Bitcoin is up 32% this quarter and the market still does not believe it. People still seemingly bearish, not believing that Bitcoin could possibly come back, not realizing how much bullishness there is from this SEC and CFTC still, which means to me we are still very early in this bull market. We got a lot going on today. I have my friend Haseeb Qureshi from Dragonfly joining in a few minutes. Then Roundtable CEO James Heckman will be joining to talk about a huge announcement they have. And then of course towards the tail end we will have the weekly reckoning because it's Friday. Let's go. That's dope.
Let's go. Good morning everybody and welcome to the show. I'm here with my beautiful Studio City background. There's a wolf over my shoulder. He's howling and it just feels good to be Friday. I hope that you're all having a wonderful day as well. The LCROY actually slipped into the opening shot on that one. I would like you to know that they still haven't paid me. But they can because I show their can said can drink that. You know, I'm going to be honest. I don't even know it's the best drink. There's better ones. It doesn't taste particularly good. Please edit this part out. It's just become a gimmick and it's part of what we do here is we talk about Lacroy. All right, so you guys don't want to talk about Lacroy. What you probably do want to talk about is my amazing interview with Brian Armstrong that aired yesterday on Yahoo Finance. I'm not saying that the guy knows things, but he probably knows things because he said in an interview that we recorded on Wednesday, the day after the Clarity Act failed for Thursday, that don't worry about it, the SEC and the CFTC are going to step in. And the SEC literally came out with their innovation exemption yesterday, which we will dive into. But the biggest hits for me from the Brian Armstrong interview, which by the way, we will also release on my YouTube on Sunday as our long form podcast with a little extra extra in there. So it will hit all the audio channels, everything. But what I really got from him was that clarity is dead, right? And of course now we've seen Tom Tillis say it's not dead. Lummis now who has said for years if we don't do it by this day it's dead is saying maybe it's not dead. Tom Emmer from over in the house majority whip or whatever he is like literally like an SNM job of some sort. He's the majority whipper. That didn't land the way I intended to. Oh, he's the majority whip. He's saying that it could still get done this year. We had that clip from Holly that I showed you yesterday. Yes, he said a, not eggs. Now he's yelling about eggs. He was saying a. He just has a dumb accent for a dumb face and dumb comments. And he says it could get done. So maybe it can. But to me, I default to, you know, jewels in Pulp Fiction. Say Clarity Act one more time. I dare you. I double dare you. Nobody wants to hear about it anymore. Clarity Act to me is dead. Say what one more time. Say Clarity Act. Okay. So before joins, we can talk about what's in the title here. Bitcoin weather September storm is rate hikes and clarity act setback test bulls. The price of a bitcoin right now is $78,000. To me, that is really, really, really, really good news considering that we got rejected here on the clarity act that rates went up and bitcoin continues to hold exceptionally strong. Like I said in the intro there, Bitcoin's up 32% this quarter and nobody's even paying attention. It's like it doesn't even exist and it's happening consistently with bad news. So I told you in my opinion that we had likely bottomed because bad news stopped mattering right sailor was selling Bitcoin thousand plus Bitcoin at a clip. We have exchanges collapsing. I mean I think another exchange just collapsed this week. Coinex, Ascendex, BitMart, BitMX, a lot of X's, which is what they now are, X exchanges, collapsing and none of that mattered. Market just kind of stayed flat and then we got the massive pump and we've stayed there. That is really good news. Like if I told you a few months ago when Bitcoin was sitting at 68ish,000 or 65, excuse me, 64 that we were going to get the Clarity Act rejected, which by the way I did tell you like for most of the year, but whatever. It's not like me being right is important. I'm right always. It's important. That didn't matter. And rate hikes. Like, is there anything that should hurt Bitcoin more than rate hikes? Bullish rate hikes. Bullish rate hikes. That's what we got. So, I personally am feeling very very good about Bitcoin here. Brian Armstrong said he thinks 300 to 400,000 by 2030. I think he's being purposely bearish. I think he thinks that it goes much much higher. But meanwhile, nothing is stopping the train right now for crypto. Haseeb will be here soon, but we're going to jump right into the tokenization news from the SEC that I mentioned there before. So, here you go. Real stocks are finally coming on blockchain. It's a weird sentence. Here's how the SEC wants it to work. Coming on the blockchain. Can we tokenize that? Real stocks are finally coming on blockchain. Here's how the SEC wants it to work. So, let's break this down. So, this is what I was talking about there before is that we have the innovation exemption from the SEC and it took all of two days after the Clarity Act for it to happen. I took some notes because there's a lot here. I don't usually use notes. I'm going to be honest, but I wanted to get this right. So, everybody's reporting this as tokenized stocks are coming legally to the United States, but there's a lot of nuance. So there's a lot of rules. So first of all, these tokenized stocks need to actually be backed one for one with full dividends and voter rights and all those things, which means that right now at this exact moment, a lot of the products being offered do not comply, especially the ones in Europe, for example, Robin Hood's tokenized stocks right now would not qualify for this, but this does give them a very obvious path on how to do it and what to do. By the time this gets done, I'm sure they will. and they've already made comments that they will be doing it. But first of all, they didn't approve any individual platform. So, it's very general. This is obviously not operational yet today. This is secondary trading only. So, this does not allow for IPOs or issuance of new shares or any of that online. These must be real securities, not price trackers. That goes back to what I said. Holders must receive the same economic interest, dividends, and voting rights, liquidation rights, blah blah blah blah blah. companies have a veto. This is important. You remember the battle between Vlad Tenev from Robin Hood? What are your concerns? Remember that tweet? So good. And the CEO of AMC who seemed to have a very large stick stuck up on his buttocks when talking about this. But this basically says that if an unaffiliated third party wants to tokenize a company's stock, the company receives 30 days to object. So, not every company will go. I don't see why they wouldn't though. It's like free liquidity for their stocks. These are have to be on public blockchains, which is interesting. Smart contracts must be public and auditable on a public permissionless blockchain, but permissioned access, meaning that traders and wallets must be verified or whitelisted for sanctions and AML compliance. Public blockchain, private gate, stocks can trade in crypto style pairs. This is really interesting because you could have something like a tokenized Apple liquidity pool against USDC. So, this is much more DeFi than you would think. It can be paired with another tokenized stock, a permitted stable coin, another nonsecurity crypto asset, or a tokenized money market fund. This is a very, very small pilot. For anyone who thinks this means we're getting the whole stock market online, the largest tier one stocks, each venue is limited to 75 symbols and can only do 0.25% 25% of each stock's prior month average daily volume. Tier 2 allows 250 symbols and 2.5% of volume. Repeatedly exceeding a limit triggers a 3-month trading pause in that stock. We're getting around the clock trading and self-custody are possible but not guaranteed. So each venue chooses its hours. It does not have to be 247 365 and they do not have to allow you self-custody. And it only exempts two very narrow requirements. Venues receive relief from registering as conventional exchanges and qualifying AMM liquidity providers receive relief from dealer registration. Anti-fraud market manipulation sanctions and other securities law still apply. So extremely good news that we're getting this innovation exemption. We just don't want to overstate that it means the entire addressable market of stocks will be available online to Americans and everybody around the world from day one. I see that has joined us in the wings. Going to go ahead bring him on right now. Good morning sir. How are you?
I'm doing well. I did not...
Can you hear him? I couldn't hear him. We don't have sound right now, I don't think. Can't hear you. We do this. This is when we wing it live, guys. Background.
You had the mute button on the mic, didn't you?
Classic. That's the classic. I used to do that on my Blue Yeti all the time in the early days. Every time. Mute button. All right, man. So, listen. I was kind of unpacking where the market stands and the tokenization exemption that we got. I interviewed Brian Armstrong yesterday and he had kind of alluded to the fact that doesn't matter if we don't get clarity, we would have loved it, but the SEC and CFTC are going to move forward and then I'm not saying Brian Armstrong knows things, but he probably knows things and then we got the innovation exemption like hours later. Right.
Right. So, I'm sure you've looked at this. I mean, maybe just give the broad thoughts on what happened with Clarity and you know the SEC and CFTC moving forward. Yeah. So, I think for those who were following along, clarity wasn't too much of a surprise that it didn't make it through. Prediction markets were putting it at, you know, 15 20% max by the time we were getting to the end zone. So, I think the reality is that it was already kind of assumed by most people in the industry that we weren't going to get a law this year that it was really going to be primarily around rulemaking from the agencies that was going to get us most of the things we wanted. And the reality is that even within Clarity, if Clarity had passed, there was a bunch of stuff in there about, okay, the SEC and the CFTC need to do a bunch of work to like decide how all this stuff is going to get regulated. So, it was already the case that clarity was putting a bunch of the onus on the agencies to figure out the gory details. So, that's where we are now. The attitude that I have around all this stuff is that look, a bill would have been nice. It wasn't really that necessary. The main thing that's going to be a bulwark against a future administration is not a law. Because of course, we've seen with this administration and others that like laws are flexible. If you're the executive, you can find all sorts of ways to get your agencies to go do havoc despite what the laws might say on paper. The real bulwark is ultimately adoption. If you just get people using this stuff, if you just get it into their hands, if you actually solve problems, that is going to be the thing that makes it politically unpopular to go and mess with applications that are just disseminating through the economy. So that's the mandate for the next few years, not trying to do some kind of regulatory game.
That's exactly what my take was. It's that the regulators can get us far enough that we now need to become basically too big to fail in the next two and a half years before we worry about another regime. You know, before we completely agreed changing hands. It seems that's happening, right? I mean, everything is becoming tokenized 24/7, 365. The innovation exemption, I kind of just broke it down, but you know, it in a limited fashion, it's basically, you know, legalizing to whatever degree all that. I'm sure that they'll get pushed back. It'll probably go to the courts because of Loperbrite and all these, you know, narratives we're seeing. But even if it does, like nothing has stopped crypto yet. And when you have the largest institutions on the planet saying they're going to do this, they are, you know, right? And more importantly, even if they don't, we will.
So maybe I mean, listen, you're looking at this as a VC every single day. Like what's exciting you, you know, the things that you think push this forward regardless of legislation or regulation. Yeah. So I mean what what Robin Hood is doing with respect to tokenization has obviously been a big injection of energy in the whole industry. And I think Vlad it's both Robin Hood and Stripe I think that both see the writing on the wall for tokenization and for stable coinization is that this is just going to end up affecting everything and it takes a few muscular parties to be able to push things forward and really start to get things in the hands of not just retail but also institutions. You know stock trading is one of these things that it's already pretty efficient for Americans. But obviously the go to market for Robin Hood has been centered around non US. So, you know, for a lot of the applications on Robin Hood chain, they're gated if you're an American, but if you are international, that's precisely the market they're targeting. That's where it's hardest to get access to US equities. That's where a lot of these overseas structures that are not technically tokenized securities or tokenized stocks because the fact that they don't hold or they don't allow you to redeem for the underlying. You know, a lot of people have been arguing, this whole AMC drama where the AMC CEO was yelling at Vlad on Twitter that how could you tokenize my stock without my permission? This is terrible. You know, a lot of the way this is done today is using these overseas structures that are structured as debt rather than structured as equity. So, they track the underlying price, but they don't give you access to the underlying stock. I think for a lot of this stuff, actually, that's probably how it's going to go international. It's going to be more like tether style where you don't have to KYC the holder. But you have to KYC people who are redeeming and minting.
Yeah. That you know the innovation exemption that we see today it does require KYC. So you know in order to trade stocks on...
And it requires permission as I reported before the company effectively has a 30-day veto on any of these third party venues tokenizing in the United States. So that addressed basically the AMC's concerns because they could just block it. Now, it also addresses his concerns that none of these stocks that will be offered in the United States will be the kind of derivative that he's concerned about. So, I don't see why anyone would actually block it because these will have voter rights and dividends. It's just going to drive liquidity and interest. But Robin Hood is very much pushing the envelope and I think they're the only people who could do it. like you said, sort of muscular parties, but Robin Hood uniquely stands at the bridge of crypto and tradfi.
The way that you can like bridge funds from your wallet to your it's just very easy. Listen, I I kind of tell I joked like, you know, I was like, I'm going to try this because I'm a boomer and I have no idea. Of course, I like immediately lost all my money. I got like a $100 worth of like 150 bucks worth worth of S&P tokenized airdrop to me and I thought that was kind of cool.
It cost me like four or five grand to do it cuz I bought something.
That's decent ROI. That's decent ROI.
Yeah. My friend was like, you bridge some stuff. Just do it like feel it.
Because in the past I am definitely one of those people that does not I'm like I need to bridge from this to this and I do I have the right USDC and and I you know I'm relatively savvy but I'm not native to it and I just give up. And I think that's how most people feel like I'm it's not worth my time to like, you know, Robin Hood made it very easy. And so if that's the first iteration of this and I think the tying stocks to memes thing, as much as I'm like kind of dismissive of memes, it's going to be a really powerful idea.
Yeah, I think it's very clear, you know, with a lot of these things. I mean, stable coins were the same way. Stable coins were first adopted by people, you know, retail trading on perps, going super levered on crypto crypto coins in the early days. Now stable coins have expanded to become a much bigger market than just crypto. Actually, as crypto goes up and down, you can't really see it in the stable stable coin metrics anymore. Which is just a testament to how much it's grown beyond just crypto native trading activity. I think the same thing is going to be true of tokenized stocks is that it's going to be, you know, people on chain doing these kind of crazy reindeer games. That's how it's going to start. But that is the initial ladder that it's going to climb up. And pretty soon, I think what you're going to see is that a lot of these neo banks that are distributing stable coins, you know, places in Southeast Asia or in Latam or in Africa that are offering people dollar banking, quote unquote, via stable coins. A lot of these are going to say, 'Okay, well, you've got dollars. Why don't you also own some US assets? Why don't you buy some tokenized Tesla or tokenized S&P?' And they're not going to tell you it's tokenized because you don't care as a user. you're just, you know, you're getting access to a financial product. I think this stuff always happens second. It doesn't start first. First is the speculative stuff. First is the thing that's easiest to get bootstrapped and to scale rapidly on chain, which is the memecoin craziness.
Yeah, I agree. I just I can't see far enough into the future to know what people are going to do with that concept, but it's going to be powerful.
And and I don't think it'll necessarily be meme coins. I think it'll there will be some much more serious iteration of whatever this is that's much more powerful and compelling for normal people than buy this meme and you know get a little bit air.
I don't know that I'm as confident that we're going to get to serious use cases quickly.
Oh, I think crypto I think three to four years. I think you know crypto I bubble and then we wait three years and something real comes of the three year ago bubble like DeFi, Metaverse G, you know, whatever.
Yeah. Three or four years.
Yeah. Yeah. Yeah, that sounds that that sounds accurate.
We're going to be able to actually trade tokenized stocks. So, you know, I think that that will help. But yeah, no, I I don't think it's going to happen fast. I think this is one of those like very quick bubble people forget about it and then someone will come up with something really compelling around it. So, there's an article here actually about you. As RWA trading surges on Hyperliquid, Dragonfly's Qureshi makes the case for a multi-chain future. Could you break down what you were saying here?
Yeah. Well so what I was pointing out is that obviously there's a lot of excitement around tokenized stocks. It's important to keep the big picture in mind which is that right now you know tokenized stocks on the whole I believe are about 3 billion in total issuance. If you take RWAs on the whole you've got about 300 billion of stable coins a little bit more than that. Now tokenized treasuries I forget what the exact number is but it's maybe in the order of 30 40 billion. And then tokenized stocks are about three billion. So you've got this ladder of like you know decreasing 10xes of how big RWAS are. Now obviously tokenized stocks are growing a lot. Robin Hood is still a relatively small contributor to the total stock of tokenized stocks. However if you look on Hyperliquid Hyperliquid OI is sitting around 11 12 billion last I looked. And about half of that is RWAS meaning mostly you know stocks, equities and indices. So what that tells you is actually the open interest on tokenized stock or sorry the open interest on stocks is actually larger than tokenized stocks in total supply which tells you that right now the story for RWAS is still mostly around derivatives and not yet around spot. I think that will change over time and there will be more supply of spot that eventually comes on chain because of course the behavior is very different right if you're if you're going levered long on Hyperliquid on you know the S&P or on SK highix or whatever you're really speculating whereas if you're buying a tokenized stock you are kind of doing something that looks more like savings behavior right you're investing you're doing some kind of long-term buy and hold type thing that's when you'd want to use a tokenized stock as opposed to open interest on a on a perpex so the reality is that the the kind of users who are engaged in savings using tokenized stocks are not really here yet. There are people saving with stable coins. We actually have a huge part of the market now that is using stable coins as a savings product and that's why they're using some of these neo banks and that's why they're using you know a and morpho and Athena and all these things are doing so well because that savings behavior has finally come on chain and it didn't for a very long time. So that that low-risk behavior always comes second and it's important to model that same thing happening with RWAS. I think that's a secondary effect actually of clarity failing which we laugh about. Another thing Coinbase literally raised their yield on USDC yesterday the day after you know two days after clarity fails because the Genius Act actually allows them to offer a yield and whatever the banks were fighting for against Clarity they literally guaranteed was law by allowing...
That's right. They they didn't get it. They ironic that...
They should have actually they would have been much them and the Democrats because of ethics they would have all been much better off passing clarity because at least there would be some ethics clause to prevent some sort of behavior. Now there's none. Trump can do whatever he wants and so can Hunter Biden and anyone else. And the banks can now...
Suffer deposit flight if they believe that's going to happen because I can go put USDC on Coinbase and earn 3.75 or whatever it was. Or if I'm actually a bit more, you know, savvy, I can go as you said into Morpho, any of these. But and then I think the other, you know, part of that savings behavior that you're talking about that I find really interesting is also if you're just if you're not in the United States, you're just using it because you don't want to be in your currency. So regardless of anything, like you'd have, you know, millions of people around the world who are in a country where they just would rather hold Tether than whatever their currency is yield aside.
That's right. So it's ironic because you know the I think for the Democrats, they largely got what they wanted. I don't know that they really cared that much about getting Trump to divest his holdings. They cared about scoring political points and they did that, you know. So like that they got Democrats got what they wanted in that sense. Obviously they didn't actually get any protections, but I don't think they really cared that much about protections. The banks decidedly lost. They really really care about this rewards loophole that exists within the Genius Act. And the fact that again this bill did not pass is evidence that if they went to go sue these people they would say well you know this was discussed and the bill was not passed which means Congress did not want there to be the removal of this loophole. Therefore they want the loophole to exist. So that actually in a court of law is considered to be evidence of how to interpret the original bill which is that the amendment to the bill or the repealing of the bill did not pass. So I think that should correctly embolden all of the stable coin issuers to be like, 'Yeah, screw it. Let's go balls to the wall. Let's start offering yield.' The nice thing, too, is that, you know, if you remember, the White House published a bunch of research in opposition to what the banks were claiming, which is that there's going to be a bunch of deposit flight.
Exactly. So, they basically said, 'Look, the banks are full of... There's not going to be deposit flight. There's no universe in which that happens.' Well, now we get to run the test. So all of that, all the think pieces that the banks are putting out, all the research that they were putting out, we're going to have a good, you know, however long it is until clarity goes back on the floor, which, you know, maybe next year, maybe in 2028, it gets there's another try at seeing if they can pass this thing. We're going to have cold hard data about how much deposit flight there was from the banks because of that the yield vote pull. And I think there's a much higher likelihood now that yield is going to be enshrined in stable coins when they see there is no harm to the banks.
