures.
They're not allowing ETH futures.
So, like, who knows what's going to happen?
But if anything's going to happen, it's going to be Bitcoin first.
And also...
Larry could have gone on and not been,
I'm with you, Mario, on this front,
he did not have to be as aggressive as he was with Bitcoin.
Yes, he's a bit of a salesman,
but he has a reputation out there as well,
and he did not have to go as aggressive and as pro-crypto as he was.
But have you heard Larry to market other funds?
So I heard Larry, you know, market a number of funds, you know,
10 years ago focus on, you know,
active credit and European credit.
And during the pigs crisis,
this guy was like,
literally pounding the table on buying, you know, European bank debt and all sorts of crap, right?
So I so we could, okay, Jay, yeah, we can agree though. We can agree, guys. I think we could agree.
Whatever his intentions are, this is a great step for crypto. Jay, you'd agree on that one.
I think that that is undeniable that's BlackRock, Vanguard, by the way, there are like five or six other large financial firms that have.
submitted to start Bitcoin ETF.
So you can't deny that.
And also, from my own perspective, having friends in the structured finance community,
I think more so than trading bonds and equities,
I think that the blockchain is more relevant when it comes to real estate.
You know, being able to tokenize real estate, which is a very illiquid market,
that's a conversation that you could potentially have in the future.
But, but yeah, just go ahead.
So I want to, if you don't mind, I'm not sure who was just jumping in, but I want to go to Ram. Ram, can you hear me?
Yeah, I hear you, Mario. How are you?
Man, good, man, good, long time.
Look, man, I want to get your thoughts on the BlackRock ATF and kind of wrap up the discussion there and move on to your thread on on the Winkleweigh twins and Barry.
And the reason again, I mentioned it earlier is that me and I think it's Tyler, not Cameron Tyler, we're talking behind the scenes about getting Barry into a.
Twitter space to air everything up in public.
So I want to get your thoughts on maybe the foundation of what the issue is and where we're at now.
But go ahead first with the ETAF.
Let's start with very briefly.
So first up, I disagree sharply with a lot of the takes here.
Larry is very cerebral.
He's a man of integrity.
And if you ask him what Black Rock is, he'll say it's a technology company and he'll point to Aladdin.
30 years ago, BlackRock was the equivalent of a C. Company.
They pioneered the introduction and growth of new asset classes like ETFs and USITs.
He is providing the intellectual defense for tokenization.
He understands it deeply.
He can talk about it unprompted.
The Bitcoin ETF and the NERC terms not going to move the economics for BlackRock.
So here's the motivator.
And I have this, I would say, on an informed sources that.
So if you look across the world to Japan and Singapore in particular, the mandatory authority there, they're embracing tokenization.
So from Black Rock's perspective, they see asset classes going on chain.
They see tokenization as inevitable.
And BlackRock is the world's leading asset manager.
Larry Fink is an American.
The commercials talk about his support of American advocacy and Americans' leadership in capital markets.
So he sees where the hockey puck is going.
He's frustrated with the SEC, as plenty of others are frustrated with the SEC.
And he is trying to kick the ass of the American policy approach to get behind tokenization.
That's the fundamental driver.
He does see Bitcoin as a digital currency, but he sees the promise around tokenization.
I recall back in 2008, BlackRock played a critical role in the TARP program.
So BlackRock helped to save the banks by arranging financing and the liquidation of all this toxic debt.
That's a key feature here.
Why?
Because...
Part of what created issues in the 2008 was the lack of trust in one another.
That's what caused rates in overnight borrowing to spike.
It was more than toxic ABS.
And what tokenization provides is a trustless decentralized means of exchange.
That's a big deal.
Since the 2008 crisis, risk has become centralized into ever larger parties like ICE.
It's a major clearinghouse.
So we've kicked and centralized this risk to these larger parties.
So that's really his angle.
He's a highly intellectual, driven leader.
He doesn't need to shill something to make a quick buck.
He is advocating for good American policy.
Fair.
All right, Ram, I think it's a good way to wrap it up.
And so I'd conclude from what you've said,
is that everything that Larry said in his interview on Fox,
and I recommend everyone checks it out, is sincere.
And that means that this is extremely bullish for crypto,
and I don't think the markets are,
taking it as seriously as they should.
But again, I read out a few quotes in the past.
Larry's been bullish on crypto and even Ethereum for a couple of years now.
But Ram, I want to ask you about what's going on with Barry and the Winkleweil twins.
What's the, maybe just a quick recap of what the issue is.
Why is it so important and why is it being aired in public?
Right.
Well, the Shakespearean drama continues between DCG and Genesis and Gemini.
So, quick backdrop, DCG is a blue chip stored institution in the space.
They launched the first ETF, sorry, not ETF, we want the ETF.
They launched the first trust through a gray scale to access Bitcoin.
They launch Genesis, which is the first quasi prime broker in the market.
And I think folks know around the history where Genesis is now in chapter 11.
And so the issue is that creditors of Genesis want their funds back.
They're two groups of creditors.
There's Gemini Earn, which is a population of retail creditors, a couple hundred thousand of those retail creditors.
And then you have direct creditors to Genesis that includes institutions and high net worth investors.
And Genesis doesn't have enough funds to go around.
The primary assets on the Genesis balance sheet include...
secured loans, but also unsecured loans to DCG, the parent company of Genesis.
And the only party that can pressure DCG is Genesis.
And Barry was very thoughtful slash clever in, you know, paying off other creditors such as Eldridge because the only party that can enforce upon the obligation to pay and threaten bankruptcy is Genesis.
DCG has failed to make $630 million in their debt payments in early May.
So they're in default on their obligations.
They've entered a 30-day mediation period that came and went.
It's now 60 days.
Cameron's fed up.
He sent a letter on the evening of July 3rd.
He restated his allegations of accounting fraud.
One, and then two, he said that Barry needs to make payment.
Three, he requested that the Board of Genesis pressure...
DCG into bankruptcy and then fourth he offered a term sheet for Genesis, sorry, a term
sheet for all the creditors, including DCG to accept, which is just untenable.
There's no way that DCG could accept that.
There's a deadline attached to this letter, which is Friday at 4 p.m.
That's high noon, the close of market hours.
So I would predict that very lets that date come and go.
Okay.
And so that's a quick recap.
And what does that mean?
So first, what could the twins do next after the date tomorrow's comes and goes?
So they, on Saturday, they will file a lawsuit against Derry holding him personally liable.
That's what they said they would do in the letter.
Now, it's interesting that the second action they said that they would take, which they did take,
is they would request the special committee to be more aggressive with DCG.
But the tone that Cameron is taking with a special committee, again, this is like the independent board that's monitoring and governing this Genesis Chapter 11 process, is very different than the tone taken with Barry.
With Barry, the tone is aggressive and attacking.
But Barry doesn't have many levers at his disposal, right?
We don't have transparency even in their ability to pay.
I question their ability to pay.
The party that has the lever here is the special committee, and they can press DCG into bankruptcy.
Now, the question is, well, why wouldn't Cameron be more aggressive with a special committee?
Why isn't there a letter writing campaign against Genesis?
Remember, the CEO of Genesis today.
He was previously the COO during the period in question last fall when these allegedly fraudulent balance sheet statements were sent to depositors and potentially induce them to deposit a rollover.
Right?
So you've got a person that's conflicted.
They are part of the executive team.
They are part of the control function.
And they are also part of supervision and going through the discovery process.
So I've called that a few times.
And last question for you, I have a very, very brief one is why should we care?
Like, why should the crypto community keep watching the drama unfold?
And what does it mean for crypto?
Good question.
So one is...
I don't think you really should care.
So I focused on this way back in Q4 because I want to understand is what does this mean for the integrity of the gray scale of Bitcoin trust?
Would there be a forced sale of Bitcoin?
And my conclusion to that is no, there won't be.
Now, is there, I think the opportunities here are if markets get frazzled from.
negative news and disorderly events, those could create opportunities, you know, buying opportunities.
That's one tactical way to think about this.
But I don't think, I think in the same way that the SEC is priced in, I think DCG and Genesis is priced in.
There could be some effects to tokens that, not there could be, there would be in effect on the token prices for these alt coins that are less liquid.
You have seen that, right?
These tokens have lagged the market in the recovery.
Some markets are expecting that they'll be sold.
So, you know, there's some small things here and there to take a look at.
But in broad brushstrokes, I don't think that's a big effect on asset prices.
It is in the interest of the industry to have a blue chip player like DCG to serve as a source of strength.
I mean, DCG has invested $600 million in seeing the ecosystem.
You need players like that to fund a vibrant ecosystem.
Cool.
All right.
All right, well, I appreciate the overview, Ram, and I don't think that space will happen.
I don't think Barry will accept.
If I was Barry's lawyer, I'd probably tell him not to accept either.
And I think this is it.
I wanted to talk about the FOMC minutes as well.
But, you know, recap, it's pretty brief.
I took some point.
Some officials favored a 25 basis point increase in the last meeting in June, but almost all of them.
agreed not to increase interest rates.
Also that in September, additional rate increases
will be appropriate in 2023.
That's according to the minutes today.
And there will be no rate cuts in 2023
and not until mid-20204.
There's little evidence of inflation
going to 2%.
and Fed staff do predict a mild recession as likely to start later this year.
I don't want to dig into this.
We usually talk about this in the finance spaces.
I'm sure Darnish talked about it earlier.
Probably Jay was there too.
Kind of my conclusion from all this is that the markets are not really caring about this
as much as they did before.
And I think there was a tweet that talks about the narrative right now
is for crypto, it's BlackRock ETF and for equities.
It's AI.
And that's kind of playing a bigger role in...
in the markets right now,
then macro and the macro
the macro picture and the Fed decision.
But we'll see in the next week's project.
That's for the last two months, right?
You know, I will say that this AI mini bubble,
there's some companies that will actually benefit.
But, you know, this has been, you know, a three-month breakout.
And in reality, I mean, today you're seeing VIX at one-month highs.
You're seeing Russell down almost 3%.
You're seeing reversals in a lot of the speculative names down 6, 7, 8, 9%.
you know, it's very hard to say, you know, and we all know the magnificent seven stocks were up 48
percent and the equal weighted S&P was only up 5 percent this, you know, this year. And, you know,
this Fed data, especially the labor data that came out after the, after the minutes, you know,
I think it's going to mean that the Fed is higher for longer, even if,
even if, you know, some things in the economy are breaking.
And when you look at the UK, I mean, you look at the BEO and you look at the ECB,
you have you go to six and a half to seven percent.
So monetary tightening.
I mean, this could be the seventh bear market rally since the October, November of 2021.
I'm not, I'm not yet convinced that this, you know, the AI driven rally.
I mean, first of all, you know, there's a study that only like,
But you're only going to see material effect on earnings from AI by like 2026.
And that's like with pretty bullish assumptions.
Where did that study come from?
I think it was Morgan Stanley.
I have to, I read a bunch of stuff over the last past few years.
I mean, Jeffrey's published a big pitch book on AI.
But I think that Jeffrey's pitch book also says something similar.
So it's just we're getting ahead of ourselves when it comes to AI.
Yeah, we're getting ahead of ourselves.
Some companies like InVedia will benefit because there's one source of GPUs.
There's, you know, there's a...
there's a new LLM that is buying one generation old GPUs from AMD.
And they said with new software, AMD can get to 80% of the efficiency.
But there's really only one player in the GPU space,
and there's a lot of front running from VCs and hedge funds like Magnitar
and European funds that are trying to hoard chips right now.
So, you know, Nvidia can do really well for a few quarters.
but a lot of the other companies that are saying that they have AI,
they're just reclassifying other revenue streams.
We've seen this before.
And Dan, Dan, maybe I've got a Dan kind of final word, Dan.
Your thoughts on crypto and are we getting ahead of ourselves
when it comes to the BlackRock ETF and where the markets are today, Dan?
You there, Dan, Mr. Spaller?
Yeah.
Yeah, I'm here.
I mean, my perspective is it kind of goes back to what we talked about last week when it comes to the North Carolina and now doing that study to put Bitcoin potentially on their general fund balance sheets.
I don't want to, I don't think we're getting ahead of this at all.
I mean, I think it's got just over the last few days, actually, we've gotten calls from certain lawmakers in reacting to this Larry Fink, Black, Black,
Black Rock News.
You know, the original intent for this study was to create some type of attempt to hedge
against inflation and systemic credit risks.
And originally it was all about gold until we were able to add that provision to include
Bitcoin.
And I mean, I don't think it's going to at this point focus on the pension fund, more on the general Randy Day fund.
And I also don't think that the state needs to go exactly the same route as what they did in Virginia a couple years back in Fairfax when they approved about a $70 million investment across to crypto yield farming funds through Morgan Creek.
I think this needs to be focused just on Bitcoin.
And the news is...
The news is good. I think we've gotten a lot of good feedback from the legislators on this.
They're very open now to discussing Bitcoin.
I suppose the question I have, and this might be for Twitter spaces tomorrow, is how,
and we'll learn this through the study, is how best for a state to hypothetically acquire Bitcoin.
Would it be through, you know, security product or would it be, you know,
I don't want to say physical Bitcoin, but actually holding it in custody.
Yeah, we'll put that in for tomorrow's space.
My question, the one I want to discuss tomorrow, I had it on the agenda for today.
And I think we're just a bit over time.
It's not too much news today.
But the, you know, the SMP 500 is 7% of its all-time high.
NASDAQ is 9% off all-time highs.
Nifty is already making all-time highs.
The KAC is already making all-time highs.
So the question is, when will crypto be in that category as well?
So that will be something would be interesting to discuss maybe tomorrow, Monday.
Otherwise, for everyone listening, make sure you check the pinned tweets.
It's pinned above, or I'm going to close the space.
It's going to be too late.
Just DM me or DMRAN.
If you want to come on the show as a sponsor,
I'll work with us in any capacity.
And we'll see you tomorrow.
Same time.
So whenever this one started, I think it's like 10, 15 a.m. EST.
Jump in tomorrow, as always, Monday to Friday.
And Scott, I think we'll be with us again tomorrow.
He's in the UK now, having some chill time.
But I should be back with us tomorrow or Monday at the latest.
All right, everyone.
Thank you so much.
Appreciate it.
We'll see you tomorrow.
Bye, everyone.
