Latest / The Paul Barron Crypto Show / TradFi Sues CFTC!🔥Crypto UNDER ATTACK!!🚨Chris Perkins INTERVIEW

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TradFi Sues CFTC!🔥Crypto UNDER ATTACK!!🚨Chris Perkins INTERVIEW · The Paul Barron Crypto Show

0:00
Speaker 1: Crypto is under full blown attack today and Tradfi is
0:03
Speaker 1: the culprit. We're going to break it down with you
0:05
Speaker 1: guys with a special guest that's going to break all
0:07
Speaker 1: of this into bite sized nuggets that you guys will understand,
0:11
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0:12
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Speaker 1: one hundred dollars funding reward just to get started. Listen,
0:32
Speaker 1: I wanted to bring in Chris Perkins, who has been
0:35
Speaker 1: on our show before, specifically for what's going on in
0:39
Speaker 1: the CME today and we'll break it all down.
0:42
Speaker 2: But Chris, welcome back into the show.
0:43
Speaker 3: Paul, amazing to be here. Good to see you.
0:45
Speaker 1: First of all, your background a little bit to the
0:48
Speaker 1: issue that we're seeing right now between the CME and
0:51
Speaker 1: the CFTC, which we'll explain. Give me a background of
0:55
Speaker 1: what your involvement has been in this area.
0:58
Speaker 3: Yeah, so if you've paid closer to me to what
1:00
Speaker 3: Terry Duffy was talking about. He said, look for these perpetuals,
1:04
Speaker 3: they're really not futures, they're swaps. And what the heck
1:07
Speaker 3: does this mean? It actually means a lot. And to
1:10
Speaker 3: really understand you have to go back to Lehman Brothers.
1:13
Speaker 3: You have to go back to the global financial crisis.
1:16
Speaker 3: And after the world blew up, and I actually happened
1:18
Speaker 3: to be on the floor of Lehman Brothers in two
1:21
Speaker 3: thousand and nine, the G twenty got together and they said, guys,
1:24
Speaker 3: enough of these derivatives, these swaps that you guys are trading.
1:27
Speaker 3: We're going to make sure that you're going to electronically
1:29
Speaker 3: execute them, report them, and you're going to essentially clear them,
1:33
Speaker 3: and we're going to force you to hold a lot
1:35
Speaker 3: of collateral against them. And then all the governments went
1:39
Speaker 3: home and they started spinning outlaws. And in our country
1:42
Speaker 3: we had something called Dodd Frank that many of you
1:44
Speaker 3: have heard about, and Dodd Frank and various regulations were
1:48
Speaker 3: put forth. Gary Gensler came on the scene when he
1:50
Speaker 3: was chairman of the CFTC Commodies Exchange Act started governing
1:54
Speaker 3: these things. We call swaps. How are they different than futures, Well,
1:59
Speaker 3: there are different product but they're regulated by the CFTC.
2:03
Speaker 3: They have required collateralization standards which are higher. So if
2:09
Speaker 3: you have a cleared swap, you have to hold five
2:12
Speaker 3: days of margin, and we can talk about what this means.
2:15
Speaker 3: Futures are usually one to two days, and there's also
2:20
Speaker 3: confidence intervals like in swaps. It's like it's ninety nine percent.
2:24
Speaker 3: So like long story short, if you have a swap,
2:26
Speaker 3: you have to hold higher collateral. Okay, so what does
2:30
Speaker 3: this mean, Like, why is Terry saying this. He's saying
2:33
Speaker 3: it because if perpetuals and the CFTCS come out and
2:36
Speaker 3: say that these are futures, Futures have the ability for
2:41
Speaker 3: more leverage, they're more easily accessed by retail, whereas swaps
2:47
Speaker 3: have higher margin, lower leverage, generally speaking, more difficult for
2:53
Speaker 3: retail to enter the space. The entirety of what he's
2:55
Speaker 3: trying to do is increase the margin, lower the leverage
3:00
Speaker 3: to make it less appealing for market participants on shore.
3:04
Speaker 3: What would this mean purps would stay offshore. He would
3:08
Speaker 3: still enjoy you know, his business on shore, you know,
3:11
Speaker 3: without the challenge of perpetuals per se.
3:15
Speaker 1: Which is what, of course mister Duffy has done, and
3:18
Speaker 1: that is CMEME now has set up to sue the CFTC.
3:22
Speaker 2: Over this very issue. This is Terry Duffy talking about it.
3:26
Speaker 2: Let's go to that. What do you want to accomplish
3:28
Speaker 2: with the lawsuit, Terry?
3:30
Speaker 4: These products that he supposedly approved as futures are not futures.
3:33
Speaker 4: They would be swaps. And if there are swaps, Melissay,
3:36
Speaker 4: as you know, there's different requirements in order to participate
3:39
Speaker 4: in the swap markets, such as five day margin, such
3:42
Speaker 4: as swap requirements for the users to register as swap dealers.
3:48
Speaker 3: So Terry, I get calls, I get Twitter. This PARP
3:51
Speaker 3: thing scared Terry.
3:52
Speaker 4: He's going to retire because of it and might response
3:54
Speaker 4: to them.
3:55
Speaker 2: Is my instincts.
3:56
Speaker 3: Suggest that he planned in the fall of last year's
3:59
Speaker 3: popular started talking about.
4:01
Speaker 4: This, speak to the genesis of this and sort of
4:03
Speaker 4: quell any concerns. I almost backed out of putting this
4:08
Speaker 4: release out this morning when I did hear some after
4:12
Speaker 4: I heard those calls, because if you know me, I'm
4:15
Speaker 4: always up for a good battle. I've never shied away
4:18
Speaker 4: from one, and I won't shy away from this. I've
4:20
Speaker 4: been working on this plan with my board for eight months.
4:25
Speaker 4: But to say that I I'm concerned about what's going
4:29
Speaker 4: on right now is laughable at best. And I think
4:33
Speaker 4: anybody who knows me knows that I do not.
4:35
Speaker 2: Back away from anything, all right.
4:36
Speaker 1: So that being the outgoing CEO of c ME, do
4:39
Speaker 1: you know Lynn the incoming CEO? Would her position be
4:43
Speaker 1: very similar to what Duffy's position is.
4:46
Speaker 3: I don't know Lynn as well I know Terry Duffie.
4:48
Speaker 3: I testified in Congress with Terry Duffie. I think he
4:51
Speaker 3: was very concerned then and I think he's very concerned now. Yeah,
4:55
Speaker 3: when we testified in front of Congress, he did the
4:57
Speaker 3: same thing back then that he's doing now. And he's
4:59
Speaker 3: trying to He's trying to perpetuate a regulatory mote that
5:04
Speaker 3: really departs from innovation, departs from the principles that the
5:08
Speaker 3: CFTC and Chairman Selig are trying to uphold. And like
5:11
Speaker 3: you have to ask a question like why do we
5:13
Speaker 3: have five day margin for swaps and why is that
5:15
Speaker 3: such a big regulatory mote? Well, think about it. In
5:18
Speaker 3: the past, I used to run the largest clearing member
5:21
Speaker 3: in all an entire world, there would be big changes
5:25
Speaker 3: in the market, and we could only collateralize when the
5:28
Speaker 3: markets were open. So if you went into a long weekend,
5:31
Speaker 3: you would have to stack three days of margin just
5:34
Speaker 3: to you know, withouta buffers, So like would it makes
5:36
Speaker 3: sense to have five? Well maybe, but perpose really collateralize
5:41
Speaker 3: quite regularly. We can clutteralize in your real time with
5:43
Speaker 3: blockchain technology, and so one of the great unlocks with
5:47
Speaker 3: blockchain technology and faster settlement is what we call capital
5:51
Speaker 3: efficiency because I shouldn't have to hold five days of
5:54
Speaker 3: margin if my markets are open, I can collateralize much
5:58
Speaker 3: more regularly. So so essentially it should save users, including
6:02
Speaker 3: retail capital, and if you don't, if you don't have
6:05
Speaker 3: to pay as much capital because the market is balanced.
6:08
Speaker 3: That makes sense, and that really is how you ctivate
6:12
Speaker 3: better derivatives markets. We're not locking up capital for no
6:16
Speaker 3: particular reason because the technology unlocks it. I think the
6:19
Speaker 3: CME is very concerned and what are what are what
6:21
Speaker 3: are competitors doing well? I saw your X make an
6:24
Speaker 3: announcement with Kraken, I saw Ice make an announcement with
6:28
Speaker 3: ok X. They're picking dance partners. They're taking different approaches,
6:32
Speaker 3: but like, what I hope happens is I hope we
6:35
Speaker 3: get back to principles and those are the markets that
6:37
Speaker 3: I understand, and having worked in CFTC led markets for
6:40
Speaker 3: for well over a decade, you know, and what are
6:42
Speaker 3: those principles? Capital efficiency, user protections and and setting the
6:48
Speaker 3: tone for deep liquid markets and helping innovators. So I think, yeah, right,
6:54
Speaker 3: you're right, Lovely. I think I know how the story
6:57
Speaker 3: is going to end. We will wake up one day
6:59
Speaker 3: and and perpetuals are going to be part of our
7:02
Speaker 3: market structure, the fabric of our derivative markets. It's very
7:06
Speaker 3: uncomfortable being disrupted, but in time, I think this is
7:09
Speaker 3: going to be part of the fabric of markets.
7:11
Speaker 1: Ah okay, all right, So I like the optimism they're
7:17
Speaker 1: in terms of where this could go. Chris, I want
7:19
Speaker 1: to play another clip because this looks like this could
7:22
Speaker 1: go into kind of a knockdown drag out.
7:25
Speaker 2: Take a look.
7:26
Speaker 4: There's a lot of h I would say, misrepresentation of
7:32
Speaker 4: certain facts.
7:34
Speaker 5: Do you think the CFTC is misrepresenting certain facts? I do.
7:38
Speaker 4: They said on your show last week that they created
7:41
Speaker 4: a rule around twenty four to seven.
7:43
Speaker 2: They did not create.
7:44
Speaker 4: A rule around twenty four to seven. There's a handful
7:46
Speaker 4: of things that the chairman has said his own words
7:49
Speaker 4: that are just not true. I think there's a lot
7:52
Speaker 4: of problems here, So yes, I do.
7:54
Speaker 2: All right.
7:55
Speaker 1: So I mean those are pretty strong words coming from
7:57
Speaker 1: Duffy going to against Mike Seal obviously over the cftc
8:02
Speaker 1: CE League is not one that backs down from this
8:04
Speaker 1: sea either, so he's going to be in a position
8:07
Speaker 1: that really starts to put a little bit of pressure
8:09
Speaker 1: on this. My question is do you think this could
8:12
Speaker 1: in some way finagle how they could ban hyper liquid
8:17
Speaker 1: or get to that point where we would see those
8:19
Speaker 1: kind of restrictions.
8:20
Speaker 3: Well, hyper liquid is currently quote banned from US person.
8:24
Speaker 1: But I'm talking about if this goes Yeah, if we
8:26
Speaker 1: get on the good side of it, getting through.
8:29
Speaker 3: If this case, like I think people like hyper Liquid,
8:32
Speaker 3: trade X y Z, these are very sharp, sophisticated operators,
8:36
Speaker 3: and I think they're all thinking about how they can
8:39
Speaker 3: compliantly work to open up US markets. If you run
8:41
Speaker 3: any business, you want access to the largest market, the
8:44
Speaker 3: best market in the world, the deepest market. So I
8:47
Speaker 3: think they're all coming up and look, at the end
8:49
Speaker 3: of the day, once you understand the rules, you can
8:52
Speaker 3: build businesses around them. I really commend the CFTC, any
8:56
Speaker 3: SEC for that matter, for providing transparency that allows these
8:59
Speaker 3: companies to operate SEC side. If it used to be
9:01
Speaker 3: a security as a death sentence, and now there's going
9:03
Speaker 3: to be paths to actually trade. Look what they're doing
9:05
Speaker 3: with reag nms, pretty amazing stuff. CFCC is the same,
9:08
Speaker 3: like they are being very thoughtful here. They're trying to
9:11
Speaker 3: make things right. I envision a world where hyper liquid
9:15
Speaker 3: there is a compliant path for US persons to trade
9:18
Speaker 3: on hyper liquid. I do think that's going to be
9:20
Speaker 3: part of the future. Maybe not there yet. And the
9:22
Speaker 3: fact is is that a lot of the technology does
9:26
Speaker 3: not reconcile with the hyper centralization that was forced by
9:30
Speaker 3: Dodd Frank. Again, the world blew up. We didn't have technology,
9:33
Speaker 3: we didn't know what to do. So we said, you
9:35
Speaker 3: know what, guys were centralizing everything. We're putting a lot
9:38
Speaker 3: of capital into that bucket and that's how we're going
9:41
Speaker 3: to manage risk. And it's generally worked, but that's not
9:44
Speaker 3: the only way. And that's what blockchain technology does. And
9:47
Speaker 3: so now it's time to get back to those principles
9:50
Speaker 3: and think about how we can create the best markets
9:52
Speaker 3: for our people. And that's what I think German Celic's doing.
9:55
Speaker 1: Yeah yeah, Well, when you look at the threat that
9:58
Speaker 1: the competition is posing right now, I was surprised that
10:01
Speaker 1: these numbers.
10:02
Speaker 2: This is talking about the situation with the CME.
10:06
Speaker 1: Ninety nine percent of the company's dominance of this business
10:09
Speaker 1: has given it solid pricing power, roughly fifty seven percent
10:12
Speaker 1: in terms of profit margin, comparable to what we've seen
10:16
Speaker 1: in terms of the Intercontinental Exchange ICE and the CBOE
10:20
Speaker 1: Global markets, which all have about a twenty four to
10:23
Speaker 1: twenty one Those are normal margins. You would think, how
10:25
Speaker 1: are they able to control that kind of market? This
10:29
Speaker 1: is crazy to have those kinds of margins in these
10:32
Speaker 1: markets right now.
10:34
Speaker 3: Like I said, we centralized all derivatives activity really post
10:37
Speaker 3: Dot frank and if you are one of those central
10:39
Speaker 3: counterparties that was able to hear war the market, yeah
10:42
Speaker 3: you went. I'll remind people derivatives are the battleground. Derivatives
10:48
Speaker 3: are what makes markets go around. Spot trading is even worse.
10:52
Speaker 3: If you look at spot trading, not a lucrative market,
10:54
Speaker 3: whether that's equities or FX or anything else. The money
10:57
Speaker 3: is in derivatives. There's a reason why Ice Button and
11:01
Speaker 3: Nisey didn't buy Ice. This is very very important. People
11:04
Speaker 3: get obsessed with n this nice yet the profitabilities and derivatives.
11:08
Speaker 3: It is going to be a battle. You know, as
11:10
Speaker 3: you go into the corps, you don't know what ends
11:12
Speaker 3: up happening. It could go in either direction. But I
11:15
Speaker 3: do have confidence in the direction of travel. I think
11:17
Speaker 3: our leadership of the CFTC has got their act together
11:20
Speaker 3: and they're going to do the right thing.
11:22
Speaker 2: See me.
11:22
Speaker 1: Located in Chicago, you have the crypto industry now pushing
11:26
Speaker 1: back against Pritzker, who sign up a two percent digital
11:30
Speaker 1: asset tax. This seems awful close and connected to the
11:37
Speaker 1: boys in Chicago. Now with all this happening, I mean,
11:40
Speaker 1: there's a is there a conspiracy? Is there something here
11:43
Speaker 1: that we need to be paying to do?
11:45
Speaker 3: What's going on in Chicago so ironic. The bedfellows that
11:49
Speaker 3: are here, I've seen a lot of Like Terry is
11:51
Speaker 3: a known Republican and a lot of Democrats are aligning
11:55
Speaker 3: with him, and so it's just I think it's less
12:00
Speaker 3: of a political thing. I think it's more of a
12:02
Speaker 3: self interest type of but it's creating really interesting bedfellows.
12:06
Speaker 3: So some of Genzler's staff last night tweeting their support
12:09
Speaker 3: of Terry Duffy, which I would have never imagined in
12:11
Speaker 3: a million years. But the stakes are are very high,
12:15
Speaker 3: and you know, it's very interesting, Chris.
12:18
Speaker 2: I want to get your opinion on this.
12:20
Speaker 1: The Federal Reserve came in and says requesting comment on
12:23
Speaker 1: a proposal to require certain payment stable coins issuers to maintain.
12:28
Speaker 1: Basically KYC is what they're talking about. I'm curious where
12:33
Speaker 1: this would be implemented. If you were thinking this through
12:38
Speaker 1: in terms of a proposal, how would this be even done?
12:41
Speaker 1: I mean because most of the time these kycs, if
12:43
Speaker 1: you're already within an exchange, regulated exchange or in a
12:47
Speaker 1: bank at some point are going to use this, you
12:48
Speaker 1: already have KYC, So they can only assume. I'm only
12:51
Speaker 1: assuming that this is going to go into the regular
12:55
Speaker 1: markets like self custody.
12:57
Speaker 3: What do you think, I haven't spent too much times.
13:00
Speaker 3: It's a notice of potential rule making, so we don't
13:02
Speaker 3: know exactly how the sausage making will play out. Look,
13:06
Speaker 3: I think in the crypto age, what's important is that
13:11
Speaker 3: entities and individuals are accountability, are accountable for their actions, right,
13:16
Speaker 3: And so if you are an issuer and you issue
13:18
Speaker 3: a stable coin, do you have the ky see that person?
13:21
Speaker 3: I think the rule is yes, you do. But then
13:23
Speaker 3: as that as those transactions go through the internet. If
13:27
Speaker 3: I don't know, when you go and you go shopping, Paul,
13:30
Speaker 3: do you ky see the people that you pay at
13:33
Speaker 3: the local merchant? No, I don't think you do. You
13:35
Speaker 3: give them cash or your credit card, and that's it.
13:38
Speaker 3: And so I think it's important that the behaviors of
13:41
Speaker 3: people are plased, Like if someone is there, you know,
13:45
Speaker 3: conducting money laundering or giving money to a sanctioned entity,
13:48
Speaker 3: they should absolutely be held accountable. And we've got great
13:50
Speaker 3: analytics to do that. But but forcing unnecessary ky C,
13:55
Speaker 3: I think does kind of get in the way of
13:57
Speaker 3: a lot of the innovations that we're bringing to bear.
13:59
Speaker 1: Yeah, obviously a FIAT not necessarily under the same guidelines,
14:03
Speaker 1: even though there are you know, somewhat controls. But you know,
14:06
Speaker 1: I can go in and pay anybody, whether it's on
14:08
Speaker 1: the open market, the black market, the gray market, doesn't
14:10
Speaker 1: really matter. This, of course, eliminates the advantage of stable coins,
14:15
Speaker 1: which has been speed and what was thought as pure freedom,
14:20
Speaker 1: you know, in terms of just like a fiat dollar.
14:23
Speaker 3: Think about it if you or I, you know, we
14:25
Speaker 3: let's just pretend stable coins were the norm, and everyone
14:28
Speaker 3: transacted in stable coins, they were all on chain, and
14:30
Speaker 3: you had this benefit of a real time settlement that
14:33
Speaker 3: we that we that we know and love. What if
14:35
Speaker 3: that was the norm, and then you and I got
14:37
Speaker 3: together one day and we're like, dude, I have this
14:39
Speaker 3: amazing invention. We're gonna put We're gonna put money on paper,
14:44
Speaker 3: and we can give it to each other and no
14:45
Speaker 3: one's going to be able to follow it. If we
14:47
Speaker 3: were to present that to our policymakers today, they would
14:50
Speaker 3: not be very happy. But for some reason, we have
14:53
Speaker 3: it backwards in certain cases.
14:54
Speaker 1: All right, so I hear where you're coming from it.
14:57
Speaker 1: You know, I'm more of a promising MAXI in the
15:00
Speaker 1: sense of there's no reason for the government to continue
15:03
Speaker 1: to kind of impede into I think private matters of
15:07
Speaker 1: an average American. And of course stable coins could essentially
15:11
Speaker 1: be plugged into almost like a CBDC. Which has been
15:14
Speaker 1: the concern I've always had is that at some point
15:16
Speaker 1: if they can claw back if they just don't, because
15:19
Speaker 1: you know the slippery slope that this can go into
15:21
Speaker 1: very quickly. I've been dbanked before. I know what that's like.
15:25
Speaker 1: It doesn't feel so good, and if that is where
15:28
Speaker 1: we're heading with these, that would concern me a little bit.
15:30
Speaker 3: Chris, for sure, that's right, and I know exactly how
15:33
Speaker 3: you feel. Be in your shoes. And the fact is
15:36
Speaker 3: is that the programmability as well makes it particularly concerning.
15:40
Speaker 3: If you're a big country that has a wallet and
15:44
Speaker 3: a CBDC and you have a social score, you can
15:47
Speaker 3: actually very easily program that social score into the wallet
15:50
Speaker 3: and burn tokens or currency to the extent that the
15:53
Speaker 3: government doesn't like it like that is very feasible. And
15:56
Speaker 3: so the good news about stable coins is that you
15:59
Speaker 3: have due process and freezencies is a part of the
16:02
Speaker 3: national security apparatus. We did seize a bunch of stable
16:05
Speaker 3: coins from the Iranians during the conflict, but there's a
16:08
Speaker 3: due process that you have to go through, and you know,
16:11
Speaker 3: hopefully we retain due process in this country. But you're right,
16:15
Speaker 3: CBDCs can become a very slippery slope depending on who's
16:18
Speaker 3: inn office or which country you're in.
16:20
Speaker 2: Yeah, exactly.
16:21
Speaker 1: Hey, I want to jump over to what's happening with
16:23
Speaker 1: bitcoin and the king of bitcoin right now, which is
16:27
Speaker 1: micro strategy. I am looking at the Stretch chart right there.
16:32
Speaker 1: This is an absolute mind reset of what's happening with
16:37
Speaker 1: the stretch asset. And this has been one that's been
16:40
Speaker 1: out there for quite a while obviously if you guys
16:42
Speaker 1: know a little bit about it. It's a variable ray
16:44
Speaker 1: product from micro Strategy, which was kind of promised as
16:48
Speaker 1: almost like a money market. The risk level I felt
16:51
Speaker 1: was never really laid out to this level that.
16:55
Speaker 2: We're seeing right now.
16:56
Speaker 1: And if you look at what's been happening here recently,
17:00
Speaker 1: here's Krueger talking about it. You sell thirty two bitcoin,
17:02
Speaker 1: the price of micro Strategy goes from one to sixty
17:04
Speaker 1: to one sixteen, You crass stretch from one hundred now
17:08
Speaker 1: down to eighty two, and the m nab of course
17:11
Speaker 1: starts to drop.
17:11
Speaker 2: Was it really worth it or was it strategic?
17:14
Speaker 1: What do you make of this right now? And how
17:16
Speaker 1: would affect bitcoin in general?
17:18
Speaker 3: Yeah, it's a difficult spot right now. I think you know,
17:23
Speaker 3: narrative is so important in crypto and one of the
17:27
Speaker 3: things about bitcoin is that there's a lot of social
17:29
Speaker 3: consensus on it as a store of value. There's also
17:32
Speaker 3: been this ongoing social consensus that sailors is going to
17:35
Speaker 3: be buying forever and no matter what. But at the
17:37
Speaker 3: end of the day, when you really understand bitcoin, the
17:40
Speaker 3: beauty of it is that it's decentralized and for people
17:43
Speaker 3: to focus on this one centralized entity is driving the
17:46
Speaker 3: real price action. That's unfortunate. Bitcoin is also very responsive
17:50
Speaker 3: to rates, and I think Kevin worsh maybe yesterday when
17:54
Speaker 3: he came out and some of his in some of
17:57
Speaker 3: his press conference, people were a little bit concerned about
17:59
Speaker 3: the direction of rates. Frankly, I think Kevin Worts is
18:02
Speaker 3: gonna be very good for crypto. I think he likes crypto,
18:04
Speaker 3: and I don't think he's going to be, you know,
18:06
Speaker 3: jacking rates two extremes, and I think he's going to
18:09
Speaker 3: be very favorable as he works with beston on a
18:11
Speaker 3: new Fed Treasury accord. So there's a confluence of factors
18:14
Speaker 3: that could be suppressing price. That said, I think as
18:17
Speaker 3: the Iranian issue seems to stabilize, inflation comes down, macro improves.
18:23
Speaker 3: I think long term, I think it's very constructive. So yes,
18:27
Speaker 3: your term, Yeah, there's going to be some noise, and
18:29
Speaker 3: I think the sailors in a tough spot. But if
18:32
Speaker 3: bitcoin rallies, I think a lot of his problems go away,
18:34
Speaker 3: and I think long term, I feel very constructive.
18:37
Speaker 1: Well with that, I mean, because this is my kind
18:39
Speaker 1: of thinking. You look at you know, the timing is
18:42
Speaker 1: very interesting here. At the same time you have black
18:46
Speaker 1: Rock rolling out and they roll out better.
18:49
Speaker 2: Let me play a clip for you.
18:50
Speaker 1: And then, because this will kind of frame it a
18:52
Speaker 1: little bit, let's go there.
18:53
Speaker 5: And so we've had lots of clients who may have
18:55
Speaker 5: been open to bitcoin, but they've been hesitant. Institutions like
18:59
Speaker 5: pension funds are sure others who are very yield focused
19:02
Speaker 5: and bitcoin doesn't intrinsically pay yield, and that's been maybe
19:05
Speaker 5: the primary objection to not allocating to bitcoin. So what
19:08
Speaker 5: this does is enables that generation of yield and also
19:10
Speaker 5: dampens the volatility a little bit. If Bitcoin goes down,
19:14
Speaker 5: bit would be expected to outperform i bit or Bitcoin.
19:18
Speaker 5: If bitcoin's flat, same thing. If bitcoin's up modestly, again,
19:21
Speaker 5: we'd expect BITTA to outperform. It's when Bitcoin is up
19:25
Speaker 5: significantly that actually we would expect it to net underperform.
19:28
Speaker 5: But we're talking, you know, fifty sixty one hundred percent
19:32
Speaker 5: type returns before you start to get that turnover point
19:35
Speaker 5: where actually you'd have rather been in bitcoin or ibit,
19:39
Speaker 5: and I think a lot of investors if that happens,
19:40
Speaker 5: will probably be pretty happy regardless. Is this product maybe
19:44
Speaker 5: an indicator as to how Black Rock is thinking the
19:48
Speaker 5: market might be for the next little while. No, I
19:50
Speaker 5: wouldn't interpret it that way. We've had this in the
19:52
Speaker 5: works for quite some time.
19:55
Speaker 1: I mean, are they this seems like it's just time
19:57
Speaker 1: to it's too he feels too close to what's going
20:03
Speaker 1: on in the market and of course what strategy is
20:05
Speaker 1: facing right now. Then Chris, you have this right here,
20:08
Speaker 1: which is where CNBC, which has been very pro sailor
20:13
Speaker 1: in the past, kind of flip the script a little bit.
20:16
Speaker 2: Let me play that clip.
20:17
Speaker 3: Let's go to bitcoin.
20:18
Speaker 4: Because you've been an enthusiast, You've been right for a
20:20
Speaker 4: long time.
20:21
Speaker 2: What's different, in my opinion, is the bullseyon.
20:24
Speaker 4: Microsoft strategies back in terms of their holdings in our
20:27
Speaker 4: average price.
20:28
Speaker 2: Where do you sort of start.
20:29
Speaker 4: To get concerned when you can see the predatory nature
20:32
Speaker 4: of the market start to kick in.
20:33
Speaker 6: Well, I mean, listen, I'm concerned. I've been humbled by
20:37
Speaker 6: life and I've been humbled by markets. A lot has
20:38
Speaker 6: happened to me since the last time I showed up
20:40
Speaker 6: on this desk, and this has been a shallow cycle
20:43
Speaker 6: for bitcoin, but I think we've been buffered by the
20:46
Speaker 6: institutional buying at the ETF level. So you know, is
20:50
Speaker 6: Michael in trouble. He's definitely not in trouble. You have
20:52
Speaker 6: to really understand the mechanisms of the balance. You need
20:55
Speaker 6: to understand a bitcoin can go a lot lower, and
20:58
Speaker 6: he's virtually not in trouble. Well, he also bought back
21:01
Speaker 6: some of these converts recently, which takes that piece of
21:04
Speaker 6: it off the table. That was something that's probably a
21:08
Speaker 6: little bit worried about.
21:09
Speaker 1: Obviously, CMBC saying, hey, there's a bullseye here, So it does.
21:13
Speaker 1: You're not really worried about this though, Chris, you don't
21:15
Speaker 1: see this being a problem for micro strategy in the
21:18
Speaker 1: near future.
21:20
Speaker 3: I mean, I don't like talking about individual equities or companies,
21:23
Speaker 3: and yes, Michael has to figure out his way out
21:26
Speaker 3: of here, but I think my point is that when
21:28
Speaker 3: when you step back and you look at fundamentals across
21:29
Speaker 3: the crypto asset class, institutions are coming into the space
21:33
Speaker 3: and institute with bitcoin, there's twenty one million coins. That's
21:37
Speaker 3: all there's ever going to be. And I do think
21:39
Speaker 3: that as time goes by, those institutions continue to march forward.
21:43
Speaker 3: Black Rock came up with an interesting product covered call
21:46
Speaker 3: strategy on their ETF trying to generate yield. I think
21:49
Speaker 3: you're going to see more and more like innovation in
21:52
Speaker 3: this space as institutions and their sophistication and their capital
21:56
Speaker 3: come in. So like I remain long term, very constructive
21:58
Speaker 3: about the asset class. It's a tough market to trade.
22:01
Speaker 3: It's always been a tough market to trade. There's volatility
22:05
Speaker 3: always on the horizon. That could be down, it can
22:08
Speaker 3: be up. Remember volatility works in both directions. I think
22:11
Speaker 3: just to get Michael Sailor out of this conundrum, I
22:14
Speaker 3: think you need positive price action and that can come
22:17
Speaker 3: in many different forms, and I guess we'll have to
22:19
Speaker 3: wait and see.
22:20
Speaker 1: I've got a clip of Sailor talking about that in
22:23
Speaker 1: terms of what he thinks is happening.
22:25
Speaker 7: So after there's nothing to worry about. We invented an
22:28
Speaker 7: imaginary problem to worry about. Imagine a computer that no
22:33
Speaker 7: one's ever built. Let's imagine that perhaps we make a
22:36
Speaker 7: scientific breakthrough and we managed to create a quantic computer,
22:39
Speaker 7: and let's imagine that it cracks our current cryptography. Then
22:43
Speaker 7: let's imagine bad things happening. It's a hypothetical problem that
22:48
Speaker 7: people imagine so that they can generate engagement on x. A.
22:53
Speaker 7: There are no real problems, and B we're in a
22:56
Speaker 7: bear market and the price is low.
22:58
Speaker 3: It's like all the blood sugars crawh which is very interesting.
23:01
Speaker 3: You've got a number of different technologies coming online, quantum,
23:05
Speaker 3: AI and crypto, these things are all working together, and
23:08
Speaker 3: I think they're actually going to make the entirety of
23:10
Speaker 3: the industry much stronger. AI right now is uncovering some
23:14
Speaker 3: vulnerabilities in certain cases. Sure, and you know people are
23:17
Speaker 3: freaking out. They're like, oh my gosh, I'm gonna get hacked.
23:19
Speaker 3: But guess what, Once those vulnerabilities are closed, that's it.
23:23
Speaker 3: And yes, you may see some social engineering coming in
23:25
Speaker 3: the future and be new vectors of attack, but the
23:27
Speaker 3: bottom line is that AI is actually going to be
23:29
Speaker 3: helping crypto by making it even more robust. Quantum as well,
23:33
Speaker 3: will enhance cryptography and so like. Rather than look at
23:35
Speaker 3: these things as threats, they're also massive opportunities.
23:38
Speaker 1: Yeah, well, I agree with those to a certain extent.
23:40
Speaker 1: Obviously we don't know what we don't know yet in
23:43
Speaker 1: terms of where AI is going to truly end up
23:46
Speaker 1: in twelve months or eighteen months, I agree with you.
23:49
Speaker 2: I think the advancements that we'll.
23:51
Speaker 1: See, especially if you look at the early stages of
23:53
Speaker 1: what my Mythos has been able to do in uncovering
23:56
Speaker 1: certain threats.
23:58
Speaker 2: But listen, we're in early stage here, guys.
24:00
Speaker 1: A lot of tech is hitting the market, like you
24:02
Speaker 1: kind of mentioned all at the same time. I don't
24:04
Speaker 1: think we've ever had a time like this in the
24:06
Speaker 1: history of anything I've ever seen. I want to go
24:08
Speaker 1: to a lightning round with you. My first one is
24:11
Speaker 1: this one right here. Track five monopolies forced to support
24:15
Speaker 1: anti privacy policies, Crypto will double down on privacy.
24:18
Speaker 2: Do you think that would be the case?
24:20
Speaker 3: One? Yes? True?
24:22
Speaker 2: Yeah, Okay, so we're on the same page there for sure.
24:26
Speaker 2: Let's go.
24:27
Speaker 1: Let's go on to this crypto market epic crash on
24:29
Speaker 1: July fourth, if we don't get a clarity, which looks
24:32
Speaker 1: like it might not make it by fourth of July.
24:35
Speaker 3: No, No, we're going to be just fine.
24:37
Speaker 1: No, I'm going to understand in the middle there. I'm
24:39
Speaker 1: a little concerned about July fourth. If strategy MNA have collapses,
24:44
Speaker 1: Shift's reputation gets replenished.
24:47
Speaker 3: I don't think so.
24:48
Speaker 2: I'm in your camp on that one.
24:50
Speaker 1: I think Schiff has done to much damage to the
24:52
Speaker 1: crypto market. CME will weaponize government to go after hyper liquid.
24:57
Speaker 1: They'd have to win against the CFTC first.
24:59
Speaker 3: Right, No, I mean there's plenty of ways to go
25:01
Speaker 3: after hyper liquid. You're starting to hear the national security
25:03
Speaker 3: thing come up. I think that there are a lot
25:05
Speaker 3: of there's definitely a lot of incumbents that are very
25:08
Speaker 3: excited to go after hyper liquid.
25:10
Speaker 2: Okay, well, there you go. That's coming.
25:12
Speaker 1: What happens if Sailor's supporters turn on him, would they
25:16
Speaker 1: move to leverage self costume? You think they'd move over
25:18
Speaker 1: to another product like black Rocks?
25:21
Speaker 3: Probably Blackrock. I think a lot of these guys are retail,
25:24
Speaker 3: they're less they're less crypto native. I think in many cases, yeah, I.
25:27
Speaker 2: Think that which is why I don't think they would
25:30
Speaker 2: go yeah.
25:31
Speaker 3: Or there are other exciting companies out there too besides Blackrock.
25:33
Speaker 1: I'm just saying you look at Brian Armstrong. He's been
25:36
Speaker 1: going back and forth against Jamie Diamond. Do you think
25:40
Speaker 1: he responded well to Diamond. Diamond went at him pretty hard,
25:44
Speaker 1: but but Brian kind of let him off the off
25:46
Speaker 1: the hook.
25:47
Speaker 3: I'm gonna stay in the middle of this one. I
25:50
Speaker 3: think I think it's ongoing. I think this is very
25:53
Speaker 3: similar to what you're seeing with the Terry Duffines is. Yes,
25:56
Speaker 3: like you know, incumbents don't like disruption. I think Brian
25:59
Speaker 3: is is. I don't want to say there'll be opportunities
26:03
Speaker 3: for those companies to partner. They already do partner, but
26:05
Speaker 3: I think holistically there's some competition and disruption on the horizon.
26:09
Speaker 3: So it's uncomfortable.
26:10
Speaker 1: Yeah, uncomfortable. If Morpho reduced inflation unlocks to zero, would
26:15
Speaker 1: it be an institutional Darling.
26:17
Speaker 3: So they've done some interesting integrations with some institutions. I
26:21
Speaker 3: think vaults and the tech that they offer is interesting institutions.
26:28
Speaker 3: So I'd say I'm very favorable of the utility of vaults,
26:32
Speaker 3: like whether it's aveda morpho, et cetera.
26:34
Speaker 1: You're going to be leading vaults over with Franklin Templeton.
26:38
Speaker 2: So what's that going to look like?
26:39
Speaker 1: If we see vaults continue to get very popular here.
26:43
Speaker 3: I think it's a super interesting technology where you can
26:46
Speaker 3: offer folks pretty interesting yield solutions, transparency around risk management.
26:51
Speaker 3: The key to vaults, frankly is when no one's talking
26:54
Speaker 3: about them, right exactly, Like, yes, I'm offerating a strategy
26:57
Speaker 3: I don't talk about. Oh, I've got this amazing that
27:00
Speaker 3: I use and I have this incredible PMS. If you
27:03
Speaker 3: don't care about the PMS that I use or the
27:04
Speaker 3: oms or like the tech that I use to offer
27:07
Speaker 3: those strategies, you know they care about the strategy and
27:10
Speaker 3: so like vaults will be successful and we don't talk
27:12
Speaker 3: about them anymore. All right.
27:13
Speaker 1: You've got SpaceX ipo huge advantage for Solana and hyper
27:18
Speaker 1: Liquid which was worth millions, and you know the kind
27:22
Speaker 1: of volume that I saw I was unbelievable here.
27:25
Speaker 3: Pre IPO markets are a big deal. I think they're
27:29
Speaker 3: finally democratizing access to these markets for retail, which I love.
27:34
Speaker 3: So I'm very I hope to see more of them.
27:38
Speaker 3: I think I think it was great for all the
27:40
Speaker 3: products that were successful on the pre ipo.
27:42
Speaker 1: What if finance wasn't banned in the US, do you
27:46
Speaker 1: think they'd be just taking coin bass lunch money.
27:49
Speaker 3: Not necessarily. When you look at exchanges around the world,
27:52
Speaker 3: typically there you see a lot of national champions, so
27:56
Speaker 3: it's not often that you see that. I don't think
28:00
Speaker 3: think they would be crushing coin based on shore.
28:02
Speaker 2: Here's another one I do. I think they would be.
28:04
Speaker 1: I think they they're in a position where they would
28:07
Speaker 1: strategically do better in DC. I think they would also
28:13
Speaker 1: be more creative on the kind of products and faster
28:15
Speaker 1: to market, which is you know the concern. Had coinbase
28:19
Speaker 1: gone with just speed to market to kind of keep
28:22
Speaker 1: up with what's going on with hyper liquid and you know,
28:24
Speaker 1: just in general what we've seen in the purpose market,
28:27
Speaker 1: I think they would have been doing much better. I've
28:30
Speaker 1: been kind of disappointed at the innovation that's coming out
28:32
Speaker 1: of coinbase personally when I look at just the products
28:35
Speaker 1: and services.
28:35
Speaker 2: That they're launching.
28:37
Speaker 1: I get it that they have to be slow and cautious,
28:40
Speaker 1: but in this market, I think it pays to be
28:42
Speaker 1: a little bit more risky.
28:44
Speaker 3: While you can be what prevents coinbase from becoming a
28:46
Speaker 3: deployer on hyper liquid.
28:48
Speaker 2: Nothing?
28:48
Speaker 1: Nothing, that would be a fantastic you know, a good
28:51
Speaker 1: example right there that in itself would be would be
28:54
Speaker 1: where I would change change my position. Let's go over
28:58
Speaker 1: to this one right here. I think this last one,
29:00
Speaker 1: worsh uncertainty will only power polymarket.
29:04
Speaker 2: What do you think.
29:04
Speaker 3: Probably I'd throw Calci in there as well. That's gonna
29:07
Speaker 3: be an interesting battle. But yeah, I think Worsh is
29:11
Speaker 3: actually gonna be very good for crypto, and I think
29:12
Speaker 3: crypto market's got them wrong.
29:14
Speaker 1: Okay, that's a big, one, big takeaway, so you feel
29:16
Speaker 1: all right, So to your point, if you think he's
29:19
Speaker 1: going to be good for crypto in general, he had
29:22
Speaker 1: three major points he was getting out there.
29:24
Speaker 2: They're going to look at new data.
29:26
Speaker 1: We're obviously going to see probably less of him, you know,
29:28
Speaker 1: because they're going to get much more selective on coming.
29:31
Speaker 2: To market with news.
29:32
Speaker 1: And then you have this new strategy around what they're
29:35
Speaker 1: going to do to be able to decipher it. And
29:38
Speaker 1: even I think they incorporated sentiment even as a forward
29:41
Speaker 1: looking or as a decision factor going into the market.
29:45
Speaker 1: Do you like all of those moves that they announced yesterday.
29:49
Speaker 3: You said to project a few things for various reasons,
29:52
Speaker 3: but I think holistically he's very bullish about the asset class.
29:56
Speaker 3: I think he's very close to the Secretary of Treasury
29:59
Speaker 3: be I think you're going to see it. While you
30:02
Speaker 3: can still have independence, you can also have cooperation, and
30:05
Speaker 3: I think both of these guys are aligned to create
30:08
Speaker 3: the best economic conditions. I think they're going to be
30:11
Speaker 3: focusing on inflation. I personally think inflation is relatively transient
30:15
Speaker 3: based on some of the action that we've seen overseas.
30:17
Speaker 3: It's like oils coming down pretty precipitously. So I do
30:20
Speaker 3: think over his tenure, you're going to see it. Like
30:24
Speaker 3: all things being equal, you can't control like macro in
30:26
Speaker 3: the markets, you know fully, but I do think that
30:29
Speaker 3: he's going to take the right steps to be more
30:31
Speaker 3: beneficial for crypto, particularly with his coordination with Treasury, than
30:36
Speaker 3: the market expects.
30:37
Speaker 1: There you have it, listen, Chris, it's been great having
30:40
Speaker 1: you on again. Thank you so much. We'll definitely have
30:42
Speaker 1: you back, especially as things heat up into clarity possibly
30:46
Speaker 1: what's going to happen with the FED around inflation, which
30:49
Speaker 1: could be happening and just in the next few months,
30:51
Speaker 1: so thanks for coming in.
30:53
Speaker 3: Good to see you, Paul. Thank you.
31:01
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31:03
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