How ETH ETFs Will Reshape Crypto | Roundup

Transcript

hold up hold up hold up you just got approved uh trading will start in four weeks let's go wow that is phenomenal we did it boys boy black Rockets no no I got [ __ ] Meed that's just one that's just someone chilling their meme coin well I guess it happens hilarious yeah strike we'll fix that in post production all right no we're keeping that no we're we're gonna keep that we're absolutely keeping that hey everyone this episode is brought to you

by say the Blazing fast parallelized blockchain which is unlocking salonik performance for the vast ocean of eth devs out there now you're going to be hearing all about say and their new V2 upgrade but if you take away one thing evm is here to stay there are some problems with it which we're going to get into later in the episode let's say and especially their V2 upgrade is helping solve that so thank you very much say for making this episode possible hey everyone wanted to give a quick shout out to this episode sponsor flood protocol the optimal decks aggregator now if you are a listener of bell curve you know that me is a massive problem which is why we are so pumped to partner up with flood on this season flood is the only gasless and me free aggregator that not only gets you the

best execution but also gives you back all the extra Surplus that you create every single time you swap now this is relevant for both swappers and Developers but you're going to be hearing all about them later in the program so for now thank you flood and back to the show all right everyone welcome back to another episode of B curve before we jump in quick disclaimer the views expressed by my co-host today are their personal views and they do not represent the views of any organization with which the co-hosts are associated with uh nothing in the episode is construed or relied upon as Financial technical tax legal or other advice you know the deal now let's jump into the episode welcome back to another round of edition

of B we got Michael one to advance and a pretty shaky intro today what going on guys that was you right there Mike yeah I don't know just too much caffeine this morning di in maybe tap in tap in tap in fellas big week big week one of the more bullish weeks in crypto uh that I can remember um we've got obviously big story this week is the eth ETF um the odds moving from 25 to 75% um I mean there's a bunch of details that we could go through on this but uh well yeah I I just I guess kick it off and I think this this was originally

tweeted from James safeer who is one of the Bloomberg boys who uh with him and er Eric balunis are I guess the unofficial spokespeople for the entire ETF industry at this point but he tweeted out that they were revising their odds from 25% of an e ETF getting approved this month to 75% and this was from chatter that they they're they're very connected to all of the ETF issuers and what made them change their change the odds was that uh the SEC was very quickly starting to get back with comments about these forms uh that need to get filled that the 19 what is it the 19B b4s b4s yeah uh this is where I'm going to lar as a legal person

now this is my expertise from my understanding there are two different sets of forms that need to get approved there are these 19 b4s and there are s1s they come from two separate divisions of the SEC but historically whenever issuers have been filing filed with the SEC you know when Bitcoin wasn't moving they just no comments just Stonewall denied um and very little response but there was uh a flurry of responses out to basically all these different issu where some of them that didn't even have for my understanding live applications um it was all around the the the due the due date for the Vanek filing which is actually today uh Thursday that we're recording and so now it seems like there's been a little bit of an about face and the question that people are

asking is is this political did this come from the top because the Democrats really cross the lines and on the Sab 121 vote that happened earlier this week so what do you guys think about all this so uh the the two components here are the 19 b4s are effectively an exchange rule change and what that would enable the approval of that would enable the trading of assets that would include uh commodity spot Futures ETFs and um they would include ethereum in that list Bitcoin was already included that list which is why we have the Bitcoin ETFs and then the s1s are from the actual issuers themselves and

that is the it's the formal document um or application to list a new asset and so when we think about sort of what's the plan of attack here where are we going what will likely happen today and this will signal you know effectively in approval is that the 19 b4s will be approved and what we started to see as soon as the chatter from James and Eric uh became more than just chatter the 19 v4s are going to get approved but we haven't even started on comments on the s1s and that's one of the reasons why I think they had this at 25% going into end of last week is the there were tons and tons of you know rounds of comments and you know

engagement and things were happening kind of all across the board for all the different issuers leading up to the Bitcoin spot ETF approval and in this case there was nothing it was silence and so the the things that can get approved quickly here are the 19 b4s which effectively clears the path for s1s to be engaged with commented on and then approved and so we've just started that process in 20 I think it was 2021 when we had the uh Bitcoin Futures ETFs the timeline was actually about five months for there to be a 19 V4 approval and then an actual launch of the Futures ETFs we would expect that it's not going to be

something that can happen immediately the launch of these so you we're expecting that there will be an approval today which effectively clears the path for there to be an ethereum spot ETF and then there's going to be engagement and there already has been some engagement and comments on the S1 documents themselves from the actual issuers I saw at least bitwise and Fidelity had their first and second rounds of comments on the S1 documents but expect that that will probably take weeks um and you know this isn't going to be very different I think from from Bitcoin at all this is going to be the same process of all the things that they need to do it's just that they're sort of behind the behind in terms of getting these comments done so you know the launch timeline here is is probably in the Wheats and

potentially you know a month or two away um but there's going to be some lag in terms of when we get the approval today and when these things can actually launch Pro probably months to Michael's Point um but also you know not to I feel like I've taken a lot of Victory laps this week so maybe another one isn't quite necessary but um I I think the case for these being approved uh was never like we believ that it was going to be 100% you know signed sealed and delivered and that there was going to be this you know pivot at the last second our case was always that it was more like 50/50 than it was you know 20% chance and I think this is also a case

study in never using a lack of evidence to prove a point like by that logic you can prove anything um there's no evidence that Bitcoin wasn't invented by aliens and so maybe it actually was it's like you that's just like a bad logic trap to fall into um and now we're going to have the same series of events as the Bitcoin ETF approval to Michael's point but like playing it forward soon we'll get the uh there's going to be no demand fud you know that that will happen then we will have the E outflows fud you know that will also happen and so you're just going to see this thing climb this wall of worry until it launches and the Bloomberg guys

I just like feel bad for them I feel like they're trapped now but they're putting the inflows at 10% of Bitcoin which is great I like that bar it's pretty low um but like why do people buy assets because they outperform and if you see consistent eth outperformance on the way to this ETF there's going to be natural demand for it and so again like my my you know understanding of the current crypto markets today is that a lot of them are driven by ETF flows like the ceiling for any given Al is kind of driven by like the ceiling for what Bitcoin could hit and the inflows that are associated with that and so it never really made sense to fade the only other asset that would have ETF flows and we've seen a lot of shorts get covered

we've seen a lot of shorts get liquidated and people are basically trying to unwind eight months of antie positioning in a few days time and it's uh it's only just starting is my sense so oh yeah go Michael no yeah I that yep I I was I completely agree with that and I think I one of our analysts wesy tweeted this out but I this is my general sense as well is there's maybe an analogy to be made here with the remember the coin Telegraph intern tweeting out the Bitcoin ETF it was that was incorrect news but it it sort of reminded the entire Market that they were off sides and it was like oh yeah the ETF is coming and it's not actually that far away and it was you know after

you saw that that fake tweet there was kind of this slow steady grind up in the price of Bitcoin I don't know if that's going to be the same thing with e but it it's just going to remind everyone that okay maybe it's not tomorrow but the ETF is coming soon everyone saw what happened with the Bitcoin ETF and there's not really much to suggest that this would be any different so yeah but what you're talking about Mike is people that are trading this or swing trading this uh I I think you know what the general perspective is is that there's just going to be a market struct structure change and that there's going to be inflows into an asset where 30% of the asset is staked much of it is being used as collateral like it has

fundamental characteristics that are just different from Bitcoin and I think that you know will also play A Part here and and that is just going to be something that people realize over time but it's it's the market it's the flows difference that I think will drive the narrative and then that narrative will will drive back onto that narrative m there there is there is also this path where it's like let's just say eth outperforms BTC and then you know maybe eth doesn't get 10% of flows maybe gets 50% and eth is a lot smaller of an asset and it's much more composable and that means that the wealth effects from like a dollar of eth price movement to the activity that happens on defi or nfts or

all these l2s like it is reflexive in that sense and so I do think there is this path for outperformance and we and we'll see you know it has to be the price outperformance drives the flow drives the narrative drives Larry think on TV like there was this great tweet from uh from some guy I forget who it was like he has like 500 followers but he was like people are asking me like how they're going to drive demand for the eth ETF it's like brother Larry fin is going to go on national television and tell people that he's tokenizing assets and putting them ony e like it really is that simple and um I think one other thing I've noticed over the past you know call it year like this is like the first time that I've ever invested in like stocks outside of crypto it's

actually hard to find a stock that goes up you know significantly in a year and like I think for a lot of Boomers like Bitcoin is like oh like this thing I forget how much it's up this year probably like 60 or 70% or something like that but that is an outlier in their portfolio and you can bet that they're going to be looking for more of that and you know if if people are just starting now with to bitcoin and all those paths are being paved and all the access to the RAS and wirehouses and you know big banks of the world you know that's just work that's been done for eth and so like just like you're seeing this kind of like third wave of ETF inflows for the Bitcoin ETFs I think you can kind of see just eth riding on on

that type of coattail um so yeah other thing is like we're not people who don't want other spot coins to have spot ETFs I think it's going to be a while for that to happen but you know I think the Bitcoin Maxi coping over this eth ETF getting approved is not something that the eth community should pay forward to any other coin uh we should generally be rooting for each coin to have their own thing so I I'm looking for this meme I'm not going to get it in time I actually did so if I'll let you guys take the high road I I did see a couple takes that I just like I had to uh include here and I Yano tweeted both of them so I'm trying to pull his Twitter up but

but yeah there was there's a guy named Matt Stoler um who this is this is an exchange that happened this morning and look I'm sure Matt's actually like a a good dude and for whatever reason this sort of just worm has gotten in his brain about crypto but you know he he tweeted the passing of the fit 21 uh the market structure Bill through the house which we haven't I'm sure we should talk about in this podcast as well um but he's talk you know Jake trinsky was talking about the number of Democrats that crossed the line to vote for this and it was 71 which was way above what everyone thought and he just TW tweeted straightforward vote for scamming and Corruption um and Jake goes take the night off Matt Matt just doubles down

and goes you're a traitor to America you're a traitor to America like easy easy Mt easy oh there buddy oh there hey there like Kirsty know I'm like doubling down on shooting her dog just like take a we come back when you're ready I mean have you tried not thinking about it those like old school fighting words that's like you know in the 1700s that get you shot you know like that is uh that's a lot take two anx and call me in the morning see if you feel better you know I mean it is a momentous week of of uh crypto political regulatory history uh

you know probably two weeks now but it started with the Trump being pro nft thing and you know we we bought some of those nfts we're part of that I guess movement um and then it kind of dovetailed with the Sab vote Into The more mass defection type movement on fit 121 which we should definitely talk about but uh I don't know it it it kind of I think the big takeway is that like we all have agency here and that people are reading crypto Twitter and they're looking at how many signups that something like a stand with crypto gets and they're listening to the people calling their Congress people and like it is possible to get good regulation for this industry but it is up to all of

us and um it's just incredible what what just happened and now it's like we're kind of the dog that caught the bus and now it's like figuring out what we want to do with that bus like do we want to have fit 121 do we want to have it as is we want to have it differently um I think there's very little chance that it actually passes this year but we all need to be supportive of the people who you know put it in a position that it could potentially do so but the more constructive uh arguments and discussions are probably like what does good regulation look like longterm and fit 121 is a pretty good place to start but there's pretty glaring holes in in it so far from what we've seen um I agree we we were reporting this podcast

last week as we were literally checking the Senate votes for Sab 121 and you know I I think about how to like best summarize this week we and I'm sure others will probably say the same but it it's exactly the Lenin quote of some decades nothing happens and then some weeks decades happen like everything has changed now and and we have we have crossed the Rubicon into this world where and I think we started to see that some of the some of the uh tea leaves with things like the the poll that Paradigm put out where 30% of people aged 18 to 45 on crypto but 5% of people over the age of 65 owned crypto and I think that fact alone signals that

this is going to be you know a a younger person perspective it's going to be 100% vote a lot of those people are actually now voting in as well and participating in the electoral process calling their Congress people calling their Senators uh signaling to the rest of the world that this is a subject that they actually care about and that I think is starting to make ripples on Capital pill and people are recognizing it they're breaking ranks with some of the the padar of whatever you know whoever was the one controlling this stuff um and and that I think is a huge shift in perspective um so uh to advance this point you know we now have a bit of the momentum and we have to decide which

direction we want to send it um fit21 is a fantastic start it's definitely not the end and you know some of the things like Sav 121 the stable coin bill which is still being you know discussed and and um potentially changed or altered like those types of things are going to be the things that will happen and I think what's becoming more clear it's just like the ETF process it's not really a question of if things are going to change from a from a legal perspective from a regulatory perspective is a question of what and and that I think solidifies you the United States as as putting itself out there as wanting to be where we haven't been playing historically as a a a crucible of innov

um for this crypto industry which has been moving overseas and so I I'm fundamentally happy um I think this is one of the biggest Wheats in crypto that I can remember uh for many reasons but it's uh it's been amazing to see Ry Ryan celus is the goat too I mean not is he like a fun guy to have like beers with that but like he has that uh fighting spirit that allows him to get up and and go do pretty cool things so shout out Ryan cus he's the goat I got to be honest I am just super I don't know what the word is like pleasantly surprised but more strong than that I I I guess I'm a little bit

sensitive every once in a while to when there's there's a lot of things that we in our little insular bubble of crypto say like oh crypto is going to be an election issue and in my heart of hearts I was like I really want that to be the case but I didn't really believe that it was and this this week I mean clearly cutely that actually is I mean crypto has actually graduated to DC um all the good and the bad that comes along with that but I think it's just a symbol of us moving up in the world and this was just a a pure political miscalculation from uh I think the Democrats here and it never really made sense I don't think there was a lot of great strategy behind it to begin with just being anti something doesn't really make sense to

me but um I think they really woke up and realized that wow a lot more people own crypto than we thought at the very least like not be super anti this and yeah I just felt like it was a massive step forward and as someone who deeply cares about crypto and lives in the US like that's huge so there's tens of millions of us in the US there's hundreds of millions of us globally the industry is worth multiple trillions like this isn't like we're like selling Girl Scout cookies you know like come on no no shade to the Girl Scouts those no shade cookies I think they got cancelled last I mean I don't even know what happened to the Girl Scouts that was Boy Scouts that was Boy Scouts oh yeah yeah um or

were they doing like look like I think the offer to politicians is like you know friendship like we can build this thing together we can get it regulated we can clean up our [ __ ] uh we can you know build technology that helps a lot of people and then the offer for being anti- it is like you're going to get primar and the industry is willing to spend a lot of money to change your minds so I'm surprised it took this long in some ways but it just felt like it was this like boiling Kettle that just the top burst off eventually and I don't think I've ever seen any sort of Industry regulatory pivot like this in this sort of a time span like AI didn't get this renewable energy didn't get this even

web 2 the internet didn't get this I think this is also an internal alarm Bell of like the current Democratic Coalition is not coherent enough to win the election and so they need to start adding some people to the Coalition that can help it on the voter side on the raising money side on the just like the organic Grassroots interest side because like having that visual of all of those people with with like the Trump suit like the blue suit the red tie atar logo you know they're all young they're they're pretty successful it's like those are not the people that you want to be isolating not not right now if you're the Democratic party I hope that the Democratic party can clean their they act up but it's been four years of basically crypto being illegal along

with a lot of other things um and I think not just our industry feels that way so you know something that's kind of cool I forget if I talked to you guys about this but permission list this year is in October it's right before the election and it actually lines up with the final in-person debate of trump vers Biden not like oh it's the same time in the same city no no no they're not doing that debate what no because that's the Democratic uh that's the uh debate commission's debate they're doing the the two special ones that they planned separately sadly oh damn that's too bad man that would have been electric uh that would have love to see that in person I mean they still may

end up doing it yeah I mean the first one is in a month um but like we've said this before but like very rarely do people think in long-term increments but like they can think in like presidential fouryear cycles and it feels like a lot of the country is kind of like thinking about what they really want what they value which is great I agree I agree okay question for you guys what do you think some of the second derivative impacts of this eth ETF approval is going to be and I'm not just talking about which is the next ETF right like everyone's kind of let's put that let's put that to bed we've talked about it before but you need you need 32 months

of a Futures a designated Futures market for an asset to be considered apparently by the SEC to be something that would have a spot Market as well nothing else has had commodity status with the cftc other than Bitcoin and eath right I would say late 26 early 27 maybe mid 27 is is I think like I I honestly do think they're going to approve the stupid ones first like the litecoins and the Bitcoin cashes like I think salana and um I guess yeah just salana is probably the one that deserves it the most but there's just so much there's so much that has to happen it's going to take the first thing that will have to happen

for salana is there just there will have to be a conclusion or culmination to the coinbase lawsuit where they're named as a security by the SEC uh yeah that there there's not going to be the possibility of the cftc coming out and saying that that's a commodity when there's current ongoing litigation that says otherwise yeah so maybe like that that people are speculating about that all over the place that's going to be further out than I think everyone's giving it credit for but here's one thing that I was at a dinner this week some people are talking about um something that might might end up hold up hold up just got appr prove uh trading will start in four weeks let's

go wow that is phenomenal we did it boys that is tree Black Rock black rock gets no no I got [ __ ] Meed that's just one that's just someone chilling their meme coin well I guess it happens hilarious yeah strike it we'll fix that in post production all right no we're keeping that no we're not we're gonna keep that we that got him all right we'll keep it hey everyone want to give a big shout out to

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much appreciate you flood all right so here's a question that I have for you so this is something that was coming up at a dinner that I was at earlier this week but people are like let's say so staking was a big question about you know if that's going to be impr uh included or maybe when it's going to be included in an ETF so that ETF holders can get yield from staking and people are starting to question well maybe the SEC or just regulatory bodies in general are going to start to take a deeper look at things like Mev um and the staking ecosystem of eth in general and we saw a little bit of this last week we talked about low carb Crusader um and he performed this me exploit about a year ago and everyone has kind of I think sort of lazily

thought yeah you know those guys at the SEC they couldn't wrap their heads around Meb or they're not interested in that and they are and turns out they can turns out they can turns out they can grock that stuff and they are grocking it and I think if you if you are going to think about including something like staking Ys in in um in an ETF then they would have to have a better understanding of where these yts are coming from and execution layer rewards and meev are a big part of that so yeah we should probably get ready for regulatory bodies to start poking around how things like relays work the Builder Market all that stuff I would be l2s yeah the government isn't Dumb obviously like if you read the me suit like they

know what's going on the guys also had this like Microsoft doc which was like step one the crime step two like the ghetto it's like you [ __ ] idiot like what recent Google search is how long does stashing limitations for wif exist dude is this Elite come on I I feel like we've talked about this but like you know children have problems with object permanence where if you go behind a wall they assume you don't exist anymore that's like the same mental model of like if I don't get caught for a crime in the first you know I guess in M like 30 seconds of it happening then it's not a crime it's like no that that's a crime so wish crime yeah yeah I mean I

think there are a lot of things that I think there is going to be some like Yang to the end of like an ECF getting approved where it's like uh our custodial l2's money transmitters is Mev you know legal or illegal um there's all these like C there's all these questions that like people assume would just be too complex for the government to get into which they probably should and I think that actually is helpful in some ways where it underlines things like what is a decentralized blockchain yeah like I'm I'm sorry but like if your L2 is a single sequencer like that's not the same thing as a decentralized chain and so I think digging into that is going to

be big for for the government at least Ju Just to be clear we're not putting Mev on trial here with this lawsuit they they exploited people at so money like totally those people were were were meev operated like it it this is it's still it's still fraud it's like you know what's the the line from the S SPF case it's like if you steal the money and then you give part of it back or all of it back you still stole the money so it's still legal like that that that is what happened uh so I me Mev is not really kind of like on trial here I just want to make that clear it's it's more you know what are the definitions of this honestly there are some interesting definitions that come through in the

fitbill which is like what is a decentralized network and you know some of the things that happen and these are in in the depths of the current text we'll see where everything lands when it gets to the Senate and after debates but for instance you know no one can own more than 20% of the tokens or have voting control over 20% of the tokens there's no one who can make unilateral changes to the code basee there's actually no changes to the codebase that didn't go through decentralized government governance in the last three months like the these are some of the definitions that are literally I mean literally just out voted on and approved by the House of Representatives yesterday so like I I think we're starting to get to the point of definitions for a lot of these things single sequen like the singal sequencer

depths of me uh you know some of some of the like really nitty-gritty blockchain Stu Stu like we're still ways away from that but I think we're starting to put the way foot forward in terms of you know what these bills actually have them yeah and really good point I I didn't mean to say that we're we're putting Meb on trial with that it's just more of a it's just one data point to say that you know authorities are starting to look into this whole world which is here D War been sort of like hey don't look over here but I maybe an optimistic take on this that I was thinking is maybe the government or like the SEC getting more involved in some of these areas like how decentralized really is an L2 what does

the me transaction supply chain look like and can we have this sort of centralized relay in the middle of it it actually might be a forcing function for decentralizing parts of the network that didn't have a forcing function before like I know you know not the goal that's the goal right I mean look jto is doing this actively on salana like they're looking into parts of that Meb supply chain and they are actively looking for solutions to decentralize that stuff I know it's going on in ethereum as well but this was one of the issues with l2s before is that there wasn't a strong incentive to decentralize your sequencer set or move off of multi or anything like that but now maybe there is more of an incentive to do that especially if somewhere down the line if you ever want

an ETF for your token you're gonna you're going to need to have that so yeah I think this could actually be a little bit of pain in the beginning but it could be a forcing function for more decentralized outcomes later down maybe it's good to talk about fit um yeah the market structure Bill like I think people will be surprised with how prescriptive it is when they really dig in like there is a path to decentralization and it involves like has anybody voted on governance changes that have impacted the protocol you know in the past X months um you know when you are vesting your assets as an investor you know like those are called restricted digital assets and those have

to be like custodi and and maybe even like wrapped in a like restricted you know no transferability type token um there's bifurcated markets for Commodities that are decentralized in Securities um there's definitely good and bad with this but I think the overall view is like it's going to provide a pathway for crypto to exist in the US like you can raise I think it's like 50 million in an Ico 75 75 like you've been asking for I to come back good news like we got something for you but it's like there there is a compliance burden that comes with that that's significant and so it's going to change a lot of how crypto works I think the my personal

take other than some of the points that Vance just described I think one of the best parts of this bill is the disclosure requirements so people that are affiliated people that are related and there's definitions for both people that are you know Founders or control people or uh governance participants um or uh employees who created the protocol and have tokens are related and there's disclosures about how and when you can sell there's disclosures around you know in you know insider trading protections um so you know Founders and investors can't quote unquote dump on retail anymore uh through you know an pseudo Anonymous wallets like that that doesn't happen in the first place just to be

clear but you know there are now restriction around that not being able to happen from a legal perspective like there are a lot of the things that I this there's a reason it's called the market structure build that create structure for these markets that I think will be beneficial to everybody involved and give a path forward there's I would say a few different nits and and changes that would ideally get through uh another round of changes in amendments but there are massive changes to the ways that these markets will work going forward um and definitions that we've been waiting for for years now uh yeah I completely agree here one thing that I was thinking about the fit

Bill specifically being really prescriptive about what it means to be decentralized and what that path looks like that feels like you can't uniformly do that for all of crypto because that looks very different for an L1 right like the level of decentralization that's required for an L1 money like commodity thing is super different from a game like a game you know that has a gaming token type thing and I think that if we got super prescript like this will just be one of the challenges of this build I I guess but you know the level of decentralization that something like Bitcoin has doesn't work for if you're trying to create a product or a service I don't think so right but that's where that's where the thresholds here I think are actually fairly okay like 20% is the

limitation of ownership that anyone cannot have more of in the last 12 months for something to become decentralized and all of these are a look back of the last 12 months and and the other process here which you know Gary gansler threw a fit in his um you letter that he sent to Congress yesterday um but basically you are able as the protocol Creator to self-certify and you file a document with the SEC saying we declare ourselves decentralized and essentially there's a 60-day period currently where the SEC can come in and say actually we don't consider you to be decentralized but you know self-certification hey we hit all of these benchmarks here's proof that we have this here's proof that we have that

and this will just become a process that lawyers become you know regularly uh akin to in the same way that you have with financings for private companies you have to file what's called a form D whenever you raise money and that form D is basically just declaring to the SEC hey I rais money from venture capitalist or hey like I sold some shares of my startup to build something like that all this stuff will just get turned on into the the legal machine but there's a self-certification process there's benchmarks that you have to hit 20% threshold like I don't if anybody owns more than 20% I I don't think I would consider that to be do is that a single is that a single person or total buy

investor sing single entity if you own more than 20% you're not decentralized what what's crazy is that like we had conversations with a bunch of senators and congressmen and like I remember this question being asked were they're like what do you think's fair for one person to own and I remember just being like I don't know like 15 20% something like that and now it's in a bill like I'm not saying it came from us but like they really did engage with industry on a lot of this stuff but the level of prescriptiveness is the only thing that concerns me and it's all done in good faith to regulate this industry but um like there's carve outs there's exemptions for def5 for like covered

activities if you're doing X Y or Z like there is some registration that you need to get there but it's mostly you know ceremonial and and easy to get um and then there's things that cut across like you know Michael to your point um you know what if it's a game what if it's a loot box in a game is that subject to existing regulations like there's there's a lot of uh it's going to be really hard to make something holistic but this is a really good effort to do so and I think the I maybe to summarize kind of the two points that I've seen is that at least things are moving now right and there's been this is you have representative of of the the um you know the government's willingness to the

actual desire to engage with crypto the community I think also Gabe Shapiro um Lex snow on Twitter has done a good job of pointing out some of the specific challenges with the market structure Bill and you know he has pointed out that in this in the in its current state that it would effectively actually allow oversight from both the cfdc and the SEC the SEC has all this control about what actually decentralization means and it'd be really easy to imagine a bad outcome where the levels weren't set appropriately or yeah we were just extremely um made it very tough for anyone to be decentralized by some I I understand where Lex is coming from and I I don't disagree um but I would

propose maybe an alternative path forward which is I think we've been so used to and accustomed to just the the vitriol of regulators that want to Stamp Out the entire industry that maybe things are actually changing and and what happens if you know Regulators also want to be able to have you know an innovation economy that's based in the U like what if things actually change like what if the perspective change instead of thinking about it in terms of what's the worst path that could happen and and yes we should make changes to the points that he makes so that you don't have overlapping Regulators who are fighting over who gets to say no first but what if you know the the tone of these

Regulators actually changes maybe that changes in November maybe that changes you know sooner than that but there like what if things actually are changing positively and that's I think you know one of the biggest takeaways from this past week that's what I would hope as well um and I agree it it feels like that that's the thing that's really hopeful about this week is that it feels like there's been real political change so I guess we'll just have to see if that's played out yeah uh so I got a question for you guys um we we talked a little bit on on this show before that this cycle or bull market or whatever we want to call it feels a little bit different and one of the things that is a little bit

different is that you don't have as much uh sort of retail or new participants coming into the market and I wonder if part of that has been Michael you had a good analogy last week about this being like our version of interest rates you know we've had high crypto interest rates because the Administration has signaled that they're super anti- crypto they've tried to stamp it out there's been this sort of invisible foot uh you know pressing down on the chest of crypto you know so to speak in the US and if that foot has now been lifted I do wonder if that ends up bringing more retail participants back to markets but also users into some of the products and I feel like one of the things that's been missing from this entire cycle is frankly just like retail us

participation and is throwing everyone for a little bit of a loop so do you think that this could materially change things and do you agree with that characterization that it feels like I don't know something has been missing thus far disagree I disagree just because it's too early in the cycle for that to happen um like our our philosophy is this could be a longer cycle and one way to think about cycle timing like there's obviously the four-year cycle but I think the three-year cycle is probably the better one and the threeyear cycle is alltime high to alltime high and you know the old alltime high was I guess at the end of 2021 and you know now we're looking at you know probably the end of this year

for for new like you know we're still below you know 70 or I guess 69 I guess today but like that convincing all-time high break is when you see retail get reactivated and even today I think coinbase is 273 on the appstore rankings like we aren't even close to that turning back on but like that happens when bitcoin's at 100K there's legislation it's on CNBC it's like we're long way from that happening maybe not a long way but maybe six months but like retail comes in unfortunately you know at the most euphoric frothy time but like what what what El we instead I mean like pixels with a

million monthly active users uh gam starting to turn on you know there's more Ronin wallets and there are bank accounts in the Philippines like like there's these Emerging Market signs that those people are contributing meaningfully um and so I I think it's just like you can't say it's a it's a different cycle yet it's just too early like this is exactly where we were at the end of 2020 defi summer it happened maybe that's like the coin summer the the spring that it just happened it was still insiders there was no retail participation you know Sor had just been banging the drum about how the S&P 500 companies are going to put Bitcoin in their balance sheet and then e and alri and you know retail started coming in

and I think that's where we are so this seems like pretty much exactly the same path as the last run without the scams and fraud my my my take on this is um and I can't remember if we talked about this here but um each market cycle you previously had a transition of you start with Bitcoin then you move to eth then you move to alts then you move to higher risk reward assets but what happens at each one of those previous Cycles is the wealth effect is what drives the transition from one asset to another and you know people buy Bitcoin and they're like o what's this Ico thing and then they're like oh let me go buy some Ico tokens and then uh in 2020 you had like Bitcoin again and then it was like ooh

eth as the number two and then it was defa and you know maybe nfts as well like there are these like natural transitions but what happens is you implicitly have to sell your original asset to move from one stage to the next stage and what we now have officially you know assuming today everything gets approved for the EF is the market structure once again is going to change where we have Capital inflows into Bitcoin which creates the we effect which then moves people into sort of the alt layer ones or the other base layers the other major assets that you would put in there and once we have the eth ETF then people are going to be able to buy the eth ETF and then you move into other assets over time but you're not

selling or there's not as much net selling at each one of those transition points because these ETFs what they will provide and I I still to this day don't think that they have provided it yet they will provide stable permanent capital and an always on buying function for you know at least Bitcoin and eth going forward and we haven't even started with that yet you know the wirehouses haven't adopted this yet I have a friend who trades at Bank of America uh which is Bank of America Mar ledge Bank of America he's a credit derivatives Trader like you know so puts onund hundred million dollar notional trads uh you know for his job uh but what he uh has with it 401K is something that's supported by Merill Lynch Merill

Lynch doesn't allow people to buy any of the Bitcoin ETFs and so he and his team uh on his desk are thinking of transferring their 401ks out of their company to something like Fidelity where you can actually buy these assets because ibit is too risky so far for Marl Lynch while he's trading credit derivatives like the the there is a lot of Market structure that still has to play itself out and you have to clear a path for a lot of these opportunities to get bought and and these opportun the these uh platforms to be able to buy this and so we're just started and I think that that's another big thing about with what Bitcoin will do for eth you're going to clear a path and then it's going to be you got the you one

asset on one side and another asset on the other you've got you know the the C analogies like gold and oil I maybe that'll ring true we'll see but it will clear a path and so I I think comparing this to where we were in the cycle last time I think is is kind of a an unfortunately difficult hard like thing to do because we had Co last time that's what drove people into def5 C it's like people were sitting on their computer all day and you know that's probably one of the reasons why retail isn't backed as fast this time we didn't have atfs last time we have them now like there are so many things that are different um I I think this one's just we laer because of it what one other way to think about it is that the alt l1s have not even

launched yet like the big ones like we think bar chain is going to be the canonical L1 I guess monad as well to some extent um um but like those haven't even launched yet so you know like just like Avalanche and salana and Luna and I guess like Phantom and there is just so many nonsense ones like those were kind of the 2021 especially late 2021 zeist like those don't even exist yet so it's still like really early you know what else needs to happen is there needs to be these Frameworks that are generally accepted about how to think about crypto for these this like Army of ETF sellers to go out and tell

people and that will resonate like you know you hear this when if you ask your average friend who like doesn't work in finance or really understand Finance like what their approach that you know they kind of repeat these talking points that that financial advisers have at one point told them say I'm like Diversified and I own like this sort of like 6040 they just kind of repeat these these things that the financial advisers have told them at one point and we have the beginnings of that with the currency debasement for Bitcoin thing but there just seem to be these accepted uh ways of of thinking about these things that people can just kind of you know put put it on autopilot be like yep I want some of this and this and that that just takes time to build I think I mean I think about it in terms

of when I buy Assets in different asset classes like I don't know [ __ ] about them really but like I kind of know the headlines and that's enough for most people and like there was a time in the pandemic especially early pandemic when it was like holy [ __ ] we need to go get guns and we need to go buy gold and we need to go like prepare for like a you know a end of the world bartering society and then it was like spaxx and Tech and zoom and like eth you know and like eth became resident with that Tech Trend and I think that's kind of how you're going to see it explained it's like eth is the App Store and eth the asset is will pay um maybe it's not gold versus oil but maybe it's something more

a little Tech oriented um but you know things don't go up in straight lines like crypto these assets are rare and raas are going to want to allocate to them is my guess I think the demand is going to be more robust Than People expect I I also think that you're just going to see people be like oh crypto what does that mean uh 50/50 Bitcoin e like that's that's is I think how people are trying to think about it's like oh well yeah bitcoin's got one part of it E's got another one don't worry about it it's just crypto like one to the index yeah what's the index how much does it charge 50 bases do done just like put it

in I agree it's it's I think that takes a little but like you have all these like schema that you don't even really know that you have for something like stocks that you just you just accept as as taken for granted like no one's questioning like what is a stock you know and then and then you have like 6040 type allocations but I don't know it's uh I I'm I'm using an like an anecdote here I was talking to my my hairdresser about this like earlier this week and you know when you hairdresser my hairdresser my hairdress but dude I that's who we're after hair artist whatever like that's who we're ultimately after here you know and when you still talk to most people about this like the reaction that I get from being

like Oh yeah I work in crypto is like like seriously like is that still going on and that's that's it's like that long-term education no one's like oh yeah that's guy from the guy cutting your hair and [ __ ] on you for your Cent Choice yeah I mean furthering furthering of the point that this is furthering of the point that this is going to takes so much longer like we are just just getting started like I think both Vance and I subscribe to the same telegram chat which is every day it just like puts the twinbase app ranking and like details around the twinbase app ranking in your telegram feed and it's like we haven't broken 250 in that kind of ever in the last like two two years and

sometimes it's 300 sometimes it's 275 like it's it's always in kind of that same ballpark and I it is it it is an interesting signal I I agree it's probably not perfect but it's directional and we are just so far away like We I also think we discount the size of the hole that we blew in the world uh from a reputational standpoint in 2022 um and like that's going to take longer to build back for retail to get back in like ultimately it's a good thing that it's going to take longer like that is a really really good thing gives us time to build gives us time to adjust and navigate things like the fit Bill and uh you know before gets too crazy and we blow ourselves up again but

I think that there's going to be a major difference in this cycle versus any other cycle and it has to do with the market structure and it has to do with the flows and how different it's G be I agree all right I one more thing I'd love you guys take on and these guys got a little bit lucky this week which was yugal Labs I don't know if you guys saw the story but yugal Labs announced that they were expanding the Crypt Punk franchise that they uh purchased from larva Labs a little while ago so they got a ton of backlash after they announced a new Punk themed collection on Monday which is super Punk world there's a 500 piece collection developed in collaboration with uh artist nah Chanel Abney uh who's been criticized

for duding the Crypt Punk uh brand value and um I mean some people were calling them ugly most people you which is whatever uh welcome to the industry yeah yeah yeah that's kind of the point um but I think people were just upset that they were touching this canonic you know sort of sacred brand and you guys been accused of this playbook in the past of not having really a business model and just you know diluting their their Collections and printing more um so there's been accusations none of them proven I mean I feel like they need to sell the Crypt pox collection before they literally drive it into the ground

I it would be great to see like an eth Community Tok takeover of crypto punks like that would set them back on their feet but this like they did this with board Apes too it's just like collection after collection after collection it's like you can't just Jam people full of your digital Collectibles there's there's a limit um so yeah no no thoughts on this other than please stop broad Broadley to pose another question what what's the prognosis for nfts going forward oh great man not be familiar familiar oh my God yeah I was definitely out ones of one those are tough to

sell tough do you think what is the most bullish prognosis that you could have for nfts at this point if you had to do a steel man for a b case uh the most bullish prognosis is that over time these are viewed as Collectibles and art in the same way that um I mean like I was just with a friend recently and he like moonlights as a collector of rare um you know sports collectibles and it's like there's like the RPA so there the rookie patch Auto and then it gets defin and you send it to one of the ratings agencies and then it's like a 1 through 10 on like the rating and like the difference between an eight and a 10 is

you know potenti thousands of dollars like if you start to build a a a cottage industry around sort of like their being reasons why you'd want to collect this like provenance oh this one was owned by this person previously like I see on chain it was in their wallet their ens address was like the owner of it and like now like I own it now like on south of East Christies you can see like where was this painting from the creation until like ownership and all the different museums that it used to be like that that I think is is one of the things that defines value if you able to have that you know Define ownership over time and like it's this thing that existed like maybe there's a cool thing of um you know this was minted in

2016 like one of the original assets on ethereum and like you can see that it was minted and you can see the block transaction that that it was minted in like that would be like onia painting and you know from the 16 hunters or whatever like I think that there's stuff like that but but honestly all these things are just things that take time yeah is also that the Collectibles Market is huge like there was a big art fair in New York last week and I think there were something like a billion in art sales um and that's obviously the Mones and the picassos and the you know masters of the old world but I don't think our generation certainly has the

same appreciation for those and I think the younger generation even less so um and so digital Collectibles are inevitable to some extent and the market is very large and it's a demographic trend and I think the other one is just they're so beaten down that these are the things that you got to look for in reversals but there's a chance that none of these nfts are the right ones or the ones that end up being long-term valuable um and there's a certain element of like the classics I think punks will do well just because they're punks and like they will get past this Yuga ownership weird thing um but there's also this element of like people trying to force these like Grails on people like ordinals or runes or like

you know it's just like deluded to the overall Classics idea um so I think there's just you know if you're in the right nfts you're going to do extremely well but if you're in the wrong ones they're probably zeros I agree with that I think the yeah it's definitely it's definitely punks well just a comment on the Yuga thing I yeah I think Yuga kind of stepped in it and to be honest over the years I've not really agreed with some of the stuff I've heard come out of that camp which just decentralized Disney and come on dude that yeah know dude decentralized Disney that was the dumbest Nar of all the dumb narrative we've come up with that was one of the dumbest and it never made any sense and

and I think you know sometimes I hear these remember when Bob Iger was all in [ __ ] nfts like I was going to say decentralized baller comes with it yeah oh God and things got nuts in 2021 that's a good reminder I think you will see things get equally insane and we none of us will be able to realize it um but it'll be differently flavored but I think decentralized Disney is Dead Forever reason hopefully hopefully Jesus but I I do think I still have an emotional connection to the collections that I really love like I miss punk I don't have any punks but my my bad kids I have a strong emotional connection I like bad kids and there's something

there um I agree with I think you're right it's probably just some collections that are going to do well over time and it's probably the collections that lean into like find a way to build community I'm much less Bess on jamming an nft into a game where it doesn't belong um I'm sure there are games that that does make sense for but like just build connection with me like create memes about it uh just make it cool basically like the more cool it is to use an nft as a profile picture is like proportionately bullish to how well the collection is going to do so I I was literally about to say that like what you get with physical Collectibles is you know the ability to put it up on your wall or show your friends or you know whatever there's like an actual visual element basically most of them or

or some element to it that is Artistic the equivalent here is the digital uh um I mean we used to call it the digital display case like where are you displaying this uh to show off or or put as your um your likeness or have it represent you and I think that that in a lot of ways just given the scale of what you could have as a Twitter profile picture has a lot more scale and so the visual elements I think of nfts could actually be as powerful um and in some cases maybe more powerful than the visual elements of art um and I think that that is but that's also something that's going to take time do you think there is uh I know really speculate well there was also uh

congratulations to farcaster they raised 150 million this week um uh so yeah I even checked in on social fine a little while but it it sort of feels like to me you're starting to put together these these little pieces out there which is you know digital art Providence type stuff and then if you maybe combine that with a web 3 native social experience maybe there's cool stuff that you can do kind of that's what it sort of feels like in the app space right now is that we have cheaper block space there are all these ideas that are kind of floating around but people haven't really found the correct mix of infrastructure ecosystem product that is just really taken off yet so maybe some combination of like what's going on in farcaster nfts maybe you can do

something cool with frames there I don't know but maybe we're just waiting for lightning to strike a little bit in some cases I'm I'm bullish on foraster I mean I think it's good that there is a canonical social media layer that's pushing the envelope of what's possible um and the fact it's eth aligned gives like Credence to the story of you know eth being this like digital oil whatever you want to call it powering these new applications but these things will take a lot of time I think foraster has like a couple hundred thousand monthly actives we'll see how many of those are real but like you know it's a SLO to build one of these things doesn't happen overnight yeah I

agree all right fellas I think that just about covers it for this week anything else we we missed lot of stuff big week a lot of stuff probably big big big week well I think we're getting this decision in a few hours time so maybe even bigger than expected do you want to call it again let's go yeah he's like my meme coin got an ETF [ __ ] yeah oh that's fake and shout out to I I'm actually kind of looking forward to this uh Nick Carter David Hoffman fight oh my God the hype video yeah oh yeah maybe we can find

maybe we can include that on the way out but Nick Carter put out a uh I me he put out a video that's gonna hype the people up about this um also shout out to Nick Carter he's looking good I mean the V has been training yeah shout out to Nick Carter he looking good oh yeah what like as it I connecting with him if you want yeah I think I'm putting the house on David me too second mortgage put it on David me too man I'm pulling for Hoffman uh me too I think he's gonna I mean he's also it's fighting too is I like it's it's all

about endurance actually it's really not like how big you are it's really just an endurance game um it's exhaust it is it is couple minutes couple minutes feels like a couple of years it's it's nuts yeah all right well we'll check back in with the results I think that's happening this next week in consensus so we'll see all right later all right J FS peace hey everyone want to give a final shout out to this episode's title sponsor say now there are a whole bunch of really exciting reasons to be building on say V2 outside of just parallelization I want you to head over to say. to looking into building on their public devet again click the link at the bottom of this episode and head

over to say. start building something today