Yo yo yo everyone happy Tuesday sorry for being a few minutes late. Let's get going.
kind of a life. Three, two, one, let's go.
be Tuesday. Welcome everyone to our weekly YouTube live or to the space where we're tuning in. It is as always myself, Theo and co-founder of Cake and our head of community
commissioner Gary Gensler gonna get demoted and not gonna be part of the SC anymore. This was a very recent kind of proposal that came out yesterday. So we have quite a few discussions to kind of talk about and yeah we have we're actually quite well prepared with some fun
fundamentals to really explain all those things. But that's Fabio, I'm going to hand it right over to you. How is everything shared a bit of the general sentiment and that's kind of get to the meat of the discussion. I'll let you kind of take it away from here. Yeah, happy Tuesday.
And as Julian said, we are prepared this time. I spent like four hours on Saturday and on Sunday reading through dot government websites and educating myself on what this all could mean. So on general sentiment, there is
definitely the number one issue and discussion it's actually quite heated and it's somewhat of there's two camps I would say you have the general crypto people or you know the general investor camp and then you have the
The sentiment or the definition shifted a bit. It's not no longer called "Mexis". The new term, I would say, is "Laser Eye Maxis" or "Hardliners" or whatever you want to pick your words. I know I guess everybody can agree on what we mean by
I think hard liners I think a hard liner I think calling them I always think like calling them when I want to kind of be a bit The Rogotary I call them these eyes, but I think if you call them like hard liners I think that's a bit of a I think it's a proper tournament. I think yeah Yeah, and so these two groups are clashing
quite a bit because I'm going to take both sides for just a few seconds. So the general crypto camp is saying, "Hey, it's not really cypherpunk if you're siding with the government and if you're practically hoping that Coinbase or that other entities would lose a battle with
you see and that you're kind of supporting Gary Gensler. So this is the general crypto people kind of accusing the maximalist, the hard line, the laser eyes of not being supportive of them. They kind of would wish that we would all like being this together, fight together against the government. Yeah. And then you have
the hardliners and they're practically more, they're basically saying, hey, we told you this would happen for three years and now it's happening and now you expect us to align with you. So these are basically very generalistic, the viewpoints of the two camps and it is insane
What kind of interactions and likes certain posts get? For example, watch Guru, he shared, I think yesterday or tonight he shared that Gary Gens, there is a bill from a congressman where he wants to restructure the SEC and other
and change things around a fire that against a taking that against it out of the equation. And this post got like 30 or 40,000 likes within a few hours. And this is like the most liked post of the last two months. So that clearly indicates what the sentiment is like. I would say a lot of anger, a lot of frustration.
I think you're explaining it really well. I actually am aligned with most of the players.
I do understand why the Bitcoin hardliners are on the one hand frustrated to a certain extent. I do understand that. I do understand why to a certain extent they're cheering for, I don't know, some regulation. But then on the other hand, I
I just think that's not the right path forward. I do understand that there... I mean, I see myself, my engagement has been up insanely over the past week. I understand I've been triggering people on purpose, but engagement was in
insane right and it's yeah I know exactly what topics to kind of post and then it's yeah I know there's like hundreds of comments and likes and stuff so yeah it's a super emotional topic for people it's crazy
Okay, why don't we start a bit with the fundamentals? Obviously one thing that's really fundamental here is that this entire kind of regulation has nothing to do with banning altcoins or banning crypto. It has nothing to do with the entire world. This is very specific to the US.
Obviously the US is a suit keep layer in all this. They have a lot of purchase power. They have a lot of liquidity. A lot of the entire kind of crypto world is around the US. So it is an absolute key kind of thing. But it's all about the SEC coming out and kind of insinuating that certain coins into
and most people don't understand what that means. They panic or they just say, "Oh, it doesn't mean anything." And then others think, "Oh, that means it's legal." Let's start with the fundamentals. What does this mean? Let's discuss this a bit. Fabio, I know you did a lot of reading and researching this. I'll let you go first and see if I have
thoughts or opinions on something, but I think you really well prepared in this. I would say I think I am. So let's do two separate things or three separate things. One is what was said, what was happened, and what kind, so in general there are two kinds of
regulatory bodies, one is the CFTC commodity and exchange commission and the other is the SEC and they are both very unclear on how they approach this and their communication is not really aligned. Some people say this and others say that and you
You can basically put it into three different camps. So there is Bitcoin, which the general consensus and also the regulatory consensus is that it's very likely that it is commodity. Then you have Ether and the general consensus there is also slightly trending into that Ether is a commodity, but there is some uncertainty because the communication
has somewhat been all over the place and to generalize this, please don't hang me up with these words, but previous to 2018 Gary Genser was very specific that ETHER is a security. In 2017, beginning of 2018, he shifted and publicly stated several times
between 2018 and 2021 that ether alongside with Litecoin Bitcoin Cash probably also George coin and maybe a few others are probably considered a commodity. Then he kind of reverted that statement when on the day, if you emerge, when if you move from
proof of work to proof of stake and he hinted that this could also be a security. We had the lawsuit from the SEC against Crocken that got settled with 30 million where the set Ethereum staking is considered a security and Crocken didn't go against that they just folded and basically turned over and set okay
we're just going to pay. But until now, it's probably or if you would put some percentages on that that's maybe 65% percent commodity, 30% security, that's my personal assessment. So this is what was said. Now, let's look into
What actually is a security and what would it mean hypothetically if something gets designated as an undergift security? So what would happen? I made some extensive notes, give me two or three minutes to run through them. So there is like a hundred year old law, which is called the Howie Test.
regulation for securities in the US. And they basically they have three major points where they say okay this is considered an under just a border or just security which is a common investment an enterprise investment of money in a common enterprise and you
If there is like a company that is issuing something and you're buying it from them, meaning a lot of, so for example Bitcoin and Dogecoin, there is no foundation or company, you're not buying it from them, you're buying it from an exchange, there wasn't an ICO, but a lot of ICOs were practically the issuer, so there
They are issuing something and you're buying it from them with the expectation of profit. It's very important. So then you were very there is one more point expectation of profit common enterprise based on the work of others. Yeah, based on the work of others. So let's just say
But what if the SEC is actually successful in the endeavors? What would happen? Let's assume the absolute worst. So I'm not going to accuse or put any of the tokens into a category. So I'm going to make up a new token and put this into a hypothetical scenario. So there's a Gary token
hyperfetically, called ticker Gary, issued by the Gensler Foundation in Switzerland. That's the HIPAA in 2017. That's the hyperfetical scenario. SEC is putting forward a lawsuit and is accusing them that they are an under-judge security. The SEC wins the
case and they are deemed an under-justed security. So what happens? There is pre-parties that are affected by that outcome. One is the issuer, which is the Gensler Foundation. One is the exchanges that actually trade this Gary token, which let's just assume that this is Coinbase and Gemini, the two biggest
US-based exchanges. And the first category are the holders. Everybody that bought and was holding on to Gary Token. So what's happening initially? And we kind of already noticed because there is a precedence. We already have seen or witnessed a little bit what the direct impacts are. So the direct
impact is that a lot of other exchanges are probably going to list the list this thing. We saw that a little bit happened with what right now is Lana Cardano on Robinhood for example or XRP in 2021 when they forwarded the lawsuit a lot of exchanges proactively dealistic it. So that would be the first thing.
The second thing is of course there is an impact on the price because when these things can be listed there is a lot of thought uncertainty and doubt people are selling this thing and the price is probably going to be affected in a negative way. And the third thing that is almost a certainty is that the Gensel Foundation is required
to pay a hefty fee to the SEC. Tens of millions probably. It depends on the size of the token of course. So mostly always depends on the profit or the revenue or something. Exactly. So now the Gary Foundation, the Against the Foundation has free choices to move forward.
So they lost the lawsuit. The first choice is we don't sell this token in the US anymore. Pretty obvious and there is some downside to that because the biggest exchanges, the big market, they are in the West. So it's not very good if you are practically excluded from the US. Your token would be delisted on all US exchanges
you're not selling it anymore in the US. First choice. Second choice, keep on selling it as an undergift security, which is probably going to result in another fine and is not a very favorable outcome. And also the exchanges are probably going to protect themselves and
they are not going to sell an undergifted security that is already deemed an undergifted security on that exchange. The third thing is actually register it as a security. So let's dive into that one because this is the most important. The main difference between an undergifted security is that an undergifted security can
only be bought by accredited investors. The accredited investor is a US thing, it's basically rich people. So let's go and the Gary Foundation is required to make this registered security. What do they need to do? So it is insane
what they need to do because there is a lot of paperwork. Let's just name a few things that they are required to actually provide. So documentation on token subscription agreement, disclosure agreements, proof of compliance with ALM and KYC law, company info, info on S on the SID itself,
a copy of publicity and other investor-facing materials, articles of incorporation and much, much more. This is a process that is going to cost you in the millions. There is no way of registering a security that is not going into the millions. The people that really win here are the lawyers
and the government entities. So it is a heavy process on the regulation, but it's entirely possible. So all of these free choices, they have kind of a negative outcome. And I'm only talking about the issue itself. So there is another party that is going to be affected by this. The second party is the exchanges that sold this thing.
So Coinbase sold, Gary token and Gemini they also sold Gary token. What do they need to do? You guessed it, more paperwork. So firstly, they need to have a broker dealer license or something equivalent to this. And here Coinbase and Gemini are at the forefront of all of this. They have a lot
of lawyers that have a lot of papers, but it's not all. They need to register with both the SEC and with the FINRA in the United States, and they will have oversight over all of the things that are happening. And, POS and GET this, they need to be registered and have a license with every single regulator in every
single state in the US, which is approximately 50 different licenses, which is crazy. So more paperwork. And here you can guess it's Coinbase and Gemini. They already did this in a lot of states and they already have broken dealer license and equivalent, so they're kind of on a good
food in going to that direction, but the question they need to ask themselves is this worth it? Is it worth it to put all of this money into lawyers and into paperwork and so on? And then the third party that is going to be affected by this is of course the holders, the people that actually bought
You don't need to worry there is no paperwork required from you, but the way you are affected with this, especially if you're in the US, is if the token gets elisted, it's kind of hard to sell and you probably don't want to sell in a loss. And the SEC is basically their mandate is to protect you, to protect me.
And here, you know, it's tough and I want not to to make a prediction, but we kind of need we are at a pivotal point. We kind of need to ask ourselves one question because if we are going the routes that 90% of the crypto market is going to be deemed an undergissive security, what is the basic generalized outcome of this?
is it's basically going to be another arm of the legacy financial system. And do we really want that? Is this what crypto and this whole movement and everything is all about? This is the question we kind of need to ask ourselves. That is, I can totally see that part of these tokens, some of these tokens,
like maybe XRP, it is an extension of the financial system that others may be as well. But a lot of projects, a lot of people that are building, they are not really building the financial legacy system. They want to build something else, something that is kind of revolutionizing the old system. So this is the basic summary
that I have prepared. I probably missed a few things, but, um, uh, uh, please, uh, no, I think that's a really, really good foundation. Um, I, I just want to maybe share some color. I think the how we case is a very interesting case to kind of understand just from a rough kind of understanding because it really, I know that people always say it's a hundred year old case and it has nothing
to do with how the world works today. And I agree the fundamentals on it, but actually the concepts are there. And so it's, that's what makes it so tricky. The howie case is, Mr. Howie in Florida had this orange farm and so yet oranges. And so he went and said, you can have a
participation on these orange sales. And if you want those orange sales, you invest into basically the highway farm and you can get profits of these sales. And I keep profits myself. Now the SEC deemed this part a security. And now this is where it gets very interesting, right? And I
I want to explain this part because this explains so well, why it's so difficult, even though we have those criteria, investing money into a common enterprise, what is money? Is money only actual dollars or is money something that can be turned liquid into money? Is paying something with Bitcoin is that the money?
Right, I mean sure Bitcoin is seen as a commodity, but you can turn Bitcoin like this into money. So is this seen as as money? What's a common enterprise is a common enterprise only if it is a registered limited or is a common enterprise something that's not registered as a company. It's just a group of people. It's a foundation. It's core developer.
What is a common enterprise? Is it a community? Are you investing in a community? These are things that are very vague and that is what makes it so difficult to kind of clarify all these things because these concepts didn't exist a hundred years ago even though the case is so interesting. I'm also interested in part about this is
is investing and expecting a profit. Also important, all these terms, so some people say there are three criteria, some people saying there's four criteria, but all criteria have to be met. So it's not enough that you hit two out of three or three out of four. It has to be all criteria, right? Because even if you look at Bitcoin, and the SEC has clearly said Bitcoin
is not a security. But for example, and I mentioned this also on my personal streams all the time, if I pick out one coin that had the strongest kind of price predictions, right, it is actually Bitcoin. You look at the stock flow model, there's no other kind of coin in my opinion that was even stronger on the price predictions, right, on the expectation
of profit, but that is irrelevant because the other points for Bitcoin are so clearly not a security that it really depends on having all those points. And a lot of those points are very vague. There's also an interesting one in the how we case that basically if you were to invest into the oranges, actually the oranges, right? And then these
oranges, you would sell these oranges for a profit and you would get a cut on those. That is not a security. What makes it a security is bundling the oranges together, letting other people do the work, you're taking a profit on that. It's interesting because then the oranges are actually part of a
security in this, once the oranges are then being sold, they go into a supermarket and then in the supermarket, let's say a little girl buys them and the little girl doesn't buy securities. That's important, right? No one in their mind would say, oh, these oranges come from the how we farm. They are part of the security contract. Now they are part of a supermarket. No one
in direct mind would say, "Oh, this is a security." So obviously something that was part of a security contract was a security and suddenly it doesn't, it's not a security anymore. And now a little girl buys them and the little girl says, "Hey, let me buy these oranges and let me set up my little orange stand in my little neighborhood and turn these oranges into orange shoes." And I
make a profit on that. And no one in their right mind in the SEC, no one would go and say, oh, this little girl is now part of a security contract kind of thing. And so the reason I'm sharing these kind of stories is because a lot in the crypto space is very similar to that, right? So you have an issuer
The issue may or may not have been a security. It then goes into a supermarket. It goes into an exchange, for example. This may or may or may not change the nature of it. Suddenly you have someone who buys this, hasn't in that wallet.
And says, you know, I have easier. Let me run a smart contract with that. So I get something more out of it, right? So there's actually a lot of similarities in this, but it's still very complicated. And so I want to just explain that the reason why
People are on the one hand, right justly scared, but on the other hand, it's also really ridiculous, and I understand the critics would say this is so much overreaching, it's because it is a really difficult kind of topic here. And it's a lot of shade to gray, and I think some coins, so especially coins that have done a nice deal. This is way harder to argue against.
being a security, a coin that didn't do an ICO, it's already very difficult to kind of make a case for that, right? So I want to be very clear. So it may be that, I don't know, for example, you have a group of court developers and this group of court developers is clearly building the blockchain and you may have people who buy the token on an
exchange and they're buying it for an expectation of profit and this profit is based on a group of court developers doing this work. But if there's no issuer who issued this where they're buying it from, so this common enterprise didn't exist, right? It's very difficult to kind of make that case already. I'm not saying impossible. I'm just
It's very difficult to make that case that it is a security because how is this possible right so and and and some people that start to attack certain coins or try to protect certain coins are actually not understanding the fundamentals here right because I can also make the case that for example Bitcoin should be a security because there was a clear expectation of profit
And if you don't believe me, look at all the hardliners who had their screens up about this is where the Bitcoin price should be all the time, stock to flow, right? I mean, but it's very clear based on the fact that again, it's not 0% Bitcoin is not a security, but it's very unlikely for Bitcoin to be a security because there is no,
It doesn't also matter. There is a foundation. There can be a Bitcoin has a foundation because there's a Bitcoin foundation. But it is absolutely irrelevant as being a common enterprise or having issued Bitcoin. People start throwing these words around without understanding how difficult
that is actually to get these shades. And so at that is one part I just want to explain and that's where a lot of the uncertainties coming from. The other part is I want to explain how securities are traded in the US. And the reason I want to explain that and the reason I noticed really really well is because last year we actually were preparing to go for a SPAC which is a reverse
So we would have been listed. Right. And so I was really looking into this entire process. So because cake would have been listed as a security on on the nest act, right. So we actually looked at this. There's actually four functions that are part of a security like of security trading in the US. And if you understand this, you're
understand how impossible it is right now to actually trade crypto as a security. It is truly impossible. And this is what people are also complaining about. The first thing is you actually have to get listed on the actual exchange, right? So in this case, this would be the Nasdaq, the New York Stock Exchange, and so on. But listing there, there's no customer
who can actually trade these things. So it just gets listed. The listing process is actually what the SEC oversees very clearly and the SEC goes and says, "Okay, give me all your due diligence to be verchainsparent about who owns how much, who are the so-called insiders. Let me check all the financials, let me check everything is going on. I do actually
think this part would still be possible, because this would actually mean that these coins would have to come register and say okay these are insiders, there are many coins, this is this, this is the best thing schedule, like all of this would get super clearly kind of disclosed and anyone with a larger kind of holding would be very much disclosed. So this part now comes to so-called
So Coinbase is listing and Coinbase is trading. So they're doing everything.
This is where the SEC says this is such a conflict of interest and to a certain extent I actually agree with the SEC. We see this with Binance, right? I'm not saying that the allegations against Binance are true because I don't know, but I'm just really following what the SEC is saying there and I'm kind of putting out these allegations and the SEC is alleging, also see if the CS alleged the Binance
because they are listing and they're basically trading at the same time or having these massive, massive, massive conflict of interest. And could be, right? So it actually takes a very ethical company to not trade and inside a trade, even Coinbase, right? Even though, I mean, this is not a security, so it wouldn't be legal. But if it
security, what Coinbase does, and this is not an, like, I'm not alleging this, this is crystal clear Coinbase even admitted this, right? They are investing into a coin with their fund shortly after they're listing it, right, and trading it. So you cannot tell me that there's some conflict there. Like, I'm not saying it's illegal, I'm not saying that.
Because as long as these things are not securities, it's not illegal. I'm just saying from an ethical moral standpoint, I would say it's questionable. It's definitely not against the law. It's fine. It's questionable. And so obviously on a security exchange, where securities would not be possible. Now let's take this step as step further. There's a third and a fourth function. The third function is
is so-called clearing. The clearing means that in regular time intervals, normally on a daily basis, the exchanges or the brokerages have to confirm with the exchanges that all the securities are actually allocated to the right parties. So if I trade, let's say, a token is a security, right?
Let's call this token Gary, let's take the Gary token just to go online. Then let's say there's a million Gary tokens. It always has to be tracked and traced and updated who actually owns those one million Gary tokens. Now why is this relevant? Now we're going into the what FDX did and what Binance did, which she said, okay, you know what?
I just have my 1 million Gary tokens in a ballot sheet under database. But I'm actually going to take the actual tokens and I'm going to move them out and I'm going to start doing dodgy stuff out there with whatever I want. So this is the entire thing with FDX, this is the entire thing with Binance, these same allegations are going against Binance that Binance moved customers
are funds out and basically start doing stuff on the site. This is what the clearing then is. The clearing actually means in regular time intervals, normally on a daily basis, these brokerage deal institutions would have to interface and everyone looks and says who actually owns the 1 million Gary tokens.
And now comes the forest part and the forest part in crypto would be actually the easiest part is the actual settlement and the actual settlement would happen on the blockchain, right? In securities, that's where like the actual shares get moved around between the various institutions so that the actual Tesla shares actually move to the real world.
rightful owner. Right. And so this is so key to understand that these four functions are what actually you have in a proper security exchange when we talk about stocks in crypto. This doesn't exist at all. And it's just merged together. Now some say that's actually okay. And others say, you know what?
There is actually some reasoning that the SEC has in this, where they say, you know, it would be actually good to kind of separate those functions. So a lot of these coins wouldn't have this insider trading stuff and that so many are alleging, right? So I just want to explain that part that like I see so many people on Twitter and on red and so on.
shooting and hitting against the SEC and saying, "Oh, this is so much BS and this is so bad and so on." And I'm sitting here and I'm saying, "Look, I actually think part of what the SEC is saying, I think part of it is probably good. There's a good direction. I'm not saying this is bad, but I'm saying right now the SEC just goes with a sledgehammer and just
completely wax left and right without much kind of step. And I probably think the right way forward is to do this a bit more in steps because if you are deemed as security right now in the US, I mean, you know, I mean, sure, you did something illegal if you did a legal offering, but it just means no one can list you right now. That's the problem. Even if people wanted to
they couldn't because the infrastructure is not there. And to me, that's a bit of the thing that I just wanted to add here, so that people really understand those four functions, understand the security issues. And it's something that I really looked into last year when we were supposed to get listed, how these things work, what are things we have to look out for and so on. Right. So I just wanted to kind of share this a bit. Fabio#
Yeah, I have a few thoughts and so there is the same if you have a hammer everything is a nail and the SEC has the security regulation the how we test so all the cryptos are a nail all the cryptos are a security because this is the only instrument they have and I want to I want to mention
one thing and this is a bit controversial. So over the last four years we saw a lot of takes on crypto Twitter where people say yeah decentralization is a spectrum and I would make the case that right now we are going to find out that is actually finally because you either can
And we hold against the government attack or you cannot. There is no in between. There is no gray area. You either can survive this attack because we are under attack. This space, this industry is clearly under attack. You saw this with operation choke point 2.0 where they are kind of trying to choke the on-ramps and the off-ramps.
You see this with the security allegations and we are under attack so right now it is basically it there is a good side to this of course there is the bad side is We don't really know what will survive and what not but we always knew that there will be a moment in time where the government is going to step in and they're not
going to let this happen. Or they try to, you know, they are in power. They have the US dollar. This insanely powerful weapon where they can dominate the whole world with. And right now there is competition coming for them. So they are moving against it. But the reason could always be
And we always knew this is the reason for crypto to be there is to be able to withstand this move, to withstand government interference. And right now we are about to find out. And there will be a few select crypto projects and tokens that will survive this and everything that survives.
is going to rise like a phoenix out of the ashes and there will be somewhat of a purge of everything that is not sufficiently decentralized. And so there is a bit of a good side to it. The only thing that is devastating is the SEC's job was to protect us and they
failed in almost every imaginable way. Like they did a really bad job at this and now they, as Julian said, they just come in with the slap with the slash hammer and try to kind of get rid of everything. But yeah, I'm 100% sure that there will be
projects, there will be things that are going to survive this attack. And now it's like the pedal comes to the metal and we really find out what works and what doesn't. - I think there's such a good point you're making it, Fabrio. One interesting flip side I want to bring here, right? Let's kind of paint an alternative reality here. Imagine
The SEC actually wanted to protect people and not just protect the bank, so not just want to protect their own thing. Let's say they actually wanted to protect people. Let's pay the different reality. Imagine the SEC had come and said, "Okay, if you want to list crypto securities, this is exactly how you do it." They give a frame
There's a special listing, it becomes a new department in the SEC and that's how you would list it. I don't know, I'm not an expert what the law would require there, but let's say it would assume and says, "Be clear, this is for actual crypto securities." So, it wouldn't apply to Bitcoin. So, it would apply to actual issues of crypto security.
under whatever the rules and so on are. I don't know. Were you insiders? What are the investing schedules? Show me the issuance schedule of those coins. Like all this stuff, right? Would get audited, would get looked at, right? So just like any company has to get listed, he's got the security schedule listed. The choke part is you can't just say you have to list a
Gary coin right the same way as we would list our company cake because our company cake has a CEO I have financials with a balance sheet right we have officers that just doesn't work in the crypto space that is just not gonna happen right so it is up but you can do very clear things so imagine this now imagine Coinbase
or any other exchange, we have a very clear rule book in saying, hey, this is where these are the coins that are listed. You want to get access to those coins? That's how you do it. That's how you do it. Great. On top of that, every day, 5 PM closing time, we're going to check that all the token holders actually have the
right full like coins. We checked that. And then step four in regular intervals, you actually have to settle the coins like this is not going to happen on a daily basis because this is not going to make sense. But let's say once a week, you actually have once a month or whatever, you actually have to settle the coins to the blockchain. So like a proof of reserve, right, let's say once a month, I think that's an
Now imagine this. Let's say the SSE comes out with this. Very clear rule book, very clear kind of steps. Consult with the industry, consult with Coinbase, consult with Crocken, consult with the top players in the US industry. Come out with this. And now it says, from now on, all coins, if you fall under this,
You have a year to register with this. We consulted with the large exchanges, which comes out with the project. If you did an ICO in the past and you think you fall under this, you have one year to register yourself. There's no penalty. You can register here's a very clear rule book. If you do this, you have these clear advantages. You're going to get listed.
on Coinbase, you're going to get listed there, you have all this. Just like on the stock exchange, right? You have the large funds to go in and say, you know what? We actually know there's no shady business going on. We actually know. So obviously, you clearly separate two worlds, right? You separate the Bitcoin world from the crypto security world. You clearly separate this with advantages and downsides.
Imagine this way. And then on top of it, the SEC comes out and says, okay, on top of it, you have one year, if you're trading platform in the US and you want to actually get these crypto security licenses, you have a year to do so. For a year, you're not going to get pet, like if you do this, you're not going to get penalized, we're going to onboard you with this. And then in#
this is the cut up. If you by that time we deem you are security and you didn't register, we're going to go after you. If you are a platform that trades in these crypto securities and you didn't register, we are going to go after you. Just imagine this kind of world and I'll tell you, you know what's going to happen? You would have a very clear separation of two worlds. I agree with this.
world would not be interoperable because obviously the crypto security world would be more of a mix between the traditional track fry world and the new world, right? But it would have very strong upsides by having a total new pool of liquidity, right? Because there would be a totally new group of people who would want to invest in this because they would say, yeah, sure, it's not the same kind of side for
kind of crazy decentralized movement, but I know it's a very clear regulated I have certain certainties and so on. And then you have the clear kind of cypherbunk, the true decentralized world over there. And I tell you the market would just rip. It would rip.
Because suddenly you would have all the large funds who haven't been investing right now because they're like I'm not gonna invest because I'm gonna just be the stupid exit liquidity to the trend side of us and I don't know who the inside us are and these guys are just like pumping and dumping because these are like the VCs the early stage and Cs and that's always the criticism like the A16 sets and so on who all early
And now they're just dumping on the stupid retail and I don't want to be that idiot right so I'm not gonna go in this and now just imagine what would happen right and it would I think that would have been a future where then we all would have set here and it doesn't mean that we all agree with what the actual regulation and looks like there may be points where we disagree and say you know what this would have this not so smarter than
this should have been way better, but there would be a very clear kind of roadmap. And from everything I hear from Brian Armstrong from Coinbase, that's exactly what they wanted to get. That was what they kept asking for, right? And I totally understand their standpoint. And so I don't know, I think that would have been the true kind of definition of 40 SEC to say, Hey, we just want to protect the investor.
And then we should have all set here and said, okay, true. I need to like, I don't know, lift my like my virtual kind of happens. Hey, good job. Like, well done. And I just think it's exactly the opposite that happened, right? And the question is really is this intentionally
delicious? Is it really kind of crypto choke point 2.0? That's something probably I won't ask you. What do you think there? Or is it just incompetence? Right? Because these are the two things that it could be. It's either incompetence or it's clearly malicious. I don't know what you think.
I have a bit of a tinful head at most mostly, so I think it's malicious. Because so I am. Many people will say the FATS mandate is, or the US regulators mandate is to keep inflation in touch and price stability.
say their number mandate is to keep the US all of strong. Right now they see a lot of competition and of course as a government you kind of need to ask yourself the question do we want to have this industry blooming and booming and everything is great and we can collect tax revenue and a lot of business is coming here a lot of builders will come
And on the other hand, do we want to protect the legacy system? Do we want to protect our currency? Do we want to protect the things that... And so what it became clear to me is I don't know the words exactly, but Signature Bank and Silicon Valley they had
these systems, the settlement systems in the background where I think it's called Zen or something along the line of Zen and there was this other system. So there were two settlement systems where you could settle fiat and crypto in the back end and it was really sophisticated and I kind of wonder why exactly
these two banks and with Silicon Valley Bank you practically had somewhat of a government takeover. They didn't even let this run into bankruptcy. The bankruptcy they closed it before it actually happened and so there were just so many coincidences where I as a tinfoil had asked myself okay this is
is cannot be just incompetence. There has to be somewhat of a malicious agenda coming into this. I think, so I believe I have a lot of hope and I'm an optimist. And I can see in the United States you have so many politicians, so maybe we can shift here into the
the bill that gets proposed right now to get rid of Gary Gensel. And you with the big question. Well, we have to say it's actually not getting rid of Gary Gensel. It's just to risk. Rockshore, DC, that we have to be like some people say it's like firing Gary Gensel, but it's actually not. It's flipping the kind of power around. Yeah. But I think that's really key to understand#
So you have a few trends going. So you have two presidential candidates that spoke up at the Bitcoin conference and they're pro crypto, they're pro Bitcoin and they make this very, very clear. You have a few people in Congress that are also going that route. And then of course you can ask yourself the question, are they doing it out of a
You know, publicity stunts today just want to grab some voters and in the end doesn't really make a difference what the motivation is but the game theory behind it is if you're against cryptocurrencies you're losing voters because there is almost nobody that thinks oh this is important to me I'm gonna vote for Senator Warren
or I don't know because they're against cryptocurrencies. But there is a lot of people that have a financial incentive that are a holder, that are part of this revolution, that hold a crypto asset, and they are single issue voters. They're just going to vote for, can be junior or for their local congressman or whatever, because
They are pro crypto and the amount of people that World Cryptocurrencies are in favor of that is increasing so I'm somewhat hopeful and we are in this storm currently because there is a storm a lot of different genders and a lot of different things are Clashing together and it's very
very messy, you don't really know who to trust and how things are going to turn out. But come on, I'm in the space super active, I came in 2015, I kind of understood it in 2017 a bit better, but back then everybody told you that
One day the government is going to come hard for this space. This was general consensus. Everybody was mentioning that at one day regulation will come, at one day a government crackdown will come. And now we are kind of here. And who's surprised? Come on. Is anybody surprised that the government is not just going to lay on its bat and let all of this happen?
I'm not surprised that they are coming and trying to kind of step in. And now it's kind of up to each and every one of us, you know, write that letter to your local politician, vote for somebody that is actually in favor of this. It is also up to us to actually make a difference.
at least how I approach this whole thing. Yeah, I think that's a good point. I agree. I think a question on the presidential stuff, and I wrote a blog post about this as well, is I think the question right now is just how important is that crypto group as an electing
group and I think a lot of the presidential candidates are probing this right now, right? I mean, I was on a Twitter space with Mario Norval, like Scott was there and Dan and I don't know, we discussed this a bit and then Scott said that he thinks that
Yeah, it's gonna be too small. It's gonna play a big role. I don't know. So I think some of these candidates just trying to kind of poke the niches, right, and kind of understand which niche is gonna fly, which niche is not gonna fly and then they for their actual kind of run, they're gonna really focus on those that are gonna fly. That's just a bit of my fear. But yeah, let's see. I#
I mean, you're right. I think that's an interesting one. At the end, I also want to add one thing. I mean, this entire topic would be less and less of a topic if we as an industry managed to get real utility into these coins. And the example I made on in a blog post, I
put out this week, over the weekend was, if you're actually, most people are not aware of this, right? If you are using Tchactivity Plus, you're actually buying tokens, right? You're actually buying these tokens and you're buying these tokens for $30 a month. So if you want to, let's use Bitcoin language, right? You're stacking sats.
$30 a month. That's what you're actually doing. But no one goes and says, let me resell those tokens. Let me resell access to Jet2PG. Let me sell these tokens for more. So this typical crypto narrative that I think 99% of all crypto investors are doing. Everyone, who are you kidding?
That's what 99% of the crypto investors are doing. I'm dollar-crossed average. Yeah, why are you? Well, I'm doing it because I hope I can sell my sets for more. I hope I can sell my ease for more, right? That's what everyone is hoping. Now in chat, you begin. No one is doing this. Everyone is using these tokens to run that AI-mange machine for useful stuff.
And that is the absolute key thing. If we as a crypto ecosystem managed to get crypto there, this entire discussion would go away. And that is the hard part. And I had like, I'm at a crypto event right now in Italy. And we have had a lot of discussions around this, right? Really like what's going to be that next actual thing that's useful, right? That people really go and
Basically, work similar like check GPT. So yeah, it's been a lot of discussions. A lot of yeah, and I think that's really the key things if you're asking me like the next trends right so because people are now obviously go losing hope they're all sitting down like oh my goodness like this 2023 thing is like worse than 2018 and where so much worse and it feels so
Terrible and we're gonna see new lows now and Bitcoin's gonna break under the this Discycle low of like 16,000 and and that's it right there's no more liquidity and blah blah blah you hear all of that right and again I'm not here to discuss price I have no interest in that for me what I want to discuss is Why I believe that crypto will see new heights right and why will
I think two reasons because we will find that strong utility drive. We will find it as industry, right? Right? Right now we're in a puzzle piece and we're just trying to puzzle piece and we're trying and trying, trying. Some point we'll find it. And the second thing is because I actually do think with regulation coming in and smart regulation coming in, we're actually going to attract
the big boy capital because actually the big boy capital wants certain regulation because that's the game they know how to play and so I think there's actually a very interesting kind of approach to this so yeah that is just something I want to leave with here I don't know if I'll be able what do you want to add but that was my kind of he take away I want to leave here at the end
Yeah, we're almost approaching the end. We're almost an hour in, or actually we started a bit later. So the only thing I would add is there is a good side to this. It's not just all bad, as Julian said. We kind of, or a lot of capital on the sidelines is waiting for clear regulation.
There is still some legacy players that think this is just a fad, you know, as it was with the internet and I can completely foresee somewhat of a Renaissance when it comes to the whole crypto space because if you just look at dot com like 98 99 2000 there wasn't a lot of utility it was just people putting dot com
come at the end of their name, building websites that didn't have a lot of utility that didn't do a lot, and then there you had this whole price discovery. And after that, you need to consider one thing from the dot com moment. So in 2000, 2001, until the NAS that made new highs was a period of 10 to 15 years.
A lot of companies had an insane somewhat of a bubble and then a long long period of nothingness and then the utility came the whole internet thing kind of needed a few things to happen like the iPhone like Facebook like like other things that Developed in the later parts of the O.O
like, oh, seven, the iPhone, Facebook, after the iPhone and so on. All of the services that we use daily, they didn't came 20 years or 25 years ago, they came 10 years ago or 15 years ago. So it took some time and kind of a process to wash out certain things that probably don't belong. And let's be
honest with each other. And fruit tokens like a no sushi and pizza and it is this really useful is this really what this industry is about in my opinion it's not. We are here to improve lives to build stuff that matters.
And one of the things like if we're talking about future trends like maybe some of you can remember the summer of 2020 was called the DeFi summer but The crystallization out of the whole DeFi sector it didn't really come there were some basic applications like DeXes and like tokenization
of assets that kind of got started, but the crystal clear use case and the mass adoption of these things didn't really happen yet. And just consider that approximately three billion people don't have access to the old legacy system and there is a lot of people that make the case. So initially in
the first 15 minutes of this session, I mentioned that if the SEC gets their way, that the whole crypto thing is practically another arm of the financial legacy system, but that's not really what we want and why we are here, isn't it? So, and then you could make the case that maybe this is just going to end up in
somewhat of an era of free banking or a secondary market that is outside of the financial system that people can kind of opt in. Some a bit of the sovereign individual thesis and I would find this future a lot more interesting than just building
building out the legacy system. I want to have competition, I want to have this free system that everybody can participate, maybe a bit outside of the US regulatory framework. Right now we are kind of finding out how all of this will develop and probably a few tokens will fall into the legacy system and a few things
will develop outside of the system. Besides that we have a lot of anger and frustration with the things that are currently going on, it's also extremely interesting to kind of witness everything unfolding. I'm still hopeful. I'm still optimistic.
not the end. Yeah. I think it's really good sharing. I like that. It's really good. Anything else at the end, but I think that's really really good. Maybe we can just keep it with this one topic and the next time we're going to be tied into other cake specific topics.
or maybe some other developments that are going to happen within the next seven days. Let's do that. I think that's good. Yeah, with that everyone. Hey, hope you had a good Tuesday. Let's hope for a really good week. I know last week was a bit bleak with the prices, but yeah, we may see better times ahead. Let's hope for that. So use those times with all across the average, and keep
long time horizon, then you're going to be right on this. Don't focus so much on the months, focus on years. And yeah, if you're not doing so already, use our platform, go to kktiva.com. Let us pay you cash flow in your crypto. And with that, see you next time, everyone. Stay healthy, stay safe, Fabio. Thank you so much. See you next week. Have a wonderful day.