Welcome back to the starting block. It's Wednesday. Happy hump day. Hope you're doing well. Very, very interesting movements in the markets over the past 24 hours and we've got a jam-packed show to talk about all of these things and more. We're going to start with the block briefing today very quickly and then we're going to be joined by Mike Belshe from BitGo for a conversation. I'm really looking forward to that. But first things first, let's get into the block briefing and I'll give you a rundown of what you need to know from the news cycle in the last 24 hours. Our first story comes out of the UK. We start in Westminster where reform UK leader Nigel Farage says he's resigning his seat in the House of Commons and immediately standing again. Farage has confirmed he's the subject of two parliamentary standards investigations into cryptolink gifts, including from crypto investor Christopher Harborne. He's calling the probes foul means by his political opponents and says he wants the voters of Clacton to decide his future in a by-election, though that vote could take weeks or even months to arrange. Farage won the seat with over 46% of the vote back in July of 2024. Our next headline today, over in Washington, the SEC has published its 2026 regulatory agenda and crypto is one of its biggest priorities. The agency is laying the groundwork for rulemaking before the end of the year with a blueprint to modify its rules for exchanges and broker dealers on the table. Amending the rule that requires brokers to hold a minimum of liquid capital. Another designed to protect customer assets if a broker goes insolvent and changes to recordkeeping requirements. All three the agency says are aimed at clarifying how those rules apply to cryptocurrencies. Then in the UK, again, a big move from Coinbase in the UK. The exchange has received authorization from the Financial Conduct Authority to provide investment services, its largest UK product expansion since it entered the market in that country. Institutional and advanced traders get access to crypto equity and commodity perpetual futures, while retail users will be able to trade equities on Coinbase for the first time. The license sits alongside Coinbase's existing UK e-money license and crypto registration. And the company says it's another step towards its everything exchange vision. One platform for payments, trading, and more. Then in the US, this one has turned heads and Mike Belshe was even tweeting about it in the last few days. Vanguard, the world's second largest asset manager, sitting on around 12 trillion dollars, is hiring a head of digital assets. So, if you're in the industry, you better dust off your CV and get it ready to send to Vanguard. According to the job post, the role will lead Vanguard's crypto strategy for personal wealth clients, deal directly with regulators, and help influence market standards. It appears to be the first time Vanguard has hired specifically for crypto. That's a notable shift for a firm that has famously kept its distance, especially with rival BlackRock already deep into digital assets with its spot Bitcoin and Ether ETFs. Then the super app race is heating up. Gemini has launched zero commission stock trading for users in most US states with NASDAQ serving as its official market data provider. Co-founder Cameron Winklevoss says the firm started with crypto and is expanding into stocks so customers can manage their entire financial lives from the Gemini app. A few places miss out for now, including Texas, Illinois, Massachusetts, and Alabama. It's the latest in a wave of crypto exchanges pushing beyond digital assets with Coinbase and Kraken making similar moves into traditional markets. Then, a legal win for Kraken. The exchange's parent company, Payward, has secured a $22 million arbitration award against auditor Mazars USA, which abruptly walked away from a nearly completed audit back in 2022 at the height of the so-called operation chokepoint 2.0, likely under political pressure. That's according to reports. Payward is now asking Delaware's Court of Chancery to enter final judgment on the award. The company says the walkout left it with years of reputational cleanup and millions in legal fees with its co-CEO putting it bluntly, an audit isn't a favor, it's oxygen. And then a story for the Ethereum fans out there. Tom Lee's Bitfinex is still stacking. The company behind the world's largest corporate Ethereum treasury picked up another $70 million worth of ETH on Tuesday. That's 40,000 tokens across two wallets according to onchain analytics from Lookonchain with funds flowing from hot wallets at FalconX and Kraken. Bitfinex hasn't officially confirmed this one, but the buying fits its pattern of weekly disclosures. As of Monday, its stash stood at 5.74 million ETH. That's roughly 4.8% of the entire circulating supply, closing in on its 5% target with total crypto and cash of over 11 billion on its balance sheet. Our final story of the day, Jack Mallers' Strike has launched what it calls volatility proof Bitcoin loans. The pitch: borrow dollars against your Bitcoin with no margin calls and no price triggered liquidations. No matter how far Bitcoin falls, your collateral stays untouched as long as you keep making your payments. Strike says it's scrapped the loan to value triggers that catch borrowers out in a crash. There is a catch though: miss an interest or maturity payment and fail to make it up and part of your collateral can still be liquidated. Bitcoin-backed lending, but it's rebuilt for the volatility averse. If you want to hear more about that, and Jack Mallers' Strike, we caught up with him at BTC Prague a couple of weeks ago. That video is up on my X account actually. So, if you just go and search for Gareth Jenkinson on X and swap over to the video tab, you should be able to find that down the timeline, about a 20-minute conversation with Jack Mallers talking about Strike, Bitcoin lending, and of course recent goings on at Strategy and Michael Saylor. That's it for the block briefing. We're going to be moving on to our next segment with Mike Belshe, but we're going to take a very short break. Don't go away.
Welcome back to the starting block. We are continuing with the show and we're going to amalgamate the market pulse in the hot seat today because we've got fantastic guests with us, BitGo CEO Mike Belshe, who is of course very knowledgeable on markets and one of the leading figures in the industry. So I'm putting you in both segments today, Mike. It's great to see you again. We last caught up at Paris Blockchain Week a couple of months ago and I think we have a bit more time than we did in Paris to catch up today. So, I'm hoping to pick your brain on a lot of things, but first things first, how are you?
Great. Sounds good. Good to be here, Gareth. Good to see you again, and glad to see the show's moving along.
Yeah, thank you. Yeah, it's been an interesting two weeks. A week ago, we launched last Monday with a big interview with CZ live in Abu Dhabi. It was a great undertaking to get that done, but it was really good and it kind of set the tone for the overall show and we've been forging ahead. I think first things first, just in terms of the markets and where we're at right now, the probably the biggest story in the last couple of weeks has been Michael Saylor selling Bitcoin. Myself and Jordan, my producer, backstage were at BTC Prague, the week after he first sold that 32 Bitcoin and then obviously last week he sold significantly more Bitcoin, $260 million worth. Quite surprising that Bitcoin didn't react sharply to that news. I want to get your thoughts on that and your general thinking about Saylor selling so much Bitcoin now and what it all really means for his strategy going forward and Bitcoin.
Well, look, I guess in terms of guessing around the price, I'm not one that usually likes to do that. In terms of strategy, look, there's nobody that's more invested in Bitcoin than Strategy. So they're going to figure out a good way through this. It reminds me a little bit of having seen in the past there's market cycles that go up and down. It was Netscape way back when and I remember Netscape had such stratospheric heights and then Microsoft comes in and Bill Gates says it's a sea change and he comes completely after it, uses his full strength of his monopoly to try to crush Netscape. Stock price gets hammered all the way down to like 15, 16 bucks a share. Just when everybody thinks everything's down and out, never going to recover, what happens? Well, there's smart people running the company and they're not going to just take it. They're like, 'Oh, well, I guess it didn't work.' No, they're going to figure their way out of it. And of course, Netscape figured out a path, ultimately was acquired by AOL at somewhere around $100 a share. So my point is, and not that Michael Saylor is going to need to be acquired or anything like that, my point is that smart people that have strong business interests in a particular direction aren't affected by market cycles being up and down every month or every quarter. And the Bitcoin game is not measured in a quarterly cadence even though our public companies are. So he's a public company, he's going to be measured on a quarterly cadence, but that's not the real game. So look, I think he's proceeding forward. I think he'll be responsible. He has a large pile of Bitcoin. I think there's an interesting question for Bitcoiners generally as to what's too large of a pile for any single concentration of risk and I'm sure that Strategy and the team there is working on that. But I think overall actually the industry is getting a little bit more comfortable that okay, look, there's going to be a management through this. It's going to have some buys, it's going to have some sells. But let's not overreact to every 32 Bitcoin sale.
Yeah, for sure. We had Jesse Myers on the show yesterday and he was talking about the ratio of Bitcoin sold versus Bitcoin bought in Q2 and I think it was something like 1 to 22.5 with the 3,000ish Bitcoin that Saylor has sold in the last quarter versus the 80,000 that they've acquired. And he was kind of just saying that he needs to prove to the credit market that they can sell Bitcoin when they need to in order to satisfy dividend payments and keep everyone happy and also not nuke the market. Do you think that's a fair assessment?
Mostly, look, I mean yeah the buying is far outpaced the selling. Okay. But I think really more what's going on is how do you manage, how do you think about Strategy as a management team and what they're doing and they have a strong vested interest in making sure that Bitcoin remains healthy and I don't think that there's much risk that they're not going to manage that reasonably well. So anyway, I'm not too worried about Strategy. And I look forward to actually just seeing Bitcoin further diversified across many many holders. I think that's really the number one thing that we want. How do you get there? Continue to make Bitcoin strong. Continue to make Bitcoin understood and used globally. We keep down that path. It's going to take years, but shouldn't be afraid of that. This is like normal long-term trend type of thing.
Yeah. You also made mention very briefly there and my last question about Saylor, I promise. You know, the concentration risk. You've got guys like Bitfinex and Tom Lee kind of saying like they only want to hold maximum 5% of the ETH supply. Do you think a similar sort of cap needs to apply to how much an entity like Strategy holds in terms of the total amount of Bitcoin on the market?
Well, it's an interesting conundrum, right? Like on one hand, these guys want to be great stewards and they're like, 'Hey, I'm going to be a great steward and I'm going to just buy it and never sell it.' Okay, that was the initial story. But of course, anytime you have a company that's holding it, well, you might trust Michael Saylor, but okay, well then, who replaces him? And of course, Fong's running it now. I trust Fong as well. But over the arc of time, management teams change and they might have a different philosophy and they might have a different set of priorities. So I think it's difficult for a company to be acting that way over the long term. And then certainly if he acquired 50% of Bitcoin, everybody would be like oh that's too much, right? So what is the number that's too much? I'm not really sure how you run that business that needs kind of a perpetual growth. At some point, it sort of needs to plateau and move into other things. I don't know what the exact magic number is. I'm not sure there is a magic number, but there's a point where you acquire so much that you start to affect the price of the asset in that other people are like, I don't know if I can invest in this because there's one guy that could really affect my investment. So that's something that has to be addressed. I don't know what the magic number is. Yeah, I think single digit percentages is probably right.
Yeah, that does seem fair. And I think we could just judge by the market reaction to this big sell now, $260 million. I mean, in the scheme of that, it's I don't even think it's 1% of their total holdings. So it's a very small...
Yeah, you could look at corporations. I mean oftentimes have concentration risk on individuals that hold far more than 10%. Those are usually companies of a smaller scope. Bitcoin is supposed to be a global asset. So I don't know exactly if the same percentages apply or not but the same psychology applies which is like okay if I have concentration risk on a small number of people or a single party then of course how is that going to affect how much I'm going to value this thing because there is a real risk and risk should come straight off of the price.
Yeah definitely. Okay enough about strategy let's talk about the Clarity Act. We've had lots of interesting conversations with different people in the industry that are highly connected to what's going on in US politics and everyone's been kind of saying Clarity Act is going to be passed in the summer. We're not midway through the summer yet. We're kind of into the beginning of summer proper. What are your general thoughts on the timelines here? And what's your overall thesis in terms of what clarity will mean for the crypto industry in general? Is it going to kick off this sort of Wall Street super cycle that a lot of people have been talking about especially with this move towards tokenized equities on exchanges like BitGo?
Well, we get excited about particular silver bullets that can solve all problems. Look, I'm a huge fan of clarity, don't get me wrong. Having a legislative pathway forward is a huge step. Remember, there's a lot of unanswered questions by clarity. It sets basically a lot of work and rulemaking to be done by CFTC and others that hasn't been started yet because the law hasn't even been passed. So we don't even get to the meat until we get the law. So I would love to see the law passed. There's still a lot of questions, still a lot of things to debate and worry about. But if you don't have the law, then okay, and we might have to live with this. Time kills all deals in business, I think is what we say. And I think the same thing applies at the legislative level. I am not expert enough on all things political of how these bills go through. But I've kind of heard milestone after milestone that if we don't hit it, we may not get it this year or maybe for quite some time. It seems like the odds are getting smaller and smaller that we see this pass. So okay, look, does that mean we're not going to get the institutional super cycle that you mentioned? I'm not sure there ever is a single silver bullet that gives you a super cycle by itself. The good news is every single major financial institution is really moving significantly. You've got of course the asset managers, BlackRock, Fidelity, been in for a long time at this point. But now the banks are coming in. We got Morgan Stanley, of course we got Citigroup, we got JP Morgan doing their announcements. Heck, back to the asset managers, Vanguard yesterday or this week announced that they're finally going to be hiring into the space. So just across the entire sector adopting and I think that's going to have a positive effect. We still have a very positive administration. I met with Paul Atkins a couple of weeks ago. Everybody says the same thing about Mr. Atkins. He is a breath of fresh air for how do you build great capital markets? What do we do to make it so that more companies are going public in the greatest capital market in the world? And why is it that they haven't been doing that? How does he accelerate that? And how do you provide a mechanism where innovation can continue to happen? And an interesting thing about innovation, especially when you think about Wall Street and maybe some of the politics, a lot of the folks that are not on the innovative side, obviously, BitGo, how do you do things in a new way? How do you build things zero to one? As Peter Thiel wrote about many years ago, Wall Street and of course politicians aren't known for the zero to one. They're known for how do you scale it up? How do you make it responsible? How do you make it efficient? So they scratch their heads and they say, 'Well, what innovation are you trying to protect?' And that's kind of the whole conundrum, isn't it? Making room for innovation means you're making room for the unknown. You're making room for something that hasn't yet been imagined that could be much better, that could provide better fees, better rates, more fairness, more transparency, less risk. And it's difficult to do that but the current administration is super understanding of this concept and wants to make it happen. So even if we don't get clarity, I think we still get the innovation. I think we still get the institutions, they're already in. I would love to see the legal pathway because there's a lot of people that are on the sidelines still scratching their heads saying, 'Is this really new? Is this really crazy new stuff?' Look, at the end of the day, it's not. We're talking about trading of assets. We've been doing trading of assets for 100 years, more than 100 years. We shouldn't be that scared of this, shouldn't be that complicated. Yes, digital assets have a few new risks to address, but this is not rocket science at this point and companies like BitGo are highly regulated and doing all of the right things in terms of the law enforcement components, in terms of understanding your clients, in terms of making sure that things are being done right. And we want to reimagine things a little bit to see if we can't make it better and we're looking for administration to make that possible. So I think we still have a bunch of good things. I wish Clarity Act was a sure thing. I guess it could still happen. So not all hope is lost, but right now we're all kind of wondering which way it's going to go.
