Latest / The Paul Barron Crypto Show / Will Prediction Markets Be Banned?🚫INTERVIEW🚨Coinbase Lawyer Ryan VanGrack

Transcript

Will Prediction Markets Be Banned?🚫INTERVIEW🚨Coinbase Lawyer Ryan VanGrack · The Paul Barron Crypto Show

• 0:00
  Speaker 1: Let's get into prediction markets today. We're going to dive
• 0:02
  Speaker 1: in deep. I think you guys are going to want
• 0:04
  Speaker 1: to stick around for this one because it could have
• 0:06
  Speaker 1: a major effect on how we are actually going into
• 0:10
  Speaker 1: the market. I want to start with a couple of things.
• 0:13
  Speaker 1: As you guys probably saw, we did a video yesterday
• 0:15
  Speaker 1: with Matt Hogan, great guest, and I asked him about
• 0:19
  Speaker 1: being exposed to things like pre stocks. This, of course
• 0:24
  Speaker 1: is one of the things when you look at private
• 0:26
  Speaker 1: markets and the exposure that you potentially could have. Things
• 0:30
  Speaker 1: are starting to brew. And even Matt said that he thought,
• 0:34
  Speaker 1: because we pinned him down, he thought five percent exposure,
• 0:38
  Speaker 1: that's the kind of exposure you should have in your
• 0:40
  Speaker 1: portfolio as you diversify. I think, so something to think
• 0:43
  Speaker 1: about as we get out there. If you look at
• 0:45
  Speaker 1: the evaluations on pre stocks when you talk about things
• 0:48
  Speaker 1: like private markets, you can take a look here at
• 0:51
  Speaker 1: what we're talking about today, which is going to be
• 0:53
  Speaker 1: Cauchy and polymarket. The market value right there, whether you
• 0:56
  Speaker 1: like it or not. Calci still leading the way polymarket,
• 1:00
  Speaker 1: but I think this is going to be a battle
• 1:02
  Speaker 1: for the ages as we start to see poly market
• 1:05
  Speaker 1: versus Calshi. If you're a sports guy, then you're probably
• 1:09
  Speaker 1: over on Calshi. If you're in crypto or on politics,
• 1:13
  Speaker 1: you're probably over on Polymarket. And I think that's the
• 1:16
  Speaker 1: thing you're going to be watching right here on Dooing Analytics.
• 1:19
  Speaker 1: Just give you an example. There's Calshi of course leading
• 1:21
  Speaker 1: the way on sports, but you can kind of see
• 1:24
  Speaker 1: poly Market holding their own when it comes to crypto
• 1:26
  Speaker 1: and sports. Really not bad, but I think this is
• 1:29
  Speaker 1: the area right here that we are going to see
• 1:32
  Speaker 1: poly market explode again. This of course will happen during
• 1:36
  Speaker 1: the mid terms. Most likely we'll get a lot of
• 1:38
  Speaker 1: activity on that. That could open up a lot of
• 1:40
  Speaker 1: opportunities around prediction markets in general. One note though, is
• 1:45
  Speaker 1: this right here poly market partnered with the NHL. You
• 1:49
  Speaker 1: can now trade with no fees, no house, and no limits.
• 1:53
  Speaker 1: So and that's one of the big factors I think
• 1:55
  Speaker 1: when you look at what prediction markets has been able
• 1:58
  Speaker 1: to do, this is where I think poly market wins
• 2:02
  Speaker 1: the game. Now I'm not saying polly Market is not sponsor.
• 2:05
  Speaker 1: They're not paying us. They don't ask me to say
• 2:07
  Speaker 1: anything nice. We just look at the kind of the
• 2:09
  Speaker 1: lay of the land, and one of the things that
• 2:11
  Speaker 1: got us a little off kilter was when cal She
• 2:15
  Speaker 1: pulled a little bit of a rug on the market.
• 2:17
  Speaker 1: We'll talk about that in a minute, but you can
• 2:18
  Speaker 1: kind of see this website went up there. They are
• 2:22
  Speaker 1: pushing the DJNS people that are in the trenches now
• 2:26
  Speaker 1: over to poly market and really making an even better
• 2:29
  Speaker 1: case for their number one competitor as we go out.
• 2:33
  Speaker 1: So this is I thing going to get a little
• 2:35
  Speaker 1: bit worse as we see things continue on. And of course,
• 2:38
  Speaker 1: remember if you're on poly market, they're actually paying you
• 2:41
  Speaker 1: some money on some money on your money when you're
• 2:43
  Speaker 1: in there. Cal she not doing that in terms of value,
• 2:48
  Speaker 1: So that's another big issue in general. One thing too,
• 2:52
  Speaker 1: if you look at where we are going to see
• 2:55
  Speaker 1: the no fee or the competitive fees going on, you're
• 3:00
  Speaker 1: going to see it in the agentic AI space. And
• 3:03
  Speaker 1: this is a very interesting visualization of this. I want
• 3:07
  Speaker 1: to kind of show you guys something. This is basically
• 3:09
  Speaker 1: AI's tracking down the best opportunity where they can get
• 3:15
  Speaker 1: the best deal. And I want to hover over a
• 3:17
  Speaker 1: few things here when we get further out, and you'll
• 3:20
  Speaker 1: notice right there is Morpho, Right there is Moon well,
• 3:23
  Speaker 1: and there you go, Morpho seamless right there. So what
• 3:26
  Speaker 1: it's looking for is the best there's ave Morpho Universal
• 3:30
  Speaker 1: Euler finance. We cover all these guys. The point is
• 3:34
  Speaker 1: is that fees matter, and it's going to be huge
• 3:37
  Speaker 1: going forward, and we're going to get into a lot
• 3:40
  Speaker 1: of that detail around this. Before I do that, though,
• 3:43
  Speaker 1: I want to showcase something for you guys. This is
• 3:46
  Speaker 1: a clip of Chris Christy, and as you guys know,
• 3:49
  Speaker 1: on this show, a lot of times, we just follow
• 3:52
  Speaker 1: the money, pretty simple. Follow the money, you'll find out
• 3:54
  Speaker 1: what's going on in the market. Let me play this
• 3:57
  Speaker 1: clip right here from Chris Christy. They're not the house.
• 3:59
  Speaker 2: There's no house, Yes there is.
• 4:01
  Speaker 1: They're taking it. They're taking a cut. It's the same thing.
• 4:04
  Speaker 2: If it walks like a duck and quacks like a duck,
• 4:06
  Speaker 2: it's a duck.
• 4:07
  Speaker 1: If it quacks like a duck and it walks like
• 4:09
  Speaker 1: a duck, it's a doc. Chris Christy defending the gambling
• 4:13
  Speaker 1: cartels as who all call it, and that is because
• 4:16
  Speaker 1: polymarket cal she are both challenging status quo on that
• 4:21
  Speaker 1: and I think prediction markets is going to be huge
• 4:24
  Speaker 1: going forward. So we wanted to bring on Ryan van Grack,
• 4:27
  Speaker 1: who is the VP of Legal and Global head of
• 4:29
  Speaker 1: Litigation over Coinbase. Great to have you ran, Great.
• 4:32
  Speaker 2: To be on PARL and thanks for taking the time
• 4:34
  Speaker 2: to shed light on these very critical and timely issues.
• 4:37
  Speaker 1: Yeah. So you saw Chris Christy there, He's he's on
• 4:43
  Speaker 1: a tear about this for sure. What did you What
• 4:46
  Speaker 1: do you make of his position right now?
• 4:49
  Speaker 2: I would say he frames it wrong if it walks
• 4:51
  Speaker 2: like an event contract and talks like an event contract contract. Right.
• 4:57
  Speaker 2: The opposition led by by by Chris Christy is premise
• 5:00
  Speaker 2: on a fundamental misunderstanding. They keep sending this as deciding
• 5:04
  Speaker 2: between a state regulator and no regulator, but in fact,
• 5:07
  Speaker 2: the real question is if you're a derivative an event contract,
• 5:11
  Speaker 2: should you have a national derivatives regulator in the CFTC
• 5:16
  Speaker 2: or be subject to a patrick of fifty state regulators
• 5:20
  Speaker 2: and federal statue makes very clear that it is the
• 5:23
  Speaker 2: CFTC that governs in this space.
• 5:27
  Speaker 1: Yeah, well, you've had Selily go out and kind of
• 5:29
  Speaker 1: talk about this very issue that he would stand ground
• 5:33
  Speaker 1: on any of this. As we start to see states
• 5:35
  Speaker 1: trying to kind of pop up and do this Paul Greywall,
• 5:38
  Speaker 1: one of your colleagues, kind of hit it right there
• 5:40
  Speaker 1: on the head and he's talking about Chris Christy. You know,
• 5:43
  Speaker 1: way too much law to offer such a problem. Federal
• 5:46
  Speaker 1: law is what Congress says, it is, not how it quacks.
• 5:50
  Speaker 1: I love that one laws based on Quacks's what we have.
• 5:54
  Speaker 1: What we got when we had an sec chair by
• 5:57
  Speaker 1: the name of Genzler. That was a big problem back then,
• 6:00
  Speaker 1: and of course now is is Chris Christy the new
• 6:04
  Speaker 1: Gensler for poly marketing? Galci poor.
• 6:10
  Speaker 2: I do think it does reinforce the problem of speaking
• 6:13
  Speaker 2: in generalities. Yeah, those to looking at facts and circumstances.
• 6:18
  Speaker 2: One of the key flaws in that articulation is the
• 6:21
  Speaker 2: fact that there are very important differences between a sports
• 6:24
  Speaker 2: book and a derivatives exchange. And I'll highlight four, but
• 6:28
  Speaker 2: I could certainly go on. I know you've got time constrained.
• 6:30
  Speaker 2: No who you trade against in a sports book, you're
• 6:34
  Speaker 2: trading and you're betting against the house the market. You're
• 6:37
  Speaker 2: training against other market participants. The second are the incentive structures.
• 6:42
  Speaker 2: A sports book has an incentive for you to lose.
• 6:45
  Speaker 2: They only win if you don't make money. Addiction market
• 6:49
  Speaker 2: has an intentive for you to win, because they're not
• 6:51
  Speaker 2: trading against you. The third difference is price discovery. A
• 6:55
  Speaker 2: DCM has odds that are determined by market forces. Price
• 7:00
  Speaker 2: reflects the market views on the likelihood of something happening.
• 7:04
  Speaker 2: That's what makes these particularly valuable tools as a source
• 7:07
  Speaker 2: for truth. By contrast, the sports books themselves are the
• 7:12
  Speaker 2: ones setting the odds, so you don't have the insight
• 7:15
  Speaker 2: from the collective. And then a fourth point I'll throw
• 7:17
  Speaker 2: in is that prediction markets allow you to enter and
• 7:21
  Speaker 2: exit positions at any point before it settles, just like
• 7:25
  Speaker 2: a security and commodities in the commodity space, whereas sports
• 7:30
  Speaker 2: books you typically are locked in. And Paul, I don't
• 7:33
  Speaker 2: just highlight that because it happens to be true, But
• 7:37
  Speaker 2: what is the so on? Okay, so I've highlighted four differences.
• 7:40
  Speaker 2: Why does that matter? Those differences are precisely white. Makes
• 7:44
  Speaker 2: sense for sports books to be regulated one way in
• 7:47
  Speaker 2: this instance by the states, and prediction markets to be
• 7:50
  Speaker 2: regulated another way by a federal regulator because those regulatory
• 7:54
  Speaker 2: regimes are tailored to those differences and concerns. And let
• 7:58
  Speaker 2: me explain, state law protects consumers against casinos who have
• 8:04
  Speaker 2: opposing interests. Federal law is protecting parties by ensuring this
• 8:09
  Speaker 2: market integrity on the exchanges, so that you're preventing fraud
• 8:13
  Speaker 2: maipulation in those transactions. Those are two very different sets
• 8:17
  Speaker 2: of concerns which require two very different sets of rules.
• 8:20
  Speaker 1: Yeah, well, I mean, we're going to get into the
• 8:24
  Speaker 1: angle of insider trading. But I do agree with you
• 8:26
  Speaker 1: is that these are two different market structures and they
• 8:30
  Speaker 1: should be organized a little different. And I agree really
• 8:34
  Speaker 1: in the sense that the CFTC should be in the
• 8:36
  Speaker 1: position to where it kind of governs what's going on
• 8:39
  Speaker 1: within this. With that being the case, and you look
• 8:42
  Speaker 1: at the misstep that kal she made on the Iran contract,
• 8:46
  Speaker 1: and this, of course was the commanding thing. Here's Ben Gaeller,
• 8:48
  Speaker 1: he's talking a little bit about this right here, and
• 8:51
  Speaker 1: it was really just COMMANI out was the contract. Explain
• 8:55
  Speaker 1: to me why that got sideways and why everybody is
• 9:00
  Speaker 1: so upset about this.
• 9:02
  Speaker 2: The controversy here is about the market rules of the contract.
• 9:06
  Speaker 2: It appears that some customers may have been confused about
• 9:09
  Speaker 2: how the commandite contract would resolve, as you noted, dealt
• 9:12
  Speaker 2: with whether a commanee would be out as a leader,
• 9:16
  Speaker 2: and the rules provided that death was not a means
• 9:19
  Speaker 2: by which the contract would be resolved. But ultimately there
• 9:23
  Speaker 2: was some confusion. What we see happening is Kyle she
• 9:26
  Speaker 2: has a process for reconciling contracts in these situations, and
• 9:31
  Speaker 2: it's my understanding they've committed to reimbursing customers think to
• 9:34
  Speaker 2: the tunes of a few million dollars. It was notable, Paul,
• 9:38
  Speaker 2: only because there were many customers who were aggrieved and upset.
• 9:42
  Speaker 2: But these are getting reconciled as you would expect in
• 9:45
  Speaker 2: a DCM in exchange. They have market roles, they have
• 9:48
  Speaker 2: rule books, they disclose what they are and it has
• 9:51
  Speaker 2: to get reconciled in an orderly fashion.
• 9:53
  Speaker 1: Cal she put out this tweet right here. I'll zoom
• 9:55
  Speaker 1: in on that for you guys. Prior version of this
• 9:58
  Speaker 1: clarification was grammatically ambiguous. Is what they're talking about. As
• 10:02
  Speaker 1: a customer service measure, CALCI will reimburse lost value due
• 10:07
  Speaker 1: to trades made between these clarifications, So it wasn't necessarily
• 10:13
  Speaker 1: reimbursing the full intended amount that many of these traders
• 10:16
  Speaker 1: were dealing with. So it was really more of a
• 10:19
  Speaker 1: you know, kind of throwing some water on the fire.
• 10:21
  Speaker 1: But my concern was this when we first saw this
• 10:25
  Speaker 1: was to me the brand damage had been done. You
• 10:28
  Speaker 1: have to remember that most of the people who are
• 10:31
  Speaker 1: playing in prediction markets are what we call, you know, trenchers.
• 10:36
  Speaker 1: They're people that are out there in the trenches. They've
• 10:38
  Speaker 1: been trading meme coins. Now they're moving to, you know,
• 10:40
  Speaker 1: to prediction markets. This seems like it's just an automatic
• 10:45
  Speaker 1: push of that audience right into the arms of polymarket.
• 10:50
  Speaker 1: Does Calcie not see this?
• 10:52
  Speaker 2: Yeah? I can't speak for Calci, but I don't think
• 10:55
  Speaker 2: it is unique for there to be debates or discrepancies
• 10:58
  Speaker 2: about how certain contracts can get resolved. If I recall
• 11:02
  Speaker 2: a year or two ago, there's an issue about whether
• 11:05
  Speaker 2: I think Zelenski was wearing a suit or not. The
• 11:09
  Speaker 2: concern is not so much that controversies or discrepancies happen,
• 11:13
  Speaker 2: it's that whenever that occurs, it would make sense for
• 11:16
  Speaker 2: those who are confused to be to feel aggrieved and
• 11:19
  Speaker 2: upset about their expectations not being met. I don't know
• 11:23
  Speaker 2: how the Zelensky matter was reconciled, but here it appears
• 11:27
  Speaker 2: at Calci's taking some steps to provide further clarification and
• 11:31
  Speaker 2: at least reimbursing under certain.
• 11:34
  Speaker 1: I would have taken. I mean, this is just you know,
• 11:36
  Speaker 1: our opinion. You know, when you run into a buzzsaw
• 11:39
  Speaker 1: like this. For Calci, they have the means to really
• 11:43
  Speaker 1: go over the top. And there's a couple of really
• 11:46
  Speaker 1: good books out there and one that is all about
• 11:50
  Speaker 1: hospitality and over delivering on things. And I think when
• 11:55
  Speaker 1: you see services like this right here, this would have
• 11:58
  Speaker 1: been a great opportunity for Calci just to slam dunk
• 12:02
  Speaker 1: on Polymarket. If they to manage this correctly, it would
• 12:05
  Speaker 1: have been a brand builder for them. Maybe would have
• 12:08
  Speaker 1: been the huge separation because they're lacking in being able
• 12:12
  Speaker 1: to get into the political angle where poly market has
• 12:16
  Speaker 1: kind of won. So I think this is going to
• 12:17
  Speaker 1: be something to watch for sure. I want to go
• 12:20
  Speaker 1: into some of these clarifications because many people are talking
• 12:23
  Speaker 1: about these death markets you know, that have been out there,
• 12:26
  Speaker 1: much like what was dealing with Kmini. You look at
• 12:29
  Speaker 1: the current polymarket right now, US forces to enter Iran
• 12:34
  Speaker 1: by this certain date right now, the lead is by
• 12:36
  Speaker 1: end of year sixty percent. Do you think that this
• 12:40
  Speaker 1: is possibly considered a death market. When you look at
• 12:43
  Speaker 1: something like this, is this considered a death market?
• 12:46
  Speaker 2: Well, I do think it's important to make a distinction
• 12:49
  Speaker 2: between US regulated markets and those that are not US
• 12:53
  Speaker 2: regulated or abroad. The c has authority to regulate prediction
• 12:58
  Speaker 2: markets under the Commodities Exchange Act, and they have the
• 13:01
  Speaker 2: authority to ban contracts they think are against public interests,
• 13:05
  Speaker 2: which can include war, assassinate, assassinations, and the like. It's
• 13:10
  Speaker 2: my understanding the calshi's own rules, for example, prohibit contracts
• 13:15
  Speaker 2: that are connected or tied to death. So there is
• 13:19
  Speaker 2: a process by which those determinations are made in the
• 13:24
  Speaker 2: US for US regulated markets. What happens elsewhere on platforms
• 13:28
  Speaker 2: outside of the US that aren't regulated. Different standard, different universe,
• 13:33
  Speaker 2: different ecosystem.
• 13:34
  Speaker 1: What about social utility? When you look at how a
• 13:37
  Speaker 1: lot of this infrastructure is being built, most of the
• 13:40
  Speaker 1: markets that are being made within this you look at
• 13:43
  Speaker 1: polymarket right now, politics leads the way, but if you
• 13:46
  Speaker 1: go to the breaking tab you can kind of see there.
• 13:48
  Speaker 1: I mean, we've got India's World Cup, the s and
• 13:50
  Speaker 1: P five hundred yukon one of your big East rivals.
• 13:55
  Speaker 2: Oh my god, whatever those numbers are in Yukon guessing
• 14:01
  Speaker 2: they're too high. But as a doing state, I will
• 14:06
  Speaker 2: note in terms of the benefits from the prediction markets,
• 14:08
  Speaker 2: I think it's worth flagging two things in particular. First,
• 14:11
  Speaker 2: all you know, for your audience, consistent with crypto, these
• 14:14
  Speaker 2: markets support economic freedom and the democratization of finance. They
• 14:18
  Speaker 2: allow Americans to invest in topics, expertise, or an interest,
• 14:23
  Speaker 2: which not just eliminates barriers to Wall Street, but helps
• 14:27
  Speaker 2: hedge risks, speculate or engage in price discovery. And from
• 14:32
  Speaker 2: that last point, because these prediction markets have proven to
• 14:35
  Speaker 2: be very powerful tools to uncover the truth, right, this decentralized,
• 14:40
  Speaker 2: incentive based market can help forecast event probabilities. And that's
• 14:44
  Speaker 2: because information is inherently more reliable when people have skinned
• 14:50
  Speaker 2: the game.
• 14:50
  Speaker 1: Well. It has proven it in the political arena for sure.
• 14:54
  Speaker 1: I mean, if you look at I think it's is
• 14:56
  Speaker 1: it the five thirty eight blog, which is Nate Silver, Yeah,
• 14:59
  Speaker 1: that was a good example of him and also a
• 15:02
  Speaker 1: lot of these pollsters that were really challenged in the
• 15:06
  Speaker 1: last election.
• 15:07
  Speaker 2: For sure, that's right, and people are most familiar with
• 15:11
  Speaker 2: how it proved to outperform traditional election polls. It's clear
• 15:16
  Speaker 2: value in that. In the months since, or maybe the
• 15:19
  Speaker 2: year since, what we're also seeing is a lot of
• 15:20
  Speaker 2: news sites CNN and beyond partnering with these prediction markets utility.
• 15:26
  Speaker 1: Well, CNBC they even announced it all the time.
• 15:28
  Speaker 2: That's right. You literally see the headline because it's another
• 15:32
  Speaker 2: source for unbiased truth. But even more recently, the Federal
• 15:36
  Speaker 2: Reserve issued a paper that found that prediction markets provide
• 15:40
  Speaker 2: a rich benchmark that is valuable for researchers policymakers. That
• 15:45
  Speaker 2: is not a paper produced by Polly Calshi or others.
• 15:49
  Speaker 2: That is the Federal Reserve independently finding that their autility
• 15:54
  Speaker 2: from these prediction markets is an unmistakable fact.
• 15:57
  Speaker 1: Well, and it's getting to the point where you're going
• 16:00
  Speaker 1: to see more and more integration, and it brings me
• 16:03
  Speaker 1: to the point of insider trading, the issue of what
• 16:09
  Speaker 1: someone may know. I want to play a clip this,
• 16:12
  Speaker 1: of course is Scott Galloway, prof Gy, who talks about this.
• 16:15
  Speaker 1: He has kind of kind of emerged as a very
• 16:18
  Speaker 1: anti prediction market voice. Listen to this clip.
• 16:23
  Speaker 3: All it takes is what fifteen thousand dollars to sort
• 16:26
  Speaker 3: of drive up the spike in the market. Everyone's going
• 16:28
  Speaker 3: to say, huh, what does somebody in Bangladesh know about
• 16:30
  Speaker 3: the Pineglassy prime minister. They can drive a news cycle,
• 16:33
  Speaker 3: they could drive a political cycle, a potential actual ouster
• 16:36
  Speaker 3: of the Bangalasty prime minister, just with like fifteen thousand
• 16:39
  Speaker 3: dollars on polymarket harm and more wars, more destruction, more death,
• 16:44
  Speaker 3: whatever happening because of the avail availability to gamble on
• 16:48
  Speaker 3: the outcomes.
• 16:49
  Speaker 1: All right, so that's a proftcy show, wasn't Professor Galloway,
• 16:52
  Speaker 1: But he has come out on this before a couple
• 16:55
  Speaker 1: of times. That statement right there, I mean, how would
• 16:58
  Speaker 1: you argue.
• 16:58
  Speaker 2: That insider trading is not a new or unique phenomenon
• 17:02
  Speaker 2: to financial markets. It exists in securities markets, it as
• 17:05
  Speaker 2: long asistent in derivatives markets. The CFTC has existing rules
• 17:11
  Speaker 2: that parties must comply with when it comes to insider trading.
• 17:14
  Speaker 2: Their insider trading rules prohibit the trading on material, non
• 17:18
  Speaker 2: public information and breach of a duty. What's important, and
• 17:21
  Speaker 2: it was often missed in this discussion Pall, is that
• 17:23
  Speaker 2: there are multiple levels of protection where you are trading
• 17:27
  Speaker 2: on a US federally regulated marketplace, just as there are
• 17:32
  Speaker 2: in the securities markets. For example, you've got exchange level protections,
• 17:36
  Speaker 2: you've got civil protections from the CFTC, you even have
• 17:39
  Speaker 2: criminal protections from the Department of Justice, and collectively they
• 17:42
  Speaker 2: are equipped and have a long history of policing this space.
• 17:47
  Speaker 2: And I think it's not just that the CFTC is
• 17:50
  Speaker 2: uniquely capable of doing it. But we see very recently
• 17:54
  Speaker 2: efforts by Kalshi as a DCM and also by the
• 17:58
  Speaker 2: CFTC to make very that they are policing this market space.
• 18:02
  Speaker 2: Calshi disciplined two of their traders and find them thousands
• 18:06
  Speaker 2: of dollars for engaging in conduct that it deems to
• 18:10
  Speaker 2: be manipulative and fraudulent, and the CFTC is now investigating
• 18:15
  Speaker 2: those same matters.
• 18:16
  Speaker 1: Okay, so let's kind of paint a picture here. If
• 18:20
  Speaker 1: we do see state level guidance, or if the states win,
• 18:25
  Speaker 1: if they go against the CFTC and you end up
• 18:27
  Speaker 1: prediction markets at the state level, would that end up
• 18:30
  Speaker 1: putting these new OBBBA gambling rules into place where literally
• 18:35
  Speaker 1: you're paying taxes on your losses of.
• 18:38
  Speaker 2: My virtue's Paul is not being a tax lawyer, so
• 18:40
  Speaker 2: I can't give advice. But what I will say is
• 18:43
  Speaker 2: one of the reasons fifty years ago Congress gave exclusive
• 18:47
  Speaker 2: jurisdiction to the CFTC to prevent a frag fragmented regulatory
• 18:53
  Speaker 2: structure where entities that are participating in the derivative space
• 18:58
  Speaker 2: are subject to fifty different rules and regulation. There was
• 19:01
  Speaker 2: long attention historically, Paul. It dates back one hundred years ago,
• 19:04
  Speaker 2: where certain derivatives' activities was regulated concurrently by the states
• 19:09
  Speaker 2: and the federal government. That experiment failed, it created chaos,
• 19:14
  Speaker 2: and so about fifty years ago, Congress amended the Commodity
• 19:18
  Speaker 2: Exchange Act to give exclusive jurisdiction. And so every market participant,
• 19:24
  Speaker 2: not just the Calchies and the Polly's and the coinbases,
• 19:27
  Speaker 2: but anyone who's on these platforms should want uniform rules
• 19:31
  Speaker 2: and regulations, not just because it creates certainty pole but
• 19:34
  Speaker 2: also you worry about a race to the bottom, because
• 19:36
  Speaker 2: if you have fifty different rules and regulations, you worry
• 19:40
  Speaker 2: about regulatory arbitrage and different states with different interests having
• 19:45
  Speaker 2: rules that actually aren't in customers or investors' best interest.
• 19:49
  Speaker 1: Yeah, well, I think this is going to listen, it's
• 19:52
  Speaker 1: all playing out in front of us right now. Of course,
• 19:55
  Speaker 1: along with everything else that's crypto related, because you know,
• 19:58
  Speaker 1: our Congress and our have never been really built around
• 20:02
  Speaker 1: a digital ecosystem like this, so of course it's going
• 20:05
  Speaker 1: to go there. I want to run a lightning round
• 20:07
  Speaker 1: with you. This is our legal addition one. My first
• 20:11
  Speaker 1: one right here is casino lobby will wait until after
• 20:14
  Speaker 1: Trump his term here to take on Calshi in the
• 20:17
  Speaker 1: Supreme Court. Do you think they will?
• 20:20
  Speaker 2: I think a lot of the cases that are already
• 20:22
  Speaker 2: in the system are working through the appellent process, and
• 20:26
  Speaker 2: I think if they go to the Supreme Court it
• 20:28
  Speaker 2: would be during Trump's term.
• 20:29
  Speaker 1: During Trump so you're going to be on No, I
• 20:31
  Speaker 1: did not know that, So I'm going to bank with
• 20:33
  Speaker 1: you predicting gatorade color is not useful to society, therefore
• 20:38
  Speaker 1: it should be treated negative by government.
• 20:40
  Speaker 2: What do you think fair to say that that doesn't
• 20:42
  Speaker 2: appear to have potential financial consequences. So I'm fine to
• 20:46
  Speaker 2: the no. Yeah, well, agreeing with the proposition.
• 20:50
  Speaker 1: Polly market has a better legal argument because it doesn't
• 20:52
  Speaker 1: collect fees. What do you think in terms of this
• 20:55
  Speaker 1: whole argument.
• 20:56
  Speaker 2: I'm not sure how that necessarily plays a role in
• 20:59
  Speaker 2: the discs rushians, and I'm not aware of that being
• 21:03
  Speaker 2: a meaningful determinant as to whether or not something is
• 21:06
  Speaker 2: a swap. Fundamentally, it meets a definition. It is in
• 21:10
  Speaker 2: bounds to see if ThEC regulates it, it's not a swap,
• 21:13
  Speaker 2: it's out of bounds. So I don't think that has
• 21:15
  Speaker 2: a material impact on the legal.
• 21:17
  Speaker 1: Argument perfect states rights. The argument has successfully destroyed legal
• 21:22
  Speaker 1: gambling for users in the US.
• 21:24
  Speaker 2: Do you think people are conflating these ecosystems which we
• 21:27
  Speaker 2: talked about. They can coexist. There's nothing that's preventing state
• 21:33
  Speaker 2: gambling laws to regulate sportsbooks and sports operate. So I
• 21:38
  Speaker 2: think we have to start appreciating these universes can and
• 21:41
  Speaker 2: should coexist.
• 21:42
  Speaker 1: So exist. Yeah, so really doesn't really cause any issues.
• 21:46
  Speaker 1: All right, let's move into retail things, insider trading and
• 21:49
  Speaker 1: market manipulation. Now, the crackdown in trad FI is better
• 21:53
  Speaker 1: than what's happening in DeFi, because DeFi feels like it's
• 21:56
  Speaker 1: a little bit of a wild West right now.
• 21:58
  Speaker 2: Yeah, what I would say is inside trading and market
• 22:00
  Speaker 2: manipulation rules and this is from securities ecosystem beyond certainly
• 22:06
  Speaker 2: have more experience and precedent in the trad FI space,
• 22:11
  Speaker 2: So in that reguard it would be further along, but
• 22:14
  Speaker 2: similar concepts should apply in terms of whether it's material
• 22:17
  Speaker 2: non public information and what are your duty and obligations.
• 22:21
  Speaker 1: Yeah, I think it's kind of the middle of the
• 22:23
  Speaker 1: road right now because there's not enough there's first of all,
• 22:26
  Speaker 1: there's not enough case law to be even deal with this.
• 22:28
  Speaker 1: I haven't seen anything on insider trading on this outside
• 22:31
  Speaker 1: of occasional scenarios, and until we have most of the
• 22:34
  Speaker 1: regulatory framework in place, you're not going to have it.
• 22:38
  Speaker 1: So other than what the Supreme Court has ruled in already,
• 22:43
  Speaker 1: what will end up being more popular by top djens
• 22:46
  Speaker 1: Calci on coinbase app or poly market on.
• 22:48
  Speaker 2: The base appy. Anything that's on coinbase or base app
• 22:51
  Speaker 2: is a winner.
• 22:52
  Speaker 1: So I'm going with the base app. I think polymarket
• 22:55
  Speaker 1: over there, you're in the middle, right win rightly, So,
• 23:00
  Speaker 1: so I'm going with base though I think pobly market
• 23:02
  Speaker 1: wins that one. Is there a legal difference between social
• 23:05
  Speaker 1: utility and entertainment consumption.
• 23:07
  Speaker 2: For purposes these issues? The answer is no. The question
• 23:10
  Speaker 2: is not social utility or entertainment consumption, is whether there
• 23:14
  Speaker 2: are potential economic financial or commercial consequences, and I think
• 23:19
  Speaker 2: it is a stretch to suggest things like sports or
• 23:21
  Speaker 2: even entertainment don't have significant potential financial consequences. So would
• 23:26
  Speaker 2: you say no for purposes of these matters, I think
• 23:29
  Speaker 2: the answer is no. No.
• 23:31
  Speaker 1: Some of these guys, I'm not answering because I'm obviously
• 23:33
  Speaker 1: not a lawyer. So I would refer to that oil
• 23:38
  Speaker 1: market and palateer stock is a war death market.
• 23:42
  Speaker 2: I don't know what the term death market is meant
• 23:44
  Speaker 2: to suggest, but I do think the oil market and
• 23:46
  Speaker 2: palenteer stock, no one is suggesting or debating that those
• 23:49
  Speaker 2: things shouldn't be traded. There are various marketplaces. The fact
• 23:54
  Speaker 2: that you have warlike activity going on doesn't suggest to
• 23:58
  Speaker 2: me that you should be shutting down on the marketplace.
• 24:00
  Speaker 2: I think it's.
• 24:01
  Speaker 1: Important for people to have. It'd be the case if
• 24:03
  Speaker 1: you were betting on any of the defense stocks to
• 24:06
  Speaker 1: do a certain level. You know, the same kind of scenario.
• 24:09
  Speaker 1: States and family values. Republicans are totally fine with gambling
• 24:14
  Speaker 1: as long as they take a cut from the listen.
• 24:17
  Speaker 1: I don't write all of these questions just so you know.
• 24:20
  Speaker 2: Yeah, State, I'm not quite sure what the question is
• 24:23
  Speaker 2: getting out. I don't want to speak for others, but
• 24:25
  Speaker 2: that seems like a loaded question.
• 24:27
  Speaker 1: Yeah, I'm with you. I'll pass on that one. It
• 24:30
  Speaker 1: would be timely, ultimately pointless for polymarket to launch in
• 24:34
  Speaker 1: the US given this climate right now.
• 24:35
  Speaker 2: Poly market is very much in this litigation. Despite they're
• 24:38
  Speaker 2: actively engaged in these lawsuits. I can only suppose given
• 24:44
  Speaker 2: the briefs they're filing and actions they're taking, they very
• 24:47
  Speaker 2: much believe in their positions, just like coinbase and cal
• 24:50
  Speaker 2: you do. So. I don't see any indication or reason
• 24:52
  Speaker 2: why the litigation and that's going on would would has
• 24:57
  Speaker 2: deterred them from pursuing their path.
• 25:00
  Speaker 1: I think they have to. I think the market is
• 25:02
  Speaker 1: too big in the United States. Polymarket has such an
• 25:05
  Speaker 1: opportunity here, and when you look at the amount that
• 25:09
  Speaker 1: ice is put into polymarket, this is a huge, huge
• 25:13
  Speaker 1: play for them in terms of the US for sure.
• 25:16
  Speaker 1: All Right, last one, bottom line invest in VPNs. A
• 25:19
  Speaker 1: lot of people are out there saying, I'm just doing
• 25:22
  Speaker 1: it this way, Paul.
• 25:23
  Speaker 2: This is the benefit of being a lawyer, is I
• 25:26
  Speaker 2: don't have to weigh in at all on that one.
• 25:30
  Speaker 2: I'd have a different line of work.
• 25:31
  Speaker 1: I'm going to say yes, I'll let you defer out
• 25:35
  Speaker 1: easiest way to stop Chris Christy. What do you think.
• 25:39
  Speaker 2: The easiest way to stop Chris Christy is through platforms
• 25:42
  Speaker 2: like yours to separate fact from fiction.
• 25:44
  Speaker 1: All Right, there you go.
• 25:46
  Speaker 2: At the end of the day, facts in the law
• 25:48
  Speaker 2: will prevail and that's the best way to address it
• 25:50
  Speaker 2: the issue.
• 25:51
  Speaker 1: As you can see, guys, we'd like to have fun
• 25:53
  Speaker 1: with these questions on the lighting around. Many of them
• 25:55
  Speaker 1: come in from our audience, so you guys have some
• 25:57
  Speaker 1: ideas for some of these. But listen, it's been great
• 26:00
  Speaker 1: having you on today. Thank you so much for coming in.
• 26:03
  Speaker 1: We appreciate it.
• 26:04
  Speaker 2: Ryan, thanks Paul, really appreciate the time.
• 26:13
  Speaker 1: If you like this video, like and subscribe, drop a
• 26:15
  Speaker 1: comment down below, and also join our free private member group.
• 26:19
  Speaker 1: The link is in the description.