Ethereum Is Strong! Zcash Is Bitcoin's Missing Privacy Layer! Kalshi Drama Debate!

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It's just it's next level. This industry is going to the next level. And guys, I I don't know what else to say. I'm bullish. HE SAID IT. HE FINALLY said it. So bullish. Andy's bullish. I'm bullish. We're bullish. [music] Hey. [music] [music]

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[music] >> [music] [music] >> Zoom out. The institutions aren't coming. They're simply here. It's the golden age of crypto, guys. Get right. Let's go. [music] >> Welcome to the next. See you on the show. Day 18 of bull market euphoria. I think we're in hype or excuse me, we are in hype, but I think we are in hope and I think Andy's euphoric. Another day on the beach coming at you.

>> Another euphoric dollar in the building here. I mean, how can you be mad? What is there to be upset about? Um, I see all the reasons why Zcash is going up and it's just more buyers than sellers. I bought Litecoin. I bought Litecoin. It is the era of the Lindy dino coins that are proof of work that are like Bitcoin and I bought Litecoin. Guys, it is September 25th and I bought Litecoin. That is where we're currently at.

>> Andy, before we get into markets, because we're going to I mean, we've got 45 minutes or so before the first guest, so we've got plenty of time to chop it up. >> Zoom out a little bit. Tell me about the ZK KYC decentralized identity composable KYC onchain tokenized economy buildout that we're seeing >> from Hester Pur and more. >> Yeah. Rumor mill strikes again. Is that the re is that the is that the vibe? >> I mean she put out that KYC creates data haststacks which I think I get the vibe.

She means like honeypotss for hacks. >> She does. >> So she put out that >> KYC creates data haststacks pretty much a honeypot for personal identifying information. >> And we're seeing hacks left and right. Unfortunately, bitget got drained for 350 million. >> And so that's obviously value, but then you've got private information of value getting hacked as well. >> And so we have this technology, this magical power of >> ZK box. Yep. And ZK, if you're unfamiliar, right, we've done plenty of like technical deep dives into it, but ZK lets you prove something is true without giving up the underlying information. Best example of this, I mean, there's several examples that you

can rattle off, but imagine that you're going into a bar. You need to prove that you're of drinking age. Here in Florida, that's 21. Other places, it might be 18. You don't have to give up your specific birthday to prove that you're 21 or 18. Here's another example. Let's say you're looking to buy a tokenized equity in the US. You need to prove to the compliance agency that you are a US citizen, but you don't want to give up your social security number because then North Korea is going to go look for the diamond in the haystack and try to, you know, needle in a hay stack look for your social, right? You can prove that you're a US citizen, that you have a social security number without actually revealing the number itself. And we I mean this was a technical invention

innovation that is only possible after the casino funded the research lab in the last 18 months. And now it's finally look for so long crypto was a solution in search of a problem. Now we have it. You just had to get further into the tokenization super cycle in order for the problem to present itself. But these things move at different speeds. And so you had a proliferation of ZK research that was moving really really fast, too fast for the current state of the world 18 months ago, but now the state of the world is caught up and ZKYC is extremely important and it's ready because we working on these things in parallel. So I'm excited. I don't know who the winner is, who is ultimately, but it feels like there's going to be one winner. The

power law of composable decentralized identity is such that you know the that those who own the relationship with the unconsumer those who collect the personal identifying information are the central touch points like the hub for all the other spokes. So you need to have one central repository. Maybe it's going to be the DTC, maybe it's going to be Chain Link, maybe it's going to be another identity provider, but you need a central repository of data that is very, very secure. And then you're going to have all of these other ZK portals, ZK touch points that tap into that central repository and they all become composable. It's going to be like

self-custodial KYC. You can take your KYC, pick it up, and put it into whichever other place needs to check that. You're not going to be giving up any information. You're just going to be carrying around these different checks that the compliance checks are going to need to check for. >> Yeah, man. I mean, I love it. I mean, look, I mean, we've seen the issue over the past um, you know, so many years of and we see it now every day or every month it seems like with these hardware wallet companies where they're getting ex they're they're getting they're having these data breaches of these hardware wallets who are, you know, they're their users addresses, their users uh, phone numbers and all of this sensitive info. And so what I think is

coming and what our sources are telling us about this SEC KYC news is that the SEC is getting ready to make a news push for KYC for tokenized securities venues. And so that means uh places where tokenized securities can trade. The rumor mill is saying that the SEC is getting ready to make an announcement that will allow for a single KYC usage by at the issuer level to be used at all tokenized security venues using a ZK technology. And so what this means is you're going to KYC if you want to trade

a set of tokenized securities onchain. Let's say you KYC at the issuer level with Ono. Okay? So you KYC with Ono at the issuer level. They have their assets held in in uh a bank or through Alpaca, right? And so that that is all KYC. So Ono knows who you are, who your information is, and so does Alpaca or and so does the bank, right? Those are kind of like the three layers or some kind of combination, right? This goes for securitiz um XT stocks, any of these issuer levels, right? Superstate. And so what's going to happen and what we're hearing is that the SEC is going to allow a ZK version of this KYC passport, if you will, um to be used and approved by

other issuers and other trading venues on chain to enable the composability that we're looking for. And so what this means is like you can you can KYC once at a given issuer level to trade on a certain venue and then you can take that wallet that you're operating in that will have effectively like a badge on like a stamp uh a transaction hash that your KYC has been approved by this provider. However, it will not share the details of your name, of your jurisdiction, of your social security, of your driver's license with the other trading venues. But the other trading vettings will be able to access the uh verification the stamp of approval that you have indeed been KYC and you have

and you're not on any blacklist and you are then able to trade. So what this means is you can get approval from an issuer at a D5 protocol let's call it unis swap ando. So you're approved to trade your your KYC through and alpaca and you're approved to trade on unis swap. You can take those assets and trade them on a drum on a different blockchain. You can use them on Morpho on a different chain. You can use them on on a different uh trading, you know, you can use them on Hyperlquid. You can bridge to uh Salana and trade on Backpack. All with a single KYC from a single entry point from a single tokenization issuer and a single tokenization securities venue also known as the TSV.

This will alleviate a massive headache in the space of tracking KYC data collection, data passing, and a massive honeypot of data that was a big concern. If the SEC comes out with this, which we've heard, they've been working on this for over a year and are ready to move on this instantly. It would be a massive win for the tokenization of all assets on chain and the ma a massive win of composability as well as broader systemic risk being alleviated from the system due to the data sharing and data storage issue that we see across web 2.

This is massive news. Hit our desk last night and the rumor is running with it hard and we have reason to believe that it could be coming imminently. I've got a couple of notes as we're thinking about how this could roll out. What are the implications of this, right? What are the regulatory components that need to fit together in order for this to ultimately come to fruition, right? So, bear in mind that a lot of this was put forth by Hester Purse, uh, you know, the mother of crypto, right? Crypto's godmother, big big proponent of everything that is coming out of the SEC and the CFTC. Now, she's stepping down in about a month, right? And the formal stuff that the SEC puts out involves months of internal work. And so when

she's putting out comments, right, she can put out comments around her own personal opinions about how these things should be constructed. But the SEC can also put out clarifying statements with some fundamental changes to the rules and that would require a long lead time. And so how quickly this comes out is still uh up in the air. We don't know how quickly this is going to come out, whether it's going to be sooner rather than later. Hopefully, it's sooner because it would alleiate a lot of the risk and it would increase a lot of composability. The other thing to keep in mind here is that the SEC is only part of the regulatory apparatus that relates to KYC obligations, right?

You've got all kinds of financial regulatory bodies. Of course, you got the SEC as it pertains to securities. You've also got the CFTC as it pertains to commodities, but then you've got FINRA. You've got the OC. You've got all sorts of regulatory bodies for all sorts of different parts of the financial system, right? So the SEC cannot necessarily act unilaterally to put these KYC systems in practice. In fact, to the extent that we are talking about KYC beyond securities transactions, which the SEC has also put out rulings that a lot of the tokens that exist on public blockchains, network tokens, tokens that represent these chains, are not securities. They're network tokens or commodities. And so implementing KYC

practices for those tokens would actually fall outside of the scope of the SEC regulatory regime. So, the SEC not doesn't necessarily have authority over all of these KYC practices. Um, it sounds as if Hester's comments or her offering thought leadership based on how she thinks this should be done for a range of asset classes, but not necessarily giving an indication of impending policy. The other thing that I think is important to just kind of forecast as we're thinking about this is the potential black market that could be created for KYCed wallets. This may already exist, but I don't think it

exists at the potential scale that we should be thinking about, right? Because you know that these self-custody wallets are portable, meaning that you can pick them up, right? If you have a machine, a laptop, and you're going to get rid of it and you're going to get a new one, you need a way to move your wallet from the old laptop to the new laptop. And that presents a problem because it also means that you can transport your KYC wallet from one laptop to another for nefarious purposes. Meaning, you know, all of these things are exportable in terms of a private key. I can imagine right because we want to try to imagine and protect against some of these worst case scenarios. I can imagine a scenario where I export my private key and I sell it on the black market to someone who is

looking to persuade or participate in regulated securities markets onchain that otherwise wouldn't be able to do so whether they're on you know some of these sanction lists right or they're participating in a restricted country right you could in theory picture a marketplace where uh you KYC your uh private key and your self-custodial wallet then you sell that ZK passport to someone on the black market by sending them their your private key with built-in KYC already done, right? And that could in theory carry a large value uh for that person who's looking to act nefariously and you don't want that kind of market to exist. So these are the kinds of things that I think might mean

that this piece of regulation actually takes a little bit longer because it feels like there's so many edge cases to consider. But ultimately, I mean, if I'm look, I'm glad that we're thinking about this. A lot of this has been in development for a long time and it's just now it's just a matter of time before we do get this in the works. And the last question that I think is important to think about here and wrap up who is going to be the biggest winner, right? If we get a ZK passport, we get ZKYC, like you mentioned interoperability and composability with the ZK Passport. The other thing to think about is like look, we've got these value exchange bridges that take value across chains. But I'm actually starting to see a use case where you

know we had sign we had so many debates between like intentbased bridges and then general purposebased bridges. Now it seems as if there's a reason for these general purposebased bridges because now you need to transport things other than value which might be personal identifying information and data and so intent based bridges might not be the right structure for that kind of interoperability. >> Yeah, you're going to need some general message passing bridges for sure. >> Exactly. >> I think layer zero and chain link will be the ones that really try to fill that gap for the institutional market. Um but I'm I'm aligned. I think we've existed in a world where um you know you know near intense has won so drastically

because how easy it is to use and how much chain coverage they have for the asset level. >> But yeah, when you think about transferring the asset with a message, you do you also do need that message level transferability as well. >> Um and so these teams are going to be working on what that looks like uh you know at scale. So, more to come from us on this guys, but I you know we have a great show today. We've got uh one of the head of institutional business at Kshi. Obviously, we are in a very very interesting spot with them given the wash trading. We're not going to grill them too hard, but you know, it'd be a miss to not talk about it. We got to talk about it. I mean, we have to talk about it. Uh we have uh Tai Gosh from

the SEC himself. So, this guy actually, sorry, he's not in the SC. He is a very well-connected lawyer in DC and he knows exactly why Clarity didn't pass, what happened there and he has he will have updates for us on the tokenization exemptions and this this KYC news and then we top it all off with one of the biggest bulls of Ethereum, Joseph Shalom. I mean, kind of a hard to beat this lineup on a sunny Friday in Florida. So, pretty excited for today's show. Uh Rob's gonna take us through our sponsors, our tweets, and more. Get us back on the show track here. But pretty stoked.

>> Yeah, we got 25 minutes before Andy from Colchi joins. That one should be interesting to say the least. Uh so let's run through the run of show. Um Andy, it's 80° in Florida. That is one of the cooler days in Florida. It's beautiful. And uh >> I mean this is the weather segment presented by the rollup. Who thought we would have been meteorologists? >> It is 77 here where I am. It's beautiful. It's definitely a beach day. It's definitely a get outside day here for sure. Andy, how was your fall equinox? How did that go?

>> Um, I don't know. I mean, nothing really changed. The astrology, it didn't really change anything. Today was options, uh, expirations. Um, I mean, Bitcoin did kind of top out at the fall equinox day on the 22nd and the 23rd. We'll see if that's it. If that's it. I mean, Bitcoin Jack is just literally a legend. We'll see if that's it. I'm not sure. Um, but yeah, we are now in fall. Is Is that what you're trying to say? It's the beginning of fall.

>> Yes, it is the beginning of fall. That is what the fall equinox uh determines. And it happened on September 22nd and Bitcoin Jack did claim that there was going to be some voodoo black magic that went along with that. Uh, let's keep going. That has been your weather segment. >> Please let it be ZK sync. Nobody got hurt by a little grilling. What's up, freedom guy? Good to see you, man. dubious rationale picked up more circle shares 88s. Yes, sir. I think it's been you who's been accumulating per scythe and circle on the equity side. I think you're going to be very happy with those with those positions in the coming months. Very happy. guys. Um, speaking of public markets, uh, you know, there are some national economic priorities in

finance right now and the 10-year treasuries are, uh, showing some real signs of distress. And so, Besson is going to have to do something drastic. And, uh, we believe what he's going to do is he's going to pull a August 2023 Janet Yellen, but he's going to pull it on November 5th with his updated QR. And that is going to kick off a Santa rally that is going to absolutely rip face. And so what that means is that he's going to finance the government spending with a ton of US short-term Treasury bills. And he's going to need some buyers for those bills. And the one and only buyer for those bills that can really stand up at scale, stable coins.

And our stable coin partner of the show is FRA. And so we believe that it is a national economic priority that these stable coin companies buy US treasury bills. Uh, FRA is a Genius compatible stable coin. They are putting the final touches on the Genius Act rulemaking. I believe the last piece of that is coming out of the OC. Then we will finally get Genius compatible or excuse me, Genius compliant stable coins. That is the one missing piece. And then these things will really be all the way ready to go and buy those US Treasury bills that Bessant is looking to issue. Frack is systemically important to the US economy and we are proud to be working with our

stable coin partner FRA >> markets presented by Zama which is up 57 and a half% this week. >> Wow. >> Not bad, huh? >> Not bad at all. >> Look at look at look at Near >> Near and Zama just ripping leading the pack. Frack's up 9% on the week. Zcash kind of consolidating. Hyperlid almost down a little bit on the week kind of consolidating the still waiting for that Hundy roll to come through. I was a little bit surprised but I mean it it hyperlid you know once you hold it for a long enough time you just realize it doesn't give anybody what they want. It is just if I was trading this coin on low time frames I would just I would off

myself. It teases you. It teases you. It goes so aggressively up and then so aggressively down and it just never lets you have a clear view and then one day you wake up and it's up 8%. And then it's and then it's up another 10% and you're like well I almost sold the damn thing, right? It's just like it's such a it's such a tease that coin. It's just it always just kind of chops it tries to chop you up as much as you can. The only way to get the upside from this thing is just to hold to hold. I think a lot of it depends on looking at the factors outside of the price itself. And so if I'm looking at Hyperlid, I'm not really trying to trade like low time frame charts. I'm looking at volatility

because Hyperlid is an exchange. >> I mean, Hyperlid needs Bitcoin. It needs Bitcoin to really make its move. >> It needs Bitcoin to either go up, right? If Bitcoin flies, Hyperlid gets a lot more volume, charges a lot more fees, and then there's a lot more earnings p pounded into buybacks. So yeah, I I agree that Hyperlid is somewhat correlated to Bitcoin. You know what I' I'd love to see on this markets widget, and I hope our uh our lovely producer Leo is listening behind the scenes. I'd love to see this broken down by category because there are multiple privacy coins that are absolutely flying, right?

>> And there's different AI coins. And so I'd love to see like a privacy category that has Zcash, Near, Zama, Fala is up 50%. Um, there's a couple other ones out there that are just >> ripping. All these privacy coins are ripping >> and then and then I want to see an AI category. Remember I was talking about Akos like two months ago during the bear. Akos is in such a fantastic position right now as this. Yes, man. Because they're talking about AI slowdown and the alternative to AI slowdown is the place where open- source software rules which is why near Zcash and Akos are like and Tao which is like the inference layer. Akos is the compute layer and so if you don't have data centers being built you need to look for decentralized compute you go to Akos and

it's rerating higher right I think it's up from like 40 cents or 50 cents up to like 70 or 80 cents today >> it's insane >> flying and I'd love to see how these categories are doing I'd love to see a dino category I'd love to see an AI category and a privacy category so that we can start to understand the flows and understand the rotation because I I think you know look we've been in the winners for a long time Zcash and near but I think there's going to be flows into not even necess like there are going to be flows into the beta of the category which is why I think privacy and AI are flying and a lot of those are doing well but I think you're also going to see just sort of irrational flows

into uncorrelated categories >> I don't even think that there's been a lot of like real tangible increase in TVL or revenue from the DeFi class, but Sky looks good. Aerodrome has the announcement Maple Athena >> like a lot of and and the point is up 5% today. one of the leaders in the c like these are these DeFi c coins are doing extremely well and I don't flying >> morphos flying obviously >> I feel sidelin dude isn't it crazy that like >> I somehow I still feel sidelined >> there's so many names that I want to own and the only way to do it is lowle leverage cross margin per ps if you

really want to own all of them but you can't like it's just not a strategy and so it's just like I'm currently battling with like dude I'm long all almost all the names on the screen, right? And I'm just like I'm I there's more like I need to buy. I need to buy more Morpho. I need to buy more. I need to buy more. >> You look at Hyperliquid. >> You look at Hyperlid 2% down on the day flat on the week and you're like Litecoin just popped off 20%, follows up 50%. Why am I not owning those names too? And I think >> maybe the market is starting to get a little bit greedy and we don't want to chase. We don't want to chase.

>> No, I agree. And Hyperlquid may not do as well in this part of the cycle. >> Like Hyperlid might have a bit of a slower growth. I still think it explodes. >> Yeah. >> But it it may not it may not like you know you you may see things like Litecoin >> or Morpho or Zama >> or Ethereum, dude. Ethereum. >> No, but as soon as rallies as soon as Ethereum rallies, hype [clears throat] flies tethered to its fundamentals. It's tethered to its revenue. That's what I'm saying. And once you get revenue, it's never enough. And so if you can detach from the revenue narative >> a lot.

>> Yes. >> And it's also really good coin, like highly fundamental coin. The stuff that we're seeing run like it's not that big of a cause of concern yet. I think investors are still like being practical with their allocations. But yeah, when you see >> the Litecoin thing is a little concerning. >> I love it. I'm all for it. I I think Dinocoin's gonna bid. But how do you look at that and not think to yourself like that's the market getting a little a little >> frog? No, I'm with you on that. I'm with you. But I think Litecoin is going to shock the freaking market to the max. I think Litecoin goes on a Zcash style run. And I know it sounds ridiculous, but what what is Zcash? It's just a private Bitcoin. Okay, great. What is Litecoin? It's just a fast Bitcoin. They

both have Lindy. They both have no VCs. They have no overhang. There's no real fundamentals outside of like, you know, transactions per second on Litecoin or amount of Zcash shielded, dude. They're just complete utter Bitcoin forks that are just beautiful. Like I look, I I'm not going to be a bear because Litecoin is going to pump because the debasement trade is on. And so >> that's what I mean. That's kind of what I mean is like that's why, right, >> Andy? All of these things are going to do well in dollar terms, right? How how do we outperform in Bitcoin terms or Zcash terms terms?

>> I've just settled in and I'm like, look, Hype and Ze are my positions for the cycle in size. I can go to bed every night and wake up and be like, I'm not going to be frustrated. Bitcoin and ETH are also like, you know, the positions for the cycle. And then you got the lighters and the nears and the venisones that are on this and the aerodyms and a couple others that are like the kind of other core positions but not like as as much size. And then I just going to have my pers account and I'm just going to trade what I think is going to do do well throughout the cycle there without and not have big size on it. And that's it. Like I I'm not I'm not rotating. I'm not playing the game. I am I'm not I'm just I'm chilling. I'm not

trying to get in the like I pulled a bunch of money out of my FOMO account. I'm not doing the memes as much as I think they can go crazy. I hope everybody makes a bunch of money there. Like I'm just I'm just I'm just trying to I'm just trying to keep it simple to do less. Just trying to do less. >> Yeah. Yeah. >> As always guys, our our digital market is powered by our friends at Zama. Visit zama.org org to learn more about why their token is absolutely ripping and how we've been talking about them for the last eight months and you still aren't exposed. That is not our problem.

That is yours. Welcome back to the roll up, guys. Let's keep it rolling. >> Um, >> but if our sounds guy was on, he would have made a sound for y'all. Let's check the chat real quick. There he is. Uh, Litecoin LCC see Sandra, she loves it. Yep, I'm in. See, I'm telling you. I'm telling you, they will get it. >> Oh my god. Like, what? >> They're all good, brother. I want them all, too. Yeah, that's kind of where we're at in the market. We're kind of at the point where like >> we're at the point where the rising tide is lifting all the boats.

>> Everybody wants to own everything. >> Fastest. Which boat is the fastest? Is it the one that, you know, cuz then you're like, okay, well, Zcash is the fastest, right? So, you own Zcash, but then Zcash is down. It's flat today, right? So obviously there's going to be in the rising tide something is going to be up today right so it's not the fastest horse today but I think time horizons Andy time horizon shrink dude now that we're in this bull market >> like we were like okay we we are down to vault this thing we're going to buy near we're going to buy Zcash we're going to put it in the vault and we're not going to touch it for five years but >> bro like during the bull market it's like such low time frame >> yeah rotations

And it kind of feels like if you can play that game and win that game, that is how you're going to get out performance. But that is a difficult game to win if that's the one that you choose to play. you have a much higher likelihood of winning >> if you play a different game and not the low time frame rotation >> or you just play the low time frame game on what you think is going to move on purpose account >> or you just don't >> I mean the other the other play is you own everything and then you don't feel like you're sidelined to anything but then it all hedges out >> returns are going to all Exactly. It's going to be more stressful for you and it all hedges out. I agree.

>> Let's keep rolling. I do think that DeFi is underallocated to right now. It's going to fly >> 100%. >> But I would love I would love different widgets. I would love to see a privacy category, an AI category, a dyno category, and a DeFi category. >> And I'd love to get a word from our producer behind the scenes. >> I'm 80% Zcash, 20% TOA long. Tow's the last big one to pop. Tow. >> I mean, yeah, [snorts] looks pretty. really be looking at pricing these things against Bitcoin or some other thing that is going up >> like like I would be looking at like ETH Bitcoin which it's moving I'd be looking at Zcash Bitcoin and then I would be

pricing things against Zcash because if you don't have a reason to go further down the risk curve why would you do it? That's the same argument that it always is when you're buying coins instead of bitcoins. >> I'm very cozy just in Zcash. Yeah, I would be looking at look I'd be looking at like what is outperforming against Bitcoin and then I would be and then we kind of know the answer to that. The answer is Zcash and then I would be looking at okay what is outperforming against Zcash. And if you can find things that look good against Zcash, then you really might have a shot because Zcash looks the best, right?

It's looked it's been the winner for the last 3 months. It's been leading. It is the fastest horse on a multi-month time horizon. So, if you can find something, if you really do want to play a shorter time horizon and you find something that looks like it's like well positioned to go on a rally against Zcash, that is probably where to look and that might be uh beta play on Zcash like the rest of these privacy names. You've got Zama, you've got, you know, Near, you've got Fala, you've got Arsium, and then you've got like this other categorical play. If you're thinking that as a category, privacy is at a local top and maybe like DeFi or AI or Dinocoins are at a local bottom, then you would be trying to play

that rotation. But I think the C what I like about the categories is that you can think of it more in like it's not going to be like a multimonth or multi-year time horizon but as a c when you see categorical flows and shifts that rotation is typically like uh weeks time horizon which is a little bit easier than playing just like hours and days. >> Yep. Yep. I love it. I love it. All righty, guys. Let's keep it rolling. Um, into some tweets, into some uh of what we got here. >> Let's do it. Um, but guys, obviously there is one leader in the market right now when it comes to AI outperforming everything else.

>> Yeah, it's near. >> Uh, it's near. It's near. >> It's near in Venice, but it's really near. >> It's really near. And uh I mean they're doing incredible things on the product front and near you know powers a lot of Venice's technology as well which I think is actually you know flying under the radar a little bit once people realize that Ilia you know was a co-author of the transformer paper out of Google when he worked there you know once they realize that Eric and Ilia worked together on Venice right and near underscores a lot of that technology it's like oh wow like there's more going on here than meets the eye and then you realize that their confidentiality technology applies applies to pers and it applies to intents and it applies to swaps, right? We've seen cool custodial products coming out. Obviously, they've

got iron claw and these different confidential AI products themselves. So it is really becoming this allincclusive um AI chain and I do believe right and we also see how black rockck is positioning uh blockchains to be the home for aentic finance stable coins being the denomination of choice for a lot of inter agent commerce like it it just makes too much sense for near and so we are very very excited and happy to be partnered with near let's get into some of our headlines. Yeah. What What do we have? I mean, what a >> Unfortunately, this is what we've got. Um >> Oh my gosh. I think the final total, guys, is 385 million confirmed by the

Bit CEO, Gracie Chen, who is a friend of the show. Um it's unfortunate that this has happened. Um it's really hard to see this. >> It's really hard to believe this. It really hards to believe this. It's hard to believe this is happening, actually. Yeah. >> It's tough. hot wallets, $390 million on hot wallets. It's part of their three layer procedure to manage their customer funds. And Jeff from Hyperlid had a tweet three years ago that said that he thinks that Bit is engaging in very shady practices. It resurfaced over the last couple hours or the last day. And it's just nuts. I mean, it's nuts. It's bad.

>> This is tough. I mean, obvious Yeah. I mean, the other thing to see here is like, you know, where the freezing happened. Um, there was a bunch of different takes on that. We won't really get into too many of the details but >> yeah, >> I mean, it's just, man, it's 2026. We're talking about, you know, tokenizing the world, tokenizing equities, DTC pilot program coming on in October. Like, these are kind of the things that just can't happen because they set the industry back. >> I know. You know, Black Rockck sees this and they're like, "Wait, >> how are we gonna put our fund that manages trillions of dollars on a blockchain if North Korea can just swipe or no swiping?" Like,

>> I know >> that just >> it just sets the industry back. >> Good news is that this is not a blockchain related problem. It is a it is a fishing of a security key that was able to falsely authenticate the signing process of the BitGet hot wallets that allowed for the transfer to happen. So it was an internal security issue at BitGet that led to this. Um and you know it was also tied to Lazarus Group. >> Yeah.

>> Um and it was verified on chain. This was tied to Laz Lazarus's group wallet addresses. >> And then the fact that we know their wallet addresses and we can't take it back or like do anything about it is >> that's the whole point of this. >> Yeah. >> In incredible. >> All right, let's keep it rolling here. Rough start to the news segment >> on a bullish day. >> But that is where I mean some of these things you just got to do what you got to do. Uh let's keep talking on [snorts] yourself.

Shout out to Zama. I mean, look, if the uh these hot wallets were confidential, maybe this wouldn't happen. I don't know. But I mean, Zama is crushing on the privacy front. We talked a lot about them on the market segment as well. So, you guys know Zama, build confidential applications on any blockchain. Go to zama.org to learn more. >> Love it. backpack, the engine for internet capital markets and tokenization. A thesis piece on how the US is in the process of exporting its capital markets in the same way the dollar was tokenized with stable coins and distributed over the internet. I was making this point to someone yesterday, Andy, on a call. I said, "Hey, look, I completely agree with the spot

tokenization of US equities because the only export out of the US out of the last 50 years since we, you know, basically uh import everything from, you know, the eastern world is the dollar. That is literally the only thing that we manufacture in the US. The reason why Trump had to make this huge claim about bringing jobs back and oil and manufacturing is because he's has to repatriate a lot of manufacturing jobs because the only thing that we've manufactured in this country for the last 50 years has been the dollar. And is it more likely that Trump reverses a 50-year trend or that his rhetoric is a blip on the radar and we end up

continuing the 50-year trend? Andy, what do you think? Huh, >> brother? They're going to max gas this. They're going to step the foot on the pedal and realize that they're export that they're exporting their most powerful >> economic weapon that we have the dollar and the equities market. >> Ex well back the equities market is turning back, right? So obviously we've exported I mean the rise of the pro dollar from the oil trade and OPAC and Saudi Arabia and the rest of the Middle East is how we were able to get the dollar into the hands of all of these countries that were trading oil back and forth and we got them to use the dollar

and we offered you know different protections for that >> and then we ended up you know exporting it to the global south as well. >> Yes. >> But now we're talking about extending our financial manufacturing exports. That's what this is. The US is manufacturing financial exports and we are now extending beyond the dollar and into the equities markets and US equities will now be the next greatest financial export out of the United States. This is what allows us to not do any hard physical labor in the US. That is why you have remote jobs and out of office jobs and people sitting and working online and not having to work at factories in the US and you've got this

massive like not unemployment in the US but people that just don't want to work and so they're just chilling. They're just at these different cushy little jobs and they're just working their life away and they're doing things as they like. And so that is what allows us to do this is the fact that we export the dollar and then we import everything else, right? which means that all of the other countries in the world are the ones doing the hard physical factory jobs and we buy the stuff from them and we give them the dollar. That's the trade that we've been able to strike with these countries for the last 50 years. That is going to continue. But now we're going to give them volatile US equities instead of the dollar. and we're going to let them open savings accounts and open NEO bank brokerage

accounts and then they're going to be be able to earn yield and appreciate a lot of the value that is on these equities accounts because the US has the greatest financial equities market in the world and now we're opening up access to the rest of the world so that they don't have to just earn in their local currency or the dollar they can now earn with financial equities as well. That is a fundamentally new paradigm and it is happening onchain with tokenized equities. >> Yo, Javier, Andy needs another pin colada LFG.

Andy ordering a pin colada had me in tears. [laughter] I'm glad that Chad is focused on the important things in life as Robbie's ranting about the tokenization mega bull thesis. I'm aligned though. I think that there's real there's real um there's real substance here. there's a real economic tailwind, right? And we meme around that, you know, the US needs to pump crypto for it to maintain its economic dominance, but that's kind of quite literally what is happening. I mean, we're in the early stages of this, but >> you know why? Because because crypto means equities now. You know the US US has always talked we all know that the

US equities market is systemically important to the political regime. The the importance of the US and its global dominance. The equities market is what sustains all of that. And now crypto and we're talking about cryptos and national economic interest of the US. Crypto means tokenized equities now. And so yes, it has always been the case that pumping the stock market has been in the best interest of the US. It's a national economic security thing. Now, they need to do that, but they're going to do that onchain so that they can export those equities to the rest of the world.

>> It's incredible. Truly incredible. And we, you know, I wish we had more time to dive into this actual post and the whole thesis, but congrats to Backpacker on the recent wins. Um, and hope you guys keep crushing it. Let's keep it rolling. >> Yeah, we're going to get our next tweet going as we set up our first guest, Andy Ross in the back. This one's fun. Hund roll. >> Yo. So, they listed So, Binance listed Hype and it literally went from 97 to 90 like in like eight three-hour candles, two-hour candles. Straight insta nuke.

They literally listed it right as it was about to break out of 100. Like, I you can't make this up. >> Yeah. I don't have much to add. >> You can't make this up. Like >> the only the only >> there's no way that they can stop the pump, but like especially not on spot markets of all things. >> Exactly. >> But you just can't make this up. Like it's just so Binance is just becoming irrelevant, man. Like they're so they're so dominating still in tokenized stocks. They're going to dominate a B&B chain. They're going to dominate centralized exchange, but Hypo's going to flip them. They're going to flip them hard. And that's where we're going. That's where we're headed.

So yeah, not much else to add here either. >> Yeah, here's another one. >> Oh god. Oh my god. Oh boy. Today we filed a lawsuit against Layer Zero and his co-founder Brian Pelagrino to write the wrongs associated [snorts] with the exploit of RSC's Layer Zero Bridge this year. For more details, please refer to the statement below. Jeez. I mean I mean basically if I didn't read this, but what I would understand is that they're probably saying that, you know, the reason that they got exploited was layer zero's fault, not them, and they they've gotten all this defamation of their brand and their entire product

stack and their entire team has been under fire and under death threats and has ruined a lot of DeFi, composability, and yada yada yada yada. A yada yada yada. All because the the the security key issue from layer zero. If I had to guess, that's what the lawsuit was like. Suing them for defamation, for public, you know, embarrassment and for this loss of funds that they owe them restitution across reputational aspect via cash payment. >> Yeah. I um I mean there was real money that was lost here. I I think it might be even more like aggressive or solid than just defamation or like brand loss in brand confidence.

>> Yeah. >> Like you know they they could be suing you know for the security practices that were put into place. Yeah. >> You know that the fact that you know this was like a supposedly allegedly it was a default >> uh default security configuration. Yeah. >> So >> whether they're suing for defamation of the brand >> Yeah. or actual hard security principles. I don't know. I didn't read this statement. It's unfortunate, but it is. >> Wow. Hester Pur just put out a letter that she wrote to Trump saying Tminus 7. Uh, thanks for giving me the opportunity to serve as commissioner of this SEC. I write to submit my reg my resignation effective October 2nd. Serving this great nation at this SEC has been the

honor of my professional lifetime. The US is exceptional because of its unifying thread is a commitment to liberty. Elevate freedom, thought, expression, and action. Unlocks the potential of people to meet one another's needs that runs through the American securities markets where innovators meet retail and institutional investors that together they can build a vibrant economy. And uh that she's very confident in chairman Paul Atkins and Commissioner Mark UIA, the talented men and women of the SEC will continue to achieve that balance. She is resigning in one week.

>> Seven days. >> Seven days. She is out of there before her required leave at the in about a month's time as you were referring to Rob. What a run. What a generational run for Hester Pur. >> Yep. SEC Commissioner Hester Pur known to many in the crypto industry as the crypto mom. She will leave the agency effective October 2nd after nearly nine years on the commission. She'll join the Regent University School of Law as an associate professor in November.

>> So, she is uh still staying in the game a little bit as a law professor >> uh at a university. So, look, she's been on the show twice. >> Yep. >> Big big fan. And uh you know, we were very happy to have her. She's been instrumental. Let's go ahead. Let's pull it up. She's been instrumental in building out the SEC tokenization exemptions, helping to illustrate and educate the community at large, both the regulatory community as well as several in the onchain community around some of the principles around privacy. She had a fantastic speech at the science of blockchain conference last summer um talking about privacy. Peanut butter and

watermelon was one of my favorites. uh most recently, you know, she's advised on the way that KYC should be implemented for ZKifying this regulatory stack. It seems as if look, unless we get something in the next week, which I think would be incredible, like like incredibly fast. Um but it seems as if you know when it comes to these implementations, right, there's proposed changes and then there's comment periods and then there's implementation. And freedom guy is so funny. He's Andy be like, I didn't read the news, but here's the news. I'm sure that was it or you were close. [laughter] Give me a break, freedom guy. I don't

have to run a show. I'm in Florida. I'm taking it easy for a week. All right, bud. We're up millions. Let Let's all calm down. We bought the right assets at the lows, man. Let's all just take it easy. >> All right, guys. We're gonna get our first guest up. Uh Andy Ross from Khi is in the back and he's ready to go. Let's uh let's go ahead and bring him up. Plenty to chat about on the KHI side of things. >> Yeah, looking forward to this. Um and let's get Andy up and let's get this show started. Andy, welcome to the rollup. Um I will get you up momentarily. Good to have you on the show. Uh, see you like the Cali Green.

>> You guys have found yourselves in a a precarious situation in the last the last 72 to 96 hours. Uh, we'd be remiss if we didn't start there. Uh, Wall Street Journal put out a post uh citing the Koshi Wash trading. Um, I don't think you can call it a scandal. I think you can call it an allegation. This is obviously public information that some anonymous autist is how he brands himself went out of his way to find. Um Khi has denied the allegations and stated that this is normal behavior for you know market making to bootstrap liquidity in early era of exchanges. Uh obviously poly market is not out of the

picture here with their allegations. Seems like prediction markets as a whole are under a lot of fire scrutiny. Um, so we got a lot to cover here, but let's just start. Man, it was quite the spat on X. We don't need to get into the drama, but give us your real unfiltered take here as to the Koshi perspective and Andy's perspective to the allegations. >> So, so first of all, thanks for having me. Secondly, 30 seconds on me because maybe not all of your viewers have met me before. >> Yes. I am um old and I'm come from Tradfi and um that means I've run an exchange before. I've worked at an investment bank before. I've had two different ones and so I've kind of been

around the block quite a lot and I've got gray hair. I don't know if you can see with the light it makes me look younger but actually I'm I'm gray and old. Right. So that that's the first thing. And the reason that's important is that this story is kind of like a bit of as old of the hills. And so what you've got is a new exchange in the perpetual side of the Kchi market. And what we do is we're a designated uh contract market, right? A derivative contract market. And what that means is that we have to follow CFTC regulations and rules. And all of the market making parameters are public. Anyone can see them. They're they're made available to people. We can't have any structure where you pay people for volume. It's not allowed. We don't do it. But what

you do have is a uh a situation where we incentivize market makers to make a price in the market and that price in the market good price it's tight there's lots of liquidity at the touch and then secondly we have a situation where we are being disruptive and we want to charge lower fees. We want to charge lower fees because consumers benefit the users of these markets our clients benefit from lower fees. Well, let's take this situation. You have people who are making prices that are very tight and you have a fee that's very small. Well, when the price moves, what happens is the fastest guy trades with the slowest guy at the new price.

That's what's happening. That's that's an efficient market. And actually, it's good news for Kashi because what that means is there's lots of liquidity at the touch for users to come in and trade against. That's what's supposed to be there. That's how markets work. Now, the fact then that a market maker gets put into a position, they're like, "Look, I'm a market maker. I've got a position. I might hold that for an hour. I might hold that for a day, but I'm not holding that for a year. I'm a market maker. I I buy and sell." And so, eventually that market maker goes, "Well, I don't want to hold that position. I'm going to have to sell it." And then they sell it because they got put into it because they're a bit slower than somebody else.

And they sell it to somebody else. And that's what you're seeing. And people say that's wash trading. That's actually a very efficient market that is there for people to be serviced on. >> Andy, there there was two things that I think kind of tipped people into the direction in which it started to then spiral with all the drama, but there was two things that sort of I think set off some alarm bells that maybe you could just help clarify. One of them was the $5500 thereabouts order lot size. why that continued to show up so many times in again public data. So it's not like you guys were hiding this, but it was suspicious or curious. And then the other was the allegation that there was

actually negative fees, right? Or rebates. And so we understand that, you know, if fees are very small, then it makes sense to take, you know, very very small percent ticks when you can capture some of that upside and then then that'll incentivize lots of volume. But actually doing so in which case you're, you know, ne there's negative rebates, right? Or or negative fees would put people into a position where it does make sense to just do some wash trading in order to get as much of that rebate as possible. So maybe you could clarify those two points. One, the negative rebates, do they exist or not? And just kind of unpack more around the incentive structure for these market makers. And then two, why did this $5,500 lot size

show up so much? >> Okay, so look, all of the fee structures, all of it's publicly available. Said that before and I'll say it again. I don't think I have to to keep saying that. Um secondly, um when you trade or when people trade, they will put sort of like a um a certain size into the market. So we all have a liquidity scheme that says, "Oh, that you need to be x amount of of of of width and you need to have x amount of volume up." And so when something then ticks over in terms of a price, then it's not surprising that somebody then trades against the x amount of volume that's there. And if you see that in if you were to look at sort of things that are trading on I don't know the spider for instance the ETF one of the most

liquid products in the world you'll find there's a there's a there's a liquid point that modal liquid point that people trade at because that's the liquidity that has been put there by market makers and so yeah sure I people can look at that data but what I can categorically say is that we're a designated derivative contract market that follows CFTC rules and you don't you're and We enforce that. And what I mean by that is we know who every member of this market is. We do full KYC on people. And wash trading is not allowed. And if there were wash trading, we would find the wash trading and we would stop the wash trading because it's not allowed. It's not allowed under the CFTC rules. And so having seen this story, having built exchanges, having built

liquidity, this isn't, you know, an attack, but it is, I think, an example of the fact that Kali's been successful. has been successful in innovating a new product. It's bringing new liquidity to the market and it's bringing new liquidity at a really economically uh interesting price point to trade and you're seeing that because people are trading at that economically interesting price point. So, as users see that market, I think it's valuable for them. Andy, one one followup there before we get into some of the other things here. The liquidity that you're talking about and you know the way that this story developed, a lot of this data was public, so it's kind of out there for anyone to pick and choose, but it you know kind of surfaced

all at once. Do you think that this is an education gap and people just don't understand what it takes to, you know, build a uh uh exchange at scale with liquid liquidity and volume? Do you think this was just an education gap or do you think this was a targeted attack by a potential competitor? >> We spent a bit of time thinking about that, but I think that the reality is you've just got to stay positive on what you're doing. And so, you have to make your business the best it can be. You have to focus on being successful with your markets. You have to make your markets as liquid as they can be. You have to have them um with the best possible prices on them. You have to

innovate new products. You have to bring bring demand and and supply to the market together. And obviously having liquidity provisions to create supply and demand um so they're not instantaneous so that they're there so that people can use them when they want to is clearly part of building a market. And we've seen that story in in this is perpetuals but we've seen that story in prediction markets. And so one of the interesting examples in a prediction market is we get bespoke requests for like maybe an insurance style product and we set that insurance style product up. Retail users, super sharp people, smart people price that and then we often get blocks trading in it afterwards and and then but that's how

you build liquidity in markets. You build them by starting somewhere and then adding adding more volume to it. there isn't another way to go from zero to one without walking down that path. And so I think how it occurred, why it occurred, um I'm quite old. I only have a few Twitter followers. It's it's very sad for me. Um you know, I I I don't really, you know, follow that. I mean, I know I'm not hip and young like you guys. So, but but the reality is I don't understand how these things take off. And and I think there is an element of of people wanting to get into that space of of of really understanding it and and and really needing to understand it. But I think also, yeah, sure, everyone likes

to knock the guy who's doing pretty well. >> Yeah, of course. I just got to ask about Jump Trading, man. They've been involved in quite a bit of the uh you know, behavior in the past that has caused some serious issues in crypto, notably Teral Luna. they were more or less uh responsible for that collapse. Obviously, the mechanism was the core uh issue, but they kind of uh were were were deep in the trenches there back in 2022 and led to a lot of downfall with a lot of people lost a lot of money. And I know that that's completely different sides to the business for jump, but I just got to ask like you know jump trading was the one and Wintermute

involved in this market making for these crypto per offering that you have. Um you know jump trading has a rough uh background a rough perception from those in the industry. Um, so I guess one, why jump trading and why kind of, you know, build your product to work with a company with that track record, but two, I think the bigger question here is Andy is like, why does Koshi even care about crypto? Like why is it even important to you guys? You guys are just crushing on sports and on culture markets and on weather and have just absolutely up into the right growth compared to the competitors in certain sectors. Who cares about crypto? Um, and and who cares about crypto perspect

to eventually become a regulated hyperlquid front end um just for for just maximizing liquidity. You know that the OI on Ethereum on Kali is quite low. You know, the OI on Ethereum on on Hyperlquid is orders of magnitude hundreds x's of the size. So, I guess there's a lot of questions in there, but jump trading, why them, you know, what does that relationship kind of look like that you can share? And really, why does Keli care about crypto? Um, when you guys are dominating so much more elsewhere and you know, the majority of the revenue comes from elsewhere. >> Look, so I'm not going to say who who is and who is not market making on Kali.

One of the interesting things you get when you trade on Kali is you trade on a central limit order book. you face a clearing house. And so each individual person faces a clearing house. And you might face via you might come in via her futures commission merchant and FCN, but you're facing a clearing house, which means you don't know who's on the other side. It's a blind order book. You don't know even the wallet address of the other side because it isn't a wallet address. It's an account on our books and records that's managing that. And so that I think is a sort of a very trady way of doing it. And that has a huge number of advantages. One, it scales so you get performance scale when you're you're you're trading on it. Two, it's very efficient because you're not doing

lots of node management around everything that that's occurring because you we've got a centralized version of the nodes. Um, and yeah, we obviously want to use crypto to help manage liquidity in the future subject and you know, the Clarity Act not passing is slowing that down, but you know, yeah, those things are important to us as that bridge between TRFI there. >> Um, and then I would say why do you start a crypto? Well, US consumers didn't really have a great opportunity to get into this market. Or if they did, they had to get into that market in a very esoteric way. You know, you know, download a VPN, you know, figure out how you're going to put some money into a stable coin, move it offshore, and then

you read about and what there was a hack this week, right, with another exchange that got hacked, right? >> You don't get any of that. This money sits in a designated CFTC account. It sits it trades on the central limit order book. We know who everybody's trading with. So, you've not got that. We're a designated contract market, which means everyone gets the data at the same speed. You don't get people who get faster data than others because they pay more money for it. And so, there's a a very simple model there. But also, if you look at what Chairman Celig has done, and I'm an English guy, right? and I I come here to work in the states and I spend a chunk of time here um because it is so innovative and they're bringing innovation on shore and that is like

under the chairman Selig's leadership of the CFTC is phenomenal and I think that's great for America. I think that's great for the industry and I think it's great for solving that and so yeah sure we started at crypto because there were other perpetuals and therefore bringing us on shore was a good thing for our clients. We've launched gold. We've launched silver. They're taking off as as we've got markets in them in prediction markets which will gold be higher or lower every few minutes. They're taking off. We've got markets then on delta. You can be long leverage gold. You can be short leveraged gold.

We're starting to see those continue to develop. We we have um listed platinum and palladium. We've got um aluminium as I would say or my colleagues here would say aluminum. I think they're wrong, but you know, I'm willing to to not split hairs about it. And um we've got copper coming. And then after that, we've got equity indexes and then equity single stock perpetuals. And so this you start with a product. We've got FX perpetuals coming. You start with a product and what you do is you then augment it. And so why do you do that? Because we want to sit inside a regulated perimeter. We want to bring these great um innovations of of perpetuals and have them available to the US consumers both um retail and

wholesale and this idea of being a front end to a non-regulated market where potentially someone ends up you know facing a Russian moneyaunderer I'm not into that bag and that's why I'm at Kowski because we're on a regulated first parameter and so that's how we think about that and I think that's a pretty good way of bringing innovation And that goes back to that we we price it really well. So if you were to pull up a a screen and you would look at the liquidity, sure, there's a bit more on that, but the pricing at the touch is really competitive on Kali for all of these products that I've listed. And that's great because we've got market makers are there and the fees are really competitive. And so that's innovation and it's bringing lower cost to users,

small, medium, and large. And and frankly, we got a lot of people who are super excited about that. And these markets don't just explode. The first time um prediction markets like everyone thinks prediction markets was around in the last 15 minutes actually, right? Ki's been going six years, right? The the the curve is is is very much at sort of an upwards J, right? the fact that we're looking at perpetuals and saying well oh it's really start it's like it's actually growing much faster than prediction markets started growing at Kelshi right and so I think you've got to have a a sort of a step back and look at that and I would say you know we we meet again in 6 months Andy you know you'd say I think Andy you got that

right I got that wrong it's huge lots of interest it's really it's really interesting for you us and institutions to trade on these products >> yeah And we are we are certainly fans of perpetuals here and we've we've discussed the modality at length and how you know it does provide a better experience and you know one of the things that it does enable is margin and collateral and that was another thing that we saw recently was the CFTC issue guidance and also I think cowshi ask the CFTC for guidance on how margin and collateral requirements could look uh with prediction markets as well as per you know one of the things that occurs to my mind is just kind of the perception around prediction markets, at least in the US, it doesn't have really

[snorts] a great brand perception despite how popular it's been. You know, there are people that call the hyper financialization and the you know, the financial nihilism aspect of this and and they call it into question. And so when then you know we look at some of the nuts and bolts like I see there was Wall Street Journal article that was back in May and I was just curious at what proportion of traders on call sheet make money versus lose money and it's actually more favorable than I realized. Um according to that article 25.6% make money 74.4% 4% lose money, which if you compare that with some of the other venues, whether that be sports gambling, right, or um or really others, you know, 25% win rate for some of these users is

actually quite good. But the idea that, you know, we enable margin and collateral on these prediction markets means that I think we just accelerate the churn through these users. And I realize Andy, you're head of institutional trading. And so I believe that the institutional clients typically fall within that 25% group of the winners whereas the retail traders are the ones that typically fall in the 75% group of the losers. And so when you think about offering margin and collateral to the 75% how do we make sure that this doesn't accelerate the financial nihilism and the churn that people are so worried about on prediction markets?

>> So So first of all um I guess I have a couple of comments. I I I reject the winners and losers argument and actually what you find is that the Cali data is amazingly accurate and these markets are super well calibrated and these markets are not calibrated by um Wall Street. These are not calibrated by those guys. They're calibrated by individuals who are super forecasters that are making things right, that are improving the quality of the markets. And we've seen research pieces, KL, she's put some out itself. Morgan Stanley's written something, but there's a public paper by the Fed that talks about the fact that the data you get on uh payrolls, the data you get on CPI, the data you even

get on on interest rates in the Fed, and these are massive market moving things across all of all of financial markets including into crypto is more accurate on Khi and that's not because Kali is pricing it. It's because of the assembled geniuses that are on that market trading those markets. And so the idea that Wall Street is better I think is is is a a nonsense. So for instance in the July um Fed meeting we Khi had only an 18% probability that the Fed were going to raise rates. If you looked at CME on Fed watch it was 44%. They didn't raise rates. But you would argue therefore that there was there's some wisdom in those people and the people

who are trading that are not necessarily these these big guys. And so I think that this this trope that you know it's uh Wall Street versus a little guy I first of all reject. And then secondly um I think there is a societal value in in good information. I joined Kashi because I've got young kids. I worry about them being doomcrolled into ever and ever more random things on on YouTube or X or wherever they are. And I love the idea that you've got a a counterpoint to that in people coming together. the wisdom of crowds in in Khi and I think that's great. And then lastly, sure we we we've got new and innovative

products bringing new and innovative pricing to areas in the market that had not seen pricing before. And I think that's got value whether it's highlighting the cost of legislation being passed. We had a trade the other week which was on um in California about passing a certain law that would have made goat herders employees as opposed to goat herders being agency staff and the cost of running those goat herders went up to millions and millions of dollars. Now clearly some of the farmers were interested in hedging that cost but actually there was a societal value for one understanding the cost of the law and that wasn't priced you know that wasn't priced just by wall street kind of guys it was priced by individuals as well and so the value of those things to

society is not just in that lastly I saw an article that was superbly written by a gentleman by by John called John Lotheian who's a who's an um a commentator in in financial markets market recently and he was talking about prediction markets and he's not necessarily the biggest fan of prediction markets, but he was talking about the societal value of them as a as something that brings people together. And the other week a friend of mine was talking about the fact that they'd all downloaded the app in the in the bar. They were all watching the game and they were all having like these were like, you know, $5 um uh trades and the reality is if someone won the trade, they'd buy the next round at the bar. For them, it was a social engagement that was a fun thing

to do. And so, not all of the engagement is purely on a on a P&L basis. There's some value for being engaged in society. And this is the one of the ways that society engages. I I mean yeah I I think that there's a lot of a lot of layers there with regards to uh the the way in which the especially the younger population is evolving their habits of speculation as as well as thinking about you know uh investing and so it's clear that these new platforms Koshi and others are obviously like pushing the agenda there.

Um, you know, the perception thing is something that I think will evolve over time, um, as this becomes more normal. >> Well, on your on your perception thing, the thing I spend, I reckon, the most time on is trying to draw a line because people talk about prediction markets. >> Sure. >> And what I talk about is regulated markets. And for me, the concept of being, you know, I try and say, look, I want to be like the CME or I want to be like ICE. I think I'm, you know, we've got some ways to go. always thought, you know, a fraction of their size.

>> But that's an interesting story for me. But people talk about prediction markets and then all of the offshore stuff and and you guys have seen this in crypto land, right? This this is not a new thing, right? And so being onshore and regulated matters and that's the differential for us. It it's difficult to reconcile that when you have sports markets right next to some of those regulated, you know, distinguished contract markets. >> Well, sports markets are regulated. And let's talk about that. You know, people talk about that to me all the time. To be clear, if you're trading with a sports book, you trade with the sports book. If you win at the sports book, the sports book says you can't trade anymore. If you win on Kalia, we say,

"Well done. Thank you for improving our price. You've done really well." Right? And secondly, if you trade with a sports book and you don't like the position, what Kali allows you to do is you're allowed to trade in and out of it. You can also make the price. You don't just have to take the price. That's an exchange. That's not a I'm going to do a bet. You are trading a derivative on Cali inside the CFTC regulated environment. Now, you could say, look, that's a very different thing from a grain future, but 200 years ago, grain futures were viewed as illegal and banned, right? that you weren't allowed to trade on those because they were gambling, but they're now obviously viewed, sensibly viewed as legitimate hedges to manage your business. Koshi spends a lot of time um solving business

problems for people. We, you know, we've got the the story that I've talked about a few times, but we've got ice cream shops who hedge against the weather. Now, >> previously that would be something that only like a S&P 500 company can do. Now a mom and pop shop can actually manage the risk of their payroll and their rent themselves. That's a huge benefit for them. >> Andy, there's one more question that I have, which is that it's probable that in 2027 we're going to get a Supreme Court case between the federal court, Supreme Court, and whether that be the prediction markets themselves or the regulators or the states, we're going to figure this out because there's been several lawsuits at the district courts.

And we had a fellow on yesterday and he's been a big investor into prediction markets kind of talking about the ways in which this could go. Right? It's possible that the Supreme Court in the US could side with the prediction markets and the regulator the federal regulators and say that these are federally regulated. These should be regulated by the CFTC and you know the prediction markets kind of win in that case and you guys can keep doing what you're doing. The alternative would be, you know, the Supreme Court sides with the states and then there would need to be, at least in the US, 50 different ways of 50 different fragmented venues and each of those would have to comply with the different state regulations.

And then, you know, the third case would be you split the baby and you say, hey, some of these markets are real designated contracts, futures, they should be regulated at the federal level with the CFTC. Others look a lot more like sports gaming. they should be regulated by the gaming commission. Others even should be regulated maybe by the states or some other regulator. Do you think that there will be a Supreme Court case? And if there is, what do you think comes out of that case? >> No. So So I'll give you the Andy view, not the Kali view. Sure. The Andy view is I I think that's an inevitability that that's where we're going to get get to. My personal view, not not speaking there as a Kali employee, speaking as Andy. Um but secondly I will say now

just putting my calcia hat on the idea that why is America exceptional at financial services. Why is it so brilliant? It's got the great greatest trading business, greatest investment banks. It's got the greatest venture capital business in the entire known world which is which I think is a driver of American exceptionalism. And we've got these huge innovative companies in tech and and and etc etc that have come out of that. One of the foundational points with that is that everybody understands how to move capital, how to manage risk, and it's consistent across the entire country. The minute you get into these stories of bulcanizing that up into little segments that you can do

this or that there, and you got different taxes here or different processes there, you start to look like Europe. And I've got to tell you, having tried to do business in Europe, it's much better to do business in America. >> Well said. I appreciate your time, Andy, and for your answers. I know these weren't the most fun or easy questions. I really appreciate you standing up and uh >> and for what it for what it's worth, we've been big proponents of prediction markets for a long time. I was tracking Augur back in 2016 as, you know, one of the first, you know, applications on Ethereum. I've been following Robin Hansen and all the things that he does on future. So, these things have been around a long time. Like you said, Khi's been around six years now. you guys are, you know, finding a ton of product

market fit and activity and that's part of why people are looking at, you know, whether you guys are doing things the right way or the long the wrong way. And so we want to see these things succeed. We feel like they are valuable pieces of technology, financial market, intelligence, and information can inform public opinion. So ultimately, yeah, we we are on the same team here despite asking some of the tough questions, but I mean, you got to give credit where credit's due. You stood up here and you you took him like a champ. So, thank you for spending the time and answering our question. I I've got to tell you, I've mentioned I'm old. These weren't that tough, right? I mean, I was expecting way worse. So, look.

>> All right. Thank you for having me. I really appreciate the opportunity to put that in. And anytime you want me back, I'll be happy to be come and get some harder questions. >> All right. Let's do it. >> All right. >> See you next time. Thanks, guys. >> All right, Andy. >> All righty, Rob. I mean, hey, he answered. I mean, he answered. We got Tyler Gillos, who is a DC SEC tokenization expert. Uh, I've got some family matters to to handle here. I'm going to pass this to you. Um, this is going to be fun. Salman from Plume hooked us up with this. He's one of Salman's great friends. Take care of him. Ask him some tough questions. This guy is very much in the know as to why Clarity did not pass. What actually happened behind the scenes, what he

thinks about the CFTC new rulings, the SEC rulings, and more. I'm going to pass it to you, Rob. Good luck, and uh would love to hear your take as well on on that last conversation. I mean, I kind of summed it up there at the end. I think this guy, you know, he stood in the face of adversity. He answered all of our questions. I don't think our questions were that easy. I think we got to the bottom of really what's happening. Sure, we would have liked to hear a little bit more on, you know, some of the specifics around, you know, the the incentives and the volume trading and the market maker situation, the the churn and the, you know, the winners versus the losers and the platform and all that kind of stuff. But the reality is that yes, KHI and other prediction markets are in some hot

water. Um, part of that is because they are raising billions of dollars at multi-billion dollar valuations and they've seen a lot of activity and adoption. Um, and so, you know, that is not slowing down. Their hot water isn't slowing down. Uh, typically that's how things go when they get really popular popular. Uh, you got lovers and you got haters. And so, Khi certainly has both. Um, but our next guest is uh a little bit of a different topic. Um, somewhat related though on the regulatory front. So, we're going to be talking about that. We just got done talking about the potential Supreme Court case that Kolshi and the other prediction markets could face next year. What could shake out of that? Uh, we saw plenty of regulatory hoopla over the last, I mean, call it

weeks and months. And so, we're going to bring up Tyler. Uh, Tyler is one of the sharpest market structure critics in Washington. Spent five years as Senate Council helping draft DoddFrank. huge regulation uh that came out of the I believe out of the banking great financial crisis. He served as a counsel to the SEC commissioner Cara Stein has run healthy markets and investor focused nonprofit pushing for transparency and fewer conflicts of interest since 2015. And so Tyler, welcome to the show. It's a pleasure to have you. And uh how how are you feeling given clarity closure didn't reach but now we're seeing the CFTC and the SEC really pick up steam.

It's been busy busy and exciting times. How are you reacting to all this? >> Yeah. No, thanks. I really appreciate and glad to be here. Um well first uh my you know you mentioned me but healthy markets it's an investor trade group meaning we have pensions asset managers broker dealers exchanges data vendors. that's who I've sort of represented. And so, you know, before joining the the government, I was a defense council. And the thing that I think is really important is things are moving so fast that we actually aren't going to know what this looks like until sometime in the future. And as someone who's kind of been around, I actually left private

practice to join the Senate staff in the midst of a big financial crisis. And one of the things I've worked on several times since is other financial crises, be it the Archagos collapse or the flash crash in the equities markets or the flash crash in the treasuries markets. And so those are the things I work on market plumbing and what we're seeing right now in crypto and what we saw with clarity, what we saw last week with the perpetual futures filings for single stocks. Um what we're seeing in prediction markets, I know you were just talking a little bit about that um for things like sports betting, but we also want to think about it for you know stocks. Are we talking about key performance indicators and what does

that look like? [snorts] is we're seeing a golden age of a what I'll call regulatory arbitrage. It is not that people didn't think about trading stocks without having stock trading rules before. It's that now we're letting them. And so the question becomes like do we care? Do we care about stock trading rules? Do we care about things like knowing, you know, having shareholder rights? do we care about whether or not you know you're you have a broker who has a duty of best execution to you? They do in stocks.

They don't in this stuff. >> And so that's kind of what I've been thinking about as a practical matter. I'm doing the same thing that everybody else who's been doing these businesses for decades is, which is reading the actual actions, reading an exemptive order from the SEC, reading the filings on perpetual futures. And the reality is um there's a lot more words than actual substance to these things. >> Okay. I I'd love to dig into some of the nuts and bolts and I I think you know part of what you're talking about is you know what people actually want. And I think you're absolutely right that right now, you know, especially if you look at some of the tokenized stock trading activity on Robin Hood chain, you see

that these people are pairing these tokenized stocks with meme coins. They're looking for 10 to 100x on their money because of some financial nihilism and so they don't really care about shareholder rights. But maybe we'll we'll get more into that. I I'd love to start with clarity because I think you've got some insight into clarity, why it didn't pass, how close it was to passing or not, and that has now kicked off what feels like an accelerated rule making or exemptive process or proposed changes from both the SEC and the CFTC.

And so, why don't we start with clarity? What actually happened with clarity? All right. So, let's just I'm going to give you a timeline of what happened. So, we'll just give you a sort of a poor man's version of a Tik Tok. So, let's just say in 2024 the election, the digital asset industry, crypto, was very influential in that election, most notably against Senator Sherid Brown, who was the chairman of the Senate Banking Committee and cryp, you know, skeptic. Following that election, I think everybody was concerned. We had never seen an industry come in as aggressively and frankly as as as partisan as the crypto industry came in in 2024. There's

never been anything like it in modern history. And so that had a lot of folks, a lot of Democrats concerned, but frankly a lot of Republicans as well. So there were, for lack of a better phrase, they had proven to be effective on the political campaign front. And so [snorts] a lot of politicians, particularly fundraising politicians from both parties, were very focused on let's do something. And so we have the Clarity Act fly through the House because things fly through the House. Frankly, whatever side has the most money, things generally fly through the House on that side and they usually happen in a bipartisan way. Um, so not surprising. We repeatedly tried to engage with House members on some of the

substance back in the summer of 2025 and [snorts] several of them of both parties said we're not here for that. That's going to be the Senate's problems. Right? So, in some respects, it was clear that, hey, we know we're the opening bid here. We're not going to try to carefully refine this. There was no effort to try to make a bill that would withstand the test of time. Frankly, it looked like it had been written by a kindergartenner, not securities lawyers, [snorts] right? So, or a collection of kindergarteners, not real securities lawyers. And so, nobody took it seriously. Frankly, the financial service traditional financial services industry didn't take it all that seriously either. The members themselves were saying, "We're going to this is the

Senate's problem. They'll figure this out later." Now, with all due respect to the House members and others who were working on it, it was just a hodgepodge of a mess. I've worked on big ugly legislation before. This was not seriously thought through in terms of just facial inconsistencies. So, it came to the Senate and everybody knew it had to get real really worked on again. There we saw in September of 2025, the banking committee puts out a draft and some requests for comments. The ad committee is working on its own.

There's actually a July draft too, September draft. In September 2025, the Democrats basically say, "Hey, we have some principles we want." We call this um the working group or you might call them some folks called them the cryptocurious Dems. These were the folks, you know, the slightly more than a dozen Democrats that were really likely to try to forge a a bipartisan agreement. And if you read that document of the principles, nothing in there should strike anybody as crazy, right? Like everything in there is like, "Oh, that makes sense."

And so we then there was a process of negotiation and from frankly September to January you got what I think everybody thought was a very close deal. Right? I think the Senate Banking Committee Republicans, I think the Senate Banking Committee Democrats, I think people who are out off of the banking committee thought that you were maybe the language itself wasn't done and dusted, but you were very close. You could get to the bill. It would have passed a closure vote. That bill would have, you know, flown through the Senate Banking Committee, would have gotten a closure vote, and you would have negotiated to get to a yes.

And then it got blown up. And I understand that other people, you know, I am not a person who knows, you know, what the motivations were of particular market participants, but you did see a notable ex post by one uh very important individual in the crypto industry who listed enumerated reasons for his objection for Coinbase. And the top one was it effectively banned tokenized stock trading. It didn't. What the bill said is it had a language that said, "Hey, a tokenized version of a stock has to be treated like a stock, a tokenized." So, it said there had to be regulatory par. Now, that was something that had bipartisan agreement at the

SEC, on the hill, frankly, every securities lawyer, every market participant in traditional finance is like, hey, we don't want one version of something to have one set of rules and the exact same thing to have a different set of rules for different players. That's how you get absolute disasters and manipulations. So this concept of parody wasn't objectionable, but it was Brian Armstrong's first objection in his post. And so we look at that language. I had never before seen a markup get pulled because of an objection of a market participant.

>> Ever in my career, I've worked for the chairman of the Senate Armed Services Committee. If Loheed Martin didn't want a hearing to happen, my boss was not going to cancel the hearing, >> right? You senators don't they're very important people and they know it and they don't like to be publicly they don't like ever to be told what to do and what not to do and they certainly don't like being told what to do and what not to do in public and certainly by by you know tweet or what have you. that mark that markup got pulled and I'd never seen anything like that. And after that, the language walked away. The bipartisan compromise disappeared because those objections,

right, had to get satiated. They had to get uh resolved certainly for the Republican committee folks who were very, very, very interested. And so from then on, the language essentially walked away further and further and further away. >> And so Tai, it sounds like you're saying that Brian Armstrong was the primary reason that the Clarity Act blew up. >> I don't know what other reasons, right? But what I do know is that was a big one. I think their objection was unique and I had again prior to that objection being voiced and the draft being released on a Monday for a markup a couple of days later

everybody thought this was a go and several market participants in the digital asset industry also had agreed like we all thought we were there and then we weren't and since then the language sort of moved away now Other things happened too, right? Other things that happened, most notably, President Trump's personal ties to the industry, relationships about world, you know, financial liberty, their who their funding sources were, what they were doing, where they getting licenses, all of that happened.

billions of dollar stories in, you know, media, frankly, around the world, um, tying President Trump to things that didn't look good, not just conflicted because he was directly invested in the industry, but also practices that themselves were facially concerning, right? Like rugpull types of things, investors loing 99% of their investment, those types of things. So, those stories started to really come out after January. And because of those stories, you also saw to start started to see [snorts] um more focus in the political process primaries both Democrats and Republicans. To the extent that the

digital asset industry got raised on the campaign trail in primaries, instead of being something people were happy to tout as supporting in 2024, it became happy to show that they were objectionable. And I'll raise one person, perhaps the woman who is the face of the digital asset industry in the House Democratic caucus. Angie Craig was in a primary and got walked in her primary by Peggy Flanigan who campaigned notably against the digital asset industry. And so you have Democrats who were previously thinking, "Hey, I want to be supportive in part for campaign funding reasons or otherwise. Maybe I'm

just really supportive at of blockchain. Frankly, I'm very supportive of tokenization. Not the versions we're seeing, but very supportive of tokenization running away. So, you have, you know, one, you had a deal that looked like a deal and then all of a sudden it disappears and the language moves away from you. Two, you have the president's own personal ties and family ties and those are coming out and frankly getting worse. Then you have the primary season happening and again it becoming increasingly resonating with voters of both parties frankly but increasingly resonating with voters that this industry has widespread corruption and sort of I'll call it integrity problems setting aside stability issues

>> right >> those things made it so on the Democratic side you're less and less likely to get TS >> the Republicans ans wanted a no vote too. And this is the part that I want to flag for a second for forgive me for filibustering. I'm an old Senate staffer. We're good at it. So, one of the things I think we realize, so as the Democrats start to look away, we realize that the Republican leadership, not saying rank and file members, I think several Senate Republicans did want a bill to happen.

Frankly, I think a bunch of Senate Democrats wanted a bill to happen. They wanted a partisan vote. They wanted it to fail. And part of the reason that we wanted it to fail is they also realized and maybe a few key players in the industry realized that the SEC and CFTC for the longest and first time in their history are still partisan regulators. There are no Democrats. They're supposed to be five member commissions with Democrats. They have no Democrats. At the CFTC, there's only one member, not five. That's never happened before.

And so, I think what people realized is that the regulators were willing to give the industry far more and frankly far more quickly than Congress passing a law would then be implemented, could then be doing something. So, if you put together a Senate majority leadership that wants to say, "Hey, we could have a partisan vote and fund raise off of that, will make the language move away from the Democrats. We don't care if we get them, frankly, at this point. We'd rather not." And then you have maybe a handful of market participants, maybe very sophisticated ones, who realize, hey, we'll dust up these regulatory filings.

We'll get this exemptive order. will get these rule proposals and we'll get them a year or two faster if we go directly to the regulators and don't go to Congress. >> Oh man, I mean that's a that's making a deal with the devil a little bit. I mean you're making a trade that we want this to happen sooner now, but it's more temporary and it could all come crashing down two years from now if there's a different administration and they put in place a different regulatory regime. Absolutely. And to be clear, it could get taken down by the courts. Yeah. Like I'll just argue that that tokenization exemption order u that we saw from the SEC,

>> I think if that were to be challenged in court, they would lose. There's a bunch of case law on this. The SEC has lost a similar exemption order in the notsodistant past, >> right? >> And so we could we would absolutely if industry chose to challenge it, now I'm not sure they will, >> right? uh that exemptive order, I think that the SEC would lose. I think with the perpetual futures order, those are going to get challenged in court and I think the CFTC will lose. >> Yeah. Wow. And so, um, Ty, I really want to get into the tokenization exemptions and proposed changes that we are seeing coming out of the SEC and the CFTC

because like you just laid out, clarity failed for a v variety of reasons. industry participants like Brian Armstrong, Republicans and Democrats. Ultimately, this thing failed for one reason or another. And we are getting accelerated SEC and CFDC rulemaking. And a lot of that is around tokenization. And just a couple minutes ago, you said you support tokenization, but you don't support the tokenization rules that we're seeing come out coming out of the SEC.

Why? Why? Why do you support tokenization but not the rules we're seeing out of the SEC? >> Yeah. So I former economist as well as lawyers so forgive me but if you have a bundle of rights like that's what a stock is. It's a bundle of rights and obligations. You can put those bundle of rights. I could write them down on this piece of paper or I could write them down in a blockchain. It's still a bundle of rights. And the technology isn't particularly unique in that in that regard. And it doesn't necessarily mean you can't comply with any of the SEC rules and that the market participants can't comply with the SEC rules um for tokenized securities and that could be for stocks or anything

else. The exemptive order they did was not a rule making. Rulemakings take years. You have to ask questions. You have to get comments. You have to, you know, analyze the comments and then you finalize a rule and then it's challengeable in court. What the SEC did is they did an exemption order without notice and comment. They didn't seek questions first. They actually sought question asked questions in the document. You don't normally see that. I think that's part of the reason why if it's challenged, they'll probably lose in court. There are requirements on how agencies can operate and normally they're not allowed to do that. But what they did is they said, "Hey, if you tokenize stock and it meets the token meets these really pretty strict qualifications

to the point where I'm not sure any existing tokens today would meet those qualifications, then all of the people that are doing the trading, the exchanges, we have lots of rules for stock exchanges or futures exchanges. You don't have to comply with those. we'll give you like one 1,000th of those rules, right? [snorts] And if you're a market maker in these tokens, um, we're going to exempt you from like 1,000th of the requirements that we would normally have on a market maker who would have to be a registered dealer or broker. [snorts] So, in that regard, the SEC was sort of strict on what a token has to look like, right? like probably more strict than

most people in the industry would have liked. But then they exempted the ent, you know, the entities doing them from all of these other rules. So let's just use as an example. I trade stocks. My members trade stocks. My members trade derivatives of stocks. So stock futures, equity swaps, those things. Those markets are linked together, right? Because we have data streams that link them together. And the regulations are linked together. those markets, meaning the stocks and the futures, the derivatives of those stocks, >> the speakers and the and the equity swap.

>> Those are all linked together. >> Those are all linked together via data streams and a set of rules that are designed to interlock. >> These things aren't going to be subject to any of those. And since they're not subject to any of those, then what happens if someone, you know, were to trade a gazillion dollars worth and create a blowup, right? like how do you regulate that? How do you identify that? How do you stop that? So, how does someone in the traditional stock market not have their traditional stock market explode, go to zero, or go to infinity when someone is trading a derivative that's really not regulated? Again, the

SEC did a decent job of regulating or proposed regulating of the token. They didn't do a good job for the intermediaries. They didn't link them together in any way. And so what I've been looking for is frankly a ton of market participants. This is something DTCC and over 50 firms have been working on, which is you can do this fully compliant with the securities rules. >> Like tiny tweaks. This doesn't say, hey, just because we put it on a blockchain, none of the rules apply to you. Like shouldn't best execution rules apply?

Shouldn't we have the ability to surveil these markets for manipulations? Shouldn't we be able to see if there's insider trading in them? I I would think so, but there's no practical way to consistently do that under this regime. But because the token is so restrictive and because of the dollar caps and the time limits, I just don't think anybody's going to really use it. >> Okay. And so, we are seeing a lot of adoption and trading activity on some of these tokenized stocks. And we had Taylor Lynman come on this show and talk to us about why these are equity linked debt instruments. They're stock tokens.

They're not the colloquial tra traditional equity structure because they don't maintain a lot of the same governance rights, voting rights, and shareholder rights that you would get if you owned a traditional share of a stock in a public brokerage account. That just full stop. And so, you know, despite the limits and the caps, there are pretty widespread adoption and act trading activity of these things, but they don't have the same shareholder rights. And so, it does beg the question that we sort of addressed at the beginning of the show, which was, you know, do people really care about that? And I think the answer is right now they don't because of the certain customer segment. the the market participant that is trading these

things on chain is the same market participant that traded Dogecoin a couple years ago and traded GME on Robin Hood and they kind of float around. It's this mercenary capital that goes to where there's a lot of volatility because of the financial nihilism. They're trying to hit a lottery ticket. They're trying to gamble. They're not looking to put together a portfolio, right? That is going to grow over the next couple of decades. And I think you know what everyone kind of you know myself as a technologist a lot of technologists that are in these regulatory bodies they want to move the real financial capital markets into a more efficient modern technological format but they want to do it for you know the lay person the person that is

looking to build a portfolio over the next couple of decades. And so my question is, you know, again, we had Taylor Lynman on the show. He was kind of describing some of these proposed changes and he said, "Look, the reason I'm on your show and why I'm going on this podcast circuit is to drum up commentary, to actually engage market participants and listen to the industry." And I had to give them credit where credit's due. If you compare this to the last regulatory regime, Gary Gendler did not listen and he ruled by enforcement. And that was something that pissed off a lot of people in this industry. At least this regime is listening. And so if Taylor Lynman is listening to this right now, Tai, what do you tell him so that we change the

proposed changes and we do tokenization the right way? >> So there's a couple of things. So first thing I want to say is what he described is a frankly a total return equity swap with an unregulated counterparty. I apologize for using institutional investor terms, but it's not like those things haven't already always existed. Um, the idea of having exposure to a stock price movement um is something that happens and has happened for decades. And the versions of that that happen you what you what the investor gets right may not be voting power with the underlying issue but they also get the risk of the person who's selling

that to them blowing themselves up or going bankrupt, right? They've got a whole new set of rights and obligations. They've got a whole new set of risks that are somewhat different. And that's part of the reason why the tokenized version in the tokenized version that they regulators did doesn't actually work the way these tokens are set up. So the exemptive order that the SEC did said, "Hey, these things can comply with our rules." Doesn't actually work at all based on what the firms are doing.

because it what they've got is their offering maybe hedged, maybe unhedged, maybe collateralized, maybe uncolateralized, but it's essentially an IOU to the customer. And we have lots of rules related to that. None of these things are applying to them. So, I would say we actually have a regulatory FRAMEWORK FOR THAT EXACT product and we could sell those things um that those exact same economics. we're just not choosing to do it. So again, I I I'm old enough to say I looked into I spent a lot of time researching the causes of the Great Depression, the financial collapse of 1929. Then I got 1980. Then I also did 2008. Um I've also looked at

the flash crash of of 2010. I've also looked at ARGO's capital management. And all of them were essentially the same types of problems. you have a financial instrument with one set of risks and you have a related analog or derivative of it that's not well regulated and when those two things that's when you have the crashes and collapses. So I would say actually go to the DTCC, go to NASDAQ, go to um the SEC and say what about this existing tokenization framework that complies with the rule that the SEC authorized frankly over a year ago and figure out there what you

need to change because it isn't hey we need a broad exemptive for all the market participants that ever touch these things. I just don't think this is going to work. You know, to be blunt, it's a moneyaundering problem and a market manipulation problem. Something that I think some of the prediction markets and some of these other that are also looking in uh are now focusing. One thing we're spending a lot of time on tokenization. Perpetual futures is where we are going to see lawsuits, right? That's where we are going to see lawsuits because those products are extremely attractive to traders with leverage with just all of the lots of advantages over cash equities. And so if you see perpetual futures in single

stocks, frankly, I don't understand how the SEC hasn't sued to block them. Again, the SEC historically, Democrats and Republican le SECs have zealously enforced their jurisdiction over securities, and there's no way I think anyone could credibly say a single stock, you know, perpetual future is not a security. [snorts] Um, and so there I think we're going to see the lawsuits. Um, and we'll see how those play out. I I think there is a large swath of the traders that are on chain right now that are looking at getting into the US equities class and kind of migrating over from this

cryptonative asset class. And perpetuals is one of the most popular modalities through which to express a position on these assets. And so I think there may be some there may be some single stock perpetual futures out there right now. I think they may have some loose geo blocking that prevents US customers from trading those products. But that is certainly something that people are going to want to trade. And so what is the right way? And I think this will be our last question. We could go for hours here and filibust together.

But I think the last question here is what is the right way to regulate equity perpetual futures whether that be onchain or off-chain. >> So first off I think it's the exact right question to end with and I'll say look perpetual futures a couple of things setting aside the name there's a real question about whether or not it's even a future. Um, hate to get too definitional here, but a future requires a future delivery date certain because every other asset like a stock, we don't call you, you say a stock, I buy it and I can hold it as long as I want and then get rid of it when I want to, right?

What a perpetual future actually is is just a swap. The rebalancing mechanism is exactly how a swap rebalancing mechanism works, right? But the the reason why we're having this disconnect in the US markets is again the the bill I actually worked on the DoddFrank Act, title seven of that regulates swaps, right? And it presumes that those are going to be an institutional bank large financial services firms. It doesn't assume that they'll be traded by individuals from their PCs, right? And so one of the things I think or much less their phones and much less through some other app. So one of the things I think we have to recognize is we built a

bunch of rules and a bunch of laws frankly just a couple years ago and they were assuming that those products would be sold to institutions only. And we built no regulatory regime and frankly it's prohibited to even have those for retail. And the reason at the time was one, retail wasn't interested, and two, they're super risky. We had just come out of a world where the banks had blown everything up by trading derivatives that were not properly regulated. We sure weren't saying, "Hey, let's let people who don't have giant compliance back offices and regulators um doing this." So, I think the way to do it is

to say, "Hey, look, we want these economic these swaps. We want them to be available to retail and how are we going to put safeguards around them? The advertising, the custody and whatever. None of that stuff has been thought through. Yeah, I I I think that is exactly the right lens to look at this through. I I'd be remiss if I didn't mention a comment that we just got in the chat because I want to I want to get a sense of how you would respond to this. It's just one word. They're calling you a doomer. And I don't get the sense that you're a doomer, but I want to give you a a chance to respond to this because a lot of crypto and onchain finance has been wild west, you know, financial experimentation,

democratize access, those products that were, you know, predominantly for institutions. Us at retail, like we don't want to meet, you know, accredited investor laws. we want to go and trade those and you know let us win money and lose money and invest in the things that we want to invest in >> and so how should we so so yeah please just I I want to give you a chance to respond to the you know the the the doomer comments >> yeah no appreciate it look um I'll do I'll do something unexpected and I'll say if this uh if the current trajectory holds and we see perpetual futures in individual stocks and S&P be traded at the CFTC without the SEC's oversight. I

don't know if it's two years. I don't know if it's five. I don't know if it's eight. It's definitely under 10. We have a broad stock market collapse. Absolutely true. I believe it. I've seen it. Frankly, again, we've seen these massive market events before. This is exactly how they happen. So, I think that I'll say yes. Do I think that there are enough factors involved to potentially get this right? And the answer is yeah. I think the SEC wants to be responsible here. Um I think Congress wants to be responsible. I think market participants want to be responsible and some in the digital asset industry do and some are just saying I shouldn't have to comply with any of this. Right?

Like the folks who say I shouldn't have to comply with anti-moneyaundering laws. I'll I'll say I agree to disagree. I think we should have anti-moneyaundering laws. I think we should know who's trading in our markets and whether or not they're building positions with leverage that can blow up stocks or manipulate the markets. I think those rules should exist. >> And so I think the regulators, again, not regulators, I think the SEC is focused on that issue in the stock market. I think it's they're in an uncomfortable spot as the Republican commissioners who want to be pro- digital assets and pro- crypto, but at the same time are being pushed to go beyond their comfort zone. And that's why I think we got that innovation

exemption that doesn't really work. >> So I would say I think there is a lot of of if folks look and say let's pump the brakes. Let's think of why these rules exist for just a minute. You'll say, "Hey, we can do a version of that that makes sense here." Right now, we're not having a discussion about what version of that makes sense. We're saying all or nothing, >> right? Yep. Absolutely. And it's time for a more nuanced discussion. Ty, thank you so much, man. Really, really appreciate it. Shout out to our uh our our mutual friend Salman from uh from Plume. And uh would love to have you on again. I mean, there's so much happening that I feel like, you know, we we'll never run out of things to talk about.

Um, so anytime you want to come on, uh, let's make it happen. And, uh, yeah, thanks. >> Hey, thank you. Take care. >> Absolutely. See you again soon. Thanks, Ty. All right, guys. There you have it. I mean, super insightful. The fact that, you know, Tai is out there in DC. Um, I mean, you know, talking about how Republicans wanted this Clarity Act to fail, you know, that is news. talking about how a lot of this tokenization is great but not doing it the right way. Like you know some some some things that we might want to consider and think about.

Um but honestly u it's always good to get a fresh perspective on this because a lot of times you know we talk to people that are all bowled up on tokenization. They want it to happen you know at all costs and uh we shall see. We shall see. Our next guest, uh, big friend of the show, you guys know him well. I gave him a big hug the last time I saw him at Arc mainet, Joseph Shalom. He spent 20 years at Black Rockck where he helped launch IBIT, uh, ETHA and Bidd before joining Sharplink in July 2025 and becoming sole CEO that December, running one of the largest corporate ETH treasuries in the world with Joseph Luben as executive chairman. We are big, big fans of Sharplink and Joseph Shalom.

I'm excited. I feel like Joseph and I and uh maybe a couple others out there are some we're we're it feels like we're a dying breed, Joe. It feels like we're one of the few that is left standing in a bullish Ethereum position and so it's a pleasure to have you back. >> It is great to have you. Um and you are a hard worker. It seems like your partner is in Florida probably pregaming for Florida versus Old Miss. [laughter] >> Yes. Yes. This Saturday big game. We are uh we are Gators, you know that. And so we've got a big game on Saturday. We're excited. Um I mean, how can you not be having fun? How can you not be excited with uh with what we're seeing out there?

>> Uh I am bullish right now and I think we're through the worst of whether you call it a cycle or a consolidation period and I think the best is in front of us. So I'm actually quite optimistic and bullish and I hope that comes through today. >> Yeah, absolutely. Well, um I I am as well. And I think it's important to remind people why we're bullish Ethereum somehow despite Ethereum being at the center of on the onchain economy and tokenization and tokenized finance being in the heart of its super cycle. Somehow people have arrived at a bearish Ethereum conclusion and that's not what we've arrived at. And so it feels like there is a disconnect. And I think this is why I think what happened is that we

got two thesis that started to evolve as people were thinking through the winners of this upcoming cycle. On one hand, it was people that called the hard money cycle the Bitcoin and the Zcash and you know there's gold that kind of is out offchain but still kind of plays into that. And then you've got the revenue meta and you've got the hyperlquids and the lighters and the pump funds and the aerod drromes and a lot of the coins and you know those that are um acrewing value from their protocols getting real traction real revenue and then acrewing that to their token >> and then people saw Ethereum and they said look it's kind of stuck in the middle. The Ethis money thesis didn't really play out. It's not generating a

ton of revenue despite Robin Hood chain absolutely flying in terms of adoption, in terms of trading activity. You got Arbitum that kind of provides this middleware component to Robin Hood that does have a revenue share agreement that scales, but Ethereum has a flat fee component for its block space. So it even though Robin Hood's you know revenue is up 10x on its trading activity, Ethereum's revenue that it acrru is flat. And so people sort of look at that and they say, "Hey, how is this going to make sense in a world where a lot of these applications are driving a lot of revenue and we have other assets that are hard money, scarce

assets that are benefiting from the accommodative monetary policy that we see at, you know, the highest level? What is the bullish ethesis? Please remind people what Ethereum is and and why it is valuable." So, Ethereum has been building for 11 years since its Genesis block. And if you just start with the scoreboard, we're both fans of uh sports. Ethereum has over 50% of all stable coin activity happening on them. And stable coins are 300 billion today. They'll be trillions in a few years. Uh over 50% of tokenized real world assets. And that is in the bottom of the first inning.

There's only 30 billion. I would expect that to be in the hundreds of billions by next year. And then DeFi activity was built on Ethereum. It has the most TVL by a factor of eight or nine. And then when you add in the newest element, which is Agentic, Agentic will have to run where the liquidity is. Um it's not going to run on chains where there aren't stable coins, where there aren't tokenized assets. uh they need to be able to move money in hyper speed and at really paces like we've never seen before. So I would argue that this is an internet infrastructure story and that ether will end up being the trust commodity for the future financial rails. So if you take a step back,

Vitalic calls it the world's computer. I think Joe Lubin and I uh would start with it'll be the settlement layer for almost all of finance and that is extremely bullish. And you talk about people uh who may not buy into this thesis. You know, there were some very prominent people who sold out and capitulated uh in June when ETH was trading at 1530 and they missed a 70% run just in 3 months. So this is going from narrative to production and I would be betting and we still have conviction a year later that this is the exposure that will be driving most of the financial system on a go forward basis.

So don't look at revenue alone, look at the scoreboard. And that's the bullish thesis even before Agentic is added to the mix. >> And and we'll get into Agentic because your former firm Black Rockck put out a new research paper that describes why stable coins and blockchains make the most sense for Agentic Finance. >> But first, Joe, I want to double click on two words that you just said. This this this idea of a trust commodity. Can you unpack that? What is a trust commodity and why does Ethereum fall into this asset class?

>> Sure. So, I spent 20 years at the largest institutions in the world at had a front row seat looking at how market structure worked, but also how people made decisions about their future of technology and the applications they used. And I know three things for certain. There are only a handful of things they care about. It's not hype. It's not sentiment. They want security. They want trust. and they'll go where the liquidity is and Ethereum is dominating on all three. So when we talk about a trust commodity, look at the use case you referred to which is Robin Hood built on arbitrum, an Ethereum layer 2 protocol. All those transactions settle on Ethereum mainet. They use Ether as

the gas fee. And as you see more and more of these case studies of people building whether it's an L1 or an L2 application, the trust commodity is every transaction requires Ether to secure it and to make sure it's paid in gas fees. And while the revenue is low today, there are many businesses where you start by trying to dominate and win market share and over time pricing power happens. People knocked Amazon and Jeff Bezos without recognizing that he was building a new type of e-commerce. He wasn't just an online book seller.

People knocked Uber for subsidizing transactions for both drivers and users in the early days, not recognizing they weren't a ride share company. They were doing much much more. So in the future where today most of transaction trust on a T+1 basis involves human trust and insurance and contracts um in the future it'll be ether as the trust commodity that's securing transactions and as that happens more value will endure to ether the token just wait and watch and we've seen that narrative start to play out as people like ARC you know she launched yesterday a tokenized VC fund on Ethereum

When Black Rockck launches funds, they start with Ethereum and that is where uh that's the signal we should be looking at because they believe the security trust and liquidity and that's why Ether is the ultimate trust commodity. >> Incredible. Yeah, I I I I mean I think that's extremely well put. I think this idea of a trust commodity, you know, it gets lost a little bit when we are in these bearish market conditions and you know people think you have to show me the money. What is the price to earnings? What is the discounted cash flow? kind of lose sight of the vision that we started with, which was to replace these systemically important systems or really evolve those systems into a decentralized cooperative. The biggest one that comes to mind is the

DTC, the depository trust and clearing corporation, which clears roughly hundred trillion in securities. I think it does between four and five trillion dollars every single or excuse me four and five quadrillion dollars of settlement volume every single year. And so quite literally on the scale of quadrillions um custodying you know over a hundred trillion dollars of securities. This is currently a privatelyowned industryowned cooperative. They don't have a public market cap and so it's difficult to value something like the DTC but we can understand because of its scale how systemically important it is given that we're thinking about Ethereum as the

settlement layer for all of finance and I think that is you know extremely important nowadays we can see the vision it is all of finance it's not just these cryptonnative tokens as we get tokenized equities Ethereum does be become this this truly decentralized you know, cooperative that is the settlement layer for all of finance can can certainly, you know, do the same scale of quadrillions of dollars of settlement volume every single year. Is the DTC the closest analog that we have if you were to decentralize the value and put ownership into the hands of, you know, Ethereum token holders? Would that represent a similar value structure that

we have between the DTC and Ethereum? >> I I actually think the internet is the better analogy. Um you don't think about the fact that every time you transact you are using the internet. Just think of the internet with a token where it requires the token to write a transaction on block. And as much as we're talking about Ethereum today, you should just think of it as the most programmable blockchain, in the future, we're going to be talking about the applications that are built on top of that by the Robin Hoods, by the ARCs, by the DTCC's, by the Black Rockcks. But underlying that will be uh a blockchain based system of Ethereum. The value will

inerture to both the application layer and this decentralized uh infrastructure layer. But my hope and belief is that in a couple of years from now, we're not going to be talking about the blockchain. It's just going to be what underpins most financial activity in the world and most agentic activity in the world. And um that is how I would think about it more than a cooperative because the DTCC does have owners. It's almost like a country club. Every member takes responsibility. Ethereum has no CEO. It can't change the rules of the game. And that is probably the better future analogy. It's censorship proof. You can't get debanked and you know the rules are not going to

change from under you. So that is the better analogy. And we've been publishing uh over the past week uh a lot of thought pieces around the agentic economy. Ironically, in parallel to my old employer, Black Rockck, and a lot of them converge, and I think we're underestimating what the impact's going to be over the next couple years, not just on the crypto ecosystem, but on finance at large. It is going to be disruptive and it's going to be really beneficial for consumers. >> Yeah. So, so let's talk about the agentic economy. I think with the release of Facebook's Muse, XAI has Grobbot and then the duopoly at the top of the AI frontier being anthropic and open AI, I can very easily see, you

know, consumer level agents being released from the frontier labs very very soon. And then you have this consumer ready network of agents that will be online doing several things both in finance and beyond. And so the agentic economy is very real. There are some standards that have started to develop, X42 being one of them. And we were at the ARC mainet uh launch that talked and we were talking to Jeremy Aair about the Agentic economy and how X42 and and stable coins work within that. Your former employer Black Rockck, you were former head of digital assets I believe at BlackRock. Um they have put out plenty of research as well as of you. And so you know some of the things

that they're saying three real key points here. One is that LLMs and blockchains share common computernative digital foundations. So these already speak a common language. The AI models and the blockchains themselves. Two, Agentic Commerce requires machinenative payment rails. And we know that stable coins are machinenative payment rails. And as you mentioned, Ethereum is where 50% of stable coins currently live. And then three, compute is emerging as a new and potentially large market for digital assets. And so maybe you could help us wrap our head around these three components being compute, stable coins,

and the common language between blockchains and LLMs, and why Ethereum sits at the center of these three pillars. >> Sure. I think of those three pillars as things that are essentially going to be for the next generation the means of production, the means of communication and the means of payment. But if I take a step back in early days of any innovation, you sometimes need to focus on the use cases. And I think Meta's release of Muse will start as a consumer assistant helping you with your day-to-day tasks. The second element is um agentic commerce and you've seen estimates that from uh deote and others that there'll be somewhere between 17

and $30 trillion of commerce buying and selling goods driven by agents. We've been much more focused on Agentic Finance, meaning an agent who has access to your accounts who is going to help you do absolutely incredible things from understand uh your idle cash, move it out of a, you know, seven basis point checking account into money market rates that will pay 10 20x that. Who will help you build better portfolios that understand your short and long-term goals? who will help um rebalance those portfolios, do tax loss harvesting, and that's just the asset side of your balance sheet. But today, you often go

to a mortgage broker to pick a mortgage. You are probably limited as to what those distribution arms are. You get a insurance policy. It renews without you thinking about it. And the biggest difference between the pre-agentic world and the post-agic world, I'm going to oversimplify. The reason why people don't meet their financial goals almost all the time is because either they lack financial literacy because it's not universal but more important what's universal is you lack attention span. We are in an attention deficit society. But when you have an AI agent that has unlimited machine intelligence and essentially financial literacy and they have

unlimited attention they will do these things for you 24/7. What the Black Rockck report points out and what I published over the last couple of days is the traditional financial rails cannot support this. Agents need to be able to pay agents trillions of dollars uh on a given week or month and they're not waiting a day for that to settle. They need to be able to make micro payments. And when they need access to your accounts, the traditional banking system is not going to open up to agents because they're afraid of their fees being disrupted. And so what you'll end up having is different blockchains, Ethereum, Solana, Suie, and others are going to have specialization and these agents are going to be running on your

behalf 24/7. And I think we're vastly underestimating the impact it's going to have on the fee pools of traditional finance. We estimate agents will touch about $4 trillion of fees. Much of that is going to go to zero. Some are going to move to disruptors, but hopefully most of it will be put back in the hands of consumers. So there is consumer helpers, there's aic commerce, we're focused on agentic finance, and the Black Rockck report focuses on a wider aperture. And of course markets are forwardlooking and I think people do realize that Ethereum is the home of tokenization. It's also got a foothold as one of the primary, you know,

benefactors of Agentic Finance. But the time horizon, the the time to ultimately see this through, again, markets are forward-looking and will preempt all of the trillions of dollars of volume from Aentic Finance. But at what time scale do you see this happening? Are we talking years, decades? [snorts] >> Yeah. So, can I go back in history? I'm not a boomer >> but let me share >> on if you think about stock trading we all grew up with maybe a parent or a friend's parent was a stock broker they were the ones driving the fancy car that's because they had a moat they had commissions that were fixed and in the 1970s the SEC undid that and it took

several decades for stock trading to go to zero most young people don't understand used to pay high fees commissions went to zero That happened in slow motion. This is going to happen in hypers speed. It took almost a decade for e-commerce and a full generation of people to get comfortable transacting online. Agentic finance will take quarters or maybe a year. Um it'll go even faster than generative and it's just going to be part of embedded in our lives. So, I think very quickly you're going to have disruptors like Stripe, like Coinbase, like Binance, uh like Robin Hood, who are going to be building these super

apps that are going to have access to all your accounts, where you deposit, how you earn, your credit cards, your stock trading, your crypto accounts, your mortgages and borrowing and uh insurance. And they are going to start by first surveilling everything you do and make recommendations. And you're going to be a little bit reluctant to let them act at first. You'll let them move your cash to a higher account. You'll let them rebook your flight at a lower fee because there's very little harm. But over time, they'll start by making recommendations with a human in between. Once they learn your preferences and you start trusting them, you can give them more rope. They'll start rebalancing your portfolios. I don't think it's going to happen in 2026

fully, but I think it's going to happen really rapidly. And I think the best quote here is what Bill Gates often says, whether you think of a team or a technology or an innovation, we vastly overestimate what's going to happen in one year. And humans vastly underestimate what's going to happen over a course of several years or a decade. This will be the case study, I would say, the next financial revolution that we haven't seen in a generation. And it might be the strongest uh and most dynamic crypto use case that we've seen because it's going to touch trillions and trillions of dollars of transactions. Not the $3 trillion market cap that crypto has today. It may be the

killer app of crypto, but it'll expand to all of commerce and all of finance. And when we think about the the ownership and the value flows from this wave of economic activity that I think we can all expect, there is, like you said, potentially $4 trillion of economic value that can flow through Agentic Finance. Let's say Ethereum is able to uh materially gain, let's say, 50% or greater market share. I think that is certainly doable especially if you look at the stable coin uh uh the stable coin market as a proxy for Agentic Finance because that is predominantly how the agents will be

transacting and so if you look at Ethereum's market share in Agentic Finance and you look at the potential of trillions of dollars of economic activity walk us through the value acrruel mechanism for ETH the asset again it's a trust commodity and so is it simply this this potentially implicit association that people have in their minds where I know my stable coins are being transacted my agents are um utilizing stable coins to make these transactions they're and and they're doing so on Ethereum and so in order to gain a piece of ownership over this economic activity I should buy and own

ETH is it providing some sort of intrinsic value. Does there need to be any sort of revenue share or or revenue flows from that economic activity or is it more so this implicit perceived value of the place where the econ economic activity is settling that leads us to own the asset. >> I think it's it's going to end up being some combination. But if you think about it, uh, agents are going to bring hundreds of billions of new users. The agents are going to be the new crypto users, the new finance users on behalf of humans. And uh, you may have several of them and hopefully they have

persistent identity. They can work across different chains, different applications. This won't be gatekept. But if that's the case, the value that's going to flow through here is not going to be measured in trillions. It's going to be measured in hundreds of trillions. I'm talking about the transaction value because it's going to be the financial lives of many many many billions of humans. And then the transactions will eventually trigger the burn. People don't often talk about the fact that Ethereum has a burn mechanism and that will drive the value of ETH up. And I don't know that every human's going to have to own ETH, but the applications that you're going to be working with, the financial institutions,

uh, the agentic frameworks are going to have to have ETH because that'll be the gas fee. So that would be, um, the really optimistic approach. I think the one thing we haven't talked about is you talked about other financial revolutions and market share. We have a moment uh, where we know what's coming. Most revolutions are usually a surprise. But in retrospect, they seem inevitable. We know what's coming. We have an opportunity to write the principles and guidelines so that we don't have the outcomes of prior revolutions. And can I go historical for a minute?

Every time we've had a massive step function innovation from railroads to telegram to telecommunications to internet browsers to social media to uh commercial cloud and now AI it almost always follows the same path. You have massive innovation. You it brings in a significant amount of competitors. Consumers end up being the first beneficiaries. something that's scarce scarce and expensive becomes abundant and cheap. But over time, in almost every technology revolution I've named, there's a handful of winners who either get there first or get scale or have a moat who end up owning this. And I I

don't have to go through the examples. They're self-evident. And then they end up monetizing the consumer, putting up moes, and most of the value occurs to them and not to consumer. I think we're early enough in the agentic revolution and I've written about that that we have an opportunity to write the rule set to make sure that agents do no harm. Agents work for their users and agents can't be co-opted by a handful of financial networks, companies or others who can change the rules of the game. And if we do this right, this could be the first uh technology revolution in several centuries where the individuals and the consumers and societies end up becoming the net winners. And I think we have the

opportunity to write those rules. And I'm going to say something controversial. Most people in crypto initially don't like regulation and then they call for it. But regulation actually sometimes helps markets thrive. It creates a healthy environment of trust. You see this in the pharmaceutical industry. If we didn't have regulations, the pharmaceutical industry would be be much smaller. We need this in agentic because I think self-p policing has not worked in big tech or technology revolutions. And I think Ethereum and other fully decentralized blockchains may end up becoming the actual solution and answer where the rules can't change. You don't ex uh eventually extract most of the value to big tech, big financial firms.

And I'm bullish that this could change society where consumers and users and agents can be the ultimate winners. And I know I've been going on for a long time. I've been writing about this. I feel very strongly. We have an opportunity to change the outcome of history where consumers win. And uh this is something I feel very passionately about and I think it's part of the role of crypto and decentralized chains. I I agree with you and I I do think that the market is now validating the thesis that Agentic Finance is real and for a long time the crypto AI paradigm felt a little bit high in the sky and it felt like it was too early but now it feels as if these agents are really coming online. people are starting to adopt

them and a a primary use case for these agents is to conduct financial activity and it only makes sense that that financial activity happens through stable coins on blockchains. I want I want to think about if you have another minute for a couple more questions. I I'd like to just revisit the analogy that you made to the internet because I I love the analogy. I think it is more true than the analogy that I made to the DTC to to really put into perspective what's happening. >> We had the capital deployment and the buildout of the internet. It led to the dot bubble. The reality is that we are still in the internet buildout. We are

continuing to put more capital expenditure into the internet and it is a systemically important piece of technology and infrastructure into almost everything that the economy runs on. And so the internet has a lot of value. But the way in which the internet got built out, it did not have a decentralized community of ownership. We had the dot bubble. There was several companies that branded themselves as internet companies. People invested into them. Some of them did quite well and continued to stick around and a lot of the, you know, hyperscalers of today are technically internet companies from back then. And then a lot of them didn't do as well. But that was the way that we

saw the value evolve as the internet was built out. Ethereum call it the financial internet or the internet economy has a different path dependency. It similarly has large capital expenditures. There are applications and companies built on top of it but it has an asset attributed to the value of the network. And so, as a thought exercise, I'd just be curious to hear your take on if you were to see an asset that was connected to the internet as the internet was being built out in the '9s and the early 2000s, how do you think that asset would have evolved? And how can we think about the differences in

the development of Ethereum given that it has a asset that can be owned by a large community? Yeah, I I think the best way to see it is think of it as I'll give you a great analogy or a great example. In January of this year, Larry Frink, you know, the CEO of BlackRock, uh, was at Davos and he did a presentation on the future of finance and it talked about AI, it talked about infrastructure and it talked about crypto and he had a slide that said Ethereum is the toll road to tokenization. you know he has a very strong belief and I have the same conviction that almost every asset will be tokenized including AI including inference. So think of it as toll roads

are a public good that everyone relies on but you feel very very comfortable because of the benefit to pay a very small toll and you can think of Ethereum as that same type of framework. It's a public good. It's decentralized. No one owns it. But to transact on it, to have the security, the trust, liquidity, you know, to have the essentially have a trust commodity that when you drive on this road, when you transact, when you write this block, you know it's going to have finality. you know that highway is safe and it'll take you from point A to point B. You're willing to pay a very modest toll, but you're able to uh extract uh or benefit from it because the volumes that are going through toll

roads and highways are enormous. That would be the better analogy. The internet was set up without a token, without ownership, and then you had to rely on public goods and tax and you hope to God that they were paved. You hope they were secure. The Ethereum framework is so much better because it has an ownership and because there is value that's provided to the token holders for securing transactions. That would be my my my best analogy and I think Larry said it best. Ethereum is a tokenization the toll road to tokenization and that's the way I that would be the mental model I will share with you.

>> Incredible Joe. I I I mean we could keep this going, you know, for for hours because there there really is so many so much depth and different dimensions through which that we can view Ethereum. And I think that is why it is so valuable is to speak to the different the generality of this technology. The internet is really the only thing that compares. And so I I appreciate you sticking around when others have left. uh you know, we're we're here every day uh doing the educational work to uh make sure that everyone else understands the thesis. Um and you've been a pioneer and a steward in the Ethereum thesis. So, thank you so much for coming and spending some time.

>> Uh it's my pleasure. Have a great weekend and I look forward to seeing you soon. I don't know if you're in Korea or Singapore over the next couple of weeks, but >> yeah, I will see you there. I will see you in Singapore. >> Safe travels, my friend, and have a great weekend. Good luck. Good luck to Florida tomorrow. >> Thank you. Go Gators. We'll see you soon Joe. >> Thanks, guys. I I am bullish, ETH. I mean, guys, you heard it. Uh Joe was our last guest. Um I mean, what a show today. What a show. Because, you know, we started off grilling KHI. Uh then we got up with uh Tai who was literally behind the scenes in Washington DC watching this thing go down at the Clarity Act. And then we had Joseph Shalom who is quite literally

bringing Ethereum to the masses. So, I mean, you know, think bigger, dream bigger. If you are unsure of or skeptical of the value that Ethereum can bring to the world, I would challenge you to reset your expectations and reset your priors because Ethereum is not going anywhere. This thing is a runaway train. all of the people who are spreading the bearish takes on Ethereum, the asset on on on Twitter. Look, there's there's conflicts of interest out there that cause um some people to, you know, have some conflicting biases and promote some

alternative layer ones, but nothing has the staying power or the market penetration that Ethereum does. Its credible neutrality gets dogged on sometimes, right? the fact that it wasn't really able to build in a, you know, very nimble and agile way because it was decentralized. These things are features, not benefits. And we get reminded of those features when we hear people like Larry Frink at the World Economic Forum in Davos talk about the scale of tokenization and why Ethereum in particular is the toll road to tokenization. It is quite literally the backbone of the financial internet and it just so happens that it comes with an investable asset. So if you missed out on buying a domain or starting an

internet company in year 2000, well now you've got an opportunity. Now you've got an opportunity with Ethereum. So guys, um this was the last show of the week. Joseph Schlalom closed this out. Last show of the day, last show of the week, last episode. Um, we've got a different kind of schedule next week. I believe we have a show Monday. Um, I hope everyone's gearing up for a weekend pump because Ethereum's tapping on the door of 2700, 2690 and uh, we are extraordinarily bullish.

I do think that Ethereum will be the home of tokenized finance. It will be the home of Agentic Finance and the market will preempt that and it is forward-looking and it will proactively rerate and repric itself higher based on the expectation that it will have a foothold in Aentic Finance and tokenized finance and so don't get caught off guard. The SEC issued new guidance clarifying securities laws. They will continue to do so. The Gators will beat the Old Miss Rebels this weekend and you will have a good weekend. We are manifesting and uh we will see you next week, I believe on Monday. DRV, it's bullish. Derive has a ton of revenue. Uh

one of the few crypto companies that does. So, we're bullish on Derive. Uh we may have them on the show very soon. Uh, next week I will be at Cyos, another digital finance traditional banking conference much likes much likes Davos in the World Economic Forum. Uh, Andy will be at the Robin Hood Summit. And so if you're out there, catch us catch us there. Shake our hand and say what's up. And uh then we'll be going to token. We'll be going to Singapore. And we are excited. And uh to everyone else that is going to Singapore and uh traveling over the next couple weeks, be safe, safe travels, much love, and thank you so much. W's in the chat. We'll see you

again real soon. Peace. [music] [music] >> [music]