🚨LIVE: Bull Market Day 1.HYPE New ATH coming? CFTC Crypto Meeting. Sam Kazemian, Shafu & Q. Markwith

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[music] It's just I don't know what else to say. >> I'm bullish. >> HE SAID IT. HE FINALLY said it. So bullish. It is bullish. I'm bullish. We're bullish. >> [music] [music] >> Heat.

[music] Heat. Heat. [music] Heat. [music] >> [music] [music]

>> Corolla [music] Heading to the top. If we're not already at the top, we're going to the tugos. >> Roll up is my favorite. >> From all walks of life, all over the world, all over this industry come together for the roll up. [music] [music] [music] >> [music] [music]

>> Zoom out. [music] 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 nest. See you on the show. >> Stanley Dr. Miller is buying our bags. President Trump said hyperlquid. Happy Thursday, guys. You're watching the rope live from the tokenization tower. It is a lovely August 20th. Live from the financial capital world, the tokenization tower, the nest as always powered by our friends at Plume. their onchain asset management products. Perr is at $990. Hype is pushing alltime

highs. Lighter looks like it's needs a green dildo. Zcash is about at $600 and I can't feel my face. >> I don't know what else to tell you. >> Good morning to you, too. >> A little bit of Bloom Energy. I'm hung over. We celebrated last night and I didn't I Yeah, man. Yeah. What does that mean? If you see uh you know Bitcoin at 72 in 2026, you're all happy. Bitcoin at 20 [laughter] 72 four years ago felt like a nightmare. Welcome to the >> welcome to the bull market day one ladies and gentlemen.

>> That's sensational. >> Sensational. >> I mean we we had called the pre-bull phase like if you guys were w I mean there's people from the outside looking in that are probably like what's a big whoop. Bitcoin's at 72. ETH is at 2200. But if you were here and you've been here every single day you know how big this is. I mean, I've had people texting me like, "Yo, man, you were right. Like, there was only a couple people bullish on the timeline. You've been bull posting the whole, you know, for the last, you know, month or two." And I'm thinking to myself, I'm like, "Okay, maybe I'm misunderstanding how many people are still sidelined."

>> Like, maybe we're not maybe like our portfolio allocations are like aggressively long right now, but they just feel normal. Well, that's because I mean we've been all in this industry for the last 10 years, Andy. We've been all in since we started this thing. I mean, you and I got in 2016, 2017. We went all in and we went all in with our business and our time, and we've been all in ever since. So, yeah, the portfolio allocation hasn't changed. >> Let's go. Hype's about to break alltime highs on the stream. Yesterday was insane. Trump said hyperl. We have the CFDC meeting today. I think it's actually at 1. I thought it was at two, but it's at one. Hype's about to go to 74. We're, you know, within striking

distance of alltime highs while on the stream. Um, all these bags look incredible. I mean, Pump is on a generational run today. Purr looks ready for alltime highs. Um, I mean, I I dude, I was down a large amount on Purr to start the week still. >> I know. We We talked about it >> still. >> We talked about it. Um, so >> the gamma squeeze, I mean, look, >> you know, we can we can sit here and and revel in our accomplishments over the last 24 hours.

>> So early like so even happened selling. I'm like, dude, it's day two of the bull market. Why are you selling? >> Yeah, exactly. And there's I mean, obviously, we've had an exorbitant amount of gains in the last 24 hours, which [laughter] feels incredible. >> Get some pullback and you know, always going to be like crazy like this. I mean, next week we might be, you know, choppy and down, but >> right. But now this billion in liquidations, Rob, this is inverse 1010. Shout out Thread Guy for that tweet. That was a banger. Inverse 1010. 10 10 but up.

>> Yep. Um, and I think now this is going to kick off a ton of just more fun conversations. Like I'm I'm excited to talk about performance. I'm excited to talk about so many things that we only talk about in bull markets. And And it feels like now the Overton windows open. I didn't realize that we were the bullish ones. Like I just thought this was normal. Like what? You're telling me you guys aren't full port hype? Ze and all the other names in some decent size that we've been talking about. Like what world have you been living in? >> Yeah. I mean, have we not been have we not [laughter] been talking about this like for the last six months since we've been >> This is such a euphoric opener right now. I'm scared. I'm scared. I'm scared.

I'm scared. I'm scared. I'm scared. Let's keep it rolling, guys. All right, guys. We have a great show today. Markets, weather, KRW, and FRA call in. AI Supercycle with the Circle New Hire, their head of agents. Um, and then we have an independent uh, economist joining the show um, calling in live. So, broad strokes here. We also have the CFTC meeting. Edward says light $3. We've been calling this for a while. Edward, we've been talking about >> nothing. I think it's at $3 right now, right? >> Lighter. Edward, we've been talking about lighter since under a dollar, let alone like a $150 and now we're at three and we're printing and we're not going to stop till 10. Tom Lee's a genius and just shalom is gonna be buying the entire city of New York. Don Alt, Don Alt coming out of nowhere and being

like "Dude >> uh, 4K ETH is my target and if we get have strength there, we're going straight to 10, >> dude. Flip gigab bullish two days before the like." >> And you got dude, so much funny little lore right now on CT. Like people's tweets are just like I could just screen share for days. Yeah, I mean it's uh it's it's a fun it's a fun time right now. Uh rising tide I do think flying new highs >> Ethereum >> Dats can I mean how can you not look at the difference in execution between Michael Sailor and the likes of Tom Lee.

>> Shout out to Tom Lee, man. >> Big shout out to Tom Lee and Joseph Shalom and Joe Luben. these guys that have been buying all the way down, lowering their entries, taking supply off, and now ETH is >> ETH is outperforming hard, is it not? >> Yeah, by a lot. ETH the unlimited money machine, one-armed bandit, music in my ears. Miss Gun, great to see you. Quantum Rose, what's up? Good to have you back as well. >> Um, you guys are watching on X, we have chat on X, shoot us a message. >> This is outperforming Bitcoin by 10%. >> Yeah, it's >> I mean, Bitcoin's up 10%, 5 and a half%.

Oh my goodness. Just wow. This whole pump is running. >> Everyone's still sideline. I put out this tweet. I was like, it is astounding to me. It is astounding to me that the amount of people that are sideline on this industry's best onchain businesses is astounding, bro. People still don't own hype and lighter. >> Yeah. >> Like, you consider yourself a real cryptocurrency investor. How do you not own hype and lighter? and then pump. >> They're not gonna buy EtherFi either.

That thing's gonna fly. >> That's the barbell right there. >> They're not gonna buy, you know, >> and we've got >> we've got like 15 15 20 minutes or so before our first guest. And so we've got a lot that we want to get into to help frame what's happening, why we're pumping and >> I was waiting for lower ice kings. Yeah. >> Oh, and where we go from here. I mean, yeah, >> guys, I just want you to know we've been bull posting ETH on the videos with Shalom and Bitwise the last couple weeks, and the comments have always had people being like, "Oh, dude, Shalom Classic Bull posting ETH again. What's new there, >> in the gutter?"

>> We had people commenting yesterday on our Zcash video with Mert saying chills. >> And if they just longed it 10x on pers, they'd be up like 100% today. The thing's at $600. Oh, guys, we're trying to tell you. We're trying to tell you. >> This is super euphoric, V. I'm scared. I'm scared. I'm scared. I'm scared. Hype 74. Hype 74, guys. Let's go. Let's give some sounds for hype 74. >> Yeah, let's get into uh >> All right, guys. Let's get into the show. Yeah, Rob. Um, weather markets quick before we do, let me tell you about dinari building infrastructure for tokenized US equities on chain.

>> This is the whole this is the next wave. The tokenized equities bull run hasn't even started yet. Talk about day two of the bull run. dinari is tokenized the entire equities market. This is just I mean this is trillions that is entering the DeFi protocols. I think now I saw some like uh requests for proposals going through a horizon that they're going to be getting like they I'm just I could just speak euphorically >> about this like over and over again. >> Yeah. Wait, what was on a horizon? I think it was actually securitiz that had put out a proposal about listing equities tokenized equities on a a horizon which obviously is part of the thesis that these assets these tokenized assets are now going to flow into the D5

protocols that means more volume more activity more fees more earnings number go up well is it's just this diversification of revenue every time I mention cryptonormies they roll their eyes at me dude we haven't even so we're still in the process of convincing crypto natives to go all in, >> right? That's how early we are. >> It's a good point. It's a good point. >> We are all in cuz >> we've been here. We've been all in. >> I don't know what else to do with my life, right? But the the rest of the industry still needs to go all in and then the normies need to dip their toes in and then they need to go all in.

>> Yeah. >> We're like multiple stages away from >> Yeah. And I have further evidence for that. I don't know if it's in our docket for today. It was yesterday until we got nerfed. But I was watching this Joe Rogan podcast, right? Funny, funny, funny guys. And it's such an indicator of sentiment. It's wild. These guys are basically >> Yes. Because they associate it with Trump and making money and this and that. And the public perception is still so negative, yet number is going up, which is formula for buying higher. It's formula for the masses of retail being sidelined and buying higher. So you're what you're saying, Andy, I just this is just more gasoline to pour on that fire.

I think what you said is absolutely right. We're still in the process of getting the natives to buy in. The natives are still >> good coins. >> Absolutely. And we're going to get we're going to get further segmented. But just in broad even into hyper liquid, you know. >> Sure. But even if you think about in unison this entire industry, the onchain natives are still in cash. They're going to come in. Then the other people from the outside are going to have to buy buy higher and then you get sentiment to actually reverse as everyone makes money at once. >> If I hear crypto's a scam one more time, little miss gun, stand your ground, girl. Let's go. That's a that's a trfy fintech daily viewer of the show.

Absolute legend. If I could give you a hug today, I would do it. All right, guys. Let's keep it rolling into the markets. We'll keep this quick. Before we do, let me tell you about Fracks, our stable coin partner, Open Stable, Borderless, the future of digital money. Visit fra.com. learn more about their FRANET product that they just launched. It's a great product. Markets, I mean, we just talked about it. I mean, we don't even need to get into it too much. Powered by Zama as always. The things that's interesting is that what happened is that the long end yields of the bonds actually eased a bit, but they started to go back up. Rob has more on on >> We're going to talk more about this later. Yeah.

>> So, we'll talk more about this. >> Um, but >> let's just look at put a headline out, Rob. He just put a headline out saying, "Guys, don't worry. We're going to be adding size to these Treasury purchases, these bond purchases." >> Yeah. He went on CNBC earlier today. I still want to watch that segment, but there is plenty. And and Andy, we're going to get into more of this because, you know, there's a lot of misinformation flying around and I want to clarify something that I had said yesterday saying that this is yield curve control. This is not yield curve control. This is uh just just essentially refinancing the government, right? If you refinanced your house because there was a lower rate available to you today, that's exactly what you would do. You'd be bragging about it, right? And so that's what we're doing on

the long end. We're shifting more of it to the short end. But what this is going to push, so this is not yield curve control, but what this could push is actually the Fed to turn on the money printer. So we haven't even seen the money printer get turned on. But by reshuffleling more of the long-term debt into the short term, it's going to push Fed, the Fed and Walsh to lower the short-term federal funds rate and then take more of their assets and buy assets to hold on their books, which is pure pure quantitative easing. So, we're going to talk more about this. The curve steep good enough for you guys. Did Did you guys hear that? Like like I heard that sounds like a math major dialed on macroeconomics. As always, our markets

are powered by our friends at Zama. Visit zama.org to learn about their confidential computing technology. Here's the funny thing. The bottom not in crowd will not long the first real pullback either. No, they won't. They will literally say that was just a bare market bounce. >> Exactly. They're going to they're going to celebrate and say now that we've pulled back from 72 to 64. That's when we're going to all go all the way down to 48. Meanwhile, we're I don't think we ever touch >> I don't think we ever touch 50s ever again. >> Needs to smash 5K early on. Are you guys going to stream the meeting at 1 p.m.? Dude, I mean, >> I think we want to >> guest. I would love to. We have We have some guests, but I think we we we can still stream with them. I think they

would enjoy that. I think it'd be worth it if not just for like 10 or 15. >> So, 1.4 trillion a year in debt payments. Little Miss Gun, guess what? Buy Bitcoin. Save your wealth. Save your money. >> All right, guys. Let's get into some of the news. Before we do, let me tell you about Near, which is also flying. One of our best clients and best sponsors of the show. Visit near.com. I'm up like 20 bands on purp.com this week. We're cooking hard. Aton was short on pump, way lower. I blew his stops out. Send it to the absolute moon. Don't let these kids go short anymore. No purpose for no more purpose for Aton. But if you want to trade pers, do it on near.com. How about this aggressive take from pouring one out for Kyle Sanmani

policy. So I mean unfortunately we get more more aggressive than this. We were two minutes away yesterday, guys. So, if you guys are watching, obviously we had technical difficulties yesterday. Um, when this was going on, basically what happened was we had a overloading of a backup server. So, we're running this whole show through data centers and warehouses and this little uh, you know, very, you know, uh, there's old process, you know, Amazon and S3 and blah blah blah. Something happened and um, the stream bricked. So, sorry about that.

Um, I think we should be good going forward, but in what we missed was I mean the god candles on our biggest positions live, which I mean that that you know I'm kind of like a snowball guy. Like if it's exciting then it snowballs. That that's how it led to being out at 2 a.m. last night on a Wednesday was one God candle. Anyhow, um let's play this video because this is what we missed and this is Chairman Celig authorized the first ever true Bitcoin perpetual futures contract on a CFTC registered exchange. First time I understand that Mike is also working to bring hyperlquid into the

United States in a fully compliant and legal fashion. working very hard on that hyperiz coin perpetual futures registered exchange first time. >> I understand that is also working to bring hyperlquid into the United States in a fully compliant and legal fashion. Working very hard on that. Chairman Celig authorized the first ever true Bitcoin perpetual futures contract on a CFTC registered exchange. First time I understand that Mike is also working to bring hyperlquid into the United States in a fully complic

[laughter] Oh my goodness. And did you see Jeff Spreer of Intercontinental Exchange on his right was like staring out into the crowd and then he says Hyperlid into the US. Now keep in mind Jeff Spectre is the guy that called Hyperlid bigger than the NASDAQ 6 months ago and the NASDAQ uh chief operating officer I think is standing directly to his right. Y >> she is there in the room as the president is talking about bringing her competitor into the US and we don't get her facial reaction but we do get Jeff to Trump's direct right just looking and being like is that right? Did he really

just say that? Because now the president of the New York Stock Exchange and the Intercontinental Exchange knows that there is a new competitor entering his market. >> Absolutely insane. Insane timeline. Could we play the video one more time, please? I don't know anyone holding XRP. Yeah, we don't like XRP here. First ever true Bitcoin perpetual futures contract on a CFTC registered exchange. First time. I understand that Mike is also working to bring hyperlquid into the United States in a fully compliant and legal fashion.

Working very hard on that. >> Chairman Celig authorized the first ever true Bitcoin perpetual futures contract on a CFTC registered exchange. First time I understand Mike is also working to bring liquid hyper liquid into the United States in a fully lighter fashion. guys. RTQ, good to see you guys. >> Um, Beef, great to see you. Oh my goodness, what a timeline. I mean, >> like, what else is there a better shill in the entire world than Hyperlid new type? Thank you for the 10 bucks. Let's see the GT video promo. Uh, yes, we invested in GTE. Happily, we'll show

that. Um, we don't like XRP people. Yeah. No, we do not do XRP here. We think it's we don't think it's worth >> Garlinghouse was uh was on the on this floor here, but obviously there's several people here. Found it also interesting that Brian Armstrong got the first word and then the president of the New York Stock Exchange. Like you can just tell. >> Yeah, [ __ ] is changing. That's so bullish. All right, let's keep it rolling. Our boy Donald, if you guys don't know his lower German guy, um people give him [ __ ] for like marrying a stripper. I don't know like what her situation is or what his actual personal life is, but that's like the lore that he would he gets crapped on for. I think he found a nice girl and he moved and he's starting a family. Like I think a

lot of the haters, but whatever, right? Anyway, he's dialed. His his his stuff is dialed. Um target for heat is 4K. If we're strong there, 10K. If we're not 4K it is. I'll probably sell halfway into the rally as usual. You guys will call me Rwashed, rinse, and repeat. nothing ever changed. This guy's dialed. ETH's going to 4K. I mean, it's already o over halfway there. This could happen in 2026. I think it's very, very possible. Um, >> Edward said Brad Garlinghouse was invited to the White House meeting for DEI purposes. I think Edward might That's an early front runner for uh for comment of the day.

>> Of the day. Of the day. Yeah. Yep. I agree. I agree. >> Um, let's keep rolling. I know we have our guests that are getting ready in the back. We also have this meeting that's going to go live. >> Yeah, we're going to cover the meeting um in the back there. Guys, could you let the guests know that we're going to do some of the CFTC meeting coverage with them as well? We can set those scenes up um while we kind of keep rolling. Before we get into our next topic, let me tell you guys about one of our partners, 1 in. You may have heard of this concept of shared liquidity. Products like 1in Aqua let you approve one wallet balance to track multiple positions at the same time across pairs, ranges, and chains. Totally different way to keep your liquidity active in

more markets. If you want to learn more, check out 1in.com/aqua. Get trading now. How about this from Daniel Chu? Uh, the funniest thing I remember from the last few years in crypto was watching crypto venture funds [ __ ] on liquid crypto funds. In reality, it was mostly a diversion tactic to get LPs to look away from outrageously inflated paper marks and virtually non-existent DPI. Today, many of those same venture funds are pivoting away from their core competencies or making fullon liquid investments inside closed-end vehicles. the golden age of liquid crypto investing is coming. I agree. Our our venture portfolio is basically not really active that much anymore. Um, and a lot of these same VCs missed hyperl hyperlquid. They obviously missed pump.

They probably missed lighter. They probably aren't investing in etherf. And they're going to be buying a lot of the stuff that we have been saying on that onchain businesses part of the barbell from you guys higher. So this is like this is your next marginal buyer guys. It is all the large VCs who have a lot of capital and they don't they're one they're scared to deploy because they think it was going to be lower, but two they they missed these rounds and they've written them off and they're going to buy from us a lot higher. That's your next marginal buyer in my opinion in terms of like the crypto natives getting all in. It's these kind of like VCs and such.

>> Yeah, I don't have too much more to add except a shout out to uh no CSM. You guys rock. I mean, big super chat day. Uh much love in the chat. Had us at we don't we don't like XRP here. That's absolutely [laughter] you need I will throw down with you on this. Andy Andy Ham we don't like XRP here. Thanks for the 10 then really appreciate it man. Um I'd like to show you guys that video. Uh so if we could please get my screen up. Um, we actually speaking of venture investing, I don't have too much to add here other than I think the next marginal buyer for your revenue producing onchain businesses are VCs that completely missed the boat and invested in over inflated infra slop and are now realizing the shift in the entire kind of market and you know

that's where we're going. On the other hand, we did invest like I think 15 or 20K into GTE back in the day. So definitely friend of the show. Um, and let's watch the video. Thanks for the 20 guys. >> Good morning everybody. [music] Wall Street has been an absolute war zone the past few days. Quantum computing stocks are crashing hard. There's still conflicting information about what happens next. [music] >> Looks like we are in fact in a memory bubble. Market analysts are monitoring the situation closely as trading volumes remain steady.

>> Rumors are getting crushed and the Fed is asleep at the wheel. We have a massive, massive problem on our hands. What the [ __ ] >> It's been an absolutely crazy day on Wall Street. Quantum advances, Iran war, situational awareness. I touch and I turn and I dream of what I need. I need a hero. I'm holding out for a hero till the end of the night. He's got to [music] be fast.

I need a her. >> Wow, dude. New type. If I knew the video was that dialed, I wouldn't have asked for the $10. [laughter] >> Love to see. >> Wow. >> Absolutely love it. >> Wow. Rumps. Honestly, if you like XRP, man, this channel is not for you. I'm sorry. If you like XRP, you're not going to have a fun time here. We're gonna outperform you and we're gonna make fun of you. So, you don't you don't have to subscribe. For everyone else who doesn't like XRP, if if you don't hold Ripple, if you're not a fan of old garbage centralized coins, smash that like button on today's stream. We we really

appreciate it. Means a lot. Helps us out. Helps the algorithm. >> XRP, if you guys hold XRP, if you like it, if you're going to talk about it, just go somewhere else. Trust me, this is not the channel for you. No hard feelings. Truly mean that. Just just go somewhere else. All love. All right, let's keep it rolling into Eleanor here. Um, so check this out. Um little inside scoop here. There was a room full of crypto people and that met with Howard Lutnik ahead of the hearing yesterday and basically it seems like they're doing anything that they can to push clarity through.

So >> from my perspective this is this is bullish. Um, and you know, I think that I think that I think that there's a chance we get a surprise passing of Clarity that sends us on another God candle. >> I mean, that's I don't think that's going to happen until September, >> but it's possible. >> Um, >> well, yeah, that's what I mean. It would still be a surprise. The odds on the prediction markets are really bad. >> Yep. So, the CFTC uh is inaugural meeting is happening now. Uh looks like uh Hayden Adams is up there from Uniswap, I believe.

>> Yeah, let's go ahead and pull that up. >> The glow up more like it. James, great to see you, man. I'm glad we're still long in the same bags. That lighter uh Robin Hood uh fractals nuts. We We like Zama. We We love Zama. Um I bought accidentally out prints me money. That's okay. More XRP for me. Quantum rose. All good. Take profits, everyone. Volatility is here. Look, you guys do your thing. Manage your own portfolio. I'm not selling on day two of the bull market, but that's, you know, that's what you want to do. That's what you can do. >> Leo, let's go ahead and pull this up.

>> Shout out to all 75 of you guys watching live. We [ __ ] love you guys. Thank you so much. >> We're in a period. >> Can we get some audio on this? Expansion in our industry in 2003. So, this is the beginning of the hearing, right? >> Contract market regulated by the CFTC. Today there are 30 designated contracts with 17 pending approval. In 2023 there were 2100 contracts regard 10% today. >> Today there are 6,700 >> Bitcoin flying new highs. Now, I believe that the Commodity Exchange Act, the operating system of our industry, is one of the main reasons for this burst of activity. Since the enactment of the

Commodity Futures Modernization Act of 2000, Congress has charged this agency with repo uh promoting responsible innovation and fair competition. Lawmakers provided the CFTC with flexible tools to effectuate this mandate from principles based regulation to self-certification to exemptive authority. Importantly, Congress included the terms fair and responsible in the CFTC's mission to ensure these public goals did not come at the expense of the safety and soundness of the markets or the protection of customers. Now, we are here today not to advocate for one technology business model or market

participant. We're here to provide practical advice to the commission. >> Thanks for the jewels eyeball per OMG. Agreed. Unreal. Thanks for uh hiding an informed policy comes from listening to the people who operate, use, and build these markets every day. Now, that's all of you. So my job as chair is to keep us on time and on topic and I apologize in advance. >> All right, so this is the very beginning like the opening remarks. Guys, we're going to go back and forth between this and our first two guests of the show.

We've got Sam from Fracks and we've gotairman one of the co-ounders of a strong Korean >> over to him for his opening remarks. >> Here we go. Thank you, Walt. Good afternoon, everyone, and welcome to the inaugural meeting of the Innovation Advisory Committee. >> Just following our our fantastic meeting yesterday at the White House with the president, uh he kicked us off and and we're all so grateful for his leadership. You know, he took us back to the uh Oval after the meeting and he asked me, "Which is the more powerful agency? Is it the SEC or the CFTC?" And I don't know looking around at you all in this room and everything that you've

built and our our very broad definition of commodity uh you know I told him it might be the CFTC these days but uh no I'm [clears throat] just kidding. Um but but we're we're uh really >> this guy's hype bags are just exploding after yesterday our our strength is really uh quite uh voluminous. So, um, we've assembled some of the world's greatest builders, thinkers, and entrepreneurs here in our nation's capital to engage in a series of conversations about where our financial markets are headed and what role America in particular market agency, the commodity suits, baby suits, >> CFTC, saping that future >> market flying started, I'd like to take a step back and discuss why American leadership on this new frontier of

finance is so important. But before I do, I must provide the standard disclaimer. The views I express today are my own as chairman and don't necessarily reflect those of the commission. For more than half a century, the CFTC has stood at the in America. >> We got our guest just about ready in the back, so we're going to bring them up in just a moment. >> Markets remain fair and resilient. >> As we continue to hear from Mike, the commodity futures trading commission. >> Are you looking for a job, bro? We are turning the pay with Robbie just roll up roll them up and knock them down of novel instruments from contracts on currencies to petroleum allocations to Jenny May certificates.

>> All right guys, we're going to get our two guests up and and go back and forth from this uh stream and also talk stable coins markets and get their takes. Just give us a couple more seconds. >> Cotton and rice. The balance of contracts were subject to the same patchwork of state laws that had prompted Congress to institute federal commodity laws in the first place. As a result, America was falling behind. The history of America's earliest commodity exchange, the Chicago Board of Trade, has been described as a saga of quote fending off countless politicians on both the state and national level, all of which seemed intent on shutting the board down end quote. In 1848, a group of merchants established the board above a flower store to enforce a set of codes

and rules for buying, weighing, and grading commodities and to arbitrate disputes among traders. By 1859, a convention emerged by where whereby parties who had committed to buy or sell a commodity could make or receive a payment to or from the other party based on the change in price of the commodity instead of making or taking physical delivery. They standardized a promise, a measure of grain, a price, a date, so that a farmer hundreds of miles away could lock in her season before the first frost and so that a miller could plan his year without relying solely on hope to make ends meet. These arrangements came to be known as future.

>> He's going to talk about per now. >> The response to this innovation, >> this like the context set up to be like buy lighter and hyperlquid. Now, boys, >> as these early markets began to take shape, state lawmakers across the country moved to subject these exchanges to a wide range of state anti-gaming and anti-bucket shop laws. One lawmaker urged federal action, exclaiming that, quote, "The grain gamblers have made the Exchange building in Chicago the world's greatest gambling house." Karl Marx himself called exchanges quote gambling parlors where little fish are swallowed by the sharks end quote.

The same rhetoric has been used to delegitimize and undermine our markets for more than a century. But when lawmakers considered legislation to amend the guys up here as soon as you're ready to codify once and for all a comprehensive federal regulatory let's start changes they recognize then what we know to be true today >> and just mute the innovation must go hand in hand and we'll go back to it. without clear rules of the road builders. >> Gentlemen, uh thank you for your patience. I hope you uh enjoyed the little commentary and uh obviously we have, you know, crazy crazy day in well yesterday with >> they're call they're calling this day two of the bear of the bull market.

>> Sam, great to have you um as well and our lovely guest of the show KRWQ all over the background. Love that. Great setup, man. Thanks for uh thanks for joining us, man. Yeah, of course. It's uh great to be here. Happy Thursday. Uh second day of the the pump. Hard to follow uh Chairman Celic. But uh you know, TLDDR is uh we're flying, you know. >> Yeah. >> Yeah, we are indeed. >> I mean, Sam, maybe place to start. you spent a lot of time in DC and we're we're going to get into Naveen and and what you guys are doing with KRWQ as well, but you know, given that you spent a lot of time in DC, Sam, I mean, how much of a surprise is this versus the inevitable, you know, uh just adoption, acceptance of this industry at the

highest level of finance? Yeah, I mean uh I actually had the pleasure of having uh lunch with Chairman Sullig back in uh Vegas, BTC Vegas this year and then um spoke to actually Patrick Whit uh last week. Um he was also at uh the the conference and I you know I've been speaking to a lot of uh these guys regularly. It's it's great, right? Regardless of what happens with clarity, right? I think we're just essentially uh either locking in, you know, this much of a pump or this much of a pump. So, it's [laughter] uh it's it's good stuff.

Well, and then hopefully the the macro stuff doesn't uh you know, block any of the any of the euphoria. >> Yeah. I mean, we we were speaking to Sam uh in the Empire State Building a couple months back and you know, this this move was well before my prediction and you know, I guess miles ahead of yours, so we're both wrong here, but for good reason. Um so, we'll see what you know, we're still very early on. We, you know, we can talk the market for for a long time, but you guys are doing some really cool work together. Um Naveen, it's your first time on the show. would love to just uh get a quick introduction to what you are building in the space with KRWQ um and also just thoughts on the last 24

hours of the industry regulatory wise etc. >> For sure. So KRWQ is the first Korean one stable coin. So we are the first to market. It was created by IQ uh with FRA as the stable coin infrastructure partner. So IQ actually we have a long history. We launched back in 2018 in Soul, South Korea. So we've been building in this space for a long time. We started with the first blockchain encyclopedia because our mission is building a more intelligent financial system. So started with the education component then expanded into AI agents which we used to manage IQ wiki and then from there just this year we've expanded into stable coins given both our presence in the Korean market having

launched in 2018 with people on the ground since then uh listing quickly on up bit and binance and then also given our experience and our shared history with fracks. >> Love it. >> Very cool. Now, another thing that happened over the last 24 hours or so is that, you know, we're getting this reshuffleling in the macro environment. And I'm just curious how that affects stable coins broadly. Like what I think we're seeing is that, you know, Bessant in the US is reshuffleling some of the long end, absorbing some of that debt, maybe pushing it a little bit, you know, frontloading it a little bit more in the short end. You know, guys, feel free, Sam, maybe you can speak to what you think this is going to mean for stable coins broadly. And then Naveen, curious of how this affects maybe regional

stable coins, KBW, you know, in particular, KRW in particular. >> I it was funny when I saw the the best announcement of buybacks of treasuries. I'm like my mind is like token buyback. So I'm like [laughter] dev saying they'll do like buyback and burn and I'm like [laughter] the OG like OGO, right? Yeah. Buyback and and burn. I think it's interesting because I mean this is this isn't a geopolitics show but like uh part of we all know that the reason that that's going on is uh the kind of global economy kind of uncertainty. So assuming that has died down uh I think we're in for a pretty uh glorious uh 6 to 12 months. I remember Andy you're right

like uh we we were like thinking when the market would turn. Uh I had kind of the realist view. I said age one of 2027. I think you had late uh you know 2026. I think you're probably closer assuming assuming this isn't a you know fake out. >> Yeah. And so when it comes to like just to be a bit more specific on the kind of treasury here I'm buying bonds that are at the long end of the of the yield curve. 20 30year government bonds. we're effectively introducing more liquidity into the system that way to kind of ease those yield curves from steepening too high and causing you know other pressures in

the economy. And so when it comes to like stable coins specifically both with what FRA is doing here with what KRWQ is doing obviously bullish market conditions bring a stronger demand to borrow stable coins. So you get this kind of borrowing demand which then leads to like theoretically growth. Maybe you could just kind of like explain to us from both your perspectives with Korea and with the US here how you guys see kind of this uh what's happened with with the Treasury and then kind of the like the latest market moves. Are we expecting now to potentially be seeing stable coin growth start to accelerate? What does this mean for holders, for yields? Just kind of

give us a bit of a sense of what you may anticipate. Yeah, and I'm sure Navin uh has has some thoughts on on the Korean or like non-USD market, but I think if you think of stable coins, right, like money is is three things, right? It's a it's a store of value, medium of exchange, and unit of account, right? And obviously USD stable coins, the unit of account is 10 out of 10. It's it's a USD, it's the uh global reserve currency and unit, you know, there there's talks how long and stuff like that, but it is right now, right? And so for savings, uh I think more and more people are holding stable coins as they're essentially cash equivalent. Yesterday I think um I saw something where there was a a open for comment on declaring stable coins itself

uh certain types cash equivalent in financial transactions. And then as a medium of exchange, look, I I think that there's a lot of things right now that people might not be seeing other than the the clear outside things like rain and Visa cards where everyone knows, okay, there's a lot of these things being used. There's also things a little bit lower under the the kind of uh the iceberg. We're we're talking to public companies that uh want a full stack system to hold stable coins for payins, payouts. And in the nonUSD uh area, I think Navan and and their team is seeing a lot of stuff. And also the the other thing uh is is kind of my kind of hot

take is Korea as a you know, as a stock uh market and a crypto scene has kind of been on the slump the past few months, right? like the this year it's actually been a little bit on the downturn. Um I think they've like halted their stock market more times in the past 6 months than I think in their like history. Um and my hot take actually is that uh this will bring back the kind of glorious Korea speculative markets that everyone knows like Korea is famous for including um Upbit which is like the largest Korean uh exchange. They're slated to release Giwa, which is like their their version of Robin Hood chain essentially, right? The Korean version. And so we've

seen how successful Robin Hood chain obviously has been. It's just like completely taken the industry and traders and everything by storm and everyone loves it. My hot take is that uh the Korean market will go back to all-time highs on the launch of Giwa, which is like Korean Robin Hood chain essentially. >> Wow. So Naveen, can you talk about how KRWQ fits into this thesis? If a bit does launch this, what is the denomination between, you know, Korean traders that want to denominate in US dollars versus those that want to denominate in KRW, you know, stable coins? Can you just talk to us about that split and then how you plan on penetrating that market?

>> Yeah, absolutely. So, currently, obviously, DEX volumes are all USD, but I think what a lot of people miss outside of Korea is that the highest volumes, some of the highest volumes are in the Korean Juan. So in Korean one fiat so across up bit them there's huge volumes there that defy is not tapping into because it's completely separate right you can't R between those pairs very easily but this is one of the things that KWQ can play a major role in so this is something that's on the horizon I think this is something that definitely upit in terms of giwa in terms of moving into defi obviously we've seen the huge profits that uh USDC coinbase have made in that traition

transition from fiat trading to USDC pairs to USDT pairs for Bitfinex. I think we're going to see a similar shift in Korea with Upid Bitum. There's some dependencies with the regulatory frameworks in Korea, but there is huge money on the table in terms of that shift from fiat trading to stable coin pairs and KRWQ is prepared for that as the first to market. >> Yes, you guys will definitely be active on the chain then. >> Absolutely. >> Yeah. >> Yeah. And so let's let's say all of this goes according to plan. You guys do have a major foothold in market share, you know, on this chain and then broadly, you know, in the Korean market as trading starts to revive itself in that market. Sam, could you talk to about the

value acrruel thesis here? Like how does KRWQ success end up acrewing value to the FRA ecosystem? >> Yeah, I mean we we've been partners since since the launch. So the the the main thesis here actually is that there's a lot of non-USD stable coins and and a lot of people have different opinions. Oh, they're only good for like FX conversions or like everyone prefers to hold USD. Some of that may be true but I think the main reason we work together to uh have the infrastructure uh provider for like KWQS I think it is the the biggest uh this again maybe a hot take but the biggest non-USD stable coin opportunity bigger than euros bigger than uh all these other ones um

but the important thing as Navin was saying is most of Korean trading is done in Korean Juan which is very unique and and different right if you go to like exchanges in LAM and stuff all the pairs are tether and tether is king right that everyone just trades uh with with tether but that's not the case for Korea in fact it is probably the biggest non-USD uh stable coin opportunity in our view and one of the things we're we're doing at FRA with FRAUSD with FRANET and our uh NEO bank infrastructure is making sure that we're in the capital flows of new emerging assets right the most obvious ones obviously that everyone agrees with is like tokenized equity these RWAs right? They're going to be like the the blue chip assets of like

tomorrow, right? The ones yesterday or WBTC, WET, right? All of these things that already have deep liquidity on like Uniswap, on Curve, on like classical DeFi. But currently there's there's this renaissance, right, on Robin Hood chain, on other places, on base X stocks, on on different uh networks, on Solana, all these things where these assets are where capital flows will come in and out. And I think one of the ones that the most valuable and and few people are uh looking at and being in the middle of is the Korean Juan unit. So FRA essentially does the mint redeems orchestration. uh there's some treasury uh underlying that is FRAUSD but most of it is KRW bond denominated right just like a actual unit of of KRWQ right you

have to basically back it with Korean Juan uh sovereign bonds right the same way you do with like a USD stable coin but we uh are working together to make sure that this is pretty much the first to market kind of the tether of Korea if if you uh if you will right because one thing I do agree on is that there won't be like 20 like KRW stable coins or like Brazilian realale like stable coins or like uh Euro stable coins. There's probably going to be one, maybe two, maybe three if if euro is like really big, right? And so the thing with KWQS, it's out. It's essentially the the Tether model. It it works. You can actually get it. You can trade it. It's on a drrome. It's on base. Uh it's

expanding quickly. Obviously, it'll be on uh Giwa. And then the cool thing is FRA powers the underlying uh infrastructure of it. >> And from your perspective, you know, on the K KRWQ side, um what what what has the experience been like working with Sam Fra and the team Nevin? And how how have you kind of gone about, you know, launching this? And you know, talk to us a bit about the growth and and the success story here. >> It's it's been fantastic. I mean Sam and I have been working together for about 10 years. So even before uh so Sam because Sam actually founded IQ. So IQ is the creators of KWQ and then when he

launched Frax and started running over there I took over on the IQ side and we've been working together for a very long time. But you know it's been great because one of the kind of advantages that KWQ has over a lot of the other players in Asia is this partnership with FRA right? So our stable coin is fully you know in terms of smart contracts and everything it's all battle tested we're using their infra no one else has launched in the market so there are other Korean Juan stable coin projects there's you know PC's here and there but there's no actual infrastructure these guys a lot of them have never actually deployed a stable coin so uh we have a huge edge there and that's one of the great things that FRA has has brought us also in terms of you know really excited

about what FRA is doing in the FX space So, for example, FRAUSD, they have the yield forwarding on Curve FX swap. So, that's one of the best places to trade uh FX in general, but specifically KRWQ. And it's exciting having that yield going back to the LPS and really being able to grow there. >> Yeah, guys, I think we're going to get uh Mike Celig uh but I want to get your commentary on this because I'm curious how in particular Forex could evolve with like some greater market conditions. I'm you know I'm curious obviously there's you know foreign exchange kind of happening on chain right now but this is a massive massive industry Sam from your conversations you know with Celig and Patrick Wit how do

you anticipate the forex market will evolve as we get greater stable coin adoption regional stable coin adoption is there any regulatory changes that you'd like to see to make this a more liquid stable coin forex market >> um I mean it's uh it's hard to complain with uh what what we're seeing literally live uh right now >> so that the webcast audience can hear the the guidance and and everything if you are attending virtually I think that >> you know the liquid discussion lighter trading all of these they're they're adding new assets as collateral right like one of the things that uh would lock in for example a stable coins network effect is using for example KRW for a lot of the the Korean uh

collateral right Korean traders and and and those things right the same thing of how USDC is essentially used on hyperlquid right now. It it is a huge huge sync in utility um as well as on lighter. Lighter's actually been pretty good at adding uh various types of of collateral. Um and so I think that literally just bringing this stuff out in the open will create so much more market potential in terms of size. Uh one of my views is like there will be like one to two billion stable coin mints here or there as like a regular thing in 2027 whereas you know a1 to2 billion stable coin mint literally would put the stable coin itself in like the

top 10 right now. Right. Uh I think that that stuff will go into hyperdrive with all of the usage of onchain trading. >> Wow. And so you think that we're going to end up getting institutional adoption to the extent where they're printing billions of stable coins in one shot? Like what is the use case? What is the reason? Can you just like help to flush out this thesis a little bit more? How maybe how it might work in Korea or how it might work in the US? Yeah, I mean uh in in Korea it's kind of uh a little bit early to get into the the 1 to two billion uh range maybe in in 2027. But even for us, we we've been speaking with uh public companies that uh we we've

signed some things with that we'll announce next quarter. But we've seen the actual demand of wanting to use stable coins entirely in their whole payins and payouts and downstream payments. And these are companies that have billions of dollars of just cash, right? Uh you know, the the biggest of which would be like the the Fang, but even going down, Fortune 500 companies, they they have billions of dollars in in cash reserves, right? It it's not crazy to think if they move 10% of the cash in a legal genius compliant stable coin, right? Like if they move 10% of their cash, it's like $3 billion. their stable coin partner, their platform that they use for like payins, payouts and and their entire business will be powered by

that, right? And so the main thing actually that is really interesting to me is that the more and more this happens, the less and less stable coins even need to be redeemed in in and offramped, right? Uh I saw um some I think there was the Rain CEO um that said you know right now 100,000 merchants accept stable coins without knowing it right through through rain cards and uh one of their goals is like eventually they can offer just direct stable coin settlement on the merchant side by turning it on and it's it's instant right and once that happens then you all of a sudden flip on right 100,000 merchants right that will just accept the stable coins now you can

actually just downstream pay in stable coins. You'll never need to actually redeem them. You don't have to have Visa's network redeem them into bank deposits, right, to actually settle uh with the merchant or acquirer bank, right? And so in those times, right, once once all those things happen, once all of those things that uh need to happen are actually live, you could totally see, right, a company having 10% of like a Fortune 500 company having 10% of its cash in stable coins because they can make downstream payments. They can make upstream payments and those don't get redeemed because that company then also can make upstream and downstream payments to their supply chain. And so that is what I'm personally extremely extremely excited about in 2027 because

we're helping actually connect some of those flows. And then other people uh on the retail and merchant side like Rain are doing it at a vast huge scale, right? 100,000 merchants. And once all of those things are actually turned on, right, uh you'll be able to literally use stable coins directly without having to off-ramp every other hop of a payment right? >> Yeah. I mean, is this consistent with the thesis that uh you know, a dollar onchain tends to stay onchain because more of the stack is onchain and so you don't need to go off and come back on at some of these different payment steps.

>> Yeah. Uh I think that you know right now a dollar onchain that uses hyperlquid or or lighter almost always stays onchain because that that's what the users really want. And the question is can everyone use hyperlquid lighter you know poly market cali and and can those larger institutions use them then they will also stay on chain and then the only thing left is the actual upstream and downstream uh merchants payments uh supply chain right and and labor right the other thing I'm I'm really uh focusing on and thinking about and trying to do research is like how much of actual uh labor payments, right? Like actual uh actual invoicing, right?

Actual uh payment salaries is done in stable coins because you have like deal and all of these uh large companies that that use stable coins now offering it directly for their monthly payments, right? I just saw Deal uh for example announced it like 3 days ago, 4 days ago that you can now run payroll, right, with with stable coins. And once that happens, right, you have all of these employees that have stable coins and then where can they spend it? Well, maybe they can now spend it in 100,000 rain merchants, right? Uh then it stays everywhere, right, in that entire network without ever having to be redeemed. That's that's like one of the things that it'll happen very quickly.

Uh and it's like a step function right now. It's it's not really there yet and I think in 2027 it'll definitely uh take a lot of people by surprise. >> Love it. anything to add there from you um >> Navvin here on kind of forex card spending labor payroll but specifically for Korea because it's different right out there than it is in in the US what changes maybe are more regional specific there from what kind of Sam highlighted when you know I think Sam probably thinks about these things from like a western perspective what's what's kind of different out there >> so we got some very big news today in terms of uh KRWQ we just launched launched KWW gifts. So, it's gifs.ckw.cash.

And why this is relevant is because this is the first step into payments, right? So, in Korea, there's not yet a regulatory framework for stable coins, but what we've been able to do is set up a platform where people can buy Korean one gift cards. So, they can start using it in real world payments. Uh, for example, all everyone in my family, they're all asking me, uh, we want some Korean skin care. So, we got to make sure to to to keep everyone happy. So we've integrated Olive and Young uh but also like Starbucks, Lay, all the regular merchants in Korea that have gift card systems. So that's our way in the foot in the door. But then yeah, the payments, you know, is going to be massive. And I think right now it's tricky, but I think it's going to flip

because the good thing about Korea is unlike the US it's, you know, it's not like cuz in the US, Mastercard, Visa, these are homegrown networks. So I think there's more, you know, buy in terms of institutionally versus I think in Korea there may be an opportunity to leapfrog that and go to direct, you know, direct payments. And actually just last week, I mean this week actually, we signed anou with Nexus, which is a Korean listed uh, you know, publicly traded game developer. And we're they're going to be integrating KWQ as their settlement for the One Store, which is the largest homegrown app store in Korea. So, we're seeing a lot of appetite to cut out, you know, these extra fees, cut out the FX and, you know, increase profitability

within Korea. >> And a boy, [cheering] congrats, man. Um, guys, we got Armstrong speaking. We'd love to hear it. Can we get some audio, guys? Would love for you to stick around, hang out, and you guys want to, you know, react, commentary, etc., let's get some audio, please. consequences. There was also, you know, some folks are here from the venture capital space like Chris Dixon and, you know, he's made the point to me very clearly that um they just saw a real uh der of new entrepreneurs coming in to build things and and to pitch them because, you know, if you're if you're 22 years old and you have um an idea and a dream and you want to co-found some company with your friend, um you're much less likely to do it if you think you're

going to be sued by the federal government within weeks of launch. True. >> And you have to go. >> Shout out Sam in 2019 starting cracks [ __ ] in Las Vegas. Like, oh [ __ ] >> venture capitalist doesn't want to write a $5 million check into a startup that they know $4.5 million of that is just going to go to legal bills um in the impending lawsuit. So that's why I think it's so important this the approach that this agency and these the new regulators, the chair here has taken. I liked what you said in your opening comments about optimism. I mean, yeah, in America, we should have optimism about the future. And every new change can be viewed as a threat or an opportunity. And I think that's what's made America great is being optimistic about the future, seeing these things as

opportunities to go work through. So, so thank you for your leadership on that. Um so yeah, clarity would be an incredible step uh to getting clear federal oversight um including from the CFTC on this spot market authority and the 50 state regime really has been that patchwork quilt. So that that would struggle. Now if for some reason I think clarity has a great chance of passing. It seems like people got% what they want on both sides and it's good for everyone. >> [laughter] >> But if for some reason it doesn't pass, I wear chair Sele and Chair Atkins for just pushing forward with >> clear rules regardless and I think that's going to be very important. So there's especially I'll I'll mention one final thing which is especially in the past it was challenging to get the two

agencies to work together and there are a certain products which sit at the intersection of the CFTC and the SEC >> markets or um KPI event contracts like on the earnings of a company or something like that [laughter] >> and it's so great to see collaborating now >> um this whole debate in the US about is this a commodity or is it security you know We operate in other countries like Singapore and the UK and places where there's just one federal regulator and this is this question never comes up and so that um that territorial nature that happened in the prior administration has completely evaporated and the collaboration is just just a breath of fresh air.

>> Oh yeah, it is. >> He's right. He's right. I mean I I don't I don't >> Tyler, did you have a comment? >> I don't see why the whole turf wars was always like a given. It's just nice to see people actually working together too. Yeah, you know, I think it's like the executive branch and the judicial branch and all these checks and balances that exist in the US government that just kind of, you know, permated or, you know, exist in all the places just to check everybody. But, you know, >> it's a power struggle. >> Yeah. But only if the the the sides are extremely power hungry, right? Like Gendler and their their whole to expand their their power and their budget and everything. Whereas the whole point of this is to serve the the people, right?

These are correct to be protecting investors, not fighting between each other to see who gets a bigger budget and who wins more cases. >> Seen one um they're all different. Some say we regulate this. Some say what are you talking about? We don't regulate it. And some say we only regulate the the marketplace and not the custody part. And of course the custody part um is where things can go really wrong. And so and even engaging a law firm to help you navigate this morass of licensing. Um it's actually a specialty at law firms.

It's so complicated that law firms have to have their own specific uh practice uh regarding MTL. >> This guy kind of looks like the uh states you can stake on Gemini [laughter] and some you cannot. And >> I actually I saw people saying like they they buy Gemini. I think it's actually I don't think they want to sell but it'd be a steal. I think it's valued at around under a billion or around a billion. So, >> what Hyperlid to buy them? >> Uh, I don't know if it was Hyperlquid, but yeah, Hyperlquid totally could if they wanted to sell. It's I I think it it's a >> for the licensing and all of that.

>> Yeah, exactly. Take it take it and connect it to Hyperlquid and just make it instead of an old school, you know, uh, centralized exchange, make it a hyperlquid, you know, front end with licenses. Right. >> Exactly. competing >> disintermediate mediate trade XYZ a little bit >> flying they must umbrella and it feels like you're running with shoes on and a parachute. Um, so it's incredible to finally be able to have a conversation of how we can bring in these amazing products into the US and offer this innovation and this competition and all this value to

customers here. I think that's great for America, that's great for consumers, that's great for American businesses. Um, so it's just great to finally be able to um be playing on a uh level playing field and just quickly the the uh so much of the innovation has been stifled. Why would you come into crypto just to get sued when you can go to these exciting other industries like AI? We know historically the best companies in America came out of garages in dorm rooms. they didn't come out of the conference rooms of law firms.

[laughter] And so we need to change that. Um and and we're finally doing that. And I think that um we need to be committed to helping pass clarity, but if that can't happen, we can't delay forever. Uh we need to pass rule rules and rulem. That's going to happen anyway. Um you need rule making. If you pass clarity, you're going to have rules if you don't pass clarity. And the question is, are we going to write rules now during this administration with these chairs, Chairman Selig and Chairman Atkins, or are we going to let these rules be written by someone else, potentially a Gary Gensler [laughter] 2.0? And so, um, it's important that we get going. Uh, Chairman Atkins showed us

the way with uh, Reb, Reggg Crypto Assets, um, just the other day and helping uh, projects raise capital with the proper disclosures and and all of a sudden um, we just may see a Cambrian explosion of innovation when it is clear to an engineer in a college dorm room how they can actually raise money. I've been getting good takes by the way that clarity doesn't pass even more bullish. So like I think everyone's just starting to buy things are bullish regardless of what happens which is the exact kind of flying wheel you need for like a super cycle right well if doesn't pass well you know we're just going to pass pro

crypto rules anyways. >> Yeah. And it could be better because it's it's like just an SEC and CFDC. >> Yeah. no agreement with Congress and >> yeah, easier to easier to just apply instead of like a federal charter like you know kind of like pathway or something like that. So, I've been hearing good takes. Uh it's uh it's bullish either way. >> Well, gentlemen, I I know we're a bit past time. I'm sure you guys are busy. Um it's a it's kind of early in the day here still on Sam's side and not sure where you are in the world there Navin, but just appreciate you guys joining us.

Um, hell of a 48 hours for my portfolio, your portfolio, our portfolios, and the industry at large. Thanks for being a part of the show. >> Thanks, guys. Always a pleasure. >> Thank you. >> Really appreciate it. >> We'll see you next time. Thanks. >> See you. [screaming] >> Epic. Um, yeah, I mean, we'll flip back there, guys, to the uh inaugural innovation committee. Guys, I am about to hop on a plane. I am going to Utah. I'm going to the mountains for another mountain retreat. I just got back from Argentina. I'm going for I need a little bit more time.

>> A little bit different, huh? >> It's going to be a little warmer. I'm going to get some time to myself. Zoom out a bit. >> Market's a little bit different than when you took off for the last time. >> Last time I dipped in the deep bare. This time it's bull. We got a 100 people watching live. You guys are [ __ ] amazing. Thank you so much. Let's give it up for the audience here. You guys are legends. Um, I'll see you guys next, not next Monday, but the following Monday. So, I'll be off for another week. I'm going out to Utah for time in the mountains. Reconnect with nature. Uh, get out of sin city here. That's what they call this place.

>> Um, and at least that's what's that that's what our producer Alex calls it. A little bit more time to zoom out. Think about what matters in life. Think about portfolio moves, business moves. you know, so we can put the innovation committee back up for a little bit more. And I think we got our next guest getting ready as well. Hype to 80 tonight. [applause] W's in the chat. If your portfolio is cooking right now, throw us a like. Throw us a subscribe. W's in the chat. Let's get the video back up. Let's keep watching. We'll get our next guest up.

I'm I'm going to head out soonish. Um, what a show today. What a 24 hours. If we can get the inaugural innovation committee video back live with some audio, that would be fantastic. >> But Rob, I mean, >> anything >> have a good trip >> uh soon. I don't know. But uh anyway, Mike, let's let's go to you. And I see uh Hayden's online, too. We're going to I for I didn't see him earlier, but we'll go after Mike to >> early OG guest on the roll.

>> First off, like everybody else, thank you for having this. It is a delightful change from the uh previous administration that that wanted to do the opposite. Um in terms of what's happened, I mean, I think we've all seen we talk about, you know, MTLS, state byst state, all of these things are hurdles. It really comes down to a more fundamental problem, which is just speed. Business moves at speed. It has to move at speed. AI is going to make a move at even more speed, which unfortunately probably makes this entire discussion even harder as we think about what comes in the in the coming years.

Uh we we've heard a little bit about regulation by enforcement. Um and and what is that? That's where you tried something and then instead of having a regulator say like, "All right, >> is that the girl? >> That didn't work. We don't like it. we'd like you to change it this way or guide the council instead slapped with something criminal or something severe civil penalties or whatnot. So I think the the most important thing is how do you facilitate speed uh making decisions I think I speak certainly for everybody here we are perfectly happy to work with the regulators on whatever it is we have to work through we just don't want the uh regulation by enforcement it holds everything back so quick decision-m I think is probably really an under

underpinning to this and then I also heard in the opening remarks you know principal based regulation CFTC has a bit of this I think it's such a better model uh as we look forward trying to define rules today for whatever is going to come tomorrow is going to be um so continuing principle based I think is a stronger path >> and Hayden if you could unmute >> can you hear me >> we can >> thank you so I'm Hayden I'm the founder of unis swap we pioneered automated market making which improves market efficiency and lowers the barrier to creating and participating in markets I really want to start by thanking Chair Celig and CC leadership as a building crypto space. the difference for us with

uh this this innovation approach uh is really night and day and I really that's what I most wanted to speak to here is you know what crypto startups in the US went through and you know from the beginning we've always we always aim to be a good actor and follow all laws and regulations uh where no proactive guidance was given and you know for that I'd say that we had you know me and my company and multiple of my employees were debanked the company received a well wealth notice from the SEC after a 4-year year investigation. We had a CFTC investigation resulting in a no admit no deny settlement. We had state regulators pile on to federal investigations and kind of bring, you know, copy pastes of those lawsuits or or investigated >> make the trip to DC.

>> We had uh the the regulatory uh vacuum that was created also led to, you know, class action lawsuits that were basically, you know, recreations of the same SEC claims. uh on top of that uh I I want to kind of uh you know throughout all this we were 100 startup and so I think most startups cannot survive that so we survived that but I think that we're more likely an exception to the rule and it was because of just like the massive adoption usage of unis swap uh and some of the resources that gave us but for us it like really held us back um and I have you know many personal friends who shut down their companies during that same period of time because their companies could not weather Uh I also had many personal friends who were

crypto founders leave the United States to build their companies outside of the US as US citizens uh because they didn't want to go through what we were going through. And I will say that the ones that left the US also were the ones that didn't get sued and they had and they were able to build faster and and not have the same concerns. Uh so you know through uh we were you know we were able to kind of survive but our competitors were able to move faster were able to build things that that we were not. they were able to kind of you know uh be a lot more aggressive in terms of their growth. Uh so you know I stayed in the US throughout it despite uh you know very frequently being recommended to leave the US um because I believe in kind of the promise of this country. Uh

I believe in the value of what we're doing and you know that it can be good for the that what we're building is good for the world and that ultimately you know working through this uh within the country that I live is is the right way to to approach it. Uh but I will say that like that was against a lot of recommendation and I think that a lot of people that left the US also didn't regret it and and had a lot less legal issues to deal with. Um so you know I think that how do how do we go from here? I think that that you know we've all been saying that we really appreciate this new approach and it is night and day for us. I think that what we have to think about now is how to kind of uh retain this these benefits

into the future, right? Which is you know the current uh like the the you know the political kind of tides can shift and turn uh very quickly as as we've seen in this very positive way. And so you know what we have to think about is you if if like we really hope that clarity passes obviously and that's kind of you know uh really important for builders in the US and if it doesn't pass then I think that the next best approach is kind of working with regulators to create as much proactive guidance uh during this pro-innovation period as we can to kind of help create a longer term uh certainty and clarity there. So you know that that's mostly what I wanted to speak to. happy to kind of uh speak speak to anything else but uh really just you know we need clarity

and if we don't get clarity we need you know uh proactive regulations. I'll also kind of mention that like even in this kind of window of very minimal regulations you know we had we we did our best to interpret and and kind of do the job that ultimately was meant to be regulators but that process itself is very expensive. You have to hire lawyers to kind of redefine from first principles how to approach every single product that you build. And so, uh, we really hope to, you know, be a partner in in creating, uh, uh, proactive rules that that can help, you know, have others not have to go through what what we we went through. So, thank you.

>> Yeah. Well, thank you, Hayden. Um, you know, one of the promises of crypto is not just the asset class that sits on top of the blockchain, but the technology that underlies it and blockchain and tokenization that we're seeing a lot of the the the institutions that have long been in our markets utilizing that technology. I do want to bring them into the conversation a bit more too because in many ways that's the most exciting part of the market structured dialogue. not not necessarily the new asset class which is exciting but the technologies that's going to revolutionize how markets work across the board.

>> Yeah, I think Brad I want to go to you next video after that. >> Uh executive director Brad Garlinghouse speaks. >> So guys, we're going to tee up our AI super cycle. You can see I got this uh this green tinge to the frame today. Uh we're going to be chatting with Shafu of Circle uh around AI agents and money. We have not abandoned even though uh digital assets are outperforming the AI trade right now. There is uh plenty plenty happening as we build out more agentic commerce. So we're going to hear from uh Shafu. Uh he's over at Circle.

He's a new hireer and he's going to be chatting about how AI agents are embracing digital assets uh and how they're using money. So let's play the animation and this is going to be AI super cycle powered by Near. [music] Welcome back to AI Supercycle, [music] our premier AI show airing every single week presented by Near. We cover the ins and outs of decentralized AI, privacy, and the future of this massive technology. Near is the blockchain for AI and the execution of AI native apps.

You can check out Near's latest AI product at near.ai. Now sit back, relax, and enjoy the show. All right, we're live. We're here with Shafu. Doing my best with the pronunciation. I think it works. Uh this is AI Super Cycle. It's powered by Near. They're our crypto AI partner and uh Shafu is here talking about how AI agents are embracing money, how they're using money, what the agentic economy looks like. Uh we had Coinbase Brian Armstrong talking about AI and so there's plenty happening in the space.

Shafu, welcome to the show, man. Pleasure to have you. >> Thanks Robbie. Thanks for having me, dude. >> Absolutely. Well, I think it's good uh that we start with just a little bit of an intro. Uh you know, you uh you've been thinking about this space a lot, newly hired at Circle. So maybe you could just tell us a little bit about, you know, what you were up to before Circle and then ultimately how you ended up working on AI at Circle. Yeah, dude. Uh, long story short, I was actually an AI guy. I was a machine learning engineer for a while. Uh, but then in 2020, I fell down the crypto rabbit hole. Uh, right. We all had that moment, you know, like Dows, Dexes, all that kind of stuff. Um, so in 2020, I actually started a start of a journey where we tokenized bonds.

>> Um, so we did that for a while. I'm half German. I would never start a business in Germany ever again. I'm very bearish Europe. So that's a story for another time. Um then I did the decentralized stable coin on Ethereum that I think at its peak had like $50 million in TVL. Um and then after that I did smart contracts for Venice AI uh Eric Vorhees's company. Um and then two years ago I started talking to the guys at Merit uh Merit Systems. Uh decided to move to New York with one backpack uh which was fun. I liked it so much I stayed. Uh initially at Marriage we built something completely different but uh around like eight months ago we were in pivot mode uh and we stumbled into X42

right so X42 is this open protocol that allows you to do payments uh over HTTP um which for nontechnical folks is basically allows you to pay money through APIs uh natively uh over the internet um at that point in time 8 months ago um when we started to XR2. Uh there were like a thousand XRO2 transactions on chain and half of them were like Coinbase tests like basically a test that Coinbase did. Um so we decided to build X42 scan. X42 scan is like Ether scan but for the X42 ecosystem which allows you to see all the transfers, all the all the servers that support this new Aentic commerce uh

protocol. Uh and it kind of went viral. Um, so we went from a thousand transactions to like a couple of million in a couple of days and basically jump started this whole uh egentic commerce meta uh that we're living in now. Um, I started talking to circle you know a couple of weeks ago. I was always a big uh USC fan in general. Um, so I'm half German, half Egyptian. I grew up in Egypt. Uh and I saw people like they want to desperately get access to US dollars. Um I have a lot of my net worth in USC on a moro somewhere. Uh so big fan there. Um also like uh talk to Jeremy there and you know they're like

super excited about this. Um because the commerce you know it's like this whole new distribution channel uh for UC to get UCCC out there. I think at this point in time 99.9% of all agentic commerce happens through UCCC. So, so the grand vision is it's pretty obvious to me that agents are going to spend billions of dollars on the internet, right? Um I'm not going to go to amazon.com to buy a mug or something. I'm going to, you know, hit up my clock code or whatever the equivalent is in 3 years and be like, "Hey, buy me this."

and it has access to, you know, a bunch of UCCC in the background and and can do a checkout. Um, so that's like the that's like the uh overall agent commerce uh vision. I'm I'm going to stop there for a second. >> Beautiful. Well, there's a lot to dig into. Uh, and Shafu, before we continue, could you put your laptop maybe on a table or something just cuz it's shaking the the camera a little bit, but I think you, you know, you you make a lot of really really great points because, uh, you know, these things are starting to explode and and, you know, we've seen how money on the internet like is just becoming ubiquitous with money off the internet. Everything is digital. And you mentioned some of the different avenues in which we can explore these things.

You mentioned X42. You mentioned some of the other ways that agents are adopting these standards. Can you speak to X42? Let's start there because obviously, you know, we're seeing how agents are now using credit cards. You know, some people are choosing to give them their own wallets versus give them permission to access your, you know, typical hot wallet. We'll talk about some of the other venues in which people can start to leverage agents and give them access to money. But let's start with X42, why you feel it's so important and and how the progress with X42 is going.

>> Yeah, 100%. Um, so let's uh let's just envision, you know, a world where we currently live in. Um, you don't have native you didn't have native payments on the internet. Um, so actually 402 is like an HTTP status code uh that people put in like defined like 30 years ago. So that was in the HTTP spec like 30 years ago and it was never used. It was never used before just because you couldn't do it through like credit cards and debit cards. Um so that's something that's uniquely enabled by uh by UCCC and stable coins in general. Um the way it's mu it's used uh right now is uh most people use it to pay for digital

goods. So just imagine you're in inside cloud code uh or cloud desktop uh and you need access to the Twitter API or you need access to the Apollo API or you need access to the LinkedIn API. How it will work right now is you would go to Apollo, get an API key, set up your MCP locally, and that's how you access it, which sucks because now you need an API key for every single service that you want your agent to get access to. Um, in this X42, in this X42 world, you have one unified balance, one wallet. That can be a hot wallet, that can be a circle wallet, that can be any wallet,

can be a preview wallet, whatever. And now you have access to s every single paid API on the internet that supports that protocol. So, so the way to think about Robbie is there there are two different visions for agentic commerce. one is um you go into chatpt you need to talk to Sam Alman and be like hey I want to get my API into chatpt and if you don't have the cloud or you know if even if you have the cloud it probably take you like one year you know like probably $100,000 in lawyers fees you know to get like enterprise agreements all that kind of stuff uh and it's probably not going to happen especially for the long tale of APIs the

the vision that we have at Circle is this open agentic commerce vision which is any API provider can implement these APIs and can implement like X42 and these open aentic commerce protocols and now your agent with one unified balance has access to your API. So that's that's the that's the vision instead of like get getting a 100 API keys having like a 100 subscriptions you have one unified balance and you pay for what you use. Yeah, very cool. Okay. And so we imagine that this is going to reshape the way that we're interacting with some of these online businesses. I mean, I I'm already, you know, asking ChateBT when, you know, I'm looking to

make a purchase, like which one should I purchase, but then I'm going and making the purchase, inputting my payment details and whatnot. And so what you're saying is that there's effectively like this hub and spoke model where now X42 becomes the standard and that is what ends up communicating to each of these protocols. But you're still saying there's an adoption curve. If I'm hearing you correctly, it's still on each of these services. Like Amazon for instance has to adopt X42. Like they have to integrate X42 into their payment rails. Is that correct? and and how do you go and make sure that the adoption happens at all of these service providers?

>> I actually spend a lot of time on like just you know like BD work, forward deployed engineering work to get these API providers on board. Um and there are actually two ways uh about getting an API behind X42. There is like a native integration. So it's like I talked to Twitter, I talked to LinkedIn and they're like we're so excited about this. are going to integrate this natively, which is just going to take them about a a little bit of like engineering cycles. The other way is you set up a dedicated X42 server, you just need one API key and you're good to go.

>> So at so uh back at Merit, uh for example, we had it down to 1 hour. So, I talked to one potential API provider. [snorts] Um, I think the last one I did was an obscure flower API provider in the Midwest somewhere. So, that's a flower API that you can call and get you flowers delivered anywhere in the US >> and they were excited about it. They don't have the engineering expertise though. So, they're like, "Hey, here's an API key and I'm going to wrap this for you." Literally takes me 1 hour. Um, and now your cloud code, you know, has access to flowers and you can send it to your wife or a girlfriend or whatever.

Um, so that's how the integration works. It's it's very uh it's very straightforward, very simple and very fast. >> Very cool. And so this is starting to become the standard for how uh really service providers, retailers are starting to integrate uh aentic payments. Maybe you can just speak to how circle fits into this because this is a little bit more broad, you know, the category as a whole. How does Circle, you know, integrate? Obviously, it becomes a better foothold for USDC market share in the Agentic economy, but what is Circle's role in this? And then how does Circle monetize this from a business perspective?

>> Yeah. So, so at Circle, we have a whole uh agent stack. So, we call that the agent stack. And the agent stack is for developers, consumers, and merchants. So this is infrastructure for merchants to put their API band X42 for customers to call X42. So it's basically we give your cloud code a wallet you know we give your cloud code a public key now you can have access to USC and can pay for those. Um, and our motivation behind that at the end of the day is just make sure agentic commerce happeneds with with USC because if you think about like UCCC was made for this like just instant settlement, no fees, you know, in comparison to like credit fee, credit

card fees, all that kind of stuff. So, we provide the infrastructure to make sure we get as many people on the demand side and on the supply side on this open agent commerce. >> Very cool. Okay. So, it's effectively a marketplace here, you know, supply and demand. You know, if there's more agents that are spending, there's more demand for these services, and there's more demand for agents to make these payments, uh we're going to end up seeing that reciprocated in the market. >> Yes. It's a very very classical uh very classical two-sided marketplace. Yes.

>> And and h Yeah, please go ahead. >> No, no, go for it. Go for it. I >> I was just going to ask how far along are we do you think? you know, it's obviously still extremely early, but when it comes to building out, you know, the channels for agents to make these payments, how far along are we? How much more progress? What is the biggest bottleneck to integrating more on is it the supply side or the demand side at this point? Which one needs more focus? >> Yeah, it's it's a great question. I think on the on the supply side, we're we're pretty good just because it's so easy uh to put your API behind X42. So if you go to the circle marketplace or to x42 scan and you type in any any famous API that you can think of there

is a very high chance that there's an x42 server that supports that API. Um the a lot of work is on the demand side and the demand side is hard for two reasons. First of all, for non-technical people or non-crypto people, it's just a lot of work to get claw desktop set up, to get an MCP set up, right? >> Um to get a wallet set up. Like these are people that are like what what even is a stable coin? >> Right. >> Right. The the the second challenge is uh on terms of the UCCC side uh the on-ramps.

The on-ramps are just there's still too much friction. M >> so for example I have a German debit card it doesn't work here I live in New York most onramps don't work here um not only for uh especially on the business side so business is getting UCCC very hard we're working very hard on this to make this uh to make this easier we have a bunch of on-ramps are very good uh but that's that's the biggest challenge like get the demand side get uh get get qcc in people's hands so they can play around with that um once you get there, it's actually an amazing experience.

>> So once you have, you know, an MCP that supports these X42 resources, you can do amazing things like you can you can buy things on Amazon through XRO2. You can buy domains through X42 and you have access to all the all the APIs uh that that are out there and it's all paper requests. You don't have a single subscription to anything. And what is for someone who's a little bit less technical out there, what is the process to integrate an N MCP in particular, this X42 MCP into their clawed, you know, clawed code or their clawed account? What is the process like?

>> Yeah, it's literally uh you go to you go to our page, you copy a skill, you put it in your terminal or your claw desktop or wherever your agent lives and and we'll figure out and we'll install it for you. It's very it's very easy to get to get installed. >> Okay. >> Okay. >> Yeah. >> The harder problem is is getting UCCC actually. >> Okay. And so for someone who's a retail, you know, uh person here and they want to make, you know, payments online, you know, they do they they first need an agent. So they need to deploy some sort of like ironclaw or openclaw instance.

>> So there there are different ways. So yes, if you have your existing uh cloud code set up or codeex or cursor, then you would do it there. But actually that like the one of the last things I built back at merit uh was something called poncho. Um and poncho is clo but it's in the web and we abstract we abstract away um all the like super eentic technical stuff, all the stable coin stuff. Uh, and it's probably the easiest way for nontechnical people to to get a feel of this open agent and e-commerce vision.

>> You can just go to Poncho. It'll help you deploy the agent and the agent will have MCP enabled X42 stable coin payment access. >> It already it already has the agent. It's just cloud code in the background. It already has a wallet everything. It you just need to sign up. >> Wow. Very cool. Okay. And as far as you know those who are just on you know claude or just on chat GPT have you or circle considered going directly to you know anthropic or going directly to chat g open aai and saying hey we have this service it's battle tested we've done the audit we we think it should come out of the box with you know a chat GPT subscription or a claw subscription have

you considered you know approaching these businesses and and starting the integration process so that they don't have to use any third party servers. >> Um yes. So actually I think like two weeks ago um and and by the way just for context I haven't officially joined circle yet like that's what announced but obviously I talked to the team a lot >> um but uh I know some of the people on the team they just had a presentation with uh with Antropic for example >> um and they were very you know it's it's a it's a magical moment. It's a magical moment when uh and and to be fair like I've been in crypto for a while now. It doesn't happen when you that magical moment like crypto people. Um but yeah,

once you have like cloud code set up and you buy something on Amazon uh through cloud code uh it's just a magical moment like it immediately clicks where it's like this this makes sense. I'd imagine that Anthropic hearing this presentation from Circle about how their agents in Claude or in you know uh these these models can directly make purchases. This has got to be like light bulbs going off because this is a revenue opportunity like we see in decentralized exchanges you know uh front-end fees or different you know maybe just one basis point two basis points as a fee for you know going and helping to execute that transaction.

I'd imagine OpenAI or Anthropic can charge, you know, a few basis point fee on top of whatever you're, you know, I'm buying something for $12 on Amazon. All right, $12, you know, and that two cents goes to Anthropic. They do this across trillions of transactions every week. It is, I mean, it's a massive potential revenue driver for these frontier model companies. thing that I want to avoid, Robbie, and this is basically my mission is I want to avoid that OpenAI builds their OpenAI agent commerce thing or anthropic builds their agentic commerce thing rather like the vision that I have is it's one open

public standard like the open internet but for agentic commerce and once you've integrated it once now open AI, Anthropic or any other agent that has access to your API. So, uh, yeah, >> I think that that vision makes a ton of sense and I think especially us, you know, in this industry, like we align with that vision most, but you know, as these things start to get played out and, you know, they start to reach some sort of product market fit, it it someone made this analogy actually recently when it came to the open weight models and the frontier models, how this starts to look like Android and Apple, like people want the verticalized clean UX X very convenient stack and then on

the other hand yeah the open weight is going to be maybe you know 10% or 5% or 1% the cost it's much much more affordable and it's maybe you know just a little bit less intelligent and I could understand or see you know an open standard for aentic commerce that's kind of like Android anyone can adopt it it's open it's it's you know essentially free standard but then there might be a more integrated payments stack into you know directly part of the chachi PT or the anthropic experience and that is kind of like the Apple experience and people are willing to pay for that level of convenience but maybe you can just talk about why you think

it's likely or unlikely and why you think it's more important that we build out this open standard and this open experience. >> Yeah, I hope it's I hope it's not going to turn uh turn into a 30 70% split. Uh I I hope like the vision that I have is so if you go back 30 years um you had like the AOL internet and you had like the mosaic open internet right and the open internet world like it's 100%. It's not even 99.999 it's just 100% like the AOL vision of the internet doesn't exist anymore. Um and that's good. If we lived in that world, you would have someone like Mark Zuckerberg begging AOL to host

facebook.com, which would be, you know, which sucks, which sucks. Um, so I hope it's I hope it's going to turn into that where it's just uh it's the it's equivalent to HTTP which powers the the global internet, but the thing same thing for aentic commerce. It's a native way. It's a native way to do payments on the internet instantaneously with basically no fees. uh through stable coins. >> Is there any sort of uh applications that you're very excited about? Because what you're talking about this open standard, this open protocol on the internet, the native way of doing these things, it implies that now we're going to see applications built on top because anyone is able to build with these

native open protocols in mind. What do you think? Anything that you're particularly excited about that you think can now be built once we have this standard? Yeah. So, one thing I'm very I'm very uh I'm very interesting in in is for for example is uh plan my trip. >> Like I'm going to Paris for a week now. Right here like I don't know 2,000 bucks I want to spend and your agent goes off and and books everything. >> Yeah. >> Books your flight. It books your hotel. It it does a restaurant reservation. So you can do restaurant reservations through X42.

>> So >> uh basically sets sets all of that up. uh for you. Um so so that's like one use case that I'm always thinking about that would be awesome. Um right now it it's a lot of like singlestep thing. So it's like look up Shafu on Twitter or go to LinkedIn and and look at the you know most vile most vile LinkedIn posts about agent commerce stuff like that. But what I'm really excited about are are these, you know, you have this high level go and then your agent goes on with like this unified balance and spence for a lot of things to make that high level goal possible.

>> I just saw some data come in actually as we're talking. It says AI agents have initiated 16.2 million transfers via X42 protocol over the last 30 days. base led with nine and a half million transfers and then Polygon with about five and a half million. And so this is just entirely fueled by people connecting MCP servers to their agents and just using it for transactions. Is it is it and is it's not just transactions onchain is it is it entirely onchain or eventually we are going to see x402 expanded beyond blockchain and stable coins and into like fiat rails or are do you think this is capped by stable coins right now?

>> So so right now right now it's all stable coins. Um so so there are two there are two protocols right now in open commerce. So the first one is X42 that we talked about which was originally defined by Coinbase. >> Um and then you have something called MPP and MPPP comes from Stripe uh tempo paradigm. Um and MPP actually allows you to do the same thing but with credit cards or debit cards. Um so so you have that path path as well. Um which works which works great for like big ticket purchases, right? So, it's actually kind of funny like I, you know, I'm European.

I never owned a credit card in my life. Kind of crazy when I say that here because people love their credit cards, you know, like, well, if you want to book a flight, you want to use a credit card because of the cash back, the credit card points. I'm actually not 100% sure how that stuff works because I've never used it, but all I know is people want to use their credit cards for big purchase uh items. Uh on the other hand for like microtransactions, digital goods, APIs, you have like there is no other way around stable coins. Um but hopefully hopefully even the big uh ticket purchases uh will be made through uh USC as well just because it's you know lower fees, instant settlement, all the stuff we love about stable coins.

And so tell me about how X42 is able to facilitate like restaurant reservations because that doesn't there's no stable coin transfers that are changing hands like how is X42 able to facilitate this? >> Yeah. So um so there is uh resi right resi is the big one here in New York that people use >> resi and open table. Yeah. >> Yeah. So someone uh basically signed an agreement with resi and we like hey give me an API key. I'm going to put it behind X42. Uh, [clears throat] and basically you can call into that server and be like, hey, here are like $5 or 1 cent or whatever they they need for a reservation. You pay that, you get a reservation back through Resi. So that's that's basically how it works. It's uh,

you know, open engetic commerce is a big word, but in the end it's a very very simple concept. It's you pay for APIs on the internet. >> Yeah. Yeah. And right now a lot of those APIs are just like monthly subscriptions, right? But you anticipate that this is going to be per call. >> Yes. So, so right now it's per call. So, so the big the big benefit is, hey, I I need access to Apollo data or I need access to Twitter data. You don't need to set up anything. You don't need an API key. You don't need a subscription. You don't even need to sign up anywhere.

You just have access to it. And and you're going to spend like 1 cent to get like Shiau Zero access followers or whatever. >> Yeah. Wow. This is this is very very cool. I think I mean look I'm still yet to hook this up. I think I need to go uh to Poncho. I need to do this just I'll just do this through the browser sign up and then bam everything is integrated. And I I take it I can connect my claw account or my BT account to Poncho and it'll everything is integrated. >> Yeah. So so if you have your own agent set up it's the MCP route. If you want the easiest way to play around with that it's uh it's poncho.

>> Very cool. poncho.com. >> It's try poncho.com. >> Try poncho.com. All right. I'm gonna try it after this. Shafu, thank you so much, man. Really appreciate it. And uh would love to have you back. Uh good luck. Have fun with Circle if you, you know, do continue there and uh we will uh we will talk to you very soon as the agentic economy continues to develop. >> Awesome, Robbie. Thank you for having me. Talk soon. >> Absolutely. See you again soon. Thanks, Sean. >> Bye. Bye. >> All right, guys. Man, I love it. That's Shafu and uh he gave us quick uh TLDDR download on everything happening in the Agentic economy. I mean, you guys got the full X42 update from Sha Fu. So, uh very very cool to see. And uh there's

plenty plenty more movement. I wish there was a way that I could just get exposure to the upside of transactions going through X42 because if you look at the chart, like we said, 16 and a half million transactions through X42, most of them on base, almost 10 million. I mean, this thing is up and to the right through August. It looks like it's starting to hockey stick and we're just going to see more transactions that are done through X42 in particular, but also just done aically online. So, I saw flash of the CFTC. Let's go ahead and bring up the CFTC innovation meeting once again. We're going to hear a little bit more from this and then we're going to cover some more tweets. So, whenever we're ready, let's get the title ready and bring up

uh the CFTC innovation advisory committee one more time and we're going to hear a little bit more as this meeting continues. As far as I understand, the market is reacting extremely positively to this. >> Let's go ahead. U the underlying product not the uh delivery mechanism i.e. tokenization. Uh think about making sure that these are all risk appropriate and making sure that we coordinate on capital regulation margin haircut methodology and crossber regulation. Um rules have been written it was noted earlier um we have ma we have rules all all over the world. Bringing you know your leadership together coordinating that internationally is also important.

And then there's the uh the importance of legal certainty and netting and making sure that that works thinking about how we have the opportunity with tokenization to move uh assets quicker to settle them quicker to clear them quicker but we can't import forget about the efficiency offered by net netting and I think French Frank has mentioned there's not enough um capital in the world cash in the world to settle growth so we want to make sure that we think about this in a most efficient way on the 247 risk management co coordinating and eos systemwide transition, i.e. making sure that clearing and risk management keeps up with trading we think is critically important. um making sure that we have the funding and clearing rules very well established around margin uh treatment

and delivery uh good sound risk management default mechanisms around some of the new infrastructures uh whether it's going to be auto liquidation how retail versus institutional is treated and then of course maintaining AML and KYC rules um that we have today that are applied broadly those have to be uh adhered to as well so a lot to do uh greatly appreciate your enthusiasm and solving these problems. Thank you. >> Great. Let's uh turn to Sergey. >> Great. Thank you. Um firstly, I'd like to thank you for creating clarity and fairness in the financial markets. I think that's a cornerstone of America's success and one of the reasons so many

people build so many great applications in the American financial system. I think we shouldn't lose lose sight of that that your two agencies the SEC and DC FDC are finally working together productively rather than fighting with each other publicly I think is in and of itself a massive improvement both for the reputation of the US the trust in the markets and obviously all the outcomes that you come together with a single unified vision uh vision instead of 16 different regulations over here and 25 over there that all conflict and you know then that American innovation thing doesn't happen which we none of us want because we all live here Now we at chain link power applications we power the majority from the tokenization I've seen as well

>> hundreds of people uh decide not to build applications in the US so for every Hayden or Shane who have the strength and the will to stay in the US and build innovative highquality applications in the US system and for the US consumer there's thousands for each one of them that left closed it down and I know know that personally cuz I'm their infrastructure provider for data crosschain every everything else beyond and in between. So that's a very serious cost in my opinion and I've personally been living that cost with those founders for now well over 7 years and a lot of them they're just not here to speak today cuz they're they're not doing this anymore right and they're not

benefiting uh the financial system or the American consumer. It's a very very serious issue and I'm very thrilled that we're addressing it. Now the thing that I think is going to happen next is extremely clear. The tokenization of equities is going to create a lot of onchain value and historically how this industry works is when value appears the corresponding markets and financial products appear around that value. Now the US equities market are the majority of the global financial systems equity you know value and flow right now. And if the global financial system moves on chain, well then you would want the US financial system to move on chain at the same speed or ideally faster if you want to retain that 60% approximate market

share. Right? So this is uh really I think what we're discussing and it's very important because it determines America's global position in the global financial system. And just to point out, you know, two key things that we've been discussing here. Collateral management is massively improved on a very basic level. You go from 215 to 247 and you reduce risk massively because there's much more transparency about what's going on with that collateral. It's a no-brainer. Anyone can do the math there. 215 to 247, right? That's that's already valuable. That's huge amounts of value. And then to to the point that was raised um from the CFTC about security that is a massively improved aspect of

private key security blockchains, smart contracts that is uh I think going to be increasingly valuable as AI decides to attack financial markets and to try to manipulate financial markets. And I think blockchains and smart contracts and oracles are going to be uniquely capable in withstanding uh those cyber risk threats which I'm more than happy to to speak with you and any any market participants about. So thank you. Thank you very much. And I think we'll we'll all make a great new financial system together. Thank you.

>> Thank you, Sergey. Um Vladimir, let's go. >> Vlad of lighter. It's the face. >> Thanks so much. I'm Vlad Nokowski, founder and CEO of Lighter. Um, you know, we've been building in the US from day one and so it's been great to contribute to American innovation as uh as part of this group here. We really appreciate um the chairman's leadership and putting this group together and doing that. So uh I guess the point I want to make is as uh builders in and DeFi, you know, I think there's been for a long time kind of a misconception about DeFi and and from our perspective, you

know, DeFi is not a regulator's enemy. In fact, it should be a regular regulator's friend. you know, having transactions on a ledger in a verifiable way, it actually makes it a lot easier to to do the kinds of tasks that a regulator needs to do in terms of transparency, in terms of consumer protection, in terms of fairness. Um, and so we've been very encouraged by the leadership and the staff at CFTC to really understand DeFi and understand how it's consistent with the CFTC core principles. Um, I'll, you know, give you an example like what's been the most robust payment system invented? It's probably Bitcoin, right? And that, why is that? Because it's verifiable because it's open source. Uh, if if there's a

problem with it, anyone in the world um, you know, the good guys will find that problem before the bad guys and and you know, things will get patched up. So with with that said, I think um as as we think about the technology going forward um you know the financial infrastructure of the US in the future, I think decentralized verifiable finance is a big part of that. Um as it relates to cyber security and operational resilience as well. um having more and more technology evolve to an open- source verifiable stack be important and even I I think a couple of uh folks raised question of ADL you know we would argue that even that functionality as

long as it's done in a way that's fair transparent verifiable uh can can be consistent with with core principles and consu protect the consumer so anyway great to be part of this discussion uh I know everyone is uh waiting for the break but uh I'll leave it with that thank Well, thank you Vladimir for wrapping that up. Um, this does conclude our discussion on the evolution of the regulatory framework for crypto. We're going to take a 10minut break. >> AI and prediction market fantastic to hear from both AI and prediction market discussion.

>> These guys are I mean they're leading this uh they're leading the charge here. >> So that's where we're at. I mean this and you heard Sergey say this in particular that they are quite literally creating the financial system as we speak like these guys are all in a room you see the biggest and brightest minds there are incumbents in this room but there's also the innovators it is the innovation advisory committee and so the CFTC is now embracing that we are evolving the financial system and you heard them speak to a piece of legislation that was signed into law um recently speaking about the modern modernization act of the CFTC. And so

with that happening, they are taking that they're ingesting it and they are quite literally upgrading the financial system as we speak. And you know, sometimes there's a lot of like comedy jokes about, you know, the shadow, you know, cabals and, you know, the hidden hand and the blob and the deep state, you know, controlling the financial system. But this is happening in broad daylight. This is in public. These are the people that are not only the innovators, they're also the incumbents. They're people that control the financial system right now. and the people that are on the the you know next stage of the financial system and they're all in a room talking and they're live streaming it for us all to

watch. So if you're curious at all about how to get involved, how to be part of the inner circle, how to be, you know, part of the those who deploy and decide make the decisions for our next financial system. This is it. This is just get in this room and this is where uh the choices are being made and the new financial system is being designed. So I mean just figure out a way to get in this room, talk to these people, get as close as possible and you will ultimately understand how this world works and how we will continue to progress and evolve this financial system.

All right, guys. While the CFTC is on a bit of a break, uh we're going to hit a few of our tweets and we've got our final guest coming up in just a few minutes. Uh we're going to get Quinn up here in a little bit. But first, we want to cover a few tweets with you guys. Uh so, we should get a little bit of a title change. Paging our intern title change. There we go. And let's hit uh we've got Eleanor who is been covering this. I mean, absolutely been uh you know, on the ball when it comes to this kind of stuff. Uh covering the Clarity Act and then, you know, covering uh everything that's happening with the CFTC today, the White House meeting yesterday, and also speaking to a meeting that occurred

yesterday between Commerce Secretary Howard Lutnik uh along with a lot of the executives that were also part of the White House meeting. Uh you guys saw, you know, Brian Armstrong, Sergey, Robin Hood's Vlad, uh you know, all up there shaking hands with President Trump. Apparently, there was a meeting uh with Commerce Secretary Lutnik before the conference with Trump. And so in the room, Brian Armstrong, Chris Dixon, Brad Garlinghouse, and Arjun from Kraken. Conversation focused broadly on the importance of passing the Clarity Act and what it could mean for US jobs, economic growth, and bringing crypto entrepreneurs and companies back on shore. It's funny to hear them talk

about jobs only because you guys know crypto. You've seen it. If you've been here, you know that these are some of the most efficient companies on planet Earth in the history of the world. These are businesses that are generating so much revenue per employee. It's never been seen before, ever. And [snorts] so I don't know if I'd really focus on the amount of job creation that the Clarity Act could provide. But I do think when it comes to economic growth, on shoring a lot of entrepreneurship and companies, this is where I think we could focus and see a ton of value created on America's shores so that it doesn't go offshore.

and end up elsewhere. Uh obviously this means tax revenue for the IRS on shore in the US, but it doesn't necessarily mean job creation. This is one thing that I would, you know, make clear if I were, you know, Eleanor in these meetings. Scroll down a little bit. And the group also discussed the remaining hurdles to passage of the Clarity Act, including ethics. This has been a major sticking point and how the White House could help find a path to bipartisan agreement. Obviously, we've seen how controversial Trump has been. I think public sentiment is still that he is profiting off of crypto and his memecoin. Uh and despite this being legal right now, this is still very gray shady behavior. And so,

I don't know how involved obviously Trump and his involvement is helping to legitimize the industry. uh the regulation from the SEC and the CFTC is helping to legitimize the industry and that obviously we've seen what has transpired in the macro environment over the last couple of days. But when it comes to the Clarity Act in particular, unless Trump is saying that he is giving back some of that money or he's saying that look, you know, there are going to be stricter rules and regulations around this industry, I don't know how much his involvement is really going to push forward the ethics conversation because his memecoin is at the center of the ethics violations and that's what we're trying to protect against. So obviously,

you know, there needs to be some involvement. uh he's ultimately going to need to sign this act in order for it to get put into law, but I don't know how important or positive of an influence his involvement is with ethics in particular. So, we're continuing to monitor this. At the very least, it's very positive to see the CFTC host these innovation advisory meetings. And I imagine that we're going to see more positive movement and uh progress out of the CFTC and the SEC with reg crypto assets and greater regulation. Whether crypto clarity act passes regardless of that we're going to see this continue to move forward and I think that is going to continue to push the industry to new

heights. Let's keep moving. I mean market is ripping as we're talking about this. Let's continue. You guys saw what happened. Uh this was on the heels of Bessant and him uh you know making this Treasury announcement which he went on CNBC today and talked about how this might get even more aggressive in terms of the Treasury buybacks and the liquidity supply that you know he is talking about doing on the long end. And we're going to be talking a little bit more about this as we continue here. Almost $3 billion in shorts got liquidated over the last 24 hours. This is quite literally the largest shorts blowout of all time.

Absolutely insane behavior happening. I mean, you guys saw how constrained we were trading in this range, this like 63 $64,000 range on Bitcoin for so long. It was like the coil, the springs got so compressed, we couldn't retain this level or this lack of volatility for much longer. We knew that this spring was going to burst in one direction or the other. We were unsure of whether this was going to push us down under 50K, you know, push the new lows, the last shakeout, if you will, that everyone was calling for. But obviously, you guys have been following, you saw that we were bullish this entire time.

And uh it wasn't if, it was just when this thing burst and it was like the beach ball underwater, we ultimately did break upwards. And that is what we're continuing to see. And so, uh, you know, we knew that this volatility was going to have to return at some point. It returned and it established the trend upwards higher. And we're continuing to see that. I mean, what timing, too. I mean, impeccable timing for the conference at the White House and the CFTC advisory meeting to happen just just hours after this liquidity supply treasury announcement as of yesterday. This was a perfect storm to break the volatility

and break it upwards. And now we have a defined trend. I think everyone is comfortable calling this at least a short-term bottom. I mean, that is what we're we're seeing. There will be pullbacks, but we're are firmly in the pre-bull market phase as the liquidity does get injected into the monetary supply. And we're going to talk about, you know, what this could mean going forward with buybacks, with the Treasury, with the Fed. Man, this is uh this feels good. Feels good. Let's continue. Uh we've got a little bit more macro that we want to talk about because this is important to the thesis and uh you know we will get back to regularly scheduled programming as it now starts

to shift into like this bull market phase. Conversations will shift. We'll start talking about pullbacks. Do you want to buy the dip? You know what is going to outperform? We're no longer talking about capital preservation. Everyone's going to be looking for the greatest amount of uh appreciation as we get into this phase of the market. You know, what are the sectors to watch? Who are the outperformers? Where is the relative strength? You know, we've continued to hammer some of the sectors that we believe are in a super cycle. Stable coins, perpetuals, prediction markets, and tokenization. These are the things and you can put vaults in there as well, but a lot of this hinges on macro. And so I just want to clarify a

couple of things that have gotten tossed around over the last couple of days because this is pretty important to the thesis. you know, as we start to zoom in more, we want to keep an eye on the macro landscape. But it's important to clarify some misconceptions because especially in this corner of the internet, you know, especially as we start to talk above our skis here, we want to bring people back to reality. What we're talking about here, the Treasury announcement as of yesterday, this is not yield curve control, okay? This is not quantitative easing, okay? This is not some of the other things that you've seen turn around. The money printer isn't even on yet. Okay. And so we're going to see some of these things develop. All right. But this is important to understand about where we

are in the mic market cycle and to understand how early we still truly are, right? Because if you don't understand what's happening around us, it's a little bit, you know, easy to see, you know, we're not going to get another CFTC advisory meeting for a while. Trump's not going to be shaking hands, you know, with the CEOs of onchain businesses for a while, right? This might look like a local top, but once you start to understand the bigger picture, I think you'll start to realize that this is sort of the end of the beginning rather than the beginning of the end. And we're starting to transition into, you know, more of that pre-bull phase further along and also the bull phase that we inevitably want to see. So, a couple of labels here. QE is federal reserve purchases of

long-term assets regardless of yield paid for with bank reserves and both increase bank reserves and decrease duration of the private sector. We have not seen this yet. There is speculation that we'll get into about you know Bessant buying the long end of the yield curve low and selling the short end of the yield curve at a premium. If Bessant is selling the short end of the yield curve at a premium and there are not individuals, sovereigns or buyers for the short end of the curve and he needs to sell that, the Fed could come in and buy the short end of the curve and that would be the definition of quantitative easing would be the purchase of long-term assets regardless

of yield paid for with bank reserves. These would be treasury bills etc that Bessant would sell. Okay, yield curve control is similar but only buys bonds when the rate is at the cap level duration is removed and reserves increase when the cap is hit. We have not seen that quite yet. There are repurchases that are happening, but this is different from yield curve control. We'll get into that in just a minute. Uh the Fed twist is when the Fed buys duration and sells short-term bonds. It reduces duration held by private sector and is reserves neutral. Treasury actions to change the composition of the treasuries outstanding via issuance amount changes or buyback changes are a

twist and impact duration held by the private sector. That is sort of what's happening now. Okay, there's treasury actions being taken but we have not seen true yield curve control. Okay, we're just getting our our definitions in order so that we can talk intelligently about the macro climate right now. Fed providing repo programs to bond buyers doesn't change what assets the private sector holds but increases bank reserves. This is liquidity positive and reduces the need for certain distressed Treasury holders from forced liquidation. So is supportive of long-term bonds. This is ultimately sort of like a bailout, right? These reverse these repo programs, right? Like the uh the bank uh funding program, the BTFP.

We saw that when some of these banks were starting to show cracks and potentially be insolvent, the Fed provided repo programs for them to take in duration and give them cash, right? And that is uh when the Fed uh becomes a buyer. Uh it increases the bank reserves and reduces the need for those distressed distressed businesses to become liquidated of their long-term bonds. Let's continue. Regulatory changes the impact the cost and amount that the regulated pays and can hold impacts demand for treasury but doesn't change reserves or duration held by private sector. That's pretty standard.

Reserve amounts in a zero required reserves regime have very little impact on monetary conditions. Uh yep it is res zero required reserves regime have very little impact on monetary conditions. Duration held by the private sector has meaningful impact on financial conditions. This is how much of the long end is being held by the private sector. Repo programs slow down liquidations and back stop liquidity, but don't force demand for treasuries. It's not a push, not a pull. It's a push, not a pull force. Regulatory changes are also a push to the regulated entity and doesn't force them to buy. Okay, so these are just some uh some definitions here, but this is going to help to set the stage for our next segment. This is going to

be daily equity powered by dinari. Daily Equity today is going to be a little bit more like a macro corner because of this massive announcement from the Treasury yesterday. We're going to get into it. Let's go ahead. Daily Equity powered by Dinari. [music] All right. So, yield curve control. Did Bessant just launch yield curve control? No, he did not. Okay, so let's get into it. You guys probably already know this from uh or you might start to suspect this from the definitions that we just

talked about, but no, Bessant did not just launch yield curve control. Let's talk about it. What did he actually launch? So, um you know, this guy's a great newsletter. He talks about some of the macro uh environment things that are happening. and we're actually going to get into some of the sketches that he has, some of the charts that he has on this article, but we're gonna move somewhat quickly through this. Okay? And so I'm actually going to pull it up on my side and we're going to walk through what we have going on in this article. Okay? And so we're going to scroll along with you guys and uh we're going to mute uh we're going to mute the CFTC. Maybe we're going to pull back that after our latest

guest. But what's happening here in this article? Let's get into it. Okay. And so this is obviously commenting on the Treasury announcement that we had as of yesterday. Uh and he's saying that this is not the Treasury conducting yield curve control. Okay. it rhymes with uh you know what he's talking about is that he wants to under he wants to uh issue a clarification on how today's action impacts um uh the thesis that he laid out for curve steepening being good for the cycle. Okay, we'll get into curve steepening, bull steepening, bull flattening, bear steepening, bare flattening. All right. So, what we have here is that what actually happened is that the Treasury has said that it is

going to at least double the size of its liquidity support buybacks in the 10 to 20 year and the 20 to 30year sectors. That is the what we classify as the long end of the curve. Okay. And so he is at least going to double the buybacks from 2 billion to 4 billion at least per operation. I believe the operations happened weekly. And this is happening from the 9th of September all the way until the beginning of November. Okay? And it happened right after the 30-year printed its highest yield since 2007. So no coincidence that bonds dumped, yields spiked, and that is when he's issuing some liquidity support. I mean, this is literally at the highest levels of the most powerful

economic system on the planet. this guy basically saying steady lads providing more capital. This is him deploying these the liquidity supply here on the long end of the curve. And so he basically showed his hand. He said look this is my pain tolerance. I don't want the long end to go over a certain point. And now he has signaled that he's going to do everything in his power with repurchasing these long-end bonds to bring it back under control and lower the yield that America has to pay on various parts of its debt and also on what it has to pay for people to finance its government.

The Treasury uh is simply using its flexibility to impact supply demand dynamics across its own debt profile, buying back long paper and funding it with issuance further in on the curve. Funding issuance on the shorter end and using it to buy the longer end. This is not QE and this is not yield control yield curve control. And so he's just kind of reshaping the yield curve. Okay. Uh, and so, uh, would you call it yield curve control if you bought back the fixed rate loan on your house in order to issue a floating rate loan instead?

No, you wouldn't do that. That's just called refinancing your house. This is the same thing you're doing uh, with the US Treasury. No new money is being created, so the money printer is not being turned on. Uh, in this transaction, the debt is rearranged, not monetized. And that's an important statement because it actually shows that money printer could still get turned on. Okay. The only way this turns into actual extra liquidity of the central bank created kind is if the Fed restarts its reserve management purchases of short-term bonds. And like we talked about, this would be if Bessant in order to finance his purchases of the long end because he's injecting supply into the

long end, he's going to need to sell the short end. Okay? And what this does is it, you know, it steepens the curve because you're going to dump the short end, you're going to increase the long end, and then your curve is going to look steeper. And if he's dumping the short end, he needs a buyer for the short end. And that's where the Fed could come in and print money and hold the short end on its balance sheet. Okay? And so this is where it gets interesting. Bessent is clearly hinting that the debt profile will be taken further inwards on the curve, meaning the short end of the curve. And the more he floods the front end with bills and short coupons, the more likely it becomes that the Fed eventually has to lean against it with exactly those purchases to keep money markets

functioning. That is massive. That means that there could be a greater case for quantitative easing in the near future because Bessant has to sell short-end dated bonds in order to facilitate the liquidity supply that he is now showing in the long end of the curve. Um so sure there is a potential liquidity angle in this but note the keyword potential. It is a second round effect that requires the Fed to move and it still has nothing to do with yield curve control. Uh and then uh this article gets into the f four curve regimes ranked. So we actually have our guest we have our guest ready. Um and we want to get into the guest in a little

bit. Um and I actually want to get his um Yeah. So here's what uh we're going to get into. Actually, here's the p the pictures that we can talk about. These are the four cases. We might bring these pictures back with our guest, but let's actually let's actually stay on this for just a moment, okay? Because um the article speaks to each of these scenarios, okay? And so, you know, we're going to talk about these four uh these four regimes, okay? These four situations that we might see in really any situation.

Here are the four possible curve actions as follows. We've got the bull steepener, the bare steepener, the bull flattener, and the bare flattener. So the the you know bond market can either the the regime can either bull be bull or bare and it can either go steeper or flatter. The ideal is that we get the bull steepener. Okay. Uh what happens in the bull steepener is that the short end gets dropped, the highend gets put under control. uh the curve steepens and this is basically uh the dream for Trump and Bessant. Uh if Worsh cooperates uh this is going to make everything run wild and this is what running the economy hot looks like.

Uh and so yeah, a steeper curve. This is the bull steepener. A steeper curve, the uh business cycle runs hot. The action is led by the short end dropping in yield terms. Uh you get the credit engine. steep curve equals more profitable maturity transformation, money creation, uh, and you get rate relief for households and corporates at the same time. This is undoubtedly what Trump and Bessant are pushing for internally. Fed cuts in the front left and the long end left alone to breathe. The second best regime is the bare steepener where the long end moves higher than the short end. Okay, and this is what we could see as well. uh less comfortable headlines but the bank

engine still runs. This is the regime we have effectively been in until yesterday and then the market just sniffed out uh this bull steepener that Bessant is signaling. Uh and this is also the regime that the Japan has been in. I we don't need to cover the other two so much because we've already seen that uh the Treasury is starting to signal uh that we are going to get into a steeper regime. We just don't know if it's going to be a bull steepener or a bear steepener. The last thing uh to talk about here um if we just scroll down a little bit more is going to be uh is going to be yeah why gold and bitcoin outperformed

and it's because uh gold and bitcoin are up and we had a rotation out of tech because the liquidity wizardry described above uh is potentially forcing the front end uh the front end flooding of bonds. The Fed is going to be forced on reserve management purchases. And you have the exact cocktail that scarce assets love, falling real rates if the Fed cuts, plus a whiff of future money printing if they end up taking the front end onto their balance sheet. Uh this is exactly what Bitcoin and gold love to see. So again, we don't know if this is going to be the case, but now that Besson is signaling that he's going to steepen the curve, that could force the

Fed's hand. And this is a scenario that is very real for Bitcoin and gold and scarce assets in general. And that is why you finally see scarce assets like Bitcoin start to outperform the tech sector in the equities market. Massive re massive reef shuffling. We're going to get the guest up. That is going to be the end of our daily equity segment for now. We're going to go solo shared for now with the guest. Why don't we go ahead and uh flip flip the title, go uh we can go solo.

Hope you guys enjoy Daily Equity. It's a little bit of a macro insight. I mean, guys, I'm learning macro here in real time. It's pretty pretty fun because it feels like everything is connected at a macro level. This is well this is why we're seeing equities and digital assets and scarce assets all sort of rearrange around the bond market because this was such a massive announcement from the treasury yesterday. And so this is uh huge news um not just for digital assets but for you know the asset classes as a whole.

And uh this is this is what we're we're seeing play out. So, uh, I think it's important to keep an eye on macro because this is ultimately where a lot of these asset classes intersect and how they all converge. And so, we're going to bring up our next guest, uh, Quinn Markwith. Uh, he's going to join us. I think he's ready in the back, so we can go ahead and bring him up. He's an economist focused on the intersection of AI and digital assets. Uh he's formerly an emerging markets economist at Capital Economics. Uh and the number one ranked focus economics for forecaster for Peru, Colombia, and Chile in 2019. Entered crypto in 2017 with subsequent roles at e Toro and Dow Maker. And so we're going to get his read on this Treasury

announcement uh and just his general read on the reshuffleling of the deck uh here between equities AI rotation into digital assets and uh the craziness over the last 48 hours. He's up on the show now. Quinn, welcome to the show, man. It's a pleasure to have you. >> Hey, Robbie. Great. Thanks. Uh good to be here. >> Absolutely, man. Well, it's been uh it's been a whirlwind of the last couple of days. It's your first time on the show. maybe you can just give us a little bit of an intro into yourself and uh you know why you stuck around in this space when everyone else went to AI and robotics and uh what your read is on the last couple of days here.

>> Yeah, absolutely. So started out my career in research doing macroeconomics um tailoring the research more towards you know private banks for the most part traders who are trading EM currencies um trading against central bank announcements like we've uh you know de developments like we've seen recently made my way over to e Toro when I started out my work as uh you know in sales uh crypto markets related um things kept up a little bit of analytical work as well over the year focusing on macro and um positioning within crypto as an asset market. Um most recently uh on my BD side, I was building a market maker in crypto called Tri. But lately, I'm focusing on more um

an AI startup at the moment, but always um trading this market, watching the market, and looking out for what's coming next. >> Oh yeah, absolutely. So, you know, we we actually have a couple of diagrams that we're going to show in just a minute uh from a great article that talked about why this isn't yield curve control from the Treasury. Maybe you can talk to us about what this is and help us understand how this macro environment and how this this bond regime is ultimately going to shift things, maybe make tech a little bit less attractive and make scarce assets like gold, Bitcoin, digital assets broadly a little bit more appealing.

>> Yeah, definitely. I mean the the in my view the bullish case for um crypto assets in particular like the ones you've described that are scarce right um readily available and liquid has definitely gone up. It was already quite bullish in my opinion that um in the last couple of months a lot of the negative news that that we would have expected to hit the market about 6 months nine month months back would have been um more pain more bleeding you know it was pretty resilient and then um with the with this news which amounts basically to a signal that um there is a clear story now over the next two years for uh the fiscal situation to be accommodative as well as the monetary.

So um yeah with uh the way things are looking competitively uh in within crypto and the way that the assets are holding up in light of news um overall the picture or at least the thesis for a bullish next two years is quite strong now on on crypto assets. >> It's incredible. Um we actually have a a chart uh from an article that we were just referencing on the show. Uh so we're going to go ahead and bring it up and uh we'll show you in the in the chat here. If you click on uh our producer Leo his screen in the chat, you'll see it zoom in. And so what what we're coming to understand here is that with Bessant's announcement yesterday, he's doing this liquidity supply, this

longdated bond buyback program. And basically, you know, he's trying to buy the long end cheap uh and he's trying to sell the short end at a premium and this is ultimately creating a steeper curve. Is that the right way to think about the liquidity announcement, the treasury announcement yesterday? And then maybe you can help us understand are we in this this bull steepener regime or are we in this bare steepener regime according to these four bond regimes here? Yeah, I think you know looking at you know the four bond regimes alto together and looking at also the context under which what we're seeing signal from the Fed um the context from which that was born right we have a um leader of the

Fed right now who is viewing AI as sort of a structural um factor towards uh um being less uh uh bullish on inflation while also you know what they're handed what they can't control is the energy uh structural um uh pressure on inflation. So I think that what we're seeing in uh is is a clear shift away from uh the more bearish case that we are seeing with um the forward guidance at least in the way of actions voting right we were seeing forward guidance turn a little bit more bearish but um for now this definitely looks like um a strengthening for you know the camp that says the dollar could be weakening in a uh more calm way which is typically quite

bullish right I mean it's a similar setup I think that we had to 5 years back except for at least the liquidity should be a little bit easier to tap into now in the system. Um which I think overall um is quite good because even during this last year which has been quite um bearish for crypto assets you saw a lot of the development on the building side um keep up pace which you know kind of tracks with past cycles. >> Yeah. You know, the the biggest unknown here feels like it's the short end. Like we don't [clears throat] know whether Wars is going to comply and lower rates and cut rates,

>> you know, >> but that's pretty important to what it seems like Besson's plan is, right? >> Yeah, I think it would be um yeah, counterproductive to make assumptions on the other way. I mean until until otherwise it looks like yeah the intention is to be more accommodative towards that kind of path of action rather than the hawkish. >> Yeah. And so, you know, another another portion of this is that uh you know, if if Bessant is, you know, injecting some uh or or buying back some of the uh the bonds on the long end and he's selling on the short end in order to do that, you know, there needs to be a buyer on the short end. And actually, we've seen, you know, potentially stable coin

companies come in and and say that, you know, they're interested in in in buying up some of these uh these T bills and these, you know, shortdated bonds, but, you know, they might not have the firepower in order to really absorb a lot of the short end. We've also seen sovereigns, you know, sort of uh, you know, decrease their Treasury bill holdings and their bond holdings. M >> how likely do you think it is now that Worsh's hand is forced and he is forced to come in and you know provide some quantitative easing. How what do you do do you have any idea of what his stance on quantitative easing has been in the past and do you think it's more likely now that he does come in and absorbs

some of the shortdated bonds on the federal balance sheet? I I [snorts] would say on balance it's it's certainly more likely now after this latest shift like traditionally to my understanding he's quite uh hawkish. So that lends kind of a directional um bent in my in my history of looking at many types of central bankers and most of them to be to be honest given my background weren't much like the Fed um they were dealing with much less deep markets. Um but given that the you know the deficit is pretty unprecedented and um given what this latest behavior in the buying of longerdated bonds signals I would say yeah the case for you know shorterd dated support has become stronger um and

yeah I the other views of mine which I think uh will just make me sound biased I'll keep to myself but um I I I I see a picture here where I I do I am kind of a buyer of the idea that money can swing um from back from AI stocks back to crypto. And I have my reasons, but it does look like a lot of the um more bullish um parts of crypto as I see them are starting to heat up a little bit, which is encouraging, I think, to to that gut feeling that I have. >> It was I mean, incredible timing.

[snorts] >> Yeah. Could it have been I don't know if it could have been a coincidence that you know President Trump is up there you know shaking his hands talking about hyperlid coming to the US the same day that Bessant makes this liquidity you know supply announcement like what are the odds that could that must have been coordinated. >> Yeah I think it's tempting um I think if if you're doing your job right as an analyst on this market like you you should be coming to conclusions like that and asking yourself if you're going crazy but that's what it felt like to me certainly. Yeah. >> Yeah. Um, I I gotta know, man. I mean, tell us about these biases. Uh, it's helpful context.

>> I'm just um I'm I'm a bull on, you know, what AI can do when given a blockchain wallet. I've I definitely found that my interest in the sector in the space over the last two years accelerated in a way I didn't think it would um because I did not see that coming um the AI agentic use case until you know two and a half years ago. I was already bullish from like a struct structural sense and the way that a lot of people are um if they're thinking about just in terms of flaws with the traditional financial system, but the AI route um definitely helped renew my interest. So yeah, I look at the the developments on base. I think about you know a lot of the buyers that can come in from the Robin Hood chain and I look at how active the

communities are even in um what is you know a very bearish last 12 months. Um yeah, pretty encouraged on that um bull case in particular being AI operating on chain. >> Yeah, very cool. I and we just spoke with someone uh Shafu who just got hired by Circle to lead AI agent payments over there. Yeah. >> Uh talk gives a whole rundown on X42. 16 and a half million transactions gone through X42 up until this point. Uh almost 10 million of them on base. So yeah, you're absolutely right. I mean, Coinbase, you know, being uh like a core inventor of X42, you know, the predominant majority of X42 transactions

happening on base and now significant investment from Circle to, you know, go deeper into this agentic payments route. Um, I think you're absolutely right. I think this is, you know, a potential vector for a massive explosion in activity when it comes to Agentic Payments. uh this is you know one uh facet of what we're seeing and the growth that we're seeing and then on the other hand you've got things like per you know literally being integrated into the highest levels of finance and just the overhaul of the financial system happening right before our eyes. It feels like you know and then you add in tokenized equities that come in and you know the TVL into these DeFi protocols rerates so much higher with a much

higher TAM. feels like the confluence is just is just really starting, you know, to to hit on all cylinders. So, it's very cool to see, especially once you add in a macro regime that is particularly accommodative. Um, it feels like, you know, now we're we're, you know, we're really hitting a stride here. I I want to just get into another diagram >> based on these four regimes. >> Sure. >> How uh, you know, we could see the reactions in the market. So, let's go ahead flip to the next one. Um, and you'll see how each market reacts to each of these regimes. I'm just curious to get your take on this because obviously there has been, you know, increase in M2 and typically what we saw

was that Bitcoin tracked M2. Bitcoin obviously being, you know, kind of the indicator for the rest of the altcoin complex. But a lot of that money didn't flow into Bitcoin. We had this decoupling and a lot of that that M2 ended up flowing into the AI buildout. And I think part of why if we look if you know we we hold this diagram to be true is that we were in this bare steepener regime where the long end was up and then tech and the real economy tended to outperform and a lot of that ended up coming from the AI buildout. But what we're transitioning from and I this is where I'm I'm curious to get your take is that we're transitioning from a bare steepener into a bull steepener. And again, we need the Fed to comply here.

But if this is the case, uh the scarce assets are going to outperform. Rates are going to compress. We get a credit and a rate relief rally. And you know, we allow the economy to run hot. It'll it, you know, is somewhat dependent on Worsh letting inflation run hot. But this is ultimately what would allow you know all of these asset classes to flourish and we would get this bull steepener regime in which case you know tech AI buildout and scarce assets scarce assets you know all do incredibly well.

>> Yeah. No, I like that breakdown of it. It makes it um and how you illustrated there. Yeah, I'm definitely in in more of the bull steepener um camp now. Um at least given what I've seen, right? because I yeah this regime is a bit different in the way of forward guidance as I said earlier but yeah typically you know actions when um you know the market is when when when when a central bank knows that the market is already uneasy about something like inflation expectations due to something structural like that and um you know the the clear behaviors are you know in line with um loosening I would say the bull steepen here makes the most sense um And I

wouldn't be surprised if in the short term, you know, equities continue to outperform crypto a little bit. Um, but ultimately I could see within the next two years. I I don't think it's unrealistic to say that within about two years you get that extra bit of what makes the bull steepener what it is. Um, which is that um, you know, tailwinds from um, you know, it being actual scarce assets that are the ones being um, pursued by institutions as a result of these consequences. M okay. And so the scarcity really starts to come into play because and and is it because people are looking for an inflation hedge because the economy has run so hot that now they're pivoting towards something with a fixed supply.

>> Yeah. Well, how I sometimes see it playing out and this is just, you know, fun imagination. It's not like any kind ofis that I would bet money on right now because a lot is in flux and I think it could take easily two to five years to play out. But ultimately, yeah, the these kinds of up moves in a market um where the underlying asset like the dollar, I think, in my opinion, it depends on on how many more weakening cycles you think it can go through. I'm kind of in the camp that um you know, there's only so many more times it can weaken in this way. That's hyper um bullish for assets as we've seen them in the West. So I'm I'm kind of in the camp that you know somewhere in the camp of about 18 months to 24 months we should

see um a dramatic enough move um on the bull steepener case that you know the market starts to price and what happens next. Um so yeah um overall yeah you could say I'm a bull steepener. >> What and so what happens next? I mean, you know, it sounds like Yeah, I I it sounds like just maybe we just start with like, you know, this liquidity supply in the long end, right? It's going to steep in the long end. Uh we know this is going to run from September 9th, I think, until early November.

Bessent has already gone on CNBC this morning and said we could do even more. >> And then at some point, it feels like the Fed, you know, might get their hand forced to come in and buy some of the short end. Mhm. >> That is sort of the next couple of months. But when you look 18 to 24 months out and you say the market starts to price in what happens next >> just just meant for you know overall um depending on your picture of you know where the US I guess sits in its fiscal cycle. There's a lot of arguments to be had that you know that delicate um undergirling um when you are pushing as hard as we're about to see I think it swing in the way of the fiscal and monetary stimulus it's

you know you typically get some kind of snapback um so yeah just speaking um off the cuff right now not making any particular um forecasts it's just um yeah I guess you could say that I'm in the camp that rather than needing to wait for 10 years for that scarce assets um type thesis for digital assets to also play out. I'm I'm I'm saying it could happen a lot quicker I think in my opinion um just because of of you know in particular the fiscal situation does seem to actually be ramping up now to okay to a more serious degree. And when you say the fiscal situation, this would mean like in the extreme case, we're talking like Ray Dallio's, you know,

>> yeah, that would be like case. Yeah. >> Debt spiral, end of the west, hyperinflation, print, print our way out of it. >> Yeah. not not making any claims on like direction or timing as of yet. But yeah, like in my experience, if you look at um the what tools are in the tool box um it it would lend itself at least over time um in the short term maybe you know 5 10 years in the short if you want to put a shorter window of time on it. Um it would be maximally bullish if your prediction was at least some kind of monetary regime change. And um it just so happens that one of the asset classes that's most sensitive to, you know, signaling of of of like let's say short-term dollar weakness even um just

so happens to also present some some nice uh trade-offs from the from the system itself which is driving that demand. So um you got kind of a double whammy on both sides. I think that makes a nice little feedback loop. >> Wow. Incredible. Okay. And uh I mean is there anything that you're watching you know in the near term that would just what you know any indicators anything that you're listening from the Treasury or from the Fed that would tell you okay further confirmation of this thesis or what could happen that would invalidate part of the thesis that you're describing. Yeah, I think in the short term, you know, um, for one, the pace at which the AI agents demand comes online

is a big factor that no one really knows and it feels like this elephant in the room, right? And it feels also like something that could change more quickly than than we think. But it's it's a hard one, right? Because it could take anywhere from months to years to see that kind of demand really bear out. Um it's also, you know, there it it doesn't seem um like there's a strong case that can be made just from, you know, publicly available info that, you know, some of the loosening that I'm talking about doesn't take more like 6 months or 12 months. I'm um kind of leaning towards it perhaps happening quicker, but um on balance, it's hard to make a case either way. So, um, yeah, I would say, you know, bullish, but with with

with reasons to be, uh, definitely reserved about the timing on that, for sure. >> Okay. And it sounds like every time we start to get into this, you know, really aggressive steepening regime, we and we start to run the uh, you know, run the economy hot, we get into a risk of that spiral, >> right? >> Like, and and so now the market is sniffing that out. That's why the scarce asset thesis is starting to revive. >> And so we could get so far down the line that ultimately that you know it flips over the edge and this thing spills over and that is what the market is sniffing out but we don't really have confirmation of that until we ultimately go through with it.

>> Yeah. Exactly. Exactly like um I would agree with that framing of it because part of the um yeah what the market's expecting is right for the old remedies to continue to work in the way that they have in the past and they and they may for for a time right but um yeah I think that we'll we'll probably see compressed like time frames to understand like the full um consequences of whatever fiscal or monetary does next. So didn't have to wait too long >> after um we see the action I I I think. >> And are you primarily you know sort of allocating towards these uh these scarce assets with you know what we call monetary premium people look at them as inflation hedge store of value gold

bitcoin. We're big Zcash bulls on the show as well. There's also kind of this onchain business like uh revenue meta that's happening. Yeah. You know, and there's a lot of uh a lot of really really solid projects that are starting to do buybacks and acrew more value to their token. Do you think >> any any one of those has and and we've kind of separated these into two classes or groups of tokens. Do you think there's any merit to the, you know, the onchain revenue generating value acrruel fundamental or are you f primarily focused on, you know, the Bitcoin, gold, Zcash side of the equation? Yeah, I would say I used to be more um in the former camp of like the more institutionalized, highly liquid ones like Bitcoin and

Zcash and these kind of things, but in recent years like I've definitely had my ear a bit closer to um the onchain world just because I'm I'm really fascinated by how you know very the the competing organizations compete for liquidity, compete for attention, um try to incentivize people to get involved with their products And yeah, I'm I I kind of view it from from that angle. When I'm thinking about allocation and how I advise clients to allocate, it would be um yeah, you keep the macro picture in mind to to to understand kind of the barometer uh forces behind the market, but you I'm always trying to keep a very nimble mind um when it comes to actual

allocation. It's about um for me what's what's going to be capturing attention next. And there's all sorts of factors that go into um how you uh determine that. But um a little bit of an ear to the ground on each of those kind of um assets, whether it's real world assets, AI, um doesn't doesn't matter so much to me. It's more about being where uh the sun's going to shine next. >> Yeah. Very cool. Well, uh Quinn, uh you spent, you know, plenty of time with us. Really appreciate it. And uh thank you so much for joining. The last thing I got for you, and I don't want to put you on the spot, but >> given uh this regime that we're faced with and uh where the light is going to shine, just curious to get your your Bitcoin prediction. Uh maybe uh end of

20, let's go, let's go like 12 months from now. We're like mid 2027. Curve is steeper. >> You know, we're going into Q3, Q4, 27, looking at, you know, a pretty positive uh positive in some ways. you know, 2028. >> Mhm. >> What do you what kind of prediction do you have over the next couple years for Bitcoin? >> Yeah, right now I'm I'm kind of um in the camp of I mean, it looks, you know, I have to give credit to my former employer. They held steadfast to the uh four-year cycle call. They called a uh October, yeah, October 24 peak, and it did kind of roughly play out that way.

And just given that we just had kind of a down year and just given everything we've said um about the macro setup, I wouldn't be surprised if yeah, by mid next year um that it's probably above six figures. I guess that could be a price call. But >> yeah, >> yeah, if if if not, it would be probably due to things which um right now if I had to bet would be more short shortterm headwinds. Um but let's see if if if how what will be really interesting is to see how Bitcoin um in this new kind of monetary environment that I think the market just priced in. I I wouldn't say new environment just yet, but to see how it um continues to react to news or or doesn't react to to news in the next

couple months would be really telling. [snorts] >> Yeah. Yeah. If uh the last couple of days is any indication, we are about to see I think uh you know the the uh six figures prediction is pretty is a pretty safe bet. So we'll we'll see how this plays out uh in this new regime. But yeah, you're absolutely right. Um and that uh you know we are starting to see these things shift and uh I think uh you're ahead of the curve. Quinn, thank you so much, man. Really appreciate you coming on. Would love to have you back. Uh we don't talk about macro, you know, too often on this show, but I think you're a great guy to uh to chat macro with. So, appreciate it.

>> Let's do it. All right. Sounds good, Robbie. Thanks again. Thanks, everybody. >> Absolutely. We'll see you next time. Thanks Craig. >> Take care. Bye. >> Bye. All right, guys. Yeah, I mean, that's a phenomenal segment right there. Uh, on the macro front, you guys heard about the liquidity situation, the liquidity supply, and the long end, uh, what the Fed could do. I personally have uh really appreciated the education that I've gotten in the bond market uh over uh uh over the last couple days. So, let's go ahead bring up the CFTC uh show one more time. Uh let's get some volume and some closed captions on it as well.

>> We're not talking about right now. >> Right now, the market for computer is just beginning to develop, but most of it's already developing offshore. Why? Two reasons in my view. The first is it's really hard to assign a spot value to compute, right? Which means it's hard to come up with an index price, which means it's hard to offer a futures. The second reason is that, you know, entrepreneurs have watched the lawfare of the last few years. And while it's true that there's nothing preventing you from launching something for compute, there's no safe harbor to launch it under. And I think it's incredibly important for uh regulators such as uh the CFTC to have some kind of zone as Tushar was saying that allows people to experiment to try things that frankly

may or may not work to figure out how to do this and how to keep America first. Uh and without some sort of assurances it's very hard as an entrepreneur to put yourself in the kind of jeopardy that you would be putting yourself in based on the last few years of the prior administration. Um, the last thing I would just say is, you know, I think with something moving as fast as AI, I agree with my colleague Mike. You know, less is more. We have to figure out how to keep people responsible, how to make sure that, you know, we're doing our absolute best for the consumer, but we're going to have to move incredibly fast as a country to make sure that we stay at the sort of peak competitiveness globally for AI innovation adoption.

Thank you. >> Thanks, Peter. Joe, >> thank you. Um, so I agree uh as others do with Brian that uh uh there will be a positive asymmetry uh for the builders uh over um the uh breakers of code um provided both have uh good access to machine intelligence. Uh but there is a timeline to it. Um I read a stat a while ago that uh for every thousand lines of code there's something like 15 bugs uh in the code and um so the world is saturated with terrible software. Most of the time it doesn't matter. Um in our industry it matters quite a bit and and

so we do a lot of work uh security auditing uh and different kinds of verification. Um, so I would encourage uh uh the CFTC um and the world uh to really lean into the idea of open-source um open protocols um to the extent that uh we can move away from obfiscation as a tool uh for security. Uh that'll be uh much better for us because your software has probably been downloaded by somebody. Uh and machine intelligence can now uh reverse compile it and uh and run machine intelligence on on

essentially something that you think uh nobody has access to. Uh and so uh your developers may not be uh quite as alert um as they should be in that sort of situation. Um there's a timeline uh to u the asym asymmetrical dominance that builders will have. Um so we're going to probably see a lot of exploits over the next little while uh because there are a lot of projects in the crypto industry and in other places um that are over uh from the perspective of the builders uh where where people aren't behind the wheel uh aren't aren't uh um paying attention to what they built. Again, uh there's a lot of software that doesn't

run on live monetary rails, and that's less concerning. Uh but we're going to see a bunch more exploits over the next year or so, uh because there there's just a lot of uh defunct uh live uh monetary rail projects out there. So, we shouldn't uh um overreact to those sorts of things. Um in the Ethereum ecosystem uh we um at the protocol level uh at the smart contract or or application layer uh we have transparency we have credible neutrality uh we have verifiable transactions uh and uh for well-formed transactions and well-formed programs we have guaranteed execution um what we're

moving into now is the ability um as both Vlads I think mentioned the ability ility to formally verify so mathematically verify the correctness of the code. Uh so we'll be able to mathematically verify the correctness of the Ethereum protocol and we do a lot of that work already. We're going to be able to formally verify the correctness of D5 protocols. Um and um that I think we're going to move into a a golden era for software. It's going to take a lot of work to get there. Um I would encourage um you with your convening power and uh hopeful um uh openness to harmonization to uh think about the holistic nature of

the open-source open protocols ecosystem. Um I mentioned before that there are cracks between protocols and that's where uh it's hard to reason logically uh to identify where vulnerabilities are. um giant machine intelligences are are able to um with their breadth uh with a huge amount of activity, they're able to look at a lot of the cracks between protocols and and how you could line up six different subtle things uh into an exploit. uh and so um there should be ways of um not just formally verifying um each individual element but uh taking a holistic approach and and that's where accountability um may lie. If we can

proactively uh prove uh that uh all these different systems uh if taken as a closed system um are formally verifiable and therefore correct um then we may not have to uh do the forensic type of work that uh that we've had to in tra traditional finance. >> Thank you. Thank you Joe. Um I I have Scott, Carla, and then um Anatoli I think is and then we'll round out today. But if we only have about five minutes left, if you can keep your comments concise, that'd be appreciated.

>> Thanks, W. Um as was mentioned by both Don and Tom, this does have very similar look and feel as the high frequency trading algorithm discussion we had. Donna, it was only 16 years. It wasn't 20 years, so we're not that old. Um but there it was a what was very kind of scary technology first um approach. How do we make sure that we don't let this run away with run away with our markets? What we found and well even though you did mention principles base it did not stop the commission from coming up with a proposal to send all code to the commission and that's not the right response to this. What we found and what

was enduring was we relied on all the infrastructures, the FCMS, the the clearing houses, the trading platforms. There were several people in this room that are on this panel today that were in that discussion. Then we talked about how you maintain oversight, responsibility, the what we found were the clearing houses and the trading platforms. we're the best uh integrators and and and basically frontline protection to making sure that our markets they ran test data, they looked at different things to make sure anything that did go into the market had been prevetted. I appreciate AI is a bigger beast than you know al trading algorithms that we were dealing with 15 16 years ago. So and the point about DeFi is going to have to be addressed as

well. I think it is this commission working with the industry and you know onchain providers etc as to how they're going to help us make sure that our markets are safe is is critically important but it's going to take everybody's involvement and I appreciate the leadership here >> and thanks for your work back in the 2010s on this issue. So Carla, >> yeah. So two points. First on the issue of AI, as someone down the line here mentioned um that we could adapt the third party or outsourcing supply chain rules that exist uh to AI questions. The one thing I'd say is I'd encourage the um commission to think about how far up the software chain those uh obligations

should be passed. Um it would do two things. One, it would provide clarity in that regard um for AI developers, but two, the clarity itself may, as colleague Kish Pearl and I have argued in a recent paper in Texas, forthcoming in Texas&M law review, it may trigger um corporate governance and other private law uh enforcement powers um that would help uh ensure security in AI models. Um simply by clarifying at the regulatory level, you can trigger um other obligations under private law. Um and then secondly as to the DeFi accountability question, I just want to reiterate again the importance of focusing on function. Not all DeFi things that are labeled DeFi uh function

the same way or achieve the same end. And there are indeed certain DeFi protocols that operate as infrastructural resources. Um and um generally speaking, capital markets regulation targets intermediaries as the object of regulation and pretending that infrastructural resources that are DeFi uh protocols are somehow an intermediary that must be held accountable to law that doesn't apply to them is actually detrimental to the legal enterprise as I argued in a paper called law's detrimental reliance on intermediaries out of George Washington law review. So simply um reminding the room that um not all DeFi is subject to the law that we want to hold it accountable to and

pretending that it is is not helpful. >> Very helpful. Thank you Carla Anatoli. >> Um just to add a bit about decentralization. I think once you guys approve like a product, whether it's per or whatever, and you approve a certain implementation of it, if it happens to look like a centralized server where people can trade, looks and feels like Coinbase, it's very hard to come and say, "Here's a smart contract that is functionally equivalent that provides the same service. Can you approve this?"

Because once you guys have done the work to kind of do the due diligence on a certain way to do things, that becomes a standard and it becomes very hard for systems that take longer because they're decentralized because we're trying to do things, you know, formally verified in an open-source way um to compete there and those will get built offshore like because it's just code, right? So if those systems are better because there's all these properties that they can guarantee for users, but we can't get them approved even though it's functionally the same. Um you effectively created a regulatory structure that only approves a certain implementation that becomes very frustrating.

Thank you Anatoli. Well, this wraps up our discussion on AI for the day. Um and we want to turn to our final issue which is prediction markets and the evolution of the regulatory structure there. Um I actually was at the commission in the 2000s when uh we approved the first prediction market and we also released the first um request for information around event markets in 2008. So this issue has been percolating for a while. It's recently exploded and now who knew it was going to be on the bingo card uh two years ago, but it is. Um and it's on the bingo card because it's demonstrated it's its immense power to you know bring information uh centrally and price

discover a variety of different types of commodities and products and things. U but it has come with legal and policy questions that we want to dive in today. You know, certain recent litigation and differing views among federal and state authorities make this an ideal time to talk about how the regulatory structure should look for prediction markets. And indeed, the CFTC's been quite active in this area. They've already released two rulemakings on proposals and a handful of other staff advisories as well. Um, but given uh there are several prediction operators in the mark uh in the audience here today and those that have invested in prediction markets, I'd

like to ask what lessons should regulators learn um from the the state and federal um developments that have been happening over the next few months in order to evolve these types of markets. We'll open it up. Is that Luke? I'm trying to Yeah, Luke, you have your Go ahead. >> Yes, thank you. Um, my name is Luke. I'm the CEO of Bitomial. Uh, we were recently acquired by uh Payward and so a lot of what we do is traditional uh crypto business. We recently launched um 2C2D retail spot margin trading. Uh we're known for things like the first globally uh equivalent US perpetual

futures. Um we also have uh crypto as margin collateral. Um but weirdly why we're talking in this uh prediction market space is because we also offer a lot of infrastructure services to other companies uh some of which are in this room. And so even though prediction markets are um in many times vertically integrated and direct retail clearing uh we offer a lot of different services with a lot of different structures for uh clearing those prediction markets on the exchange on the clearing house. And so I guess just to keep it quick, what we would ask from the commission is um please just keep an open mind when uh drafting new

regulation and thinking about how to um put all this together. I I think there's a lot more differences in the ecosystem and in the space than maybe even we realized when we were first getting into it. I think in the futures world uh we're very used to kind of the the CMU way of doing things. It's very well established. Um but it's uh the diversity is is um quite a bit more uh pervasive than we you know would originally see on the surface. So um thank you for uh having me here. >> Thank you Luke Lana.

>> Um hi I'm Lana. I'm one of the co-founders of Kawoshi. First of all thank you so much. Thank you so much chair and all of you for having us here. Um, I also really want to thank the CFTC staff because we're here talking about all this innovation, but it just means an insane amount of work for them to be able to in a very prompt manner answer all of our questions and and help us work through um all of these issues and we're really grateful. Um, in a lot of ways, Scouch had a very different path than the traditional the the crypto companies that talked here. We started the company in 2018. Um and we from the start we wanted to get regulated because as you said um these are not prediction markets are not necessarily new. They've been around for a very long time. Um and

we knew that the right way to do it was coming through the front door and working with the CFTC on how to bring them here. But we had the the issue was actually that even though we became regulated, it was years of the the the CFTC not allowing us to launch any products uh or do anything. Uh and meanwhile offshore competitors were really really growing and taking a lot of market share and it took instead of the courts suing us or an agency suing us we had to sue the CFTC um to make sure that the law was being applied in the in the correct way and I think a lot of the prediction market growth that we've seen after that came because of this lawsuit really just reinforcing uh prediction markets and the regulatory framework um here in the US and what we learned after is that actually Americans

really like regulated platforms. uh if you see the the market share of onshore US-based prediction markets now versus in the past it's it's the majority of the market is now in the US because Americans like regulation they like consumer protections they like having something here that they can they know the face they know where it's coming from and they know that the the government is there to to help and look look it over um and yeah a lot of the issues on on the state regulation as you said state versus federal have been around for over 100 years multiple Supreme Court cases. Um, and all of them ended up enforcing the CFTC's exclusive jurisdiction on regulating these markets. And a lot of these lawsuits are actually becoming very dangerous because

of how broad they are. If you look at New York, for example, uh they're not just about sports. They're not just about prediction markets. A lot of companies here that actually never touch prediction markets could be interpreted to being um under a lot of the the the what New York uh state is trying to trying to make um happen. And I think it comes from a fundamental misunderstanding of the benefits of these markets. So when we started Kawoshi actually in 2018 the idea for Kawoshi came from our time working in Wall Street and seeing how investors actually didn't have a good option a good alternative a good way to hedge an Brexit Brexit or elections or a lot of things that there just wasn't a direct transparent market where you could buy and sell future events and being able to

hedge this exposure that had hedge this risk that was unhedgable was one of the main reasons we started Kawashi and on the other side on the price basing side. It's extremely the this is like kind of like the bread and butter of why prediction markets are important. Over 75% of our users, they never traded on the platform. They just come to consume information. And actually just earlier today, we released um the largest study to date on calibration and prediction markets showing how good these markets are for casting the future. So when we talk about defending these markets in the US is less there's obviously very important on the activity and the hedging side but it's multiples larger on the people that use these markets for information and to have a way to have unbiased view of what's going to happen in the future especially in the world so

polarized by the news. Um and with that I think the only other two things I wanted to add is then consumer protection. And I think that there's a lot of the attacks on the on the consumer protection side. And I've never heard a single argument on why state by state has better consumer protection uh than a federal framework. Um if you look at actually if you go state by state, you see that very few states actually have any regulation against advertising to minors or any regulation against advertising to self-excluded or people have have retail that has shown uh some issues. And I think this is an opportunity for the CFTC to yet again show we can be great at consumer protection. Um, and my last point on the SEC and CFTC harmonization. Um, well,

our take on this is that it's very important that we keep markets efficient and that we keep allow competition um to to competition and users to really pick what is better for them. And I think that it's important that we let different companies compete and different models compete so that the users at the end of the day can compete and can can decide which type of market, which type of structure um is important um and better for them. And at the end of the day, efficiency is very important and I would urge you guys to just look at how do we bring innovation in a fast way and allow a lot of participants to to to participate. Thank you so much.

>> Thank you Lana. Um, one concept I want to throw out here, and I see Craig and and Terry in the audience, but, you know, in the 90s when we were struggling with whether derivatives, over-the-c counter derivatives were futures or not, um, you know, we brought clarity to that in 2000. And I think the concern was that these were competing products that that there was a zero- sum game. Um, they would they would u one for the other. Um but we found out in the futures markets took off after we brought legal certainty to the over-the-counter markets. And so my question to the group is whether you know event contracts and prediction markets are complimentary products to a lot of the derivatives we see. Are they

going to enhance risk management in ways we can't do it today? Um I to me that seems analogous but I'm just I would love people's opinions on that or whether there are substitute products. Uh, I got Craig and then Terry next. >> Thank you, Walt. Um, and thank you, Chairman Celig, for convening this group. It's an impressive um group of people and the intellectual firepower in the room is quite evident and I think bodess well for the future of our industry and the continued growth that we have. Um, being probably one of the more tenured people in the room. Um, you know, it's a great privilege to be with a lot of the young bright people who are bringing innovation and new ideas to our

market. Um, which I think are great. Um, I think the work of the commission, um, in terms of improving legal certainty in crypto, advancing tokenization, um, and onchain transactions will all be very good if done the right way for our industry. Um, you know, I think earlier, maybe late [clears throat] last year, I had the chance to meet Shane, and I was very excited to meet him because, uh, I so respect his story and what he's done. And like he did with you today, chair, um, he greeted me by saying, "What up?" Um, and then he said, "Oh, you're the OG." And when he left, I had to ask my younger colleagues what was meant by that. and I was educated about what it means to be an original gangster, I

guess, but um but which makes me feel really old. I think a lot of um the topics today um while they seem new and there are certainly new elements to them, you know, the intersection of innovation competition and jurisdictional disputes and border skirmishes about products is not at all new. Um I think I've been in this room for almost four decades listening to conversations like this that are very similar. Um I also want to thank the chair for the um you know recitation of the the history of the development of these markets which I think is really um apppropo for talking about and trying to solve a lot of the issues that I know

you're looking for input on today. Um I had to laugh when you were talking about the floral shop underneath the board of trade. Many of you may not know, but I had the great privilege of um knowing Terry Duffy's mother, who was an extraordinary and wonderful woman. Um and she owned a floral shop in Chicago. And I just wanted I didn't want to interrupt you, but I wanted to just say Terry and I were there in 1848 when that was happening. Um but on a more serious note, um I I I think one of the things that I would say is um yes, it's true. Um, internationally there are different regulatory paradigms that are, you know, used to promote both securities and futures and swaps

markets. I would encourage all of us to actually turn this on its head and look at the great success that we've had by having a bifurcated regulatory regime in our country. Yes, we do have border skirmishes and they happen over products, you know, from time to time and as an industry, we've had to fight about those things and we've had to sort them out, but we've generally done it in a really su successful way. Um, today the equity market capitalization of US companies is by far greater than the market capitalization of every other country in the world combined. Um, that's pretty successful. If you look at exchange traded derivatives and

over-the-counter markets, similarly the US represents a dominant um market share um in what we have done. And that's because we have regulatory regimes that are tailored for entirely different markets. customers, users. Um, futures and options and swaps markets have typically been geared toward the professional wholesale institutional highly sophisticated, large institutional market. Um, securities markets have obviously been geared toward protecting individual investors and retail customers. And so the ability to tailor those regimes which are very very different and operate very very differently um have fostered growth and

they fostered innovation and they fostered competition and we wouldn't be where we are uh in terms of market share and the dominant place that we have in the global marketplace if we didn't have that. So, I just leave you with the following, which is that, you know, there are areas that are black and white, and there are areas that are gray. And I've been doing this a long time, and a lot of the gray areas are very complex, and they're difficult. And I'll just express appreciation for the difficult tasks that the commission staff at both the SEC and the CFTC have and sorting out those gray areas. But we have also the different regimes. And so, you know, on the CFTC side, even though I'm generally a big fan of

self-certification and the ability to do things quickly, especially in the context of a professional wholesale financial market with sophisticated customers, we also have securities products that are trading on CFTC uh markets. Um, we have yes, no binary options contracts that were approved for trading as securities on the Chicago Board Options Exchange 15 years ago. Um, and so we see a proliferation of those things happening on CFTC, DCMS pursuant to self-certification today, but economically and legally, they are securities. Um, and there's no question about it. The 1934 act defines a

security broadly to include any put, call, straddle, option, or privilege on a security certificate of deposit or group of index securities based on the value thereof. It's clearly a security both economically and legally. The definition of a swap added to the Commodity Exchange Act excludes all those things I just said. So, I would encourage the regulators stay away from the black and white. figure out the shades of gray. There are shades of gray. We don't have time to talk about what they are today, but the consequences of not doing that, and I'd like to go back to where um uh former chair Walt Lukan uh started, which is our job, I think, as an industry is to

promote responsible innovation and fair competition. And it's to effectuate safety and soundness and customer protection. We can't do that when we blur the lines on what is black and white. And there's a limit. There's a limit to what the regulators can do. They're bound by the law. They're bound by what Congress has done. And more importantly, in securities markets, they're boundied by the fact that there isn't ex exhaustive federal preeemption of securities laws. They are regulated to some degree by the states. And so when you have securities products that are unregistered trading on a DCM, no matter what the regulators want to do, at some point there's going to be litigation. At some point there'll be

recision. uh exercised by customers on those platforms at the state level or at the federal level because they can do it both ways. And those are risks that don't promote safety and soundness. They don't protect customers and they do the opposite of what I think the spirit of this whole meeting today is to do, which is foster legal certainty and protect customers, give them a safe environment to execute. So, thank you very much. I appreciate the opportunity to provide those comments. Thank you, Craig. Terry, >> well, thank you all. Appreciate it very much. Sheriff Celig, Mike, thank you very much for holding this event. Uh, appreciate it. I want to thank you, Craig, for referencing my mother. I miss

her dearly. She's the reason that I'm in this room today. Uh, she was a big supporter of mine 45 years ago when I got into this business. So, and she was a great florist, too. Craig is right. Um, I want to talk a little bit about a couple things. First, I want to thank all my colleagues sitting around a table that talk so eloquently about the crypto industry in of itself. I'm a big supporter of the crypto markets. I have been since 2017. We're the largest futures exchange in the United States, largest futures exchange in the world by volume. Um, we are a big crypto franchise. I listed crypto back in 2017 when others would not do so. And we did it because we thought the timing was right and we wanted to promote and support the product. Um, I know that

SIBO was down the path of listing it back then, too, but then they got away from it. That was before I think you joined the the firm, Craig. But we're we're a big supporter of it. So, listening to the group around the table today, I'm I'm very heartened where the crypto industry is at, where I think it can continue to grow, and I think it'll be a part of our lives for many years to come. So, that being said, thank you very much for all that and educating me even further today. on the AI stuff. I mean, I believe from an exchange standpoint, from a market structure for all of us in that world, you know, we we have to look to how embrace it and what the guardrails are to make sure it's running properly. But really, when I look at artificial intelligence, I look

at the algorithms that some of the firms are running today for their risk management protocols and how they are going to mitigate and manage risk for their either as a fiduciary or on behalf of their own firms. So I think that is fabulous that AI is going into these programs as long as it's done responsibly. So thank you for that conversation. I want to talk a little bit about the prediction markets and I'm a little concerned about this and I'm a lot concerned about it. There's been 2500 self-certifications since this administration has taken office in January of 2025 of which none have been opposed. And there's been a lot of self-certifications around products that are in violation of core principle 3es which is susceptible to manipulation.

There's no c doubt about it. And if you don't think that's true, then you don't watch the news because if you looked at the Maduro situation, if you looked at the teleprompter situation from the president of the United States, um there's a lot of things that are susceptible to manipulation. And there's some sporting events that are not just outcome based or individual based. That are definitely people that are manipulating these contracts. That is not good for our industry. That is horrible for our industry. We're not a bunch of carnival barkers at a circus. We are running the most envious markets in the world in the United States of America. Chair Seelig, President Trump has said how they want to make America the crypto capital of the world. Well, we don't want to chase our own

participants out of our own markets either. And by listing susceptible markets to manipulation is really doing the opposite of what we're trying to affectuate. So the record there, those products are not listed in the United States. They never were. This occurred offshore. And that's fake news. >> Fake news. Okay. That's a cute comment, too. Um uh so you're suggesting that some of these sports events are not listed in the United States. >> The Maduro contract and the teleprompter related contract were not listed in the United States.

>> I understand they're on poly markets contract they were listed overseas. Fair. Yes, that's that's the answer. So the regardless of the circumstances that that the the president's own teleprompter operator was in the manipulation that was not good and I believe you're are looking at the investigation to that. That's neither here nor there. I'm just bringing it up. That's not good for markets. Um we can get into a back and forth if you like. I'm happy to do that too. And there's another really economic contract that has been massively important for the United States. That's a Nathan's hot dog eating contest.

That's another prediction market that is on a US platform. It was called Kelshi. Kelshi also has a compute contract where when Don Wilson says, "Why are we having a 60-day period on compute?" Kelshi was already approved for a prediction market on compute. Doesn't make any sense. Now, Caner Fitzgerald [snorts] is now partnering with Kelsey on that compute. Okay, we'll just call that a coincidence. Um, PERPS, I listen to all the conversation, but per 247 oil, which is something we want

to do here in the United States. Why? because these are having an impact on our markets off the decentralized finance uh platforms on egg trade XYZ on hyperlquid platform. Now these are illegal to US participants. I would have to ask the commission what they are doing to police everybody's VPN where they are not accessing these markets. They are having an impact on this. But yet we are being held up. Others are being held up. Kelshi is being held up on trying to list 24/7 markets. Some people like them, some people hate them.

I think all markets are going 24/7. I do believe that. That's just a matter of time. Banking systems got to get there. The federal government's got to get there and we will get there. But I think it's truly important that we don't have double standards for people that have prediction markets on compute. But yet we will not have a listed spec contracts that we have out for compute going through these long review processes for reasons I don't know when there's already one approved by a US entity by the CFTC.

So, I appreciate you having this meeting, but I think it's important for us to go forward as innovators on markets to have a level playing field and make sure that the consumer is always protected because the best way to ruin a market and I guess I'm old enough to recall in 2008 and n when the financial industry takes bad behavior, it doesn't take a step backwards. It takes 20. It takes years to respond to build back the financial system. We've been able to do that and I hope we don't go backwards again. I appreciate the time today.

>> Yeah. >> Thank you. Uh Henry. >> Yeah. Uh Harry Crane. >> Oh, Harry, I'm sorry. professor at Rutgers University and uh director of the um graduate program in fintech analytics which uh for which all of the topics uh here uh are certainly relevant and um I appreciate the opportunity to speak here and to discuss these topics especially on prediction markets which I've been uh involved in uh to some degree or another for almost 20 years now of course going back long before uh the CFTC has been treating them over the since Commissioner Celique. Um the there's a few topics specifically that I want to

address uh on the topic of uh first of all principles based regulation I think is crucial uh for driving innovation. And I'm glad to see that the uh the rulem that's been proposed uh by Commissioner Celig and the CFTC is vastly different than the rules that were proposed uh for prediction markets uh several years ago. um in particular on the topic of the enumerated topics, war terrorism assassination gaming uh other topics that are um illegal under federal or state law. It's very important to get clar clarity on what these uh what these what these terms actually mean because that's the only way for these markets to uh to operate

properly. Uh but one thing that I would urge the commission is to um is that these are also the topics that are among the most important and potentially the most useful and valuable to offer markets on uh from both a financial and an information standpoint. You can think of markets on war. Uh of course there are huge risk exposures to these types of markets. Um and there it's also extremely valuable information to the general public. Uh we we also have everybody here would also uh of course agree that there these are very sensitive topics um and so they have to be addressed appropriately. But um I think that in the spirit of innovation

it's important to uh not not stifle uh potential innovation in those markets. I think actually the sensitivities only emphasize the need for innovation rather than prohibition. Um as far as the state uh the state issue um well first of all on the topic of sports which is related to states um the the it's it's very clear that sports have a huge um economic impact. Uh it's a hundred billion dollar at least annual industry plus travel uh hospitality industry downstream. Um there the states are approaching sports however as a as a gambling product. We haven't seen the the true value of sports markets um when

it's treated as a financial product. There are very few examples out there. There was one several years back in the mattress mac uh hedging case where there was actually a very innovative uh marketing um marketing approach by a furniture store related to the Houston Astros winning the World Series. Uh well, this this actually led to a $50 million liability for a furniture company which which was subsequently hedged at that time in the state regulated sports books. So there are these use cases and the more that these markets are allowed to flourish we will see more and more innovative more and more innovation outside of the markets by being able to use them. And then finally on the states issue very important on the on the topic of

consumer protection because if you look at how the states regulate these markets or any any type of related market um these are not customer protection is not the first and foremost thing. they they are allowing these these companies particularly the sports betting companies they are exploiting losers they are banning winners they are not treating this in the same way as a properly operated financial market um and so I think that that's a very clear distinction and uh so I'm glad to see the CFTC is taking that on and it's extremely important to have this principles-based approach to protect and serve not only the market participants

but also the uh the general public and the public interest. So, thank you. >> Thank you, Harry. Um I want give Lana a chance to quickly respond and then I'm going to go to to Vlad and Brian next. >> Yeah. No, thank you. Um I just wanted to respond since we were couch was called um by name here. Um, I would actually like to ask, um, Terry, has CME never had any issues with, um, you know, any any market manipulation, any issues ever in its history?

>> If you'd like to have a debate, I'm happy to have a debate with you. We There's always >> No, I'm just asking a simple yes no question. Have you guys more people in my regulatory department than you do in your entire company? Okay. Thank you. >> Maybe maybe you should learn a bit about efficiency then. Um, >> well, maybe you should learn about credible markets. Okay. >> Um, >> let's let's try to keep this productive. Okay. >> Yeah. I mean, I think every market has risk and every nent market will have risks as well. Uh, and there have been issues in every single traditional market uh, and every single exchange here onshore and offshore. And I think the point of having regulation is that you find these issues, you address these issues, and there's a way um to to address them in a in a correct way. Um

and one point to make on the on on prediction markets. One of the reasons prediction markets have grown this much is because it has looked into events and things that a lot of the traditional industry has ignored a lot of industries that need hedging u hging hedging and price basing and a lot of the markets that the traditional industry looks at and thinks it's too small or thinks it's irrelevant is actually very important. We have actually a study coming out very soon from Kawashi research that talks about the relevance of mainstream markets on how for example different words that Trump says move the S&P in a very dramatic way. uh and we have that coming out and we have a lot of other studies there and same thing goes for the Federal Reserve and same thing goes

to local and you know very state specific local markets that we're happy to bring to market because we are able to list markets very fast and again with a robust regulatory framework we're able to work with that um on the CFTC and SEC point I think that I just wanted to address that a lot of great products fall in between um and there should be a path as we talked about in the crypto part of the conversation. There should be a path for regulation and innovation on on both sides and self-certification especially for prediction markets is extremely important uh because a lot of prediction markets again and the price basing that comes from these markets come from the news and and something that happens and we need to be able to have these markets fast uh for our users

and it's important that you know we when we think about where certain markets land we think about the end consumer and what's best for them and what's safer for them and then backtrack from there on on how to make these things um these things work. But thank you so much. >> Thank you, Lana. Obviously, we're at time, but we're going to keep going. Um and I want to make sure everybody gets a chance to comment, but if we could try to wrap this up in 15 minutes. Let's start with Vlad. I'll be very quick. Thank you. Um, first off, it's clear that customers love this new ability to trade prediction markets and to uh own economically the outcomes of real world

events. Uh, so and um I I think I'm probably not unique in saying this. We believe the CFTC is the correct regulator for these. We appreciate all the support and you guys actually um going to bat and agreeing with this publicly. Um and a lot of the criticism, no doubt, from the states and other actors are folks that have a financial interest in the opposite rather than a principled interest. And as some others have mentioned, principled arguments about, you know, a federal framework not being sufficient for uh surveillance or uh customer protection just doesn't make sense uh on its face. And and I think

that if we continue to iterate on this asset class, it's not just going to be a good trading product, but uh it's going to be a truth engine, a truth machine that'll make it easier and clearer for people to make important decisions. A couple of things that have come up um or that are maybe less duplicative. One is uh on mention markets. Um I have mixed feelings about mention markets. So on the one hand I agree that they can be very fun. Um on the other hand certain mention markets I think are very prone to manipulation. Um, and and

I don't think that it's necessarily even even conscious or uh intentional, but if it's, you know, someone giving a informal speech, um, I mean, you'll just see people at at these events saying, "Hey, say this, say that." or you know, you never really know uh whether you're giving someone a thumbs up because they have a financial interest in the outcome or whether it's something more innocent. So, I think it I think it's just something to watch over. I think that uh the line it doesn't feel like we have the right line in how we think about uh things like mention markets and certain

certain ones that I've seen I think are very prone to manipulation and um there's there's just a customer protection issue that um that raises although I I do admit that they're very fun. So, uh it's something to to to look at a little bit more carefully. I think the other one is on the disparity between uh direct to DCM and FCM intermediate intermediated retail access when it comes to KYC.

Um you know, I talk to customers from time to time, right? And you know, I was at dinner in DC and I uh I I caught some conversations about prediction markets and I was like, "Oh, you know, why do you use this one? Why do you use this other one?" And one of the things that struck me is some people actually prefer to use direct DCM models because they don't collect their employer information and you know v various reasons for that of course and it's not always um that someone's intending to do insider trading. sometimes they just don't like their information being collected,

right? And having this idea that the employer knows what you're doing if you're a customer might like uh raise some questions. It provides some friction. Um so I think my point there is really that it doesn't really make sense for there to be two different models for retail access. I think that whether you're going through a DCM directly and you're a retail customer versus an FCM, uh we should make sure that we uphold strong uh strong uh customer protection. And my preference would be for the FCM model to be widespread. I think it just makes

sense to have more information and uh the friction is is probably sensible in that case. uh but regardless there shouldn't be this implicit arbitrage and whether you're a retail customer coming from FCM versus direct to DCM I think KYC requirements should be uniform. >> Thank you Vlad. >> Thank you uh Brian. >> Yeah. So just a couple comments on prediction markets. The first is that you know the federal law is unambiguous here that the CFTC has exclusive jurisdiction. Congress has said so explicitly and we really appreciate you defending that territory from even in the face of litigation. I think it's a

great counterweight to what we heard earlier about the 50 state regime and the crypto markets. Here we have federal preeemption already in statute and I just want to thank you for enforcing that. Uh the second was this prediction markets I do think are creating a genuine um public good and walt this gets to your question about you know does it is it complimentary to futures or unnecessary and I think I think it's very complimentary the reason is that it helps people understand what's true in the world uh in a way that's really difficult to get from other sources. Um the the breadth of the markets is important here. It's it's really kind of becoming an alternative, I think, to traditional media and social media because traditional media comes with its

own uh biases and you're often reading not what is actually going to become true in the world. You're right. You're reading what someone wants to become true in the world and they're they're pitching you with their own biases. Same thing on social media. So, that's very important. The there was part of the prompt here was about what principles should govern the listing of novel contracts. And I I just wanted to put forth a concrete proposal to advance the conversation. And um so first of all, I think just because something is novel um you know that doesn't mean that's not a good reason to reject it, right? And so I was trying to think of like a three-point test. And um what I came up with was first the first test would be

does it create public harm? Uh now of course I you could say does it create a public good or public benefit. Um but I actually think we should be in a default allow it to happen unless we can point to a specific harm. You know somebody might say that um oh that market is it's it's frivolous or who knows what it's for. But somebody might be deriving benefit out of it in a way that we didn't contemplate. So unless we can point to a specific public harm I would default to to listing in my view. The second point would be uh the market would have to have a direct causal link to that harm, right? And so you know the example here would be um like an assassination market or something like that. But if the market was um you know

when will the ayatollah ayatollah committee leave uh be out of office? There's a variety of ways someone could come out of office. And um you know I think you could have a second order effect, a third order effect. you get you can tie yourselves into knots with this unless I think you should hold the bar at there has to be a direct causal link. Um if you don't if you don't enforce that um almost anything could have an indirect link um imagine any of us stepping down as CEO and the stock price uh fell that day. Um so you know if you're if you're going to go to that extreme of saying um you know there can't be any second or third order effect of harm then we wouldn't even

have public stock markets right in some ways the public stock markets are already a prediction market on um you know a CEO stepping down or something like that and then the third part of the test would be this question of you know how subject to manipulation is it and I think you know it is dangerous to have something that could be decided by one person. But we we have to be careful not to go too far with this because there could be examples um where the the public good outweighs um the risk of of it being you know subject to manipulation by one person. It's really comes down to like a resourcing question of can the CFTC appropriately enforce um you know you could say our stock markets are subject to manipulation but we have

an agency that enforces that and investigates it and gets tips and as long like something a good example would be you know President Trump making a comment about the tariffs in Canada. Um that is that's to in my me that's a mention market. It's by one person. Um, one could say it's even subject to manipulation, but to me the public good of that outweighs um the downside. So that's the the idea that I I wanted to put out there of does it have public harm? Is there a direct causal link to that harm? And how subject to manipulation is it?

>> Very helpful. Thank you, Brian. Um, I think I have Don next on the list. >> Yeah. So I I'll be brief. I mean just a couple of high level thoughts. Obviously a Brexit contract would have been incredibly useful. Um will the Fed hike or not? That's an example of something that's an a very useful cont uh contract. Obviously, you know that you can also trade Fed funds futures. I haven't seen any evidence that volume in Fed funds futures has declined because of the existence of a will the Fed hike contract. So I think that they're complimementaryary. I think that some people prefer the simplicity and ease of of a prediction market around the Fed.

Now I I think we can and and Brian I like your your kind of proposal around around you know a framework of of you know this kind of three-prong framework. Um and and there are clearly some markets that just don't meet that bar that have been listed. I mean, you know, and and you know, nice job to the CFTC and to to Khi working together on the on this, you know, George Santos situation, but but you know, the question of will George Santos attend the State of the Union address, I don't think that that was really all that important to anybody. And it was obviously readily subject to manipulation by one

person with you know kind of no I mean whether he went or not was not going to have any impact on his on his life really and and of course he took advantage of that. So, a good outcome in in policing that, but I would argue that never should have been listed in the first place. And I think there are a bunch of other things in that category that just don't meet the bar and and just should not be listed. And I think that it's in everybody's benefit in this room that we cut that bottom tier of things out so that the important things like Brexit and Fed hike can can thrive and and uh you know and grow. Thank you.

>> Thank you, Don. Uh Jason, I think I is it Jason at the very Yeah. Hello. First, uh thank you uh to the chairman for I think everybody said this, but I would be remiss not to uh pile on. The constructive collaborative approach you've taken I think is an example of how government and industry should interact to everybody and really just can't thank you enough and can't tell you how much I appreciate it. Uh having seen many examples of the opposite as I know everybody in this room has over the course of their time uh in their jobs. So, thank you for that.

um you know one I just want to make two quick points. One uh I want to add uh or really agree with what Vlad was saying that the rules for uh customers going directly to DCM versus those going through an FCM should be identical. There really is no distinction from the consumer protection perspective. So that absolutely should be the case. Um the second point I want to make is more of a message for everybody in the room. I know that this is a very uh sensitive topic. Uh I also know all of you have experienced regulated industry for a long time and um those who have I'm sure have seen infighting get in the way of constructive dialogue and solutionsoriented discussions. So I would just ask everybody uh both in this

hearing and then also in future communications to try to refrain uh from taking shots at each other's business models or decisions that you may not 100% agree with. Um that doesn't advance the discussion. and all it does is seow divisions and distract the discussion towards debates that really aren't productive. So, uh that's something I think all of us should take away and you know I certainly have opinions as all of you do. Uh and there's a time and a place for it. So, I think we all should make sure that we are doing that in an appropriate manner and trying to actually get things to the right people who are trying to set up these hearings to facilitate constructive dialogue so that they can do their job and get policy right. So, thank you for all that.

Thank you, Jason. Prudent advice. Uh Matt, >> uh I will not fully reiterate Jason's sentiment, but as a new participant to this industry, I really appreciate the spirit of welcomeness, uh and collaboration, um that we've experienced coming into this industry. Um there are a lot of issues in this room that I don't fully appreciate because I am new here. I'd say the one issue and the one thing I know very well is retail. Um, I've been working with retail consumers for a long time, and I would just uh underscore the importance of getting a principles-based approach to uh consumer protection and responsible trading nailed as part of all this work. While a vast majority of customers will use these products for

profit or for fun, there is a small chunk of them that will have a problem using them. And I think it's really important that we set minimum standards for all operators in the industry in order to ensure that one, we protect customers, but two, you ultimately avoid the backlash that would be inevitable from a lot of negative stories coming out where people have used any of the platforms in this room or in this industry to their own financial harm. Um and I think we have a amazing opportunity because of the leadership in this room to take a uh leadership position around the issue and set super clear standards from day one uh from a proactive perspective and that's very unique.

>> Thank you very much. We haven't heard from Tom Farley so I want to jump the line here a bit. Tom, >> thanks Walt. Tom Farley bullish. Uh first time I was in one of these confabs was in this room circa 2008 with chair Walt Lucan presiding. Um but thanks chair Celig and Mike and Amir. I I just want to say of all these I've been to CFTC SEC over the last couple decades um the firepower in this one is is unmatched and uh this been a really valuable session and thanks for all that you're doing for the broader industry as well. I've told you privately how much I appreciate it. I'll say it publicly. Um, two quick thoughts. One, Walt in providing some context asked the question, you know, is this a zero- sum

game? You add some new products, I don't know, prediction markets or what have you. Is that generally good or is it just subtract from something else? It's always good. Like when I look back, there was hand ringing about electronic trading. There was hand ringing about, I'm sure, equity indices. There was hand hand ringing about uh basically every single innovation that we've all been a part. you look back and they all added to the GDP growth. They added to riskadjusted GDP growth. They added to this great free enterprise engine that we're a part of. So I would just say please keep this stance of tending towards innovation and being willing to accept a little risk knowing full well we're going to make some mistakes like you know the example of the Santos mistake. I'm sure everybody was okay

yeah it was a mistake you're going to get some of that but you're getting this incredible innovation including from from uh uhh Khi in particular. And by the way, thanks Terry and Lana for spicing it up after 3 hours. That was that was helpful. I'm wide awake. Um, and then the last thing I'll say is that somebody mentioned this VPN thing. I the VPN thing is a real issue. And what I mean by that is there's a playbook to getting access to the US markets if you're overseas. It's I start overseas uh and I get a whole big US following because they're spending 30 seconds downloading a VPN and and they're logging on supposedly from Turkey, but it's the US. What I've seen in crypto and I've been in and around it now since 2013. Um, when things are successful and they have a lot of volume and a lot of

customers, they have somewhere between a lot and tons of US customers even though they don't have access to the US. So, we can ignore this VPN issue, but then that means that playbook will exist where firms will just get big overseas. They'll tap the US market illegally and then they'll come to you and they'll apply and they'll say, "Oh, look, we're good good people. We have no US customers. don't pay attention to any of this uh VPN business. So that that's what's going on and and I think it's worth a look. Thanks again. >> Thank you, Tom. Shane, turn to you.

>> Well, I was actually going to talk about surveillance of uh of prediction markets. Um back to uh what what Terry was saying and I think other people have mentioned. uh you look at these new asset classes, you kind of see the uh you go and see the life cycle of a new technology or a new market and um I think uh like it's not going to be right from the get-go and uh you know was I think more eloquently by uh by Tom but um so you know it's you kind of got to think about like throwing the baby out with the bathwater it is most definitely an experimental phase right now where it's like okay you know these things were an idea as a lot of people have mentioned they've been an idea for a really long

time. A lot of people have attempted to build them. Um, prediction markets, there's been some academic research from some even folks in this room dating back over a decade that are like very poignant and and preient in terms of, you know, how we think about prediction markets today. The fundamental premise is if you can go and apply the magic of price formation and price discovery to important current events, you go and give everyone uh like just an easy way to say, "Hey, well, what are the odds or how likely is this to happen?" Or there's no shot. you know you can go and extend that with markets to to reality. I think people have found that immensely important. It was really the the the you know s core kernel insight that that led me to build poly market and you know when we think about these like the

Maduro thing and and whatnot and these things around the edges like yeah you know those are those are f you know those are those are problems. Um and uh you know when when that happened like we worked with we worked with the commission we worked with law enforcement. We have someone here right now who um is XFBI who works full-time at Poly Market has built custom proprietary surveillance software on chain. I know this is live stream so people are going to be upset to hear that but you know we [snorts] we talk with our partners Palanteer analysis and they're like damn you guys have this in-house this is serious. Um you know and we're we're grateful to have that and we continue to invest more in it. So um you know I think that I I like people have said there's always throwing stones when something new comes along

especially when the dollars get involved when people say oh you know these young people are getting so rich and um you know it's kind of like this fixation and sens in sensation you know kind of sensationalizing it uh but you know this stuff has taken a long time to get here there's been you know I give a lot of credit and uh and you know gratitude for a lot of the people who've paved the way a lot of credit to Koshi for going and fighting the battle in the US to go and and sue for what's right and and win you know and a lot of us have been beneficiaries of that large portion of us in here and you know like I think that this big facet of oh you know people talk about poly market they talk about poly market international the D5 version because you

know we have a US regulated DCM dco uh but a lot you know there's all this stuff like anonymized and like you know inside trading it's first of all it's not anonymous it's all public it's all on chain And it's the least anonymous financial market of all time. You can look at every single market and see every single trade and look at the trading history in full of every single participant. Like it's, you know, a level of transparency that's unprecedented. Um, and with that, it actually brings it brings a whole new set of data uh and like, you know, insights you can go and gleam from when you look at any market um to go and find anomaly detection. I think that that's what we've been investing in. And you know the the point is when you're on the fringe and you're building something new

and you're innovating uh you know as things pop up you have to deal with you know you have to deal with problems that that that come uh appropriately and diligently and seriously and you have to engage and I think the most important thing is um you know no one I think is here saying hey we don't want to be held accountable for mistakes or or missteps but um you know when there's collaboration between public and private sector when there is innovation and there are things that are not gotten perfect or there are problems s like you can be so much more productive um in bringing new markets uh but also like maintaining American dominance. So, um, you know, grateful for that. And definitely by no means, you know, I I'm sure I speak for, you know, all the the young the younger companies here, like

by no means coming here and saying, "Hey, everything's perfect. We've got it all figured out." Um, I'm sure we have a lot to learn from from the all the the season operators in here, but, you know, we are doing our best, and we think that the pros far outweigh the cons. >> Thank you, Shane. Um, and we have to wrap up here. Um, but Christian, I we haven't heard from you. if you can wrap up in a minute. Um and then I'm going to turn it over to the chairman for some closing remarks. >> Yeah, you can put me [clears throat] on the clock. Uh first of all, thank you, chairman, and we really appreciate um I'm from FanDuel. We appreciate our inclusion uh in this group and and the the uh fostering of transparency and open dialogue in this session and and beyond. Um we're a relative newcomer to

the space. I think our perspective is that the the most critical thing we can do for prediction markets right now is to build uh consumer trust. and that the way to do that is to have clear rules of the road and a level playing field for all the participants. And so, you know, to that end, we really appreciate the the rulemakings and the more public comment and we, you know, we encourage more of that and we're happy to be a participant in the dialogue around consumer protection, market integrity, advertising, and all the issues that we think will will build that consumer trust. Thank you. >> Well, thank you. That wraps up our session. Um, I think we can all be in agreement that that nobody wants uh contracts to be able to be manipulated in our markets to your point on trust

that that is to the detriment of everybody and especially the CFTC. So, um, just to make that point abundantly clear, but let me turn it over to the chairman uh to give some closing remarks. >> Wow, this was such an incredible session. I learned so much. I think we all I'm sure learned a ton from everyone in this room and it's incredible to see all of the, you know, development that's happening here in the United States. I I think you all should pat yourselves on the back for being here in this country fighting the fight uh against everything uh that you've seen in the past and a lot of you still today with with many of these state actors. Um you to me the takeaway from this conversation really

is that we've been here before. A lot of these challenges aren't new. You know, it's it's the first time I'm hearing reggga at in a long time. Uh, you know, and that source code revision I know was really a challenging one. Um, so glad we're not collecting source code here at the the CFTC, especially when we're talking about honeypotss earlier. Um but but you know I think what's really important is that we've learned so much from all of these challenges that we faced both at the agency and in the private sector whether it was fighting against these anti- gaming and anti-bucket shop laws back in the 30s uh or fighting Chris Christie and James today. Um we're seeing a lot of parallels. We saw it with crypto uh

where you know you had a 50 state patchwork and the bit license and uh you know you're going to the Bahamas and offshore to build your projects. Um and that really was not beneficial to anyone in the country or to any of the projects that had to take those risks. I mean I I don't know how many millions and millions or hundreds of millions of dollars were spent on legal fees. I'm sure everyone can compare notes in the room. Um but it wasn't good for the country and we've really tried to turn the page. We're still working to protect our jurisdiction. We're working to get the Clarity Act across the line to expand upon that, protect that even further. And I think that's something hopefully everyone takes away here that we're working with Congress to get uh more protections, more preeemptions so

that you're not dealing with the same sorts of things you're dealing with in the prediction markets and that you've dealt with in crypto. Um, and we've got to make sure we win in court because, you know, if we get judges that, uh, you know, overturn some of this stuff, it's really problematic. So, I I think it's great to have everyone in this room working together. Um, I want to thank Walt, Michael, Amir, and everyone who's organized this meeting. It really has been a productive one. Um, and so, thank you all for taking the time to to be here uh, and for your service. And, um, and I hope everyone takes away some really great um, thoughts on how to to approach regulation um, and help work with us at the commission to get things right.

Thank you, Chairman Celig. I'm sorry. And to our MC and chair of the IA, Walt Lukan. I also want to thank everyone for attending and participating in the inaugural meeting. I must also add that to the extent you would like to submit written comments in connection with this meeting. You can do so electronically via the CFTC's website until August 27th, one week from today. And so, thank you again. And the meeting is adjourned. >> [music] [music]

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