WEBVTT

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<v Speaker 1>What's it like looking back to and seeing the firms

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<v Speaker 1>that you worked on, like City and JP Morgan, now

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<v Speaker 1>they're all in.

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<v Speaker 2>They're definitely not. I would say it's far more theater

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<v Speaker 2>than actuality. And this is something I think it's important

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<v Speaker 2>for crypto people to understand. The power structure at banks

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<v Speaker 2>and tech companies is basically reversed. At banks, the tech

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<v Speaker 2>teams don't matter. They are far down the stack. They

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<v Speaker 2>are not the important people. The revenue is the commercial bankers,

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<v Speaker 2>the people running the credit card platform, the investment bankers,

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<v Speaker 2>and the traders. Because I look around at the street,

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<v Speaker 2>what I'm seeing is a lot of science experiments by

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<v Speaker 2>people who don't have P and L.

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<v Speaker 1>This episode is brought to you by Treasure. Treasure makes

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<v Speaker 1>big fan of this hardware wallet. So if you'd like

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<v Speaker 1>to learn more, visit the link in the description. Hey everyone,

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<v Speaker 1>welcome into the Thinking Crypto podcast. I'm your host Tony

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<v Speaker 1>Edward and we are recording at Station three in New

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<v Speaker 1>York's Financial District. And joining me is Austin Campbell, who

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<v Speaker 1>is the founder and managing partner at Zero Knowledge Group

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<v Speaker 1>and an adjunct professor at NYU Stern. Previously, he ran

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<v Speaker 1>Stable Value Trading at JP Moore, was the cohead of

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<v Speaker 1>Digital Assets rates trading at City, and was the head

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<v Speaker 1>of portfolio management at Paxos. Austin, great to have you.

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<v Speaker 2>Good to be here. I'm looking forward to this one.

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<v Speaker 1>Yeah, absolutely, Austin I appreciate you a lot. I'm not

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<v Speaker 1>saying that to make you feel good, but you have

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<v Speaker 1>a plethora of knowledge. You're very, very knowledgeable in digital

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<v Speaker 1>assets and what's happening in the crypto industry. You've testified

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<v Speaker 1>before Congress and much more so.

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<v Speaker 2>I think it's a.

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<v Speaker 1>Great time for us to be talking to get your

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<v Speaker 1>perspective on what's happening, get the lay of the land.

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<v Speaker 1>I think I want to start off with, are you

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<v Speaker 1>planning to leave crypto to go into precious metals.

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<v Speaker 2>I'm planning to bring precious metals to crypto, right, Like,

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<v Speaker 2>hold on, Like, let's figure out the pathway here. I mean, so,

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<v Speaker 2>one thing I would say that I think is very

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<v Speaker 2>important when you're looking at things is if you're a trader, right, so,

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<v Speaker 2>if you're at like Go Anywhere type fund, if you're

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<v Speaker 2>engaged in certain strategies where you're providing liquidity, they have

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<v Speaker 2>to follow essentially the hot ball of money wherever it

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<v Speaker 2>moves between markets, right because that's going to drive interests,

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<v Speaker 2>that's going to drive trading volume, that's going to drive premiums.

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<v Speaker 2>So some of the discourse that you're going to see

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<v Speaker 2>online moving from crypto to precious metals right now, or

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<v Speaker 2>you know, move from game stop to crypto. In the

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<v Speaker 2>first place you've got to understand is there's a whole

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<v Speaker 2>business model of like liquidity, provisioning, trading, like all of

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<v Speaker 2>these sorts of strategies that work on where the money

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<v Speaker 2>goes and money and markets just flows around.

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<v Speaker 1>Right.

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<v Speaker 2>Great, it's a totally different thing to be a long

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<v Speaker 2>term investor and builder, right Those people are kind of

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<v Speaker 2>agnostic to market cycles or maybe even in some ways

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<v Speaker 2>countercyclical to those. And so one of the things that happens,

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<v Speaker 2>and this is true of all markets, like we talk

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<v Speaker 2>about it in crypto some, but this is actually true

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<v Speaker 2>of all markets, is that when the tide goes out

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<v Speaker 2>and the hot money leaves and the attention leaves, there

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<v Speaker 2>are people who are the long term thinkers left behind

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<v Speaker 2>who continue building things. And the question of when the

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<v Speaker 2>next cycle shows up is fundamentally a question of are

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<v Speaker 2>the things you're building things that work and have any

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<v Speaker 2>value and capture people's interest again, or are the things

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<v Speaker 2>you're building kind of crappy and don't work and aren't valued,

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<v Speaker 2>in which case they're going to get washed out and

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<v Speaker 2>then people are going to try again. And if there's

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<v Speaker 2>really no there there, you could have an entire sector

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<v Speaker 2>die like good example, like can anybody point me to

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<v Speaker 2>a horse and buggy company in the s and P

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<v Speaker 2>five hundred right, Like that's a thing that just got

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<v Speaker 2>wiped out by the forward progress of technology. But there

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<v Speaker 2>are consumer package goods companies, There are banks, there are

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<v Speaker 2>insurance companies, and some of them are very new if

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<v Speaker 2>you look at like SOFI, very recent. But if you

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<v Speaker 2>look at like JP Morgan, like hundreds of years of

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<v Speaker 2>history and so each industry. As you look at that

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<v Speaker 2>hot ball of money phenomena, you've got to differentiate between

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<v Speaker 2>call it the trading and short term investing and like

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<v Speaker 2>the long term ability.

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<v Speaker 1>So Austin, A couple things I want to peel back

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<v Speaker 1>from that is is it the idea of you mentioned

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<v Speaker 1>traders and market makers right, they're looking for markets where

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<v Speaker 1>they can get the best returns. But also there is

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<v Speaker 1>a cyclicality with the macro, the FED liquidity and all

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<v Speaker 1>these things. So you think it's a combination of factors

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<v Speaker 1>as affecting crypto right now?

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<v Speaker 2>Oh one hundred percent. I think you know the right

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<v Speaker 2>way to look at this is assets have value from

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<v Speaker 2>a number of different perspectives. One of them is like

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<v Speaker 2>call it fundamental value value investing, right, like the classic

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<v Speaker 2>if everybody else hates this, right even at that level,

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<v Speaker 2>like what is this thing worth if I just strip

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<v Speaker 2>it down to the studs? Right? So, like the classic

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<v Speaker 2>example is like buying bankrupt companies for less than the

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<v Speaker 2>value of their inventory because you could just go liquidate

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<v Speaker 2>the inventory and things like that. Okay, you know what

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<v Speaker 2>that is a floor that you're going to find out

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<v Speaker 2>value for a lot of things. One of the problems

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<v Speaker 2>you have in crypto and maybe large is there's often

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<v Speaker 2>no real floor value, or if there is, it's very

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<v Speaker 2>very low, because like what's the floor value of doge coin?

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<v Speaker 2>Right exactly?

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<v Speaker 1>I mean I guess my initial thought would be because

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<v Speaker 1>I thought about this a lot would be network effects

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<v Speaker 1>metchaps law. Could you say, the brand to reach the affinity?

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<v Speaker 1>But then is that tangible?

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<v Speaker 2>Doze is not Like Doze is not a brand you

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<v Speaker 2>can buy, Like how do I buy the doge coin

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<v Speaker 2>intellectual property? Right? Like that's not how that works. And

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<v Speaker 2>so there is like no or very little fundamental value

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<v Speaker 2>for a lot of crypto. So then you get to

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<v Speaker 2>the second level of potential value here, right, which is

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<v Speaker 2>future expectations of growth. This has been the driver of

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<v Speaker 2>many tech companies. If you look at the valuations historically

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<v Speaker 2>of tech companies, they've traded vastly above current earnings. And

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<v Speaker 2>that's totally rational if you think future earnings will be

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<v Speaker 2>very big, right, and so so long as there's a

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<v Speaker 2>belief in like future platform, future earnings, future scale, then

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<v Speaker 2>you would expect those values to hold up. Number three

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<v Speaker 2>is sort of what I'll jokingly call the mimetic or

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<v Speaker 2>trading value, or just people are buying it because other

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<v Speaker 2>people are buying it. Like, whether you like that as

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<v Speaker 2>a concept or not, it's real. We see bubbles and markets,

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<v Speaker 2>We see people who are buying things, especially in like

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<v Speaker 2>meme coins or collectibles because they think other people will

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<v Speaker 2>buy them, right, sort of greater fool theory is one

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<v Speaker 2>way of describing it. And so all of those forces

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<v Speaker 2>right now have been working against crypto. If we're being

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<v Speaker 2>totally honest, you're seeing very little like core fundamental value

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<v Speaker 2>for some of these things, especially non RWAs RWAs live

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<v Speaker 2>in their own world, but like for crypto native assets. Two,

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<v Speaker 2>you've got to ask about future adoption. And here's where

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<v Speaker 2>I think there's been a real problem, which is with

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<v Speaker 2>genius passing with more institutione utional people coming into the space.

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<v Speaker 2>Something I've actually been talking about for a while. I

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<v Speaker 2>think I said this like two years ago on odd

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<v Speaker 2>Blots and it kind of shocked Joe and Tracy at

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<v Speaker 2>the time. Was just because people adopt crypto, I don't

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<v Speaker 2>know that the value accruise to the current platforms are tokens, right,

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<v Speaker 2>So like when JP Morgan or Fidelity Right or Stripe enter,

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<v Speaker 2>is that value going to a crue, to etherorium in

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<v Speaker 2>salata or are they going to do something else to

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<v Speaker 2>capture the value for themselves. Like it was never obvious

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<v Speaker 2>to me that growing adoption equals token price go up,

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<v Speaker 2>and I think other people are seeing a little bit

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<v Speaker 2>of that, and that's been weighing on tokens because if

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<v Speaker 2>you look at the divergence between bitcoin and alts.

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<v Speaker 1>Yeah, yeah, to your point usin we've seen over the

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<v Speaker 1>past quarter or so or even more incredible adoption things

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<v Speaker 1>we would have never thought of back in twenty fourteen

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<v Speaker 1>or twenty fifteen, Banks using bitcoin and crypto's collateral, incredible

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<v Speaker 1>tokenization happening on eth and Solona and so forth, and

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<v Speaker 1>then you have more ETFs than ever I mean on

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<v Speaker 1>rams being built, and it's not just the United States

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<v Speaker 1>but across the globe. But yet something seems broken. How

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<v Speaker 1>do we get out of this? How do we recover

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<v Speaker 1>from this?

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<v Speaker 2>Well, the first thing I would ask is is something broken?

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<v Speaker 2>Or were things broken before? And now we're discovering that.

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<v Speaker 2>What I mean by that is it's the classic where

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<v Speaker 2>is the value captured? And what was the valuation? And

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<v Speaker 2>so if you compare like crypto market caps to public

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<v Speaker 2>company market caps, there have been some highly aspirational market

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<v Speaker 2>caps in crypto where there were times where like you

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<v Speaker 2>look at ethereum and you're like, this is worth more

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<v Speaker 2>than almost all the banks. Do we think that's correct?

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<v Speaker 2>Like I would genuinely ask that question, like the reality

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<v Speaker 2>as token prices may have just been too high and

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<v Speaker 2>the correction is healthy because that will bring us back

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<v Speaker 2>down to more realistic expectations. The other part is if

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<v Speaker 2>they weren't too high, the way you fix it is

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<v Speaker 2>by building much better platforms to capture more of the

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<v Speaker 2>economic value when people adopt. But again, crypto has this

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<v Speaker 2>magical way of like speed running history, and there was

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<v Speaker 2>the whole fat protocol thesis, which was similar to the

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<v Speaker 2>idea that the rails are going to capture a lot

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<v Speaker 2>of the value in finance, and it turns out no

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<v Speaker 2>whoever has the customer relationship captures the value right like DTCC, Yes,

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<v Speaker 2>is less profitable than like being one of the global megabags,

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<v Speaker 2>even though every single global megabag uses DTCC to settle securities.

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<v Speaker 1>Hmm, that's so interesting. I feel like, Austin, you're kind

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<v Speaker 1>of breaking my mental model and crypto to have had,

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<v Speaker 1>not in a bad way, but getting me to think

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<v Speaker 1>outside of that boss.

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<v Speaker 2>This happens a lot. And what I mean by that

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<v Speaker 2>is and this is something I would urge people, not

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<v Speaker 2>just in crypto, but also traditional finance to think deeply about,

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<v Speaker 2>which is we're at a point in time where you're

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<v Speaker 2>having a collision between two traditional forces. Right. You have

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<v Speaker 2>traditional financial practices, which has centralized lots of intermediaries, and crypto,

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<v Speaker 2>which is decentralized with few intermediaries excluding maybe centralized crypto exchanges,

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<v Speaker 2>which somehow are even more consolidated than finance. But ignoring those,

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<v Speaker 2>these two are like slamming into each other at high speed.

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<v Speaker 2>That is a chaotic situation, and you need to think

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<v Speaker 2>deeply about where is value going to accrue and what

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<v Speaker 2>are future systems going to look like. And what I

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<v Speaker 2>would tell you is that I think the crypto community

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<v Speaker 2>has had a lot of incorrect beliefs about how things

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<v Speaker 2>work that have led them to value things that quite

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<v Speaker 2>frankly don't have much value. However, I would level the

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<v Speaker 2>exact same critique against the traditional financial industry, Like, if

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<v Speaker 2>you think a lot of your centralized intermediaries are going

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<v Speaker 2>to retain their value ten twenty thirty years from now,

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<v Speaker 2>you guys have no idea what's coming, and so it's

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<v Speaker 2>sort of going to like scramble everything on both sides,

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<v Speaker 2>not just one side or the other. And so this

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<v Speaker 2>sort of psychic shock that I think people experience sometimes

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<v Speaker 2>when I talk about these things is because I've lived

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<v Speaker 2>in both of them and like tried to pay a

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<v Speaker 2>lot of attention to the actual market structure on the

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<v Speaker 2>ground and where the value accruise, and I think that

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<v Speaker 2>leads you to some surprising places.

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<v Speaker 1>Pardon the interruption. Hi, I'm Tony. I'm the host of

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<v Speaker 1>the Thinking Crypto podcast. I wanted to ask you if

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<v Speaker 1>you can please support the podcast by hitting the like

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<v Speaker 1>button subscribing. If you haven't as yet, you can leave

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<v Speaker 1>a comment below as well. And if you're listening on

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<v Speaker 1>a podcast platform such as Spotify, Apple or wherever you

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<v Speaker 1>get your podcasts, please be sure to follow and hit

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<v Speaker 1>the five star rating. I'll let you get back to

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<v Speaker 1>the content. Thank you so much. So, speaking of the collision,

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<v Speaker 1>do you see that this convergence over time will blend

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<v Speaker 1>the markets where it won't be the tratfi markets and

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<v Speaker 1>the crypto markets, it will just be the.

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<v Speaker 2>Market, correct, Yeah, Because like, let's zoom out here for

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<v Speaker 2>a moment, right, what is the value of a blockchain?

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<v Speaker 2>So not Bitcoin specifically, but like any blockchain, all right,

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<v Speaker 2>it is more decentralized for some definition of decentralized than

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<v Speaker 2>central ledgers, because if it's a single company running a blockchain,

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<v Speaker 2>that's not a blockchain. It's a database, right, you have

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<v Speaker 2>unilateral control. So to be a blockchain I'm going to

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<v Speaker 2>subscribe to. You've got some theory of call it credible neutrality. Now,

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<v Speaker 2>is that completely decentralized anonymous validators like ethereum or hypothesis?

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<v Speaker 2>What if the five hundred largest financial institutions in the

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<v Speaker 2>world all just ran a blockchain right where none of

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<v Speaker 2>them had the power to unilaterally change. That's actually still

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<v Speaker 2>quite decentralized. Fine, but those are blockchains. Two, they tend

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<v Speaker 2>to be open access, and this like, we talk a

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<v Speaker 2>lot about decentralization, but I actually think the open access

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<v Speaker 2>part is more important in the long run. And what

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<v Speaker 2>I mean by that is the traditional financial system. It's

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<v Speaker 2>a little bit like getting into this building. You have

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<v Speaker 2>to go to the front desk, you have to check in,

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<v Speaker 2>they look at your ID, they let you in. If

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<v Speaker 2>you're on the list, you come up here, you do

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<v Speaker 2>the podcast. Okay, fine. Blockchains are more like a public park.

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<v Speaker 2>The default is you're allowed in, and in many cases

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<v Speaker 2>you could be kicked back out for bad behavior, especially

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<v Speaker 2>with RWA's or permissioned protocols and things like that. But

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<v Speaker 2>the reality is in many bitcoins a little different. But

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<v Speaker 2>certainly for like stable coins, token is stocks, tokenied gold,

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<v Speaker 2>there's not infinite tolerance for bad behavior, but the default

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<v Speaker 2>assumption is yes instead of no. That change is huge.

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<v Speaker 2>The other part is it's an omni ledger. That means

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<v Speaker 2>we can put all this stuff on there right if

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<v Speaker 2>you live in the United States right now and You've

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<v Speaker 2>got a Fidelity account, a bank account, and a coinbase

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<v Speaker 2>account getting money from here to here to just kill

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<v Speaker 2>me now, it's crazy, right, Whereas what the blockchain instant

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<v Speaker 2>or at least close to instant. And so it is

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<v Speaker 2>these open access and omni ledger components that I think

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<v Speaker 2>are more powerful for financial markets in the long run

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<v Speaker 2>than the decentralization.

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<v Speaker 1>And then we see institutions like JP Morgan, for example,

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<v Speaker 1>they're building their own private permission version internally, but they're

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<v Speaker 1>now bridging to public. So do you see that being

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<v Speaker 1>the model institutions have the internal chain, but settlement and

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<v Speaker 1>you know the transactions have to happen on public.

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<v Speaker 2>Yeah. Private internal blockchains are a bridge to nowhere. Yeah right,

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<v Speaker 2>because yeah, like look, I was at JP Morgan. I

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<v Speaker 2>think very highly of that bag from a skills and

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<v Speaker 2>competence standpoint. But Onyx or Connexus, I guess they're calling

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<v Speaker 2>it now is a doomed project. And why do I

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<v Speaker 2>say that. Let me make you a pitch, Hey Goldman Sachs,

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<v Speaker 2>I'm at JP Morgan. Come put all of your trading data,

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<v Speaker 2>all of your technology, and all of your customer activity

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<v Speaker 2>on a ledger that I unilateral culture, right, okay, obviously

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<v Speaker 2>held out, But then imagine that pitch in reverse. So

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<v Speaker 2>Goldman builds their private chain and now they come tell

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<v Speaker 2>JP Morgan, why don't you use this? JP Morgan is,

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<v Speaker 2>of course like no, and so there's no mutual meeting point.

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<v Speaker 2>And all we've done is everybody's running their own private

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<v Speaker 2>ledger and then you're somehow having to get information between them,

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<v Speaker 2>and you don't trust what's going on on the other side.

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<v Speaker 2>Same situation that led to the creation of DTCC. Okay,

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<v Speaker 2>and so if you're trying to build a private blockchain

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<v Speaker 2>like product, I would tell you it will not work

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<v Speaker 2>if you're the only one doing it. If you look

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<v Speaker 2>at financial markets, there's two consortium models that historically have

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<v Speaker 2>done well over time. One is what DTCC did, which

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<v Speaker 2>is to say you get all the big guys in

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<v Speaker 2>a room on day one, and it's got critical mass,

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<v Speaker 2>so other people have to use it. So if somebody

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<v Speaker 2>came to me and said, hey, I'm launching a blockchain

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<v Speaker 2>in the US and it's a permission chain, and as validators,

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<v Speaker 2>I have all of the top twenty banks and a

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<v Speaker 2>bunch of the asset managers, I would say that's probably

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<v Speaker 2>gonna work, right, that has the scale to force other

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<v Speaker 2>people to use it, right, Okay. Two is something like Visa,

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<v Speaker 2>which is to say, we've built a platform that people

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<v Speaker 2>can join, and when they join, they basically get the

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<v Speaker 2>same economic terms as the people who are already there.

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<v Speaker 2>Because the thing that will not work is I built

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<v Speaker 2>a platform and I gave a really favorable deal to

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<v Speaker 2>the early adopters, and everybody who comes later on gets

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<v Speaker 2>a worse deal because they're going to look at that

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<v Speaker 2>and rationally be like, well, why don't I just build

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<v Speaker 2>my own thing to compete with you unless you already

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<v Speaker 2>had critical scale, which is DTCC. So this explains, like

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<v Speaker 2>I've been very skeptical, for instance, about like Tempo and

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<v Speaker 2>Canton and things like that. It's because they don't fit

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<v Speaker 2>into one of those two buckets. Interesting, right, Like and

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<v Speaker 2>so what like the history of fighting like zoom out

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<v Speaker 2>from blockchain bock chain parts not relevant here. The history

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<v Speaker 2>of financial products would tell you those things don't survive,

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<v Speaker 2>got it?

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<v Speaker 1>But do you think the banks attempt to do it

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<v Speaker 1>given that they may feel threatened that hey, let's all

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<v Speaker 1>come together. I don't know whoever, JP Morgam City Bank

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<v Speaker 1>of America, all of them. They come together in a

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<v Speaker 1>form of consortium. They said, hey, let's launch our own

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<v Speaker 1>public blockchain, kind of like what you're talking about. All

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<v Speaker 1>be validators, everybody gets a fair stake. Do you think

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<v Speaker 1>they might do something like that.

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<v Speaker 2>I think if it's only the banks, that won't work, right,

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<v Speaker 2>because all markets need to have two sides. And now

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<v Speaker 2>you're going and pitching the entire asset management community. Hey,

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<v Speaker 2>you don't like that we have so much control over

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<v Speaker 2>this system, So we built another system that we have

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<v Speaker 2>total control over that we want you to use, and

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<v Speaker 2>they'll just be like right, Like Larry think is not

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<v Speaker 2>going to be down with that. It would be my prediction. Okay,

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<v Speaker 2>I think if you did that but added in asset managers,

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<v Speaker 2>payments companies, large insurance companies, now you might have something.

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<v Speaker 2>But that's how you get towards credible neutrality. Hey, we're

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<v Speaker 2>all one kind of institution and we're going to control

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<v Speaker 2>this is not credibly neutral.

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<v Speaker 1>Yeah, that absolutely makes sense. You know, you mentioned Canton network,

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<v Speaker 1>so that is backed by Goldman, Sacks, Citadel, and a

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<v Speaker 1>bunch of others. So you don't think what they're trying

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<v Speaker 1>to do kind of you know, having the backing of

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<v Speaker 1>these wallsheet firms will necessarily work.

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<v Speaker 2>They don't have enough of them. It's back to the

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<v Speaker 2>DTCC thing. If you told me that Canton, the founding

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<v Speaker 2>group who all got the same deal to join was

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<v Speaker 2>Goldman Morgan, Stanley, JP Morgan, City, b of A, Wells, Fargo, Blackrock, Fidelity, Vanguard,

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<v Speaker 2>sit it, I'd be like done, You've got it, Like

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<v Speaker 2>you have critical mass, but you just named one bank

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<v Speaker 2>and one trading firm. Yeah, that kind of feels like, uh,

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<v Speaker 2>Goldman Chain as opposed to ONNYX, Like why would JP

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<v Speaker 2>Morgan favor Canton over just using their own thing? Right?

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<v Speaker 2>This is that mutual like conflict that we were just

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<v Speaker 2>talking about. By the way, Okay, now both of you

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<v Speaker 2>were doing this, go pitch HSBC. Good luck both of you. Right,

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<v Speaker 2>And so you know again it's the if you want

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<v Speaker 2>other people to join over time, you need to have

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<v Speaker 2>given them the same deal. Right. So if you've got

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<v Speaker 2>something like a Canton where you know they'll argue, well,

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<v Speaker 2>there was no pre mind. It's like no, but you

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<v Speaker 2>had an inner circle doing the permitted activity, piling up

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<v Speaker 2>a ton of tokens, and now they've got it and

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<v Speaker 2>you want other people to join. That's no, like I

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<v Speaker 2>would tell you bluntly. I used to be the cohead

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<v Speaker 2>of digital assets at City within Global rates. If somebody

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<v Speaker 2>brought that to me, I would be an absolutely not right.

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<v Speaker 2>I would just look at that and be like, this

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<v Speaker 2>doesn't work economically, get out, We're not using it. And

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<v Speaker 2>so I if there are even semi competent people right

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<v Speaker 2>at many of these other places, I don't see future

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<v Speaker 2>adoption there.

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<v Speaker 1>What's it like looking back to and seeing the firms

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<v Speaker 1>that you work on, like City and JP Morgan now

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<v Speaker 1>going all in in crypto, it seems like if you

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<v Speaker 1>don't have a crypto strategy or you know, hiring Guessada,

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<v Speaker 1>it was announcements of different folks hiring at Morgan Stanley

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<v Speaker 1>and that now they're all in and races on.

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<v Speaker 2>They're definitely not I would say it's far more theater actuality.

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<v Speaker 2>And this is something actually something I think it's important

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<v Speaker 2>for crypto people to understand. The power structure at banks,

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<v Speaker 2>at tech companies is basically reversed. So if you work

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<v Speaker 2>at Facebook, the people who are going to be powerful

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<v Speaker 2>are people in the product and engineering group. They drive

401
00:21:18.599 --> 00:21:21.920
<v Speaker 2>your platform, they're going to drive things like ads monetization.

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00:21:22.160 --> 00:21:25.440
<v Speaker 2>That's where all the revenue flows through. And the finance

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00:21:25.519 --> 00:21:28.640
<v Speaker 2>team at Facebook is like in a back room, right, Like,

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<v Speaker 2>imagine trying to get something major at Facebook done, like

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<v Speaker 2>as a product by going in through like their treasury

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<v Speaker 2>cash management team. It's not going to happen, right, Like,

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<v Speaker 2>could you get them to change their local cash management strategy? Maybe,

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<v Speaker 2>but could you change like Facebook or Instagram? Absolutely not. Yeah, okay,

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<v Speaker 2>So here's the problem at banks that's reversed. The tech

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<v Speaker 2>teams don't matter. They are far down the stack. They

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<v Speaker 2>are not the important people. The revenue is the commercial bankers,

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<v Speaker 2>the people running the credit platform, the investment bankers, and

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<v Speaker 2>the traders. If you're not talking to people in those groups,

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<v Speaker 2>nothing is happening and it doesn't matter. So as I

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<v Speaker 2>look around at the street, what I'm seeing is a

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<v Speaker 2>lot of science experiments by people who don't have P

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<v Speaker 2>and L. Right, That's mostly what I'm seeing. The outliers

418
00:22:19.799 --> 00:22:23.160
<v Speaker 2>for that are probably Standard Chartered and JP Morgan, who

419
00:22:23.160 --> 00:22:26.680
<v Speaker 2>are doing a little bit more. But in general it's

420
00:22:26.920 --> 00:22:29.839
<v Speaker 2>much smaller than people think. And the other part is

421
00:22:29.880 --> 00:22:33.720
<v Speaker 2>banks don't really have the best personnel here right, they're

422
00:22:33.759 --> 00:22:35.519
<v Speaker 2>going to need to wrap their head around how to

423
00:22:35.519 --> 00:22:40.640
<v Speaker 2>build like tech divisions and blockchain talent, and like get

424
00:22:40.680 --> 00:22:42.559
<v Speaker 2>the people who know how to trade these twenty four

425
00:22:42.599 --> 00:22:44.799
<v Speaker 2>to seven systems. And like I'm not seeing people from

426
00:22:44.799 --> 00:22:46.640
<v Speaker 2>winter Mute going to Morgan.

427
00:22:46.359 --> 00:22:50.000
<v Speaker 1>Stanley could be passing of the clarityac change that where

428
00:22:50.039 --> 00:22:52.039
<v Speaker 1>banks try to acquire these cryptonative firms.

429
00:22:53.160 --> 00:22:55.319
<v Speaker 2>I'm not even sure we need clarity for that to

430
00:22:55.400 --> 00:22:57.680
<v Speaker 2>start happening. I just think we need the SEC and

431
00:22:57.720 --> 00:23:02.160
<v Speaker 2>CFTC to write some rules down, which they're working on. Right.

432
00:23:03.119 --> 00:23:06.960
<v Speaker 2>So I was a big critic, despite being a democrat

433
00:23:07.160 --> 00:23:11.200
<v Speaker 2>of Biden and the Gensler SEC, And a lot of

434
00:23:11.200 --> 00:23:15.319
<v Speaker 2>my critique came from, could you just write stuff down

435
00:23:15.960 --> 00:23:18.759
<v Speaker 2>right that makes some degree of sense and then have

436
00:23:18.880 --> 00:23:21.440
<v Speaker 2>like a first principles approach, because there's two big things

437
00:23:21.440 --> 00:23:24.880
<v Speaker 2>that got wrong that held this back so far. One

438
00:23:25.519 --> 00:23:27.440
<v Speaker 2>they didn't write anything down and by the way, if

439
00:23:27.480 --> 00:23:29.519
<v Speaker 2>you look at some of their court filings, like they're

440
00:23:29.599 --> 00:23:33.720
<v Speaker 2>arguing mutually contradictory things in different cases, Like I have

441
00:23:33.799 --> 00:23:36.240
<v Speaker 2>no time for that, Like that's not okay from a

442
00:23:36.319 --> 00:23:39.559
<v Speaker 2>rule of lost standpoint, And I actually want to pause

443
00:23:39.599 --> 00:23:41.599
<v Speaker 2>for a moment and say this. There are a lot

444
00:23:41.599 --> 00:23:43.880
<v Speaker 2>of very good people at the SEC. When I say

445
00:23:43.880 --> 00:23:47.119
<v Speaker 2>I have problems with Gensler's SEC, I largely mean the chair,

446
00:23:47.279 --> 00:23:49.799
<v Speaker 2>his policy people, and a few people in enforcement who

447
00:23:49.880 --> 00:23:52.720
<v Speaker 2>were driving those actions. There's actually a lot of very

448
00:23:52.759 --> 00:23:55.079
<v Speaker 2>hard working staff at the SEC who I think were

449
00:23:55.160 --> 00:23:57.240
<v Speaker 2>kind of victims of this whole thing in many ways

450
00:23:57.279 --> 00:24:01.480
<v Speaker 2>because they are very well intentioned. Fine, but so to

451
00:24:01.519 --> 00:24:04.640
<v Speaker 2>be very specific, it's, hey, you can't argue two different

452
00:24:04.680 --> 00:24:07.440
<v Speaker 2>theories in two different courts on enforcement. That's crazy because,

453
00:24:07.440 --> 00:24:09.680
<v Speaker 2>by the way, that's a super highway to the Supreme Court.

454
00:24:10.559 --> 00:24:15.559
<v Speaker 2>Two write things down, Like why is this hard? We

455
00:24:15.599 --> 00:24:17.240
<v Speaker 2>can't be like we're not going to tell you what

456
00:24:17.279 --> 00:24:19.400
<v Speaker 2>the speed limit is, but then I'm going to ticket

457
00:24:19.400 --> 00:24:23.000
<v Speaker 2>you for speeding. No, And because they didn't write it

458
00:24:23.039 --> 00:24:25.160
<v Speaker 2>down or have first principles. If you look at their

459
00:24:25.240 --> 00:24:29.480
<v Speaker 2>enforcement record, it's like the work of a madman. Okay,

460
00:24:30.119 --> 00:24:35.400
<v Speaker 2>they were going after coinbase and binance and cracking and

461
00:24:35.559 --> 00:24:39.720
<v Speaker 2>like this project doing a decentralized library and like stoner

462
00:24:39.799 --> 00:24:42.480
<v Speaker 2>cats and like all of that stuff. Do you know

463
00:24:42.519 --> 00:24:45.119
<v Speaker 2>who they didn't get in front of before bad things happened?

464
00:24:45.599 --> 00:24:52.119
<v Speaker 2>FTX three Arrows, Capital, Terraform Labs, Celsius, even Block five. Right,

465
00:24:52.680 --> 00:24:56.680
<v Speaker 2>they just missed everything that was bad and hit everything

466
00:24:56.720 --> 00:24:59.359
<v Speaker 2>that was good, like random dessic. Putting all the names

467
00:24:59.400 --> 00:25:01.519
<v Speaker 2>on a wall and growing darts at them would have

468
00:25:01.559 --> 00:25:03.039
<v Speaker 2>produced a better enforcement outcome.

469
00:25:03.079 --> 00:25:05.920
<v Speaker 1>Well, maybe that's on purpose. Gencer wanted those things to happen.

470
00:25:06.559 --> 00:25:09.160
<v Speaker 2>Well, I do think it was on purpose, not that

471
00:25:09.240 --> 00:25:11.200
<v Speaker 2>he wanted them to happen, it's that he was going

472
00:25:11.240 --> 00:25:13.839
<v Speaker 2>after the biggest names in the press to try to

473
00:25:13.960 --> 00:25:18.200
<v Speaker 2>Like I think this was purely somebody reading social media

474
00:25:18.279 --> 00:25:22.720
<v Speaker 2>driven strategy as opposed to good governance, and so everybody

475
00:25:22.720 --> 00:25:24.920
<v Speaker 2>in traditional finance just stayed the hell away from that

476
00:25:25.039 --> 00:25:28.039
<v Speaker 2>clown show, as they should have. I was giving people

477
00:25:28.079 --> 00:25:33.519
<v Speaker 2>advice to do that. That was a good decision. Fine. Now, look,

478
00:25:33.640 --> 00:25:35.960
<v Speaker 2>I know I'm an outlier opinion on this, but I

479
00:25:35.960 --> 00:25:39.359
<v Speaker 2>think whether clarity passes or not, a good bill would

480
00:25:39.400 --> 00:25:42.440
<v Speaker 2>be helpful. A bad bill is harmful. I don't think

481
00:25:42.440 --> 00:25:45.559
<v Speaker 2>it's as important as people think if the CFTC and

482
00:25:45.680 --> 00:25:50.160
<v Speaker 2>SEC just write rules down. Right. We know how securities work,

483
00:25:51.079 --> 00:25:54.240
<v Speaker 2>we know how commodities work, we know how derivatives work.

484
00:25:54.839 --> 00:25:58.799
<v Speaker 2>There are some novel questions around crypto because let me

485
00:25:58.920 --> 00:26:02.240
<v Speaker 2>pose you a question in nineteen seventy that was unanswerable,

486
00:26:02.240 --> 00:26:06.559
<v Speaker 2>which is how do I do clearing without a centralized counterparty?

487
00:26:07.480 --> 00:26:10.759
<v Speaker 2>Now we could do that, So there probably needs to

488
00:26:10.799 --> 00:26:14.680
<v Speaker 2>be some interpretive guidance exemptions. But like the SEC has

489
00:26:14.720 --> 00:26:18.480
<v Speaker 2>done this before. I will remind everybody electronic trading is

490
00:26:18.519 --> 00:26:22.240
<v Speaker 2>not mentioned anywhere in the forty Act named that because

491
00:26:22.279 --> 00:26:26.240
<v Speaker 2>it was written in nineteen forty. And the ABS regime

492
00:26:26.440 --> 00:26:29.079
<v Speaker 2>for like registration and reporting and all of that was

493
00:26:29.119 --> 00:26:34.880
<v Speaker 2>just created by the SEC because like essentially SPV that

494
00:26:35.000 --> 00:26:37.480
<v Speaker 2>just exists on paper to hold assets is not an

495
00:26:37.559 --> 00:26:40.799
<v Speaker 2>operating company. They're capable of these things. As I said,

496
00:26:40.799 --> 00:26:43.240
<v Speaker 2>there were some very good staff members at the SEC.

497
00:26:43.599 --> 00:26:48.039
<v Speaker 2>They were just prevented from doing any of this. Man.

498
00:26:48.839 --> 00:26:51.599
<v Speaker 1>So, you know, I'm surprised by your take where you said,

499
00:26:51.599 --> 00:26:55.519
<v Speaker 1>like the Clarity Act not necessarily important. But the regulatory agencies,

500
00:26:55.839 --> 00:26:58.440
<v Speaker 1>the twin towers so to speak, the SEC and CFDC,

501
00:26:58.920 --> 00:27:00.839
<v Speaker 1>you know, they are the ones that need to put

502
00:27:00.839 --> 00:27:05.279
<v Speaker 1>out the guidelines and the rules. But do you think

503
00:27:05.559 --> 00:27:08.480
<v Speaker 1>the CLARITYAC allows more capital and could to come into

504
00:27:08.519 --> 00:27:10.960
<v Speaker 1>the crypto industry and acid class and could it be

505
00:27:11.000 --> 00:27:14.960
<v Speaker 1>a catalyst that sparks a rally, not price predictions, but

506
00:27:15.039 --> 00:27:15.480
<v Speaker 1>just curious.

507
00:27:15.519 --> 00:27:19.720
<v Speaker 2>You know, the answer is, it would really depend what's

508
00:27:19.720 --> 00:27:23.079
<v Speaker 2>in the act. I think the important one was Genius. Okay, actually,

509
00:27:23.160 --> 00:27:27.519
<v Speaker 2>as we think about this, because I know this is

510
00:27:27.640 --> 00:27:30.160
<v Speaker 2>very basic, but like I'm a college professor, so I

511
00:27:30.160 --> 00:27:32.680
<v Speaker 2>think about these things. If I have goods and services,

512
00:27:32.720 --> 00:27:35.759
<v Speaker 2>I need money to exchange for those. Otherwise we're just

513
00:27:35.839 --> 00:27:38.880
<v Speaker 2>using the barter system. And the number one thing that

514
00:27:38.960 --> 00:27:42.200
<v Speaker 2>happened with Genius was you've given a formalistic definition to

515
00:27:42.200 --> 00:27:45.119
<v Speaker 2>what money looks like on a blockchain. It was a

516
00:27:45.160 --> 00:27:47.880
<v Speaker 2>good one because they basically took two thousand and eight

517
00:27:47.920 --> 00:27:51.279
<v Speaker 2>money market reform and there's a straight line from that

518
00:27:51.480 --> 00:27:53.200
<v Speaker 2>all the way to Genius. Like I'll tell you the

519
00:27:53.240 --> 00:27:55.880
<v Speaker 2>reserves and design of Genius stable coins I have very

520
00:27:55.960 --> 00:27:59.720
<v Speaker 2>high confidence in. And that forced the banking regulators to

521
00:27:59.759 --> 00:28:01.799
<v Speaker 2>get out of their box and start writing rules for

522
00:28:01.839 --> 00:28:03.880
<v Speaker 2>all these things, which means now the banks can do it.

523
00:28:04.480 --> 00:28:08.279
<v Speaker 2>So I don't think clarity is nearly as important because

524
00:28:08.400 --> 00:28:11.839
<v Speaker 2>Genius passed. If Genius had not passed, I think clarity

525
00:28:11.839 --> 00:28:15.000
<v Speaker 2>becomes vastly more important because he needs something to force

526
00:28:15.039 --> 00:28:18.119
<v Speaker 2>the regulators to get off zero. But we've already got that.

527
00:28:18.599 --> 00:28:20.559
<v Speaker 2>And by the way, there was a rally after like

528
00:28:20.720 --> 00:28:22.960
<v Speaker 2>Genius was passed and then Trump was elected, so I

529
00:28:22.960 --> 00:28:26.599
<v Speaker 2>think we got that rally. So clarity passing, I think

530
00:28:26.680 --> 00:28:29.359
<v Speaker 2>is a neutral right for the industry in the sense

531
00:28:29.359 --> 00:28:30.920
<v Speaker 2>of like, okay, now, what are you going to do

532
00:28:31.000 --> 00:28:34.519
<v Speaker 2>with it? Becomes the question because we already got off zero.

533
00:28:34.640 --> 00:28:36.799
<v Speaker 2>So now it's much more a question of is this

534
00:28:36.920 --> 00:28:41.079
<v Speaker 2>legislation effective or not? Because clarity is very complex in

535
00:28:41.200 --> 00:28:43.519
<v Speaker 2>financial terms, the answer to that will be checked back

536
00:28:43.559 --> 00:28:45.680
<v Speaker 2>in five years, which makes it hard for there to

537
00:28:45.680 --> 00:28:46.720
<v Speaker 2>be an immediate rally.

538
00:28:48.319 --> 00:28:51.240
<v Speaker 1>What are your thoughts on I think you had mentioned earlier,

539
00:28:51.319 --> 00:28:54.000
<v Speaker 1>but coinbase in certain firms pushing back on the current

540
00:28:54.079 --> 00:28:57.680
<v Speaker 1>version of the Market Structure Bill, and the banks are

541
00:28:57.720 --> 00:29:01.000
<v Speaker 1>trying to add the removal of stable coin yield to

542
00:29:01.039 --> 00:29:03.759
<v Speaker 1>be issued by these platforms in this bill.

543
00:29:03.839 --> 00:29:07.759
<v Speaker 2>I think it shows how little people understand about that

544
00:29:07.839 --> 00:29:12.039
<v Speaker 2>collision that I was just talking about, because allegedly, and

545
00:29:12.559 --> 00:29:15.680
<v Speaker 2>I say allegedly, but I've had some first and second

546
00:29:15.720 --> 00:29:18.480
<v Speaker 2>head sources like confirmed some of these details. For me,

547
00:29:19.119 --> 00:29:22.160
<v Speaker 2>it's the big banks pushing back against stable coin yield

548
00:29:22.359 --> 00:29:25.200
<v Speaker 2>So let me just say this, if you are at

549
00:29:25.200 --> 00:29:27.480
<v Speaker 2>one of the big banks, like in an operating group

550
00:29:27.480 --> 00:29:29.400
<v Speaker 2>and a trading group and a policy group, one of

551
00:29:29.400 --> 00:29:34.440
<v Speaker 2>the executives, this is incredibly stupid. You were some of

552
00:29:34.480 --> 00:29:38.839
<v Speaker 2>the biggest beneficiaries of yield peg stable coins in the

553
00:29:39.079 --> 00:29:42.079
<v Speaker 2>entire world, and you were shooting yourselves in the foot

554
00:29:42.200 --> 00:29:46.319
<v Speaker 2>and reloading. Now, why do I say that stable coins

555
00:29:46.319 --> 00:29:50.640
<v Speaker 2>are crypto euro dollars? Okay, something like eighty to ninety

556
00:29:50.680 --> 00:29:54.000
<v Speaker 2>five percent of holders of stable coins are non US persons,

557
00:29:54.680 --> 00:29:57.519
<v Speaker 2>all right, So the flow of funds to get there

558
00:29:57.680 --> 00:30:00.680
<v Speaker 2>is you had a local currency, you exchanged for something

559
00:30:00.720 --> 00:30:03.400
<v Speaker 2>on chain off in bitcoin, and then you exchanged that

560
00:30:03.720 --> 00:30:06.640
<v Speaker 2>for a US dollar stable coin. So this is reducing

561
00:30:06.680 --> 00:30:10.799
<v Speaker 2>the demand for foreign currencies and increasing the demand for dollars. Right.

562
00:30:11.319 --> 00:30:13.839
<v Speaker 2>It's also going to systematically take money out of the

563
00:30:13.880 --> 00:30:16.640
<v Speaker 2>euro dollar system that was held in deposits at foreign

564
00:30:16.720 --> 00:30:20.640
<v Speaker 2>banks or literally physical cash in some cases, and bring

565
00:30:20.680 --> 00:30:24.119
<v Speaker 2>it back formally into the US dollar system through a

566
00:30:24.480 --> 00:30:28.519
<v Speaker 2>US domiciled US dollar stable coin. Now, what do most

567
00:30:28.559 --> 00:30:31.279
<v Speaker 2>of the stable coins do with their reserves? Look under

568
00:30:31.319 --> 00:30:36.160
<v Speaker 2>the hood, bank deposits, T bills and overnight reverse repo

569
00:30:37.000 --> 00:30:39.160
<v Speaker 2>that last one is the key. And by the way,

570
00:30:39.240 --> 00:30:41.839
<v Speaker 2>go look at Black Rocks fund that they run for Circle.

571
00:30:41.880 --> 00:30:44.759
<v Speaker 2>There's a lot of that in there. Reverse repo is

572
00:30:44.799 --> 00:30:48.680
<v Speaker 2>funding for the large banks. So these guys are taking

573
00:30:48.720 --> 00:30:51.119
<v Speaker 2>money out of the Euro dollar market to lower your

574
00:30:51.160 --> 00:30:54.160
<v Speaker 2>cost of funding. And it's mainly non US users, and

575
00:30:54.200 --> 00:30:57.880
<v Speaker 2>you're freaking out about it because you have uninformed people

576
00:30:58.000 --> 00:30:59.839
<v Speaker 2>who think it's like sixty five year olds in the

577
00:30:59.920 --> 00:31:03.160
<v Speaker 2>US using this stuff, which it is not, and you

578
00:31:03.200 --> 00:31:05.720
<v Speaker 2>are I'm not kidding, Like, if you're Bank of America,

579
00:31:05.799 --> 00:31:09.440
<v Speaker 2>you're currently in DC arguing I want my funding costs

580
00:31:09.440 --> 00:31:11.440
<v Speaker 2>to be higher and I want to be uncompetitive in

581
00:31:11.559 --> 00:31:16.640
<v Speaker 2>non US dollar markets. That's insane, Like really, this is

582
00:31:16.680 --> 00:31:18.920
<v Speaker 2>what I mean by like the collision is not well

583
00:31:19.000 --> 00:31:23.400
<v Speaker 2>understood and people have the story totally backwards in some cases,

584
00:31:23.759 --> 00:31:24.519
<v Speaker 2>but is part of it.

585
00:31:24.559 --> 00:31:27.000
<v Speaker 1>Also, the banks are trying to maintain the amount of

586
00:31:27.000 --> 00:31:29.519
<v Speaker 1>revenue they're making those big bonuses, right, this is a

587
00:31:29.559 --> 00:31:32.200
<v Speaker 1>complete change. Instead of being competitive launching their own stable

588
00:31:32.240 --> 00:31:34.960
<v Speaker 1>quin and offering the yield or boosting the interest on

589
00:31:35.039 --> 00:31:38.359
<v Speaker 1>savings accounts basic ones, they're just like no, no, we

590
00:31:38.400 --> 00:31:40.079
<v Speaker 1>want to keep They parked their money at the fed

591
00:31:40.119 --> 00:31:42.079
<v Speaker 1>and whatever, and they keep the majority of that.

592
00:31:42.680 --> 00:31:48.079
<v Speaker 2>So one not quite right for how bags operate. But two,

593
00:31:48.200 --> 00:31:49.880
<v Speaker 2>to go back to what I just said, guys, if

594
00:31:49.880 --> 00:31:52.640
<v Speaker 2>you lower your cost of funding, your bonuses are even bigger.

595
00:31:53.400 --> 00:31:57.799
<v Speaker 2>Right again, banks do use repo markets, can use repo

596
00:31:57.880 --> 00:32:01.440
<v Speaker 2>markets to create capital for themselves, right or if they

597
00:32:01.440 --> 00:32:04.000
<v Speaker 2>think the repo market is really hot, they can provide funding.

598
00:32:04.079 --> 00:32:06.319
<v Speaker 2>Like banks can be on both sides of that trade.

599
00:32:06.720 --> 00:32:10.960
<v Speaker 2>But here's the key right now, US banks have dollar

600
00:32:11.039 --> 00:32:16.319
<v Speaker 2>deposits from US persons. Okay, that's mainly what's in there,

601
00:32:16.480 --> 00:32:20.359
<v Speaker 2>so to speak from a consumer franchise deposit perspective, all right,

602
00:32:20.839 --> 00:32:23.599
<v Speaker 2>And there's kind of two things going on here. Number

603
00:32:23.680 --> 00:32:25.680
<v Speaker 2>one is that the big banks have already been the

604
00:32:25.680 --> 00:32:27.880
<v Speaker 2>big winners in the system. If you look at banking

605
00:32:27.920 --> 00:32:30.799
<v Speaker 2>deposits in two thousand and eight to present, it is

606
00:32:30.839 --> 00:32:34.200
<v Speaker 2>a one way flow into the big four. Right. It

607
00:32:34.240 --> 00:32:37.119
<v Speaker 2>does not seem to matter that they're paying zero interest

608
00:32:37.240 --> 00:32:40.160
<v Speaker 2>because the money keeps going there anyways. And a lot

609
00:32:40.200 --> 00:32:42.559
<v Speaker 2>of that is that they provide all kinds of other services.

610
00:32:43.160 --> 00:32:44.960
<v Speaker 2>Like if you bank with b of A or Chase,

611
00:32:45.680 --> 00:32:47.519
<v Speaker 2>you have a bank account, you have a savings account,

612
00:32:47.559 --> 00:32:49.440
<v Speaker 2>you have a card, you have a brokerage account, you

613
00:32:49.440 --> 00:32:52.200
<v Speaker 2>have a mortgage. Right, Like the interest on your checking

614
00:32:52.200 --> 00:32:55.960
<v Speaker 2>account is probably not even close to your biggest consideration

615
00:32:56.039 --> 00:33:00.880
<v Speaker 2>in the relationship. The people that's been hurting are community banks,

616
00:33:01.200 --> 00:33:04.640
<v Speaker 2>who are now down to like low double digit percentage

617
00:33:04.680 --> 00:33:07.880
<v Speaker 2>of the system, right, And a lot of that is

618
00:33:07.920 --> 00:33:11.839
<v Speaker 2>because for community banks, every year your average customer gets

619
00:33:11.920 --> 00:33:14.519
<v Speaker 2>one year older, which is to say, young people are

620
00:33:14.559 --> 00:33:17.920
<v Speaker 2>not using them. Right. If you're your local community bank,

621
00:33:18.720 --> 00:33:21.359
<v Speaker 2>I have bad news, which is basically it is likely

622
00:33:21.400 --> 00:33:25.240
<v Speaker 2>that the fastest growing bank in your locale is so Fi.

623
00:33:25.559 --> 00:33:27.839
<v Speaker 1>Yeah, my wife recently went to so Far.

624
00:33:28.359 --> 00:33:30.480
<v Speaker 2>There you go. I have a good friend who works

625
00:33:30.519 --> 00:33:32.680
<v Speaker 2>at one of the big four banks who banks with

626
00:33:32.759 --> 00:33:37.720
<v Speaker 2>so Fi. Okay, point is, younger people want tech forward

627
00:33:37.759 --> 00:33:40.799
<v Speaker 2>platforms where they can bank online, and you could prove

628
00:33:40.839 --> 00:33:42.720
<v Speaker 2>that because there are some banks that have a great

629
00:33:42.720 --> 00:33:46.279
<v Speaker 2>core value prop and young people don't use them. Good example,

630
00:33:46.359 --> 00:33:49.839
<v Speaker 2>Apple Bank, not just to be clear, not affiliated with

631
00:33:49.880 --> 00:33:52.039
<v Speaker 2>Apple Computer. In fact, I think they've sued each other

632
00:33:52.039 --> 00:33:54.000
<v Speaker 2>in the past over the name, which is just funny.

633
00:33:54.440 --> 00:33:56.559
<v Speaker 2>But like Apple Bank is a bank here in New York.

634
00:33:57.079 --> 00:33:59.640
<v Speaker 2>An Apple Bank will pay you two percent on your

635
00:33:59.720 --> 00:34:03.400
<v Speaker 2>check account. But the problem is they are psychotic. And

636
00:34:03.440 --> 00:34:05.119
<v Speaker 2>what I mean by that is if you go look

637
00:34:05.119 --> 00:34:08.239
<v Speaker 2>at their technology, there's a separate app for your bank

638
00:34:08.280 --> 00:34:12.840
<v Speaker 2>account and your debit card. Whoever at Apple Bank did that, please,

639
00:34:12.920 --> 00:34:16.400
<v Speaker 2>for the love of God, stop right. Yeah, it's if

640
00:34:16.800 --> 00:34:18.719
<v Speaker 2>you're under the age of sixty five and you see

641
00:34:18.719 --> 00:34:21.440
<v Speaker 2>that happen, you're gonna throw your phone out the window, right, Like, no,

642
00:34:22.599 --> 00:34:24.719
<v Speaker 2>I looked at Apple Bank and said no because of that.

643
00:34:24.760 --> 00:34:27.559
<v Speaker 2>So just to be clear, here's one potential customer you lost,

644
00:34:29.199 --> 00:34:31.920
<v Speaker 2>and so like you got to fix those things. Stable

645
00:34:31.960 --> 00:34:34.719
<v Speaker 2>coins are a way out for them to fix their

646
00:34:34.760 --> 00:34:37.519
<v Speaker 2>technology problem and for the big banks because most of

647
00:34:37.519 --> 00:34:40.760
<v Speaker 2>the users are non US, it's a giant source of funding.

648
00:34:41.280 --> 00:34:42.920
<v Speaker 2>By the way, they can also do all the trading

649
00:34:42.960 --> 00:34:44.679
<v Speaker 2>for the bills and the refo, They could do the

650
00:34:44.679 --> 00:34:47.480
<v Speaker 2>custody of the assets. They can process pavements between the

651
00:34:47.480 --> 00:34:50.599
<v Speaker 2>stable coid and traditional banking rails, so you could capture

652
00:34:50.599 --> 00:34:54.239
<v Speaker 2>international wire business. Like, there are infinite reasons where you

653
00:34:54.280 --> 00:34:57.400
<v Speaker 2>could grow your bonuses by doing this. This is a

654
00:34:57.440 --> 00:35:00.639
<v Speaker 2>little bit like everybody in nineteen ninety eight, like, let's

655
00:35:00.679 --> 00:35:03.480
<v Speaker 2>ban internet commerce. Yeah, it's just not going to work.

656
00:35:03.920 --> 00:35:06.639
<v Speaker 2>If you stand in front of that train and shout stop,

657
00:35:07.079 --> 00:35:08.400
<v Speaker 2>you're just gonna get run over.

658
00:35:09.239 --> 00:35:11.800
<v Speaker 1>So, Austin, how do you see this resolving with the

659
00:35:12.960 --> 00:35:17.239
<v Speaker 1>sausage making process of the bill? Because the banks are lobbying, right,

660
00:35:18.199 --> 00:35:20.039
<v Speaker 1>how do you think they come to a resolution? Is

661
00:35:20.079 --> 00:35:23.480
<v Speaker 1>it they do get a ban or no, it's off

662
00:35:23.480 --> 00:35:23.880
<v Speaker 1>the table.

663
00:35:25.039 --> 00:35:26.960
<v Speaker 2>I actually think the answer is the bill's not going

664
00:35:27.039 --> 00:35:31.079
<v Speaker 2>to pass. Right. When you get into political fights between

665
00:35:31.159 --> 00:35:36.199
<v Speaker 2>large constituencies who have mutually oppositional views, they tend to

666
00:35:36.280 --> 00:35:40.000
<v Speaker 2>just not happen. So look at the Credit Card Choice Act,

667
00:35:40.079 --> 00:35:42.599
<v Speaker 2>which has been a huge fight between the pavements companies

668
00:35:42.599 --> 00:35:45.559
<v Speaker 2>and the retailers. It is just paralyzed all kinds of

669
00:35:45.559 --> 00:35:48.960
<v Speaker 2>financial legislation because the Senate does not want to get

670
00:35:49.000 --> 00:35:51.480
<v Speaker 2>up there and give the middle finger to Visa MasterCard

671
00:35:51.519 --> 00:35:54.000
<v Speaker 2>in the banks. But they also don't want to get

672
00:35:54.039 --> 00:35:57.079
<v Speaker 2>up there and give the middle finger to like Amazon, Walmart, Target,

673
00:35:57.079 --> 00:35:58.960
<v Speaker 2>et cetera. So what do they do. They just back

674
00:35:59.000 --> 00:36:01.599
<v Speaker 2>out of the room. Right, It's like the homer backing

675
00:36:01.599 --> 00:36:03.960
<v Speaker 2>into the hedge meme is what's going to go on here?

676
00:36:04.000 --> 00:36:06.239
<v Speaker 2>And so you're just not going to have anything happen.

677
00:36:07.039 --> 00:36:10.559
<v Speaker 1>Oh, Man Austin. I hope that's not the case. I

678
00:36:10.559 --> 00:36:14.119
<v Speaker 1>hope you're wrong, that they somehow get something through.

679
00:36:14.400 --> 00:36:17.360
<v Speaker 2>Well, I hope I'm wrong too, But again it's because

680
00:36:17.400 --> 00:36:21.079
<v Speaker 2>I think the American banking industry is lobbying against its

681
00:36:21.119 --> 00:36:24.079
<v Speaker 2>best interests because they don't understand how things work. Like

682
00:36:24.239 --> 00:36:27.000
<v Speaker 2>I would tell you, I think the big problem is

683
00:36:27.039 --> 00:36:30.199
<v Speaker 2>if you look at like the Bank Policy Institute, the ICBA,

684
00:36:30.360 --> 00:36:33.960
<v Speaker 2>which represents the community banks, they have leadership who are

685
00:36:34.079 --> 00:36:37.400
<v Speaker 2>not informed on these topics and not up to speed

686
00:36:37.440 --> 00:36:40.800
<v Speaker 2>on how things work like in actuality on the ground,

687
00:36:41.360 --> 00:36:44.000
<v Speaker 2>and therefore think this is a competitive threat to their

688
00:36:44.039 --> 00:36:47.280
<v Speaker 2>membership when actually it's a huge benefit to their membership.

689
00:36:47.639 --> 00:36:50.119
<v Speaker 2>This would be a little bit like Ford Motor Company

690
00:36:50.719 --> 00:36:54.519
<v Speaker 2>arguing for very restrictive rules on autos and letting horses

691
00:36:54.519 --> 00:36:58.920
<v Speaker 2>and buggies operate untaxable. Like they're just wrong. So I

692
00:36:58.960 --> 00:37:01.280
<v Speaker 2>do hope it gets fixed because they're damaging their own

693
00:37:01.280 --> 00:37:02.480
<v Speaker 2>industry with what they're doing.

694
00:37:03.039 --> 00:37:05.239
<v Speaker 1>Our question, do you think it's within a couple of

695
00:37:05.280 --> 00:37:08.480
<v Speaker 1>years they finally have that awakening aha moment like oh shit, yeah,

696
00:37:08.920 --> 00:37:09.639
<v Speaker 1>we need to do this.

697
00:37:10.400 --> 00:37:12.719
<v Speaker 2>I mean, certainly it's a matter of time because the

698
00:37:12.880 --> 00:37:15.480
<v Speaker 2>biggest divide on do you get this or not is

699
00:37:15.719 --> 00:37:18.840
<v Speaker 2>how old are you? And actually, in kind of a

700
00:37:18.840 --> 00:37:21.800
<v Speaker 2>weird way, which is to say, it's not like sixteen

701
00:37:21.840 --> 00:37:24.000
<v Speaker 2>year olds get it, and like sixty five year olds don't.

702
00:37:24.039 --> 00:37:26.840
<v Speaker 2>I would say, ironically, it's like sixteen year olds don't

703
00:37:26.840 --> 00:37:29.639
<v Speaker 2>get it because they don't know anything about how stuff works, right,

704
00:37:30.039 --> 00:37:32.880
<v Speaker 2>and sixty five year olds not all. There are some

705
00:37:32.920 --> 00:37:35.320
<v Speaker 2>who clearly get it, So I'm speaking in generalities here, right,

706
00:37:35.360 --> 00:37:37.920
<v Speaker 2>but sixty five year olds on average don't get it

707
00:37:37.960 --> 00:37:39.760
<v Speaker 2>because they didn't even grow up with the Internet. And

708
00:37:39.800 --> 00:37:41.960
<v Speaker 2>all of this is still a little bit weird. It

709
00:37:42.079 --> 00:37:44.800
<v Speaker 2>is the body of people between like call it thirty

710
00:37:44.880 --> 00:37:48.159
<v Speaker 2>to forty five point fifty somewhere in there, depending on

711
00:37:48.199 --> 00:37:50.559
<v Speaker 2>how tech savy you are, that get it because like

712
00:37:50.599 --> 00:37:52.679
<v Speaker 2>they've learned how things work, but they also grew up

713
00:37:52.679 --> 00:37:55.840
<v Speaker 2>with the tech. And so as that body of people

714
00:37:55.880 --> 00:37:59.320
<v Speaker 2>pushes further and further into management, I would expect this

715
00:37:59.400 --> 00:38:02.159
<v Speaker 2>problem to say of itself, the question is how many

716
00:38:02.199 --> 00:38:03.880
<v Speaker 2>dead bodies are there going to be on the road

717
00:38:03.920 --> 00:38:07.960
<v Speaker 2>in the process. And also do we fumble in the

718
00:38:08.079 --> 00:38:11.440
<v Speaker 2>United States the edge to a lot of international banks, right,

719
00:38:11.519 --> 00:38:14.320
<v Speaker 2>And so this is part of why I'm so agitated

720
00:38:14.360 --> 00:38:16.920
<v Speaker 2>about the lobbying in Washington is I'm an American. I

721
00:38:16.920 --> 00:38:20.000
<v Speaker 2>want America to win. Yes, right and right now many

722
00:38:20.039 --> 00:38:22.880
<v Speaker 2>of the banks furthest ahead here are non American because

723
00:38:22.880 --> 00:38:23.559
<v Speaker 2>of this stuff.

724
00:38:26.039 --> 00:38:29.599
<v Speaker 1>Do you think Coinbase and half of the industry, because

725
00:38:29.800 --> 00:38:32.440
<v Speaker 1>there's I've been seeing comments and opinions on both sides.

726
00:38:32.440 --> 00:38:34.480
<v Speaker 1>I'm saying, let's get this bill through even if it's

727
00:38:34.519 --> 00:38:37.000
<v Speaker 1>not perfect. Well, you know, folks at Coinbase and others

728
00:38:37.079 --> 00:38:39.239
<v Speaker 1>are like, no, no, no, no, no, we need to

729
00:38:39.239 --> 00:38:42.800
<v Speaker 1>have this. You kind of answered this earlier, but by

730
00:38:42.800 --> 00:38:44.679
<v Speaker 1>saying the bill may not pass. But do you think

731
00:38:45.199 --> 00:38:47.360
<v Speaker 1>that some folks capitulates that, you know, we got to

732
00:38:47.360 --> 00:38:50.239
<v Speaker 1>get something through because the midterm elections are coming up,

733
00:38:50.239 --> 00:38:51.960
<v Speaker 1>with worried another Genser may come in.

734
00:38:52.880 --> 00:38:55.000
<v Speaker 2>Well, I mean certainly that's not going to happen in midterms,

735
00:38:55.119 --> 00:39:00.840
<v Speaker 2>right right. Twenty twenty eight Item one, It's much harder

736
00:39:00.840 --> 00:39:03.079
<v Speaker 2>for a Guenstler to come in with genius on the books.

737
00:39:03.360 --> 00:39:06.239
<v Speaker 2>This is why that was important because, like just to

738
00:39:06.280 --> 00:39:09.480
<v Speaker 2>remind everybody, the way it works in the United States

739
00:39:09.480 --> 00:39:12.000
<v Speaker 2>with legislation is Congress writes down what it thinks the

740
00:39:12.079 --> 00:39:15.159
<v Speaker 2>law is, and while it can delegate certain amounts of

741
00:39:15.519 --> 00:39:19.320
<v Speaker 2>interpretive authority to agencies, it can't delegate the law to

742
00:39:19.440 --> 00:39:22.639
<v Speaker 2>the agencies. There's a thing called the non delegation doctrine.

743
00:39:22.960 --> 00:39:25.440
<v Speaker 2>Like Congress can't just pass a blank sheet of paper

744
00:39:25.519 --> 00:39:29.119
<v Speaker 2>that says, hey make rules for stable coins, like that's

745
00:39:29.360 --> 00:39:32.480
<v Speaker 2>not constitutional. They have to write down what they think

746
00:39:32.519 --> 00:39:36.079
<v Speaker 2>they mean. And over time, especially the current Supreme Court

747
00:39:36.159 --> 00:39:39.159
<v Speaker 2>has been getting more and more skeptical of agencies taking

748
00:39:39.159 --> 00:39:43.000
<v Speaker 2>aditionative themselves and kind of like, if I could summarize

749
00:39:43.000 --> 00:39:45.239
<v Speaker 2>the Roberts Court in one sentence, it would be it

750
00:39:45.320 --> 00:39:49.480
<v Speaker 2>means what it says, right, and so genius is already

751
00:39:49.480 --> 00:39:53.320
<v Speaker 2>written down. You could put somebody relatively like strong armed

752
00:39:53.360 --> 00:39:56.039
<v Speaker 2>in there, but they can't undo the fact that these

753
00:39:56.079 --> 00:39:59.960
<v Speaker 2>things can trade on blockchains. There's also some court to

754
00:40:00.000 --> 00:40:03.719
<v Speaker 2>decisions that because the Gainstler sec grossly overreached, they kind

755
00:40:03.719 --> 00:40:06.440
<v Speaker 2>of blew themselves up on like the ETF decisions. So

756
00:40:06.480 --> 00:40:10.199
<v Speaker 2>they're stuck with those two. I don't think another Gaenstler

757
00:40:10.280 --> 00:40:13.719
<v Speaker 2>sec is possible. Would you have somebody restrictive, Yes, but

758
00:40:13.800 --> 00:40:16.400
<v Speaker 2>I think Againstler sec would get run over in court

759
00:40:16.440 --> 00:40:19.840
<v Speaker 2>immediately and it would just be a disaster. Honestly, it might. Like,

760
00:40:21.079 --> 00:40:23.719
<v Speaker 2>what's the best way to say this. If I were

761
00:40:23.719 --> 00:40:26.920
<v Speaker 2>advising the US financial regulators, I would be super cautious

762
00:40:26.960 --> 00:40:30.159
<v Speaker 2>about taking anything to SCOTUS right now, because you do

763
00:40:30.239 --> 00:40:33.360
<v Speaker 2>a lot of things that are based on you thinking

764
00:40:33.400 --> 00:40:35.679
<v Speaker 2>you have a lot of agency powers that they might

765
00:40:35.800 --> 00:40:38.719
<v Speaker 2>disagree with. So this could be one of those not

766
00:40:38.760 --> 00:40:40.960
<v Speaker 2>only can you not do the crypto thing you were doing,

767
00:40:41.000 --> 00:40:43.519
<v Speaker 2>but like, here's eight other things you're doing in regular markets,

768
00:40:43.559 --> 00:40:47.079
<v Speaker 2>you also can't do those, right, I would be careful,

769
00:40:47.280 --> 00:40:50.480
<v Speaker 2>So I don't think that's going to happen. Now, do

770
00:40:50.519 --> 00:40:52.800
<v Speaker 2>I think it's good or bad that clarity doesn't pass?

771
00:40:54.039 --> 00:40:57.159
<v Speaker 2>That becomes a question of craftsmanship. Our best outcome is

772
00:40:57.159 --> 00:41:00.400
<v Speaker 2>a good clarity bill passes, Our worst out come as

773
00:41:00.440 --> 00:41:03.079
<v Speaker 2>a bad clarity bill passes. Because then, based on what

774
00:41:03.199 --> 00:41:05.039
<v Speaker 2>I just said, and that's why I did that whole

775
00:41:05.079 --> 00:41:08.000
<v Speaker 2>lead up, it means what it says. So if you

776
00:41:08.000 --> 00:41:11.960
<v Speaker 2>write something stupid, that's what it means. Yeah, right, So

777
00:41:11.960 --> 00:41:14.800
<v Speaker 2>you're better off not writing anything at all than writing

778
00:41:14.840 --> 00:41:17.760
<v Speaker 2>something dumb, But you're better off writing something good than

779
00:41:17.800 --> 00:41:21.199
<v Speaker 2>not writing anything at all. And if I were steel Manning,

780
00:41:21.199 --> 00:41:24.320
<v Speaker 2>coinbases position on this who you brought up. I think

781
00:41:24.360 --> 00:41:26.559
<v Speaker 2>their view was enough had gone from the good to

782
00:41:26.599 --> 00:41:29.039
<v Speaker 2>bad that they thought nothing was a better outcome. And

783
00:41:29.079 --> 00:41:32.079
<v Speaker 2>I want to be clear, you may agree or disagree

784
00:41:32.119 --> 00:41:35.000
<v Speaker 2>with them, but I think that was a genuinely held belief.

785
00:41:35.079 --> 00:41:37.239
<v Speaker 2>I don't think they were bluffing, right.

786
00:41:37.599 --> 00:41:40.920
<v Speaker 1>Yeah, no, absolutely, And I think we want to get

787
00:41:40.920 --> 00:41:44.559
<v Speaker 1>this right where we protect consumers, we allow innovation to flourish,

788
00:41:44.599 --> 00:41:48.719
<v Speaker 1>and you know, the crypto ecosystem grows. You mentioned earlier

789
00:41:48.840 --> 00:41:50.960
<v Speaker 1>that a lot of the token isition and these initiatives

790
00:41:51.000 --> 00:41:54.199
<v Speaker 1>from these financial institutions like banks are kind of fugazi.

791
00:41:54.280 --> 00:41:57.880
<v Speaker 1>It's maybe some marketing is f do do you think, though,

792
00:41:57.960 --> 00:41:58.960
<v Speaker 1>that changes over time?

793
00:41:59.360 --> 00:42:03.239
<v Speaker 2>I do think it changes over time. I do agree

794
00:42:03.239 --> 00:42:06.719
<v Speaker 2>with that characterization right now, because like, who's really doing

795
00:42:06.760 --> 00:42:10.760
<v Speaker 2>stuff at scale that's moving around you don't see it?

796
00:42:11.320 --> 00:42:14.840
<v Speaker 2>And also who's addressing what's the right way to say this,

797
00:42:15.039 --> 00:42:18.400
<v Speaker 2>like the core frictions in the system where the money

798
00:42:18.519 --> 00:42:21.360
<v Speaker 2>is to be made, not a lot of people. Yet.

799
00:42:21.639 --> 00:42:23.920
<v Speaker 2>In fact, maybe the people who've done the best job

800
00:42:23.960 --> 00:42:26.280
<v Speaker 2>of that for as many slings and arrows as they

801
00:42:26.320 --> 00:42:30.119
<v Speaker 2>catch is tether, right, because tether understood the problem. If

802
00:42:30.159 --> 00:42:33.440
<v Speaker 2>you are a non US citizen who is not rich

803
00:42:33.519 --> 00:42:36.440
<v Speaker 2>enough to have a Swiss bank account, how do you

804
00:42:36.480 --> 00:42:39.840
<v Speaker 2>securely get dollars in your own country? If you're the

805
00:42:40.000 --> 00:42:45.480
<v Speaker 2>average Argentinian or Venezuelan or Nigerian or Indonesian and you

806
00:42:45.599 --> 00:42:49.199
<v Speaker 2>had to pay an egregious FX rate to get dollars

807
00:42:49.239 --> 00:42:51.519
<v Speaker 2>in your local bank, that they'll just steal from you

808
00:42:51.559 --> 00:42:54.360
<v Speaker 2>if they don't like you, or you had to hold

809
00:42:54.639 --> 00:42:58.239
<v Speaker 2>physical dollar bills and hope they don't get stolen or destroyed.

810
00:42:59.320 --> 00:43:01.840
<v Speaker 2>You now have the option of a let's go back

811
00:43:01.840 --> 00:43:05.800
<v Speaker 2>to what we were saying earlier, open access, credibly neutral

812
00:43:05.880 --> 00:43:08.239
<v Speaker 2>ledger where you can keep your dollar bills. You could

813
00:43:08.280 --> 00:43:12.920
<v Speaker 2>think of like US dollar stable coins as globally people

814
00:43:12.960 --> 00:43:16.559
<v Speaker 2>being able to opt into blockchain technology and US rule

815
00:43:16.599 --> 00:43:19.559
<v Speaker 2>of law, and that's a huge expansion of human rights.

816
00:43:20.159 --> 00:43:23.159
<v Speaker 2>So if you saw like a JP Morgan right, or

817
00:43:23.199 --> 00:43:25.840
<v Speaker 2>a Bank of America, like if Bank of America launched

818
00:43:25.920 --> 00:43:28.960
<v Speaker 2>America Dollar like the Bank of America stable coin and

819
00:43:29.119 --> 00:43:32.039
<v Speaker 2>shotgun to that into the world, that is a real

820
00:43:32.280 --> 00:43:34.400
<v Speaker 2>like effort. And by the way, BFA, if you're listing,

821
00:43:34.480 --> 00:43:37.440
<v Speaker 2>you probably should do that. But right like that would

822
00:43:37.480 --> 00:43:39.360
<v Speaker 2>be big, and that would be hundreds of billions to

823
00:43:39.400 --> 00:43:42.119
<v Speaker 2>trillions of dollars because they will have way more trust

824
00:43:42.559 --> 00:43:44.360
<v Speaker 2>than the current crypto companies who are in there in

825
00:43:44.440 --> 00:43:47.719
<v Speaker 2>much better rails underneath it. But we're not there yet.

826
00:43:47.719 --> 00:43:50.599
<v Speaker 2>That's why I say all of this. What's the right

827
00:43:50.639 --> 00:43:53.239
<v Speaker 2>way to analogize this? We're like in the early to

828
00:43:53.280 --> 00:43:58.039
<v Speaker 2>mid nineteen nineties in tech terms, right like, still sounds

829
00:43:58.039 --> 00:44:00.679
<v Speaker 2>like an electronic goat is being tortured when you get

830
00:44:00.679 --> 00:44:03.639
<v Speaker 2>on the internet. We've got all these spare coasters, Sorry,

831
00:44:03.719 --> 00:44:06.519
<v Speaker 2>I mean CDs for you young people, right but AOL

832
00:44:06.639 --> 00:44:09.280
<v Speaker 2>keeps mailing to people and I was alive for that,

833
00:44:09.360 --> 00:44:12.599
<v Speaker 2>so I still remember this. But we're not yet. There's

834
00:44:12.599 --> 00:44:17.159
<v Speaker 2>no Facebook, there's no Google, there's no tiptop, right like,

835
00:44:17.519 --> 00:44:20.880
<v Speaker 2>it doesn't just work right like. Stuff is still janky.

836
00:44:21.159 --> 00:44:23.960
<v Speaker 2>And you'll know we're getting there when people start building

837
00:44:24.000 --> 00:44:26.320
<v Speaker 2>at scale the stuff that just works.

838
00:44:27.440 --> 00:44:30.360
<v Speaker 1>The US in it's twenty thirty five. Given everything we've

839
00:44:30.400 --> 00:44:33.719
<v Speaker 1>just talked about, where do you see these markets? We

840
00:44:33.719 --> 00:44:36.360
<v Speaker 1>talked about the convergence and it being one market. Are

841
00:44:36.400 --> 00:44:39.480
<v Speaker 1>we seeing all assets on the blockchain? Are stable coin's

842
00:44:39.480 --> 00:44:43.119
<v Speaker 1>powering payments? Are people using more tokens from brands. Companies

843
00:44:43.159 --> 00:44:45.800
<v Speaker 1>like Amazon have tokens. I can go spend it different places,

844
00:44:45.800 --> 00:44:47.840
<v Speaker 1>I could stake it, or all these things part of

845
00:44:47.840 --> 00:44:48.840
<v Speaker 1>the ecosystem.

846
00:44:49.480 --> 00:44:51.079
<v Speaker 2>So one, I don't know if there will be one

847
00:44:51.159 --> 00:44:55.920
<v Speaker 2>blockchain because transaction preferences are not monolithic. The amount of

848
00:44:55.960 --> 00:44:58.480
<v Speaker 2>security I need to buy like a five dollars coffee

849
00:44:58.519 --> 00:45:00.639
<v Speaker 2>is very different than the amount of secu I need

850
00:45:00.679 --> 00:45:04.039
<v Speaker 2>to clear like a five hundred billion dollar repo trade. Okay,

851
00:45:04.480 --> 00:45:07.960
<v Speaker 2>so you may want different blockchain architectures, but I think

852
00:45:08.079 --> 00:45:09.920
<v Speaker 2>they will be able to talk to each other through

853
00:45:09.920 --> 00:45:12.320
<v Speaker 2>the money object, which is stable coins, Like it will

854
00:45:12.320 --> 00:45:15.440
<v Speaker 2>be faster to move between those kinds of things with

855
00:45:15.519 --> 00:45:17.960
<v Speaker 2>stable coins. But I also don't think we're going to

856
00:45:18.000 --> 00:45:20.639
<v Speaker 2>have like five hundred blockchains, like I think there will

857
00:45:20.639 --> 00:45:24.880
<v Speaker 2>be some consolidation. I do think many assets will be

858
00:45:24.920 --> 00:45:27.840
<v Speaker 2>on blockchains, and more importantly, kind of the call it

859
00:45:28.199 --> 00:45:32.800
<v Speaker 2>unexplored quadrant is I think a lot of information will

860
00:45:32.800 --> 00:45:37.280
<v Speaker 2>be on blockchains, right, that is to say, like driver's licenses,

861
00:45:37.480 --> 00:45:40.800
<v Speaker 2>housing title and leans. All of these things are going

862
00:45:40.840 --> 00:45:43.880
<v Speaker 2>to move off of paper ledgers and fragmented stuff and

863
00:45:44.360 --> 00:45:46.440
<v Speaker 2>out of the shadows where quite frankly, there's a lot

864
00:45:46.480 --> 00:45:49.800
<v Speaker 2>of corruption and an efficiency and on chain over time,

865
00:45:49.840 --> 00:45:52.559
<v Speaker 2>the gravitational pull is too strong and it doesn't happen

866
00:45:52.599 --> 00:45:55.440
<v Speaker 2>all at once. It's debris being sucked in, right, But

867
00:45:55.559 --> 00:45:58.440
<v Speaker 2>it will be happening by twenty thirty five, I would

868
00:45:58.480 --> 00:46:01.119
<v Speaker 2>expect to see at least some of that right. At

869
00:46:01.199 --> 00:46:04.679
<v Speaker 2>least one US state will likely have figured out, wait

870
00:46:04.719 --> 00:46:08.039
<v Speaker 2>a minute, if we just put everything we're doing on

871
00:46:08.119 --> 00:46:12.800
<v Speaker 2>a blockchain from an information and like money standpoint, that's

872
00:46:12.840 --> 00:46:15.679
<v Speaker 2>probably better and more secure than our current systems that

873
00:46:15.719 --> 00:46:18.880
<v Speaker 2>get hacked and break constantly, and it'll be very good

874
00:46:18.960 --> 00:46:22.280
<v Speaker 2>for transparency and corruption. It's probably a small state that

875
00:46:22.360 --> 00:46:25.239
<v Speaker 2>already hates the government, so like keep your eyes on,

876
00:46:25.360 --> 00:46:28.519
<v Speaker 2>like Wyoming or Idaho or something like that. But the

877
00:46:28.559 --> 00:46:31.159
<v Speaker 2>problem is when they do it in works, it starts

878
00:46:31.199 --> 00:46:36.159
<v Speaker 2>becoming pressure for everybody else to do it right. Right two.

879
00:46:37.400 --> 00:46:39.800
<v Speaker 2>I think by that point we're going to have rules

880
00:46:39.800 --> 00:46:42.320
<v Speaker 2>and a lot of jurisdictions globally about how you do

881
00:46:42.400 --> 00:46:44.960
<v Speaker 2>this stuff, and those rules will at least have become

882
00:46:45.039 --> 00:46:49.559
<v Speaker 2>somewhat technologically savvy. Because back to the age thing, however

883
00:46:49.639 --> 00:46:52.679
<v Speaker 2>old you are right now, ad ten, that's how old

884
00:46:52.719 --> 00:46:54.760
<v Speaker 2>you are then, which means a lot of people who

885
00:46:54.760 --> 00:46:58.239
<v Speaker 2>are currently like junior to very early mid career are

886
00:46:58.239 --> 00:47:00.599
<v Speaker 2>now the senior people at these regulars and have a

887
00:47:00.679 --> 00:47:03.480
<v Speaker 2>much better handle on how this stuff works. So the

888
00:47:03.559 --> 00:47:06.679
<v Speaker 2>changing of the guard basically to be blunt the boomers

889
00:47:06.719 --> 00:47:10.400
<v Speaker 2>aging out, I think will change things significantly from a

890
00:47:10.440 --> 00:47:15.039
<v Speaker 2>technological adoption standpoint, because from gen X onwards nobody wants

891
00:47:15.079 --> 00:47:17.719
<v Speaker 2>to be using paper banking in person. Right, The big

892
00:47:17.719 --> 00:47:24.400
<v Speaker 2>divide is between gen X and the boomers. Three, I

893
00:47:24.440 --> 00:47:27.679
<v Speaker 2>think a lot of small currencies will be under extremely

894
00:47:27.760 --> 00:47:30.840
<v Speaker 2>severe pressure or collapsing at that point because of dollar

895
00:47:30.920 --> 00:47:34.920
<v Speaker 2>stable coins. Right. Again, if you live in a third

896
00:47:34.920 --> 00:47:38.559
<v Speaker 2>world country with a corrupt government and an abusive banking

897
00:47:38.599 --> 00:47:41.199
<v Speaker 2>system and you could just use a dollar stable coin,

898
00:47:42.320 --> 00:47:43.719
<v Speaker 2>it's going to be very hard.

899
00:47:43.840 --> 00:47:43.960
<v Speaker 1>Like.

900
00:47:44.039 --> 00:47:46.840
<v Speaker 2>One of the things stable coins do right, and thus

901
00:47:46.840 --> 00:47:50.760
<v Speaker 2>blockchain technology does, is makes the cost of locking people

902
00:47:50.760 --> 00:47:54.920
<v Speaker 2>in your system go from low to very high, because

903
00:47:54.960 --> 00:47:57.079
<v Speaker 2>before you could lock them in by controlling the choke

904
00:47:57.119 --> 00:48:00.800
<v Speaker 2>point at banks. Now the choke point is the Internet.

905
00:48:01.480 --> 00:48:03.480
<v Speaker 2>Right when I was at Paso's the only country in

906
00:48:03.519 --> 00:48:05.960
<v Speaker 2>the world where I was confident the average citizen didn't

907
00:48:06.000 --> 00:48:09.400
<v Speaker 2>own any of our stable coins was North Korea. You

908
00:48:09.480 --> 00:48:12.679
<v Speaker 2>have to turn the internet off, right, so capital controls

909
00:48:12.679 --> 00:48:14.880
<v Speaker 2>are going to get broken, which means that a lot

910
00:48:14.920 --> 00:48:16.719
<v Speaker 2>of these places people are just going to defect to

911
00:48:16.760 --> 00:48:19.840
<v Speaker 2>the dollar. So I think like over time US dollar

912
00:48:19.880 --> 00:48:22.800
<v Speaker 2>stable coins are going to dollarize not just informally but

913
00:48:22.840 --> 00:48:25.079
<v Speaker 2>maybe formally huge parts of the world.

914
00:48:25.639 --> 00:48:29.000
<v Speaker 1>And it feels like that's part of a changing world order.

915
00:48:29.039 --> 00:48:31.079
<v Speaker 1>I know that's like the cliche thing, and people get

916
00:48:31.119 --> 00:48:34.360
<v Speaker 1>conspiratal about it and so forth, But just this naturally

917
00:48:34.400 --> 00:48:36.760
<v Speaker 1>happens maybe every one hundred years, I don't know, with

918
00:48:36.880 --> 00:48:40.599
<v Speaker 1>industrial revolutions and technology and changing of the guard, that

919
00:48:41.679 --> 00:48:44.599
<v Speaker 1>shifting a world powers and consolidation. It seems to be

920
00:48:44.719 --> 00:48:46.880
<v Speaker 1>like something that's happening, just like what the United States

921
00:48:46.920 --> 00:48:50.039
<v Speaker 1>is doing with Venezuela Greenland. It seems there's a big

922
00:48:50.039 --> 00:48:50.719
<v Speaker 1>shift happening.

923
00:48:51.119 --> 00:48:52.840
<v Speaker 2>Yeah, And I would say I think people kind of

924
00:48:52.880 --> 00:48:55.960
<v Speaker 2>have it wrong thinking about like cycles based on time

925
00:48:56.360 --> 00:48:59.400
<v Speaker 2>that doesn't hold up historically, right, Like anybody who thinks

926
00:48:59.400 --> 00:49:02.880
<v Speaker 2>that not does. My answer to you is expand your sample, right,

927
00:49:02.920 --> 00:49:07.400
<v Speaker 2>like zoom out right, Like you've had dynastic cycles in

928
00:49:07.480 --> 00:49:09.920
<v Speaker 2>China that were much longer than one hundred years. The

929
00:49:10.039 --> 00:49:13.239
<v Speaker 2>Roman Empire was not one hundred year cycle type thing, right, Like,

930
00:49:13.400 --> 00:49:17.079
<v Speaker 2>zoom out, right, anybody's like this happened three times in

931
00:49:17.079 --> 00:49:18.679
<v Speaker 2>a row. I'm like, I can flip a coin and

932
00:49:18.719 --> 00:49:20.280
<v Speaker 2>get heads three times in a row, and it's not

933
00:49:20.360 --> 00:49:24.159
<v Speaker 2>totally improbable, like too small, so zoom out. What it

934
00:49:24.280 --> 00:49:28.599
<v Speaker 2>really is is transformational things in the world. And if

935
00:49:28.639 --> 00:49:32.280
<v Speaker 2>you look at things that tend to be really disruptive

936
00:49:32.320 --> 00:49:37.800
<v Speaker 2>transformational technologies, it's usually new ways of harnessing energy, right,

937
00:49:37.880 --> 00:49:40.000
<v Speaker 2>So like, for instance, here's a big one that was

938
00:49:40.039 --> 00:49:42.920
<v Speaker 2>globally transformative that like the people who talk about these

939
00:49:43.000 --> 00:49:45.639
<v Speaker 2>cycles ignore all the time, which is just deep water

940
00:49:45.719 --> 00:49:49.519
<v Speaker 2>sailing ships. Right once it went from I can only

941
00:49:49.559 --> 00:49:51.760
<v Speaker 2>sail on rivers or take a horse to I have

942
00:49:51.840 --> 00:49:54.360
<v Speaker 2>a giant ship that can move a ton of cargo

943
00:49:54.440 --> 00:49:59.519
<v Speaker 2>with wind across an entire ocean, world changing. Like if

944
00:49:59.559 --> 00:50:03.679
<v Speaker 2>you want to know why the Spanish Empire existed, it

945
00:50:03.719 --> 00:50:06.039
<v Speaker 2>was deep water sailing. They had the ports, they had

946
00:50:06.039 --> 00:50:08.559
<v Speaker 2>the boats, they could get around faster and more efficiently

947
00:50:08.599 --> 00:50:12.400
<v Speaker 2>than everybody else. Huge win, And that's harnessing a form

948
00:50:12.440 --> 00:50:17.199
<v Speaker 2>of energy. The Industrial Revolution, steam coal, all of those things, right,

949
00:50:17.280 --> 00:50:20.159
<v Speaker 2>like similar so that's one. The other one is new

950
00:50:20.199 --> 00:50:23.719
<v Speaker 2>forms of communication, right, Like obviously, probably the biggest invention

951
00:50:23.760 --> 00:50:26.960
<v Speaker 2>in the history of humanity is writing stuff down right,

952
00:50:27.000 --> 00:50:30.519
<v Speaker 2>because suddenly generational memory becomes infinite or at least as

953
00:50:30.559 --> 00:50:32.639
<v Speaker 2>long as you can preserve your records for as opposed

954
00:50:32.679 --> 00:50:36.800
<v Speaker 2>to Hey, a guy told me, right, And so those

955
00:50:36.840 --> 00:50:40.360
<v Speaker 2>sorts of communication things are big changes. Well, guys, the

956
00:50:40.400 --> 00:50:44.440
<v Speaker 2>internet only hit in the nineties. We are in one

957
00:50:44.480 --> 00:50:49.559
<v Speaker 2>of those periods, like, hey, pure to pure communication instantly globally.

958
00:50:49.760 --> 00:50:53.199
<v Speaker 2>That was not a thing in nineteen seventy, not a thing.

959
00:50:53.800 --> 00:50:56.960
<v Speaker 2>Now it is super a thing. Like Elon Musk is

960
00:50:57.000 --> 00:50:59.719
<v Speaker 2>trying to make that a thing globally with starlink right now,

961
00:50:59.760 --> 00:51:01.679
<v Speaker 2>even if people don't want it, He's like, no, you're

962
00:51:01.719 --> 00:51:05.159
<v Speaker 2>getting it. And so I think that's the thing that's

963
00:51:05.199 --> 00:51:07.639
<v Speaker 2>causing this disruption, because if you look at a lot

964
00:51:07.639 --> 00:51:11.000
<v Speaker 2>of what's causing the change in global order. In the seventies,

965
00:51:11.039 --> 00:51:13.199
<v Speaker 2>you got your news from a newspaper. You probably spent

966
00:51:13.360 --> 00:51:15.320
<v Speaker 2>fifteen to thirty minutes a day on it. You didn't

967
00:51:15.320 --> 00:51:18.840
<v Speaker 2>think deeply about this. Now I can see live as

968
00:51:18.880 --> 00:51:22.880
<v Speaker 2>an American French people talking mad shit about me online

969
00:51:23.320 --> 00:51:25.880
<v Speaker 2>while at the same time, they have no economy and

970
00:51:25.880 --> 00:51:28.039
<v Speaker 2>they're not paying for NATO. And this is why the

971
00:51:28.119 --> 00:51:30.119
<v Speaker 2>right gets all agitated. Right, And by the way, the

972
00:51:30.119 --> 00:51:32.400
<v Speaker 2>reverse happens to like the French are very angry with

973
00:51:32.440 --> 00:51:35.000
<v Speaker 2>America now in a way they probably weren't before, right,

974
00:51:35.039 --> 00:51:38.280
<v Speaker 2>So like that's just one of many examples. But like,

975
00:51:38.320 --> 00:51:42.360
<v Speaker 2>we're not gonna understand how that like shakes out until

976
00:51:42.360 --> 00:51:45.320
<v Speaker 2>we see it happen. So I think the reason things

977
00:51:45.320 --> 00:51:48.239
<v Speaker 2>seem so unstable and why the world is like reordering

978
00:51:48.800 --> 00:51:51.599
<v Speaker 2>is we've had one of those transformational things hit, which

979
00:51:51.639 --> 00:51:52.519
<v Speaker 2>was the Internet.

980
00:51:52.760 --> 00:51:56.760
<v Speaker 1>Oh absolutely, And to your point, like we're in another

981
00:51:56.800 --> 00:52:01.960
<v Speaker 1>industrial revolution. You have all these different technologies of the internet, crypto, AI, robotics,

982
00:52:02.119 --> 00:52:06.440
<v Speaker 1>electric cars. I'm so curious to know what the future

983
00:52:06.519 --> 00:52:08.639
<v Speaker 1>looks like with all these things and how it changes

984
00:52:09.199 --> 00:52:12.079
<v Speaker 1>and even solves some of the legacy issues, right, And

985
00:52:12.159 --> 00:52:15.000
<v Speaker 1>maybe the debasement of currency does it help solve that?

986
00:52:16.360 --> 00:52:16.960
<v Speaker 2>Which is it.

987
00:52:16.960 --> 00:52:20.559
<v Speaker 1>Seems to be what helps collapse the empires and much more.

988
00:52:21.360 --> 00:52:24.320
<v Speaker 2>Yeah, so, to quote one of the greatest American philosophers,

989
00:52:24.360 --> 00:52:27.840
<v Speaker 2>predictions are hard to make, especially about the future. But

990
00:52:29.079 --> 00:52:32.599
<v Speaker 2>the debasement thing, I think is really misunderstood. And what

991
00:52:32.639 --> 00:52:37.679
<v Speaker 2>I mean by that is this money supply being static

992
00:52:38.440 --> 00:52:41.400
<v Speaker 2>one is just not a thing historically because even if

993
00:52:41.440 --> 00:52:44.039
<v Speaker 2>you're like, oh, we used gold, it's like yeah, but guys,

994
00:52:44.199 --> 00:52:47.559
<v Speaker 2>new gold does show up sometimes. There have actually been

995
00:52:47.599 --> 00:52:51.800
<v Speaker 2>some really destabilizing events and commodities markets. Like anybody who

996
00:52:51.800 --> 00:52:53.800
<v Speaker 2>wants to go to a gold standard, you're in great

997
00:52:53.880 --> 00:52:57.760
<v Speaker 2>shape until SpaceX lassos an asteroid and they have more

998
00:52:57.800 --> 00:53:00.639
<v Speaker 2>than all the gold on earth. Again, right, be careful

999
00:53:00.639 --> 00:53:04.360
<v Speaker 2>what you wish for. But two and like this is

1000
00:53:04.400 --> 00:53:06.519
<v Speaker 2>an interesting thing that came out of two thousand and eight,

1001
00:53:06.559 --> 00:53:09.079
<v Speaker 2>and like, actually bernanke right place, right time for a

1002
00:53:09.079 --> 00:53:12.159
<v Speaker 2>guy who had studied this. Fixed money supply can be

1003
00:53:12.199 --> 00:53:14.880
<v Speaker 2>a real problem in a downturn. And what I mean

1004
00:53:14.920 --> 00:53:18.400
<v Speaker 2>by that is when demand for money is falling and

1005
00:53:18.400 --> 00:53:21.119
<v Speaker 2>you're having deflation, you should hold onto currency. And when

1006
00:53:21.119 --> 00:53:23.239
<v Speaker 2>you hold on to currency, there's less buying of goods,

1007
00:53:23.239 --> 00:53:25.760
<v Speaker 2>which causes the economy to slow down, which causes deflation.

1008
00:53:26.320 --> 00:53:29.000
<v Speaker 2>Like that's the death spiral problem. And just like there

1009
00:53:29.000 --> 00:53:32.639
<v Speaker 2>are hyperinflationary spirals, there could be hyper deflationary spirals and

1010
00:53:32.679 --> 00:53:36.599
<v Speaker 2>both of those kill currency. So the problem I think

1011
00:53:36.679 --> 00:53:41.559
<v Speaker 2>is not inflation or deflation, which is what people fixate on.

1012
00:53:41.840 --> 00:53:46.480
<v Speaker 2>It's more magnitudes. Lots of inflation is bad and lots

1013
00:53:46.480 --> 00:53:50.320
<v Speaker 2>of deflation is also bad. Right, And what you really

1014
00:53:50.360 --> 00:53:53.480
<v Speaker 2>want is a way to keep it bounded between those

1015
00:53:53.519 --> 00:53:55.920
<v Speaker 2>two things so that you're not having wild swings in

1016
00:53:56.000 --> 00:54:00.639
<v Speaker 2>either direction. And a fixed money supply doesn't do that. Now,

1017
00:54:01.519 --> 00:54:04.920
<v Speaker 2>could you have a programmatic money supply that follows rules,

1018
00:54:05.000 --> 00:54:08.039
<v Speaker 2>so not human subjective but literally, like if inflation's high,

1019
00:54:08.039 --> 00:54:12.440
<v Speaker 2>there's less, and if inflation's low, there's more. Yeah, that

1020
00:54:12.519 --> 00:54:15.199
<v Speaker 2>might work, but that's not bitcoin. But again, this is

1021
00:54:15.199 --> 00:54:17.320
<v Speaker 2>what I mean, Like we're going into the future, Like

1022
00:54:17.400 --> 00:54:20.800
<v Speaker 2>tell me who in nineteen ninety four was like TikTok. Yeah, right,

1023
00:54:20.880 --> 00:54:21.800
<v Speaker 2>Like we just don't know.

1024
00:54:21.880 --> 00:54:24.360
<v Speaker 1>We don't know. But maybe to your point, a blockchain

1025
00:54:24.360 --> 00:54:27.280
<v Speaker 1>and AI could help do that where human error. Humans

1026
00:54:27.280 --> 00:54:29.320
<v Speaker 1>have to sleep and eat and all that. But it's

1027
00:54:29.360 --> 00:54:32.159
<v Speaker 1>there saying hey, Austin, I think you need to do

1028
00:54:32.199 --> 00:54:33.639
<v Speaker 1>this suggesting ideas.

1029
00:54:33.880 --> 00:54:36.280
<v Speaker 2>AI makes plenty of errors too, like I don't know

1030
00:54:36.360 --> 00:54:37.239
<v Speaker 2>that it's an assistant.

1031
00:54:37.360 --> 00:54:39.360
<v Speaker 1>Yeah, now that it's in control like skynet or something.

1032
00:54:39.440 --> 00:54:43.800
<v Speaker 2>Yeah, I'll say this, I'm skeptical about that. Part being better.

1033
00:54:43.840 --> 00:54:47.360
<v Speaker 2>What I'm not skeptical about, though, is the coordination and

1034
00:54:47.440 --> 00:54:52.239
<v Speaker 2>ability to create programmatic, like credibly neutral money that I'm

1035
00:54:52.239 --> 00:54:56.079
<v Speaker 2>more optimistic con so like from a monetary perspective, AI

1036
00:54:56.159 --> 00:54:58.719
<v Speaker 2>is good for many things. I have doubts about the

1037
00:54:58.719 --> 00:55:01.559
<v Speaker 2>money side, though. I think we'll be more useful on

1038
00:55:01.599 --> 00:55:03.840
<v Speaker 2>the money side crypto will be less useful on some

1039
00:55:03.960 --> 00:55:05.800
<v Speaker 2>other things that AI is much better at.

1040
00:55:05.880 --> 00:55:10.840
<v Speaker 1>So Austin Tether launched their US base stable coin this

1041
00:55:10.880 --> 00:55:14.400
<v Speaker 1>week USAT. So distable coin race is heating up after

1042
00:55:14.440 --> 00:55:15.280
<v Speaker 1>Genia's pass.

1043
00:55:15.519 --> 00:55:16.400
<v Speaker 2>What do you think the.

1044
00:55:16.320 --> 00:55:18.280
<v Speaker 1>Stable coin market may hit one trillion?

1045
00:55:20.000 --> 00:55:24.679
<v Speaker 2>So a couple of points on that. Resting balances versus

1046
00:55:24.719 --> 00:55:28.400
<v Speaker 2>transaction volumes are two different things in markets. Most of

1047
00:55:28.440 --> 00:55:32.760
<v Speaker 2>the resting balances and stable coins are people converting euro

1048
00:55:32.840 --> 00:55:38.400
<v Speaker 2>dollar like holdings into literal dollars or trading collateral. I

1049
00:55:38.440 --> 00:55:42.079
<v Speaker 2>think that trend continues, so I think we're probably going

1050
00:55:42.159 --> 00:55:44.079
<v Speaker 2>to get to a trillion in stable coins in the

1051
00:55:44.119 --> 00:55:47.039
<v Speaker 2>next like five to ten years. I don't think that's

1052
00:55:47.039 --> 00:55:49.840
<v Speaker 2>a shocking opinion. We're already at like three hundred and

1053
00:55:49.840 --> 00:55:52.119
<v Speaker 2>ten billions, so if it happens in two years, within

1054
00:55:52.119 --> 00:55:54.519
<v Speaker 2>the realm of possibility, but I would like make a

1055
00:55:54.559 --> 00:55:56.519
<v Speaker 2>market at five to ten right now, and there's a

1056
00:55:56.519 --> 00:56:00.840
<v Speaker 2>lot of volatility on that two and I'm really watching

1057
00:56:00.840 --> 00:56:03.880
<v Speaker 2>for is the transaction volumes on this right, So it's

1058
00:56:03.960 --> 00:56:06.599
<v Speaker 2>less about just the resting balances. But when does this

1059
00:56:06.639 --> 00:56:11.239
<v Speaker 2>start replacing like international wires, right, like consumer payments? When's

1060
00:56:11.280 --> 00:56:16.159
<v Speaker 2>it use to settle trades? That will really start accelerating volumes.

1061
00:56:16.199 --> 00:56:18.400
<v Speaker 2>And while you know you may not end up with

1062
00:56:18.480 --> 00:56:21.960
<v Speaker 2>like tens of tens of trillions, there's only like, you know,

1063
00:56:22.039 --> 00:56:25.079
<v Speaker 2>twenty trillion ish bank deposits, right, Like, it's not that big.

1064
00:56:27.079 --> 00:56:29.320
<v Speaker 2>You're going to see a lot more transaction volume. Because

1065
00:56:29.320 --> 00:56:31.599
<v Speaker 2>I'm going to give a number that is so large

1066
00:56:31.679 --> 00:56:34.519
<v Speaker 2>it sounds like my daughter made it up. But there

1067
00:56:34.559 --> 00:56:40.000
<v Speaker 2>are one point twenty five quadrillion dollars annually of wire business.

1068
00:56:40.760 --> 00:56:43.880
<v Speaker 2>So that's why that's what I'm really watching. Like, the

1069
00:56:43.960 --> 00:56:47.480
<v Speaker 2>volumes there are so large, the numbers are almost like fantastical,

1070
00:56:48.159 --> 00:56:52.000
<v Speaker 2>and that's when that starts getting breached by stable coins.

1071
00:56:52.039 --> 00:56:53.400
<v Speaker 2>That's when you know their mainstream.

1072
00:56:53.719 --> 00:56:57.599
<v Speaker 1>Oh absolutely, what's new with zero knowledge group?

1073
00:56:58.559 --> 00:57:03.280
<v Speaker 2>Oh boy, it's okay, So genius past institutions are coming.

1074
00:57:03.880 --> 00:57:06.280
<v Speaker 2>I think what we're finding in the world right now. Well,

1075
00:57:06.320 --> 00:57:08.239
<v Speaker 2>one what I'm finding is like I probably need to

1076
00:57:08.280 --> 00:57:10.920
<v Speaker 2>clone myself three times or hire some people because we

1077
00:57:10.960 --> 00:57:14.039
<v Speaker 2>have a ton of business coming in. But it's people

1078
00:57:14.079 --> 00:57:17.079
<v Speaker 2>in the traditional financial world are starting to take this seriously,

1079
00:57:17.119 --> 00:57:19.039
<v Speaker 2>and as they do so, they're realizing they don't have

1080
00:57:19.119 --> 00:57:22.119
<v Speaker 2>the talent internally to do a good job. And that's

1081
00:57:22.119 --> 00:57:25.039
<v Speaker 2>not just the business people. They're actually I think business people,

1082
00:57:25.079 --> 00:57:30.840
<v Speaker 2>there's probably more. It's more like risk legal, like senior management,

1083
00:57:31.000 --> 00:57:33.119
<v Speaker 2>Like these people need a lot of help, and they

1084
00:57:33.119 --> 00:57:35.360
<v Speaker 2>also have a structural problem where they can't just listen

1085
00:57:35.400 --> 00:57:38.559
<v Speaker 2>to the business people because they get paid on volume, right, right,

1086
00:57:38.599 --> 00:57:40.639
<v Speaker 2>So this is a governance thing. So you're gonna have

1087
00:57:40.639 --> 00:57:43.920
<v Speaker 2>a lot of firms, the broker dealers, the asset managers,

1088
00:57:44.000 --> 00:57:47.199
<v Speaker 2>the banks, the insurance companies who are needing help on

1089
00:57:47.239 --> 00:57:49.840
<v Speaker 2>this front. And so people are starting to come into

1090
00:57:49.880 --> 00:57:52.000
<v Speaker 2>the door. There's gonna be even more. I could see

1091
00:57:52.000 --> 00:57:55.280
<v Speaker 2>the trend coming, and you're going to have people trying

1092
00:57:55.280 --> 00:57:58.280
<v Speaker 2>to make professional efforts. This is why I analogize to

1093
00:57:58.360 --> 00:58:00.920
<v Speaker 2>like the nineties in the Internet, that's when it stopped

1094
00:58:00.960 --> 00:58:03.039
<v Speaker 2>being like, oh, we have one weird guide cares about

1095
00:58:03.079 --> 00:58:06.400
<v Speaker 2>internet commerce to start being like, what's our internet commerce strategy?

1096
00:58:06.960 --> 00:58:09.440
<v Speaker 2>And once that happened, you needed a lot of help

1097
00:58:09.480 --> 00:58:12.599
<v Speaker 2>and it started professionalizing. So I would tell everybody right now,

1098
00:58:13.599 --> 00:58:15.760
<v Speaker 2>the real thing I'm seeing is if you're a trad

1099
00:58:15.800 --> 00:58:20.159
<v Speaker 2>FI firm and you're starting the race now, one call me,

1100
00:58:20.639 --> 00:58:23.719
<v Speaker 2>But two, you need to do it in the next

1101
00:58:23.840 --> 00:58:26.599
<v Speaker 2>yearish or you're going to be behind your peers. Right.

1102
00:58:26.719 --> 00:58:29.360
<v Speaker 2>It's not a problem that you're starting now, but it

1103
00:58:29.440 --> 00:58:30.639
<v Speaker 2>is a problem if you wait.

1104
00:58:32.519 --> 00:58:34.639
<v Speaker 1>Well, the race is certainly heating up, and I'm sure

1105
00:58:34.639 --> 00:58:36.199
<v Speaker 1>people are going to be calling you, especially if the

1106
00:58:36.199 --> 00:58:39.079
<v Speaker 1>Clarity Act passes. I feel like, psychologically right, maybe it's

1107
00:58:39.119 --> 00:58:40.320
<v Speaker 1>one of those psychological bearers.

1108
00:58:40.400 --> 00:58:43.800
<v Speaker 2>Oh yeah, we're good to go. We'll see. I mean,

1109
00:58:45.320 --> 00:58:47.119
<v Speaker 2>I think it could also help if the SEC and

1110
00:58:47.159 --> 00:58:49.960
<v Speaker 2>CFTC formally write down the rules. It will be sooner

1111
00:58:50.039 --> 00:58:52.119
<v Speaker 2>of those two items, let's put it that way.

1112
00:58:52.280 --> 00:58:56.320
<v Speaker 1>Oh absolutely, Austin. Always a pleasure. Appreciate your knowledge and

1113
00:58:56.320 --> 00:58:58.079
<v Speaker 1>your perspective. Thank you so much for joining me.

1114
00:58:58.400 --> 00:59:00.400
<v Speaker 2>Yeah, thank you for having me, and I hope people

1115
00:59:00.440 --> 00:59:01.440
<v Speaker 2>find this one interesting.

1116
00:59:01.599 --> 00:59:03.559
<v Speaker 1>Yeah, we'll definitely have to do round two at some point,

1117
00:59:03.840 --> 00:59:04.480
<v Speaker 1>definitely later.

1118
00:59:04.480 --> 00:59:06.519
<v Speaker 2>It is here. See what angry questions you get.

1119
00:59:08.719 --> 00:59:11.280
<v Speaker 1>Thank you so much for tuning in. Please hit the

1120
00:59:11.360 --> 00:59:13.760
<v Speaker 1>like button, subscribe if you haven't as yet. If you're

1121
00:59:13.760 --> 00:59:16.800
<v Speaker 1>listening on a podcast platform such as Spotify or Apple,

1122
00:59:17.000 --> 00:59:19.719
<v Speaker 1>please follow and leave a five star rating. Thank you

1123
00:59:19.760 --> 00:59:20.199
<v Speaker 1>so much.