Latest / CRYPTO 101 / Ep. 758 Why Crypto Tokens Are Starting to Look Like Equity

Transcript

Ep. 758 Why Crypto Tokens Are Starting to Look Like Equity · CRYPTO 101

• 0:08
  [SPEAKER_00]: All right everybody welcome back to another episode here of the crypto 101 podcast.
• 0:14
  [SPEAKER_00]: I'm your host Bryce today.
• 0:16
  [SPEAKER_00]: Not joined by my good buddy Brendan he had some conflicts coming up and so you just get me but man I couldn't be more excited to have an incredible guest Gabe Shapiro who is an OG in the crypto space co-founder and CEO of metal x labs and managing partner of metal x pro
• 0:35
  [SPEAKER_00]: lawyer by background somebody who I follow it on Twitter slash x for years Love your commentary and really, you know, feeling privileged and happy that you're joining us Gabe.
• 0:45
  [SPEAKER_00]: So Welcome to the show and how are you feeling?
• 0:50
  [SPEAKER_01]: Thanks for having me up glad to be here.
• 0:52
  [SPEAKER_01]: See you in good
• 0:54
  [SPEAKER_01]: doing good.
• 0:54
  [SPEAKER_00]: All right.
• 0:55
  [SPEAKER_00]: A lot of movement here in the crypto market.
• 0:57
  [SPEAKER_00]: Obviously, the big backdrop, the big theme in crypto specifically was the failure of passage for the Clarity Act, whether it's a delay, whether it's a complete failure.
• 1:12
  [SPEAKER_00]: We just spoke with Christian Carlo on the podcast a moment ago and he says it's going to
• 1:18
  [SPEAKER_00]: never pass.
• 1:20
  [SPEAKER_00]: Other people are saying it's just a delay.
• 1:21
  [SPEAKER_00]: Maybe it's going to get passed through in the lame duck.
• 1:23
  [SPEAKER_00]: So the jury's still out.
• 1:25
  [SPEAKER_00]: But within a couple days of that not passing, we had the innovation exemption, the CFTC, was coming out as well alongside this SEC with a lot of announcement.
• 1:35
  [SPEAKER_00]: So there's a lot of interesting things to talk about that are hyper relevant to the market today.
• 1:41
  [SPEAKER_00]: But before we dive into that, I just want to get you in our audience acquainted.
• 1:46
  [SPEAKER_00]: Tell us a little
• 1:48
  [SPEAKER_00]: your background, you know, bringing businesses on chain, focusing on decentralization, law, and, you know, what's your focus on right now in terms of building?
• 2:00
  [SPEAKER_01]: Yeah, sure.
• 2:01
  [SPEAKER_01]: So I've been a lawyer for like 16 or 17 years now.
• 2:07
  [SPEAKER_01]: And the first half of that was in Big Law, doing biceye tech him and A.
• 2:13
  [SPEAKER_01]: So working for like Facebook, eBay and Tal.
• 2:19
  [SPEAKER_01]: companies like this, Adobe, and so on and so forth, buying other companies, right?
• 2:26
  [SPEAKER_01]: And I got a bit pretty badly by the crypto bug in like 2016.
• 2:31
  [SPEAKER_01]: I got pretty obsessed with Ethereum.
• 2:33
  [SPEAKER_01]: As soon as I read about smart contracts, actually, because
• 2:37
  [SPEAKER_01]: You know, once, if you're as a lawyer, if you read about a smart contract, you just think, oh, well, it's an escrow without an escrow agent, we use escrow as all the time.
• 2:45
  [SPEAKER_01]: That seems like it could be pretty useful, right?
• 2:48
  [SPEAKER_01]: And so I got super into crypto if you're that, and basically quit big law a couple days after being offered to join the partnership program at Hogan Levels actually, and I've been doing crypto, you know, basically for the last seven years,
• 3:06
  [SPEAKER_01]: And Metilex, initially started out as a governance project because I had noticed there were a lot of legal entities related to DAWS.
• 3:17
  [SPEAKER_01]: And at the time, Gensler paranoia was kind of at a TIS, the industry was under attack.
• 3:23
  [SPEAKER_01]: and people were very interested in having all kinds of legal and technical strategies for managing risks around DAWs.
• 3:32
  [SPEAKER_01]: Like, can you have a DAW that appoints a board of directors of an entity and can remove the board of directors of an entity?
• 3:39
  [SPEAKER_01]: And
• 3:40
  [SPEAKER_01]: You know, can you sort of like subject the discretion of some entity that maybe owns a bunch of project-related funds to some kind of checks and balances from a doubt so that this entity doesn't like to steal the money or do stupid things with the money?
• 3:56
  [SPEAKER_01]: And, you know, what I realized is that there are no pure legal solutions to that.
• 4:02
  [SPEAKER_01]: You really have to have a mix of legal and technical solutions.
• 4:05
  [SPEAKER_01]: So we came up with a kind of protocol mixed between law and smart contracts for having daos manage these entities.
• 4:13
  [SPEAKER_01]: We call them cybernetic entities or a borx.
• 4:17
  [SPEAKER_01]: What I quickly realized, however, is that these issues are all sort of a continuum, right?
• 4:23
  [SPEAKER_01]: If you can put a doubt related entity on chain, while you can also put normal business entity on chain.
• 4:30
  [SPEAKER_01]: And I began to get more interested in that in part because a lot of the space was moving away from Dow Solutions and toward more trust-based solutions and tokenized securities kind of enjoyed began to enjoy a second wave of interest
• 4:48
  [SPEAKER_01]: And so we ended up focusing more on that.
• 4:51
  [SPEAKER_01]: And so now, we don't call them boards anymore.
• 4:53
  [SPEAKER_01]: We call them cybercorp's.
• 4:55
  [SPEAKER_01]: And it's really normal business entities that use on-chain workflows combined with security's tokenization to do corporate finance type of things, like raising a venture capital around on chain or
• 5:10
  [SPEAKER_01]: doing stock sales on chain and this sort of thing.
• 5:15
  [SPEAKER_01]: So that's pretty much what I work on.
• 5:18
  [SPEAKER_01]: Anything relating to putting any of these on chain and mixing legal agreements and smart contracts and tokens.
• 5:26
  [SPEAKER_00]: You're doing the Lord's work, that is some tough stuff.
• 5:31
  [SPEAKER_00]: Have you noticed your job being just in terms of like reading the tea leaves or just kind of navigating it?
• 5:39
  [SPEAKER_00]: Is it easier in the Gensler era or easier sort of with the guidance that we've gotten recently?
• 5:46
  [SPEAKER_01]: Um, as a lawyer, I would say it was easier in the Gensler era
• 5:54
  [SPEAKER_01]: You know, there was like a very clear threat.
• 5:57
  [SPEAKER_01]: Founders took it pretty seriously.
• 6:00
  [SPEAKER_01]: And I had sort of a pretty well-defined playbook for how to deal with that threat, you know, focused around decentralization, frankly.
• 6:10
  [SPEAKER_01]: certain communications, strategies, not promising, very many things, being careful what you say, reducing any sort of discretionary management.
• 6:21
  [SPEAKER_01]: As a builder now, it's much easier, which is I think is the probably the most important thing because people are not really getting sued.
• 6:29
  [SPEAKER_01]: And so there's freedom to innovate and just let the market decide what's good.
• 6:42
  [SPEAKER_01]: How do you advise someone when the laws are still the same?
• 6:45
  [SPEAKER_01]: But they're no longer really being enforced at all.
• 6:49
  [SPEAKER_01]: And you don't want to kind of limit entrepreneurs creativity through some kind of flood.
• 6:56
  [SPEAKER_01]: But on the other hand, just because the laws are not being enforced, the laws are not changed.
• 7:01
  [SPEAKER_01]: And so the threat model is very similar to what it's always been.
• 7:06
  [SPEAKER_01]: And so in many ways, that's a more challenging environment from a legal point of view because you have the risk of seeming like some type of Cassandra or whatever, but also your job is to interpret the law.
• 7:21
  [SPEAKER_01]: So it can be more challenging in that sense, even though it's a much better environment for builders.
• 7:27
  [SPEAKER_00]: You know, that's kind of like in a, you know, in a certain way that that's kind of what I expect you to say because all the things that are coming out now are guidelines and they are sort of recommendations or staff bulletins, but it doesn't really feel like the law has changed.
• 7:46
  [SPEAKER_00]: And I think that's an interesting space to be, and again, I certainly am happy, but having legislation and new law would have made things more clear, but they're working with what they have.
• 8:01
  [SPEAKER_00]: And I guess the question that naturally comes up in this conversation is, okay, we've got,
• 8:07
  [SPEAKER_00]: two years and a quarter left of this administration and this SEC and this CFTC is the idea that we're going to get these exemptions and guidelines and safe harbors so intertwined and get Wall Street ready to rock and roll on chain get the DTCC you know piped in on the blockchain and get everything so that it eventually becomes nonpartisan so that it
• 8:32
  [SPEAKER_00]: not only will be hard to unwind in the new administration, but it will actually be not preferential to either party to do so, that this will eventually become just status quo and maybe eventually turned into law in some later bill.
• 8:50
  [SPEAKER_01]: Yeah, I mean, I think that's certainly an aspect of strategy that many important businesses in the industry and their lobbyists and like the trade associations that they're in, et cetera, have.
• 9:07
  [SPEAKER_01]: You know, it's, it's,
• 9:11
  [SPEAKER_01]: There still is, it's not as unified, I think, as that would imply, because different kinds of outcomes definitely favor different sorts of parties, even within the crypto industry.
• 9:23
  [SPEAKER_01]: And then, as you mentioned, there's this factor of Wall Street, right?
• 9:28
  [SPEAKER_01]: And they, yes, although they're very interested in crypto and they're doing things in crypto.
• 9:34
  [SPEAKER_01]: You know, if you read, for example, the letter that Citadel recently wrote to the SEC sort of complaining about some of the SEC's recent guidance, potentially being to liberal or creating an unfair advantage for the crypto format of doing securities, you know, they're they're very powerful and money as well.
• 9:57
  [SPEAKER_01]: And they're certainly investing in crypto.
• 9:59
  [SPEAKER_01]: I believe they're invested in Canton.
• 10:01
  [SPEAKER_01]: and some of these other ecosystems, but the version of crypto that they would want is a very different one that is more favorable to the intermediaries and has a more permanent wall for the intermediaries and is less disruptive.
• 10:19
  [SPEAKER_01]: to the existing order, then what some other types of parties in the crypto industry, like I suppose, you know, maybe like Uniswap, you know, would want, which is more of this truly permissionless, decentralized version of it, right?
• 10:34
  [SPEAKER_01]: So it's definitely not a monolith, but I think,
• 10:37
  [SPEAKER_01]: You know, broadly speaking, the strategy you described, waving the frog, so to speak and becoming too big to fail.
• 10:43
  [SPEAKER_01]: You know, while doing damage control along the way, is certainly a big part of the strategy.
• 10:51
  [SPEAKER_00]: is, you know, we've got these two regulatory bodies, CFTC, SEC, one does commodities, one does securities, it's in the name, but is there a third classification of an asset that you think is emerging that is somewhere, like, is it a spectrum or is it black and white?
• 11:12
  [SPEAKER_01]: It's a spectrum because, I mean, there are even outside of crypto, there are already our types of assets that are co-regulated by the CFTC and the SEC, right, like securities based swaps.
• 11:25
  [SPEAKER_01]: So the...
• 11:27
  [SPEAKER_01]: Um, it is, they're not mutually exclusive categories, and the really, I mean, you mentioned the Clarity Act and, you know, how big of a deal is it that it failed?
• 11:36
  [SPEAKER_01]: I would say the biggest aspect of the Clarity Act was that it gave regulatory authority over the crypto spot market.
• 11:46
  [SPEAKER_01]: to the CFTC and although the CFTC regulates commodities broadly speaking, it's actually never had regulatory authority over a spot market.
• 11:55
  [SPEAKER_01]: It's only have fraud authority over spot markets in the past.
• 11:59
  [SPEAKER_01]: And so without that, now some people are speculating the CFTC is just going to
• 12:09
  [SPEAKER_01]: You know, if everyone is wearing their sort of somber hats, I think that is not really possible, you know, without a change in legislation for them to do.
• 12:19
  [SPEAKER_01]: And so that does mean that there is a significant regulatory gap over spot-reading in crypto.
• 12:25
  [SPEAKER_01]: This you have to see can regulate like futures in crypto and center already, but it never had the ability to write rules in such for spot-reading of crypto.
• 12:35
  [SPEAKER_00]: And when people, you know, you think about, okay, when you buy a security, you kind of know what you get, generally speaking, there's all these disclosures, you buy it in your brokerage account, you can read through something they, you know, they sometimes they even mail you if there's a big vote, there's a hundred page document, they mail you kind of get over disclosed.
• 12:53
  [SPEAKER_00]: And if you buy a commodity,
• 12:56
  [SPEAKER_00]: You know, you're like, okay, I'm buying wheat.
• 12:58
  [SPEAKER_00]: I kind of know what that is.
• 12:59
  [SPEAKER_00]: Maybe it's going to go up or down or I'm buying oxen.
• 13:02
  [SPEAKER_00]: You know, I kind of know what's going to happen with that market as well as somebody can.
• 13:08
  [SPEAKER_00]: But when you buy a crypto token, sometimes people are like, well, what do I get?
• 13:12
  [SPEAKER_00]: And it's of course evolved over time, 2017.
• 13:16
  [SPEAKER_00]: You bought a white paper.
• 13:17
  [SPEAKER_00]: You bought a dream.
• 13:18
  [SPEAKER_00]: That's what you got.
• 13:20
  [SPEAKER_00]: and things evolved over time, but today, you know, fast forward Q4 of a 2026, what is an investor get when they buy a crypto token?
• 13:32
  [SPEAKER_00]: I know not all crypto tokens are the same, and maybe you could buck it them, you know, if you're buying this kind of token here's what you get like a theory, I'm right.
• 13:40
  [SPEAKER_00]: When you buy a theorem here's what you get.
• 13:41
  [SPEAKER_00]: It's a commodity and that gets you x.
• 13:49
  [SPEAKER_01]: right.
• 13:50
  [SPEAKER_01]: Yeah, it's very, it's very interesting and there isn't a one-size-fits-all answer.
• 13:54
  [SPEAKER_01]: I mean, in terms of law and policy, I think the reason for regulating tokens differently from securities or the idea of it would be that you don't really get anything, as you said, it's an asset whose value is determined by supply and demand and doesn't have any rights.
• 14:17
  [SPEAKER_01]: In crypto through crypto economic mechanisms and other things, we found a lot of good ways of kind of getting you almost all the same benefits as you get through rights through rights and obligations, let's say, right, like a stock gets you the right to a dividend or the right to like the residual equity in an MNA event.
• 14:39
  [SPEAKER_01]: And then it also gets you the benefit of certain duties called fiduciary duties, right?
• 14:43
  [SPEAKER_01]: So that's typically how it is, securities get you a mix of rights and duties.
• 14:48
  [SPEAKER_01]: And in crypto, we have found some marvelous crypto economic mechanisms,
• 14:55
  [SPEAKER_01]: based on powers and incentives, I would say, instead of duties and rights, that can get you into a very similar place, if the protocol is always buying back the token, that's like an incentive and if you're always able to spend the token,
• 15:17
  [SPEAKER_01]: through this cryptodynamic mechanism, then that's like a power that you have, and it sort of takes the place of these rights and obligations.
• 15:25
  [SPEAKER_01]: And what it means is that you can construct a system that's basically like a systems-based business where the token is effectively like equity in that system, right?
• 15:36
  [SPEAKER_01]: And I've written a lot about this.
• 15:38
  [SPEAKER_01]: I haven't used the system equity mean,
• 15:40
  [SPEAKER_01]: That much these days, but years ago, I used it a lot, but that's really what it is and that's sort of what makes it a gray area Because it can look and feel a lot like an equity while not having rates and the question has always been how do you regulate that and
• 15:55
  [SPEAKER_01]: I still don't think the question has really been answered to be honest, because even the SEC is like red lining, it's own guidance, like it came out, like it's probably some guidance last week, then it published a red line of it this week, and I think people just get very confused by this whole situation, and one of the most confusing situations is obviously one where there's a somewhat centralized operation, like let's take Binance, for example, right,
• 16:25
  [SPEAKER_01]: But they have this token called B&B, and it gets you something like utilities on their centralized platform.
• 16:31
  [SPEAKER_01]: And then they also, they just happen to have a habit of applying a certain percentage of their revenue to buying back the token on a regular basis.
• 16:38
  [SPEAKER_01]: You don't have any right to that.
• 16:40
  [SPEAKER_01]: In theory, they could stop doing that at any time.
• 16:43
  [SPEAKER_01]: There's no contract that you have.
• 16:45
  [SPEAKER_01]: They don't owe you any fiduciary duties.
• 16:47
  [SPEAKER_01]: But they just do it and do it and do it and do it for years.
• 16:50
  [SPEAKER_01]: to the point where basically you can expect that they're always going to keep doing this, right?
• 16:54
  [SPEAKER_01]: Um, and so that's kind of like the edge case of, is that going to be treated as a security or not?
• 17:01
  [SPEAKER_01]: And I still think we have a real answer for that, but that's that's the edge case, really.
• 17:08
  [SPEAKER_00]: Yeah.
• 17:09
  [SPEAKER_00]: And like for instance, if if some of these tokens come out and it's
• 17:19
  [SPEAKER_00]: What's the risk to the issue, or is what's the risk to risk to change it?
• 17:22
  [SPEAKER_01]: It depends what the issue has done.
• 17:24
  [SPEAKER_01]: You know, if the issue has sold them in a capital raising transaction, then the risk is, and assuming there's no fraud, then the risk is what we call recision that they're required to buy back all the tokens at the price that they initially sold them at.
• 17:43
  [SPEAKER_01]: And if they,
• 17:46
  [SPEAKER_01]: if they, and sometimes there can be penalties as well, right?
• 17:50
  [SPEAKER_01]: And, and so of course, from a game through, you know, really what I do now as an lawyer or designing any kind of technical solution, implementing legal strategies, is a lot of it is more pragmatic and tactical and strategic.
• 18:03
  [SPEAKER_01]: So, so from a strategic perspective, as a developer or an entrepreneur, whatever, what you have to realize, no one is going to take that by-back offer,
• 18:12
  [SPEAKER_01]: unless the token has performed very poorly, right?
• 18:15
  [SPEAKER_01]: So your redskis sort of cabin, you know, as long as you can keep your token above the initial offering price for at least a year, which is when the decision right typically expires, like you actually have very limited securities law risk, right?
• 18:31
  [SPEAKER_01]: From a fundraising perspective.
• 18:33
  [SPEAKER_01]: Now, people used to talk about more of an ongoing risk of like, okay, well, you know,
• 18:41
  [SPEAKER_01]: Maybe the token is covered by the securities laws because this group is making ongoing entrepreneurial efforts There's no recision right anymore because either they air dropped at all or they sold it a long time ago or it's trading above its recision price or whatever it may be But it's still may be something illegal that's going on and so the SEC may come in and say hey, you know This has to be delisted from these exchanges because they're not securities exchanges
• 19:08
  [SPEAKER_01]: more of you just have to shut down the project because what you're doing is just in the Eagle and there's no way to fix it, right?
• 19:16
  [SPEAKER_01]: You just get an injunction rather than having to give money back per se.
• 19:20
  [SPEAKER_01]: And so that was a risk, you know, that a lot of projects faced in the undergencer and there were some projects shut down like that, like the library project.
• 19:30
  [SPEAKER_01]: You know, it was a good example.
• 19:32
  [SPEAKER_01]: or kick, kick was another one, right they did a big ICO and they basically just kind of got checked down.
• 19:39
  [SPEAKER_01]: But you know, people are not going to jail over this generally speaking and so most entrepreneurs will just choose to navigate that risk.
• 19:48
  [SPEAKER_01]: They'll be optimistic that their token is not going to perform extreme for a lot less than what they sold it for, you know, and so they're unlikely to have a problem, but there's some theoretical risks.
• 20:00
  [SPEAKER_00]: Wow, fascinating, and that was a great answer and something that is definitely new information and very valuable.
• 20:09
  [SPEAKER_00]: And I want to take an example, again, never, I never liked to call out projects by name or whatever, just,
• 20:15
  [SPEAKER_00]: For obvious reasons, but I'm going to kind of break that rule here because it's been in the news quite a bit Venice, right VVV is the token and I love the founders entrepreneur behind it a guy who I'm sure you know Eric Voorhees and one of the things that he mentioned was that
• 20:35
  [SPEAKER_00]: You know, Venice, VVV, everything that this company does, which high level, it's trying to be a private inference layer for AI.
• 20:45
  [SPEAKER_00]: And so if you want to use something like chatGPT, but you don't want to open AI to store all your data and query against it and end up like those mathematicians who got completely ripped off, then use something like Venice to have private conversations and protect your business IP and so on.
• 21:02
  [SPEAKER_00]: in your research.
• 21:03
  [SPEAKER_00]: And so what they do with the money that they earn from these subscriptions, they take a portion of it to programmatically buy back the token off the open market, and this is driven the token price way up.
• 21:16
  [SPEAKER_00]: And
• 21:17
  [SPEAKER_00]: a while back they were we're talking about some of their equity and people were calling them out like hey, you've got equity You've got a token.
• 21:24
  [SPEAKER_00]: You're duplicitous.
• 21:25
  [SPEAKER_00]: You're not being and he's like look the only reason why we have equity is because we have an international organization We have bank accounts.
• 21:31
  [SPEAKER_00]: We have payroll.
• 21:33
  [SPEAKER_00]: We need the equity as sort of operational like an operational layer But it has nothing to do with like, you know, you know, we're not trying to raise the value of the equity all the equity all of the or sorry all of the
• 21:46
  [SPEAKER_00]: the incentives are sort of pointing towards, you know, stabilizing or raising the value of the token.
• 21:54
  [SPEAKER_00]: And so, you know, I guess one, do you think that this is like a model that makes sense?
• 22:01
  [SPEAKER_00]: And do you think that, you know, this idea that like, hey, tokens in the future will have tokens, and they will have equity, or do you just have to have one or the other?
• 22:12
  [SPEAKER_01]: Yeah, it's a great question and it's an interesting question for me because I was kind of like one of the earliest dual token equity haters, so to speak, in fact, hating from Uniswap still has me blocked on X because no.
• 22:27
  [SPEAKER_01]: you know, I was just criticizing that they were like this venture back company with like this true very traditional Silicon Valley equity model and then they have this token with this like theoretical fee switch that they would like always refuse to turn on and there was
• 22:44
  [SPEAKER_01]: There was this guy who wrote, I think he, he went on to become a founder himself, but he wrote this like massive apology for why this structure is actually genius.
• 22:54
  [SPEAKER_01]: He said it's a hyperstructure and the whole point of a hyperstructure is that like the token is valuable because people will buy it so that the fee switch to make sure the fee switch is never turned on to make sure that the token stays
• 23:13
  [SPEAKER_01]: I'm sorry.
• 23:13
  [SPEAKER_01]: It might be an extremely silly stuff.
• 23:16
  [SPEAKER_01]: But at the time, like VCs, like loved this, they like loved this hyperstructure, idea, and all this, and I was very critical of it.
• 23:23
  [SPEAKER_01]: And now, everyone is critical of dual-token equity.
• 23:26
  [SPEAKER_01]: They want you to either be equity or token.
• 23:28
  [SPEAKER_01]: And I actually become less critical of dual-token equity.
• 23:32
  [SPEAKER_01]: And I can sort of explain, like why.
• 23:34
  [SPEAKER_01]: I mean, number one, it's just pragmatism.
• 23:38
  [SPEAKER_01]: The tokens and securities are going to be regulated differently.
• 23:42
  [SPEAKER_01]: Yes, it's like sort of a continuum and like some of the tokens will be more security-ish, right?
• 23:48
  [SPEAKER_01]: And some of the securities will be more token-ish.
• 23:51
  [SPEAKER_01]: But at the end of the day, there is going to be a fundamental difference between how these things are regulated.
• 23:57
  [SPEAKER_01]: And that means they are different things.
• 23:59
  [SPEAKER_01]: And one of the interesting things, which in my opinion, you know, this current SEC has really
• 24:08
  [SPEAKER_01]: He's saying if they made it worse makes it sound like it's a bad thing which is not my intention But they increased this trend that you could get a heavy arbitrage by raising capital through tokens as opposed to through securities, right?
• 24:21
  [SPEAKER_01]: Because they're they've introduced this right crypto It has pretty much more liberal rules What much more it has at least some more liberal rules that of raising
• 24:33
  [SPEAKER_01]: funds by selling a token in a securities transaction as opposed to selling a security in a security transaction.
• 24:40
  [SPEAKER_01]: And so there's a natural arbitrage that exists because these things are regulated differently.
• 24:46
  [SPEAKER_01]: And what that means just as a practical matter is that many types of companies will want to have a token.
• 24:53
  [SPEAKER_01]: even if they're not defy, even if they're not decentralized, they will want to do it because and they will just introduce some sort of utility, you can be a perk token or you can just be a brand mean token or whatever the hell it is or a club token, whatever they're going to want to do it because it's going to let them raise some extra money with fewer springs attached.
• 25:12
  [SPEAKER_01]: And not every business is appropriate to be pure token, right?
• 25:16
  [SPEAKER_01]: If you are a, I, for interior lab, it would make no sense for you to be pure token.
• 25:22
  [SPEAKER_01]: You have all these business deals, you're getting these opaque revenues, the people are going to need to know about those things, they're going to, they can't always monitor what's happening on chains, so they're going to need fiduciary duties,
• 25:35
  [SPEAKER_01]: in order to be able to trust what you're doing and that they could sue you if you do something bad and all these things, right?
• 25:40
  [SPEAKER_01]: And so just as a practical matter, there're gonna be lots of businesses that are pretty much mostly appropriate for equity that are gonna do tokens anyway.
• 25:49
  [SPEAKER_01]: And so dual token equity is going to be a thing forever, in my opinion.
• 25:53
  [SPEAKER_01]: And so you just have to accept it and you have to figure out what is the way that we can make those companies the least bad and the most fair that they can be, right?
• 26:02
  [SPEAKER_01]: So, so I now accept that this category is real and here forever.
• 26:06
  [SPEAKER_01]: And part of what we do at Metilex is working with those types of visuals to try to say, what's the way that you can make this the most fair and good for your community?
• 26:17
  [SPEAKER_01]: right.
• 26:18
  [SPEAKER_01]: One way we came up with is you could do periodic rounds where you offer participation in those equity rounds as a perk of the choking, in effect, right?
• 26:27
  [SPEAKER_01]: Use the choking to buy equity.
• 26:30
  [SPEAKER_01]: You stuff to be in a credit in a investor, you stuff to qualify, whatever, but at least it's
• 26:35
  [SPEAKER_01]: giving token holders and opportunities to also get equity, right?
• 26:39
  [SPEAKER_01]: There are other ways, but I think it's a category that exists.
• 26:42
  [SPEAKER_01]: Then I think some of our other clients are pure token launch pads that have tried to make the token as trust mitigated as possible relative to the business.
• 26:54
  [SPEAKER_01]: So metadata is a client or one might say a user of ours.
• 26:59
  [SPEAKER_01]: Umia is another one in this category and I so we've done some work with pump fun for their kind of more hackathon style projects as well for this.
• 27:10
  [SPEAKER_01]: And so the idea there is let's create a legal structure.
• 27:14
  [SPEAKER_01]: It's not giving the token rates per se.
• 27:17
  [SPEAKER_01]: But everyone who launches on this launch pad, they will commit to specific legal entities that have specific rules.
• 27:25
  [SPEAKER_01]: And therefore anyone buying this token can know that they, it's not as good as a security, but necessarily, but they have certain protections and certain transparency, et cetera, right?
• 27:36
  [SPEAKER_01]: Like for example, in one way is, if the business is gonna sell the IP, let's do a decision market oracle on that.
• 27:45
  [SPEAKER_01]: So that's another approach, and I think that's a better way of doing token only projects.
• 27:50
  [SPEAKER_01]: And then on the equity only side, we also work with projects to say, can we make your equity work more like a token?
• 27:57
  [SPEAKER_01]: Can we tokenize your equity, give more transparency, put more of your revenue flows on chain, more of your governance on chain?
• 28:03
  [SPEAKER_01]: So to me, all of these are just part of a spectrum and any given business should be looking at all three of these types of options and figuring out which one they want to commit to, they'll have bad ways of doing them, they'll have good ways of doing them, right?
• 28:17
  [SPEAKER_01]: And that's that's kind of how I see it.
• 28:20
  [SPEAKER_00]: I love it.
• 28:21
  [SPEAKER_00]: Super comprehensive and just kind of an anecdote from Metadow, you know, I run a fund with management business and we participate in some of these metadata ICOs.
• 28:33
  [SPEAKER_00]: And so one of the ICOs that we participated in was Ranger Finance.
• 28:38
  [SPEAKER_00]: And I think I've told the story on the podcast before, but it made me such a believer in Metadow because Ranger, they were making misrepresentations.
• 28:46
  [SPEAKER_00]: Everybody voted.
• 28:47
  [SPEAKER_00]: We all got our money back.
• 28:48
  [SPEAKER_00]: And it was the first time I invested in a crypto where the thing, you know, you know, it starts plummeting to zero, the community freaks out.
• 28:56
  [SPEAKER_00]: And then you literally get your USDC back deposit in your wallet, you burn the token.
• 29:01
  [SPEAKER_01]: I thought in a sense, it's building in the recision rate into the actual offering by using smart contracts.
• 29:08
  [SPEAKER_01]: right and that's a very good, you know, I love things like that, that's these are these are the things that I got into crypto for because a lot of crypto I would say right now is like the worst of both worlds like you have full trust in in the whales and the team and everything and then you also have no rights and no protections
• 29:28
  [SPEAKER_01]: Right.
• 29:30
  [SPEAKER_01]: What metadata is doing is you may not have that as many rights as in Tradify, but you have smart contract protections that are equivalent or possible even better.
• 29:41
  [SPEAKER_01]: Like, yeah, I think in the example you just raised, it's better because ordinary, if doubt, if you had had a security and you had made a normal capital investment, I'm going to take all the years to get my mobile back or your lawyers have to come in.
• 29:54
  [SPEAKER_01]: is may take years to resolve by then most of the money is spent and you're not going to get anything back with this you could get an almost immediate remedy right and so it actually is in a case where crypto is superior to travel.
• 30:07
  [SPEAKER_00]: Totally.
• 30:08
  [SPEAKER_00]: Yeah.
• 30:09
  [SPEAKER_00]: I couldn't agree more.
• 30:10
  [SPEAKER_00]: And I think that the Umea model, the metadata model, and I think what Pump Fun is doing is totally interesting, you know, full disclosure.
• 30:18
  [SPEAKER_00]: I have exposure across those names.
• 30:21
  [SPEAKER_00]: And I think a good question that a lot of our listeners are probably thinking is, okay, I get it.
• 30:28
  [SPEAKER_00]: There's new token models.
• 30:31
  [SPEAKER_00]: What are some questions I should be asking
• 30:35
  [SPEAKER_00]: before I buy a token, so say I get an ad for a token or I'm on Queen Gekko or X, I see somebody talking about a token, you know, now with AI, any of these models, you could go and you could just genuinely get deep research.
• 30:48
  [SPEAKER_00]: What is like, one or two, if you want to be generous, three prompts that you should ask an AI bought about, before I get into it.
• 30:57
  [SPEAKER_01]: Well, are the, you know, what are the entities related to this token?
• 31:03
  [SPEAKER_01]: And can you find me their legal documents?
• 31:05
  [SPEAKER_00]: Right, okay.
• 31:06
  [SPEAKER_01]: I like it.
• 31:07
  [SPEAKER_00]: I like it.
• 31:08
  [SPEAKER_01]: That would be my very first question.
• 31:11
  [SPEAKER_01]: V, and often the answer is no.
• 31:16
  [SPEAKER_01]: Right, or, you know, and it's tricky because there are a lot of science, man, like a lot of these foundations, so to speak, you could maybe get one of their documents, you know, which is maybe like the articles, but you actually have to read and think about it because they also have something called bylaws.
• 31:34
  [SPEAKER_01]: and the bylaws are not published and the bylaws may be where most of the customization and the real rules are, you know, so it gets tricky.
• 31:42
  [SPEAKER_01]: That's number one for any token, really.
• 31:47
  [SPEAKER_01]: One of the interesting things is that we're actually think the documentation is most lacking.
• 31:53
  [SPEAKER_01]: Believe it or not is with tokenized securities.
• 31:57
  [SPEAKER_01]: it's extremely hard to find documentation for most tokenized securities and sometimes it's easier for non-security's tokens.
• 32:07
  [SPEAKER_01]: When you think it's the opposite, right, because the tokenized security actually depends on law.
• 32:12
  [SPEAKER_01]: But the, the, the, the, the, the, the, the, the, the, the,
• 32:15
  [SPEAKER_01]: traditionally, I don't know what the thinking is exactly, but most of these tokenization projects are really not publishing much detail about the underlying legal system, and part of the excuse, like I had a little debate with one of the guys from Securitize about this some month ago, because I wrote an article criticizing a lot of tokenization models, and I said,
• 32:40
  [SPEAKER_01]: no one can even know what this token means.
• 32:43
  [SPEAKER_01]: They can't get the legal document.
• 32:44
  [SPEAKER_01]: They said, well, it's a private security.
• 32:47
  [SPEAKER_01]: So that means the documents have to be private, which is actually not true at all.
• 32:51
  [SPEAKER_01]: But it's a very close thing for whatever reason they want to keep it close.
• 32:55
  [SPEAKER_01]: So that's just an interesting,
• 32:57
  [SPEAKER_01]: aspect, I guess, and it's counter-intuitive.
• 33:02
  [SPEAKER_01]: But certainly I would ask about that.
• 33:05
  [SPEAKER_01]: And I would, you know, obviously the traditional things about, you know, is it a high FDV low float token?
• 33:14
  [SPEAKER_01]: You know, that's, that's obviously one of the things that people have gotten most screwed on.
• 33:19
  [SPEAKER_01]: Um, is there any way to like track the unlocks know which wall it's our investors, you know, things like that.
• 33:25
  [SPEAKER_01]: So that's kind of, that was three-ish Um, but like it.
• 33:29
  [SPEAKER_01]: It's the legal documents and it's the unlocks and it's um, yeah, that, I mean, that's, that's pretty much what.
• 33:35
  [SPEAKER_01]: And, and this more contracts, right?
• 33:37
  [SPEAKER_01]: Okay, it does this have a mint function, right?
• 33:39
  [SPEAKER_01]: And that's sort of thing, right?
• 33:40
  [SPEAKER_01]: Um,
• 33:42
  [SPEAKER_00]: I love it.
• 33:42
  [SPEAKER_00]: No, these are great.
• 33:43
  [SPEAKER_00]: I mean, I'm taking notes.
• 33:45
  [SPEAKER_00]: I know everybody at home listening is a champion at the bid, and this is awesome, and you know, I'm curious as well, like, you know, to kind of dovetail into the tokenized security stuff.
• 33:57
  [SPEAKER_00]: It seems like there's just been an explosion of different models, and you're getting public debates now between, for instance, the most popular one, the AMC versus Robinhood discussion, AMC saying, hey, I didn't consent to you make in this derivative.
• 34:11
  [SPEAKER_00]: rapper, pseudo what you know he is all confused and Vlad from Robinhood's like no no like you know what what's the concern and you know my my legal guy He was a I think Dan Gallagher former C SEC commissioner he's you know representing Robinhood as their
• 34:27
  [SPEAKER_00]: I don't know general counsel chief legal officer something like that.
• 34:29
  [SPEAKER_00]: He's saying this is all kosher and so could you break it down for us?
• 34:33
  [SPEAKER_00]: What are like the most popular models you mentioned secure ties?
• 34:36
  [SPEAKER_00]: They have a model.
• 34:38
  [SPEAKER_00]: There's the Robin Hood.
• 34:40
  [SPEAKER_00]: There's X stocks.
• 34:41
  [SPEAKER_00]: There's quite like is there a way to buck it this into like I don't know two or three models?
• 34:46
  [SPEAKER_01]: Yeah, I mean, I personally divide it into two broad categories, and then they're kind of subcategories from there.
• 34:53
  [SPEAKER_01]: Sure.
• 34:53
  [SPEAKER_01]: So there's one model that I call constitutive tokenization, which is where you are.
• 35:01
  [SPEAKER_01]: The issuers involved and the issuers legal documents give a token or some type of on chain apparatus, a smart contract or some type of on chain transaction, definitive legal standing within their corporate governance and corporate finance structure.
• 35:22
  [SPEAKER_01]: So, you know, the easiest example for me to explain is the approach that we encourage at Metilex, which is that in the, let's just say it's a corporation.
• 35:32
  [SPEAKER_01]: The corporation's bylaws would recognize a category of tokenized stock, and it would say that for whatever shares of their stock are tokenized, specific NFTs on chain represent the definitive record of who owns that security.
• 35:48
  [SPEAKER_01]: right and that that's to me is the most perfect example of constituent organization.
• 35:54
  [SPEAKER_01]: You can also do that more partially.
• 35:55
  [SPEAKER_01]: I believe that's what secure ties considers itself to do.
• 35:59
  [SPEAKER_01]: They use ERC 20 tokens and I think I believe that they say like well the on chain is the record of how many units of the security you hold and then you combine that.
• 36:09
  [SPEAKER_01]: with like a trans-region position that says what is the name of the owner of that number of units and the tube combined, and I would also consider that to be constitutive, loosely speaking.
• 36:21
  [SPEAKER_01]: And then there is the other category is point to tokenization.
• 36:27
  [SPEAKER_01]: and pointer tokenization basically means that something is happening on chain and it's either a trailing or a leading record of something that has or should happen on an off chain
• 36:43
  [SPEAKER_01]: So a classic example of this would be what's called an instruction token, where me sending some amount of tokens to some other address constitutes an instruction to a transfer agent to make a change on its books, which are the legally definitive books that
• 37:02
  [SPEAKER_01]: the person who controls that other address is now the owner of some securities, right?
• 37:09
  [SPEAKER_01]: Another example of this going that's sort of like where it's it's an advanced indicator of what should happen.
• 37:15
  [SPEAKER_01]: Another example of this would be the transfer agent makes a change and then they cause
• 37:22
  [SPEAKER_01]: I'm mirroring blockchain for transaction to occur to kind of keep the books in sync, right?
• 37:28
  [SPEAKER_01]: And I would call that pointer tokenization, right?
• 37:30
  [SPEAKER_01]: And then the confusing thing is that there's sort of like another dimension between constitutive and pointer, which is like, I guess like direct versus indirect, right?
• 37:43
  [SPEAKER_01]: Where basically, okay, is it is,
• 37:48
  [SPEAKER_01]: is the issuer themselves because like basically you could take a have a stable coin type of model and this is what's become very popular like it's what Robinhood is doing it's what Coinbase is doing it's what a lot of them are doing.
• 38:00
  [SPEAKER_01]: You have some entity, it goes out and buys stock.
• 38:03
  [SPEAKER_01]: Let's just simplify things to say, buy stock.
• 38:06
  [SPEAKER_01]: And then issues are choking that is essentially some sort of director indirect claim against that entity's pool of this stock, right?
• 38:15
  [SPEAKER_01]: And so that, you know,
• 38:18
  [SPEAKER_01]: You, with that, that token that is issued, that itself could either be constitutive or pointer relative to that intermediary entity, right?
• 38:31
  [SPEAKER_01]: But ultimately, what people want exposure to is not that entity, it's the, this other, the stock of this other entity that that entity holds.
• 38:39
  [SPEAKER_01]: So it's, so it's indirect, right?
• 38:41
  [SPEAKER_01]: So those are kind of the dimensions, how I put my personal,
• 38:45
  [SPEAKER_01]: like taxonomy of this and you know it can be confusing.
• 38:50
  [SPEAKER_01]: And then there's also things like you know I would say what was it called?
• 38:55
  [SPEAKER_01]: Not x-docs, x-docs is kind of like the stablecoin model but there was another one on Solana and blanking on the name of it.
• 39:09
  [SPEAKER_01]: But basically
• 39:11
  [SPEAKER_01]: There's as even like more remote, right?
• 39:13
  [SPEAKER_01]: It basically says like, well, here's some entity, we'll tell you that it owns these securities and by the way, there's also this token and maybe one day if you ask us nicely, we'll give you some securities for this token, but it's not clear.
• 39:27
  [SPEAKER_01]: Right, and so, like basically the token has no rights at all, even like hypothetically, right, and so that's yet another, you know, sort of police synthetic model, and there's perks, of course, right, which are just like completely synthetic, meant to have the same price as the thing, but have no actual, no one owns the stock.
• 39:47
  [SPEAKER_01]: It's just a totally synthetic position that's meant to have the same price as some stock or whatever.
• 39:54
  [SPEAKER_01]: So, there's a lot of different models, they all have pros and cons to them.
• 39:58
  [SPEAKER_01]: As far as the AMC thing goes, I think, you know, obviously everyone rallied to the Robinhood side because we're crypto and, you know, we like doing things to the securities and the Robinhood or ecosystem is right, but I think there are actually some legitimate concerns that the company can have, you know, against their, their stock being tokenized against the company's own will.
• 40:19
  [SPEAKER_01]: fragmented liquidity, um, potential insider trading, you know, all these sorts of things, you kind of lose control.
• 40:27
  [SPEAKER_01]: Um, and, uh, so, so it is a real issue in a real policy debate.
• 40:31
  [SPEAKER_01]: And the SEC, in some of its guidance seems to be taking that side of it, like I said, well,
• 40:36
  [SPEAKER_01]: Look, we're not going to give you some fancy great exemption if you've done this against the issue as well.
• 40:43
  [SPEAKER_01]: That's part of the SEC's executive guidance that they've given for tokenized securities is like, well, you have to tell the issue where that you're going to do this and if they object, you can't do it.
• 40:54
  [SPEAKER_01]: So it is an issue and the SEC gets that.
• 40:57
  [SPEAKER_00]: Yeah, I could definitely see like both sides like, you know, you want total control over your cap table and the other side is like, well, you want the distribution of the asset spread as far and wide to all ends of the earth to anybody to trade it and, you know, build that community in that sense and, you know, further bolster your your main business.
• 41:19
  [SPEAKER_00]: So I could see it going any, you know, any which way, but would you say like generally, you know, directionally.
• 41:25
  [SPEAKER_00]: your, like, you think this RWA trend is a good thing that will bring benefits, you know, if you look 10 years down the line, stocks are trading on chain, Nasdaq is running on block chain.
• 41:39
  [SPEAKER_00]: Like, do you think that that's directly likely to happen or is this kind of a yet another crypto pipe dream that we've
• 41:47
  [SPEAKER_01]: We've definitely, I mean, it's definitely happening and it's happening, you know, much faster than I think anyone anticipated.
• 41:55
  [SPEAKER_01]: In terms of it, you know, whether it's a good thing and how good a thing is it is, I think it really depends.
• 42:01
  [SPEAKER_01]: I mean, the version of it, I think that's currently taking off, it's just like,
• 42:06
  [SPEAKER_01]: Well, you can trade the risk of a certain stock in more venues.
• 42:14
  [SPEAKER_01]: You can do it in the formats.
• 42:15
  [SPEAKER_01]: You can do it on chain.
• 42:19
  [SPEAKER_01]: The problem that I see with these kind of stable coin type of tokenization models that are taking off, right, where it's like some third party that's buying the stock and then they're issuing the token.
• 42:29
  [SPEAKER_01]: and trying to keep the price the same is it's not structurally improving the overall market and it's not really solving any trust problems.
• 42:40
  [SPEAKER_01]: In fact, it's increasing that.
• 42:42
  [SPEAKER_01]: What I always thought was the bull case for tokenization is you can have far fewer intermediaries.
• 42:48
  [SPEAKER_01]: You don't need DTCC anymore.
• 42:49
  [SPEAKER_01]: You don't need seed anymore.
• 42:50
  [SPEAKER_01]: You don't need brothers anymore.
• 42:51
  [SPEAKER_01]: You don't need broker dealers anymore.
• 42:53
  [SPEAKER_01]: The issuers could just directly issue tokens, and then the stockholders could hold them, and you could dramatically simplify the system, right?
• 43:04
  [SPEAKER_01]: So that model has not really taken off so far and instead what's taking off is a model that adds more intermediaries, more hidden things, more potential risks, more fragmentation because there's not one token that represents a particular stock there.
• 43:21
  [SPEAKER_01]: You know, there's like a bunch of them, right?
• 43:24
  [SPEAKER_01]: They'll have their own pools and so on and so forth.
• 43:27
  [SPEAKER_01]: And so in that sense, I mean, it's possible that it could make the market structurally worse.
• 43:31
  [SPEAKER_01]: if it keeps being done in that way, right?
• 43:33
  [SPEAKER_01]: So it's definitely good that we have things in this launching format where people can get them, someone in India can trade a stock without KYC with NASDAQ or whatever, but there are some hidden downsides and I think some of the potential or maybe potentially the biggest potential benefits are not being focused on, which is
• 43:58
  [SPEAKER_00]: Yeah, no, that's, it's incredibly, you know, prescient because it seems like, you know, sometimes crypto has a habit of over complicating things and, you know, whether it's something that is going to, you know, unfold the constitutive way or the pointer way or both are going to proliferate the jury still out.
• 44:20
  [SPEAKER_00]: But I think another interesting trend, which is kind of a 180,
• 44:24
  [SPEAKER_00]: which I've only noticed a couple things I believe centrifuge was one who and I'm just going to call it reverse tokenization because it seems like they're trying to take their token and turn it into equity and I've gotten questions from people like what is that supposed to mean and I don't have a good answer and I've also seen things like the Thai capital they announced they're going to help potentially have tokens convert to equity is what it seems like.
• 44:51
  [SPEAKER_00]: And so what is this whole concept?
• 44:53
  [SPEAKER_00]: And do you think it's going to happen?
• 44:55
  [SPEAKER_01]: Yeah, and I think backpack is another one that is sort of doing something like this or has like promised to do something like this in the future.
• 45:03
  [SPEAKER_01]: And yeah, so it's very interesting.
• 45:07
  [SPEAKER_01]: And I think there's kind of like two different things that can mean, right?
• 45:10
  [SPEAKER_01]: I like your term reverse tokenization.
• 45:12
  [SPEAKER_01]: I may run with that meme.
• 45:14
  [SPEAKER_01]: Yeah, go for it.
• 45:14
  [SPEAKER_01]: Yeah, go for it.
• 45:15
  [SPEAKER_01]: One thing you could mean is, like, look, we launched the token.
• 45:20
  [SPEAKER_01]: We used to be a very token-centric project.
• 45:23
  [SPEAKER_01]: Our business have changed, and we realized we're much, much better as an equity business, and we just want to get rid of this token, and we want to give people equity.
• 45:30
  [SPEAKER_01]: Right, and I think a cross protocol is trying to do that and I think centrifuges is another example that has at least proposed to do that and and I think that's very good because tokens and equity are very different businesses and it may make sense not have a token anymore and to me what what that would be is kind of like a one time redemption event.
• 45:56
  [SPEAKER_01]: Right, there's just it's almost like a tender offer.
• 45:59
  [SPEAKER_01]: right where you're you're you're tendering securities for tokens.
• 46:03
  [SPEAKER_01]: Question the legal strategy around that because you do need some kind of exemption for this security and that may be challenging in a fully public process but like maybe you can ask the SEC to give you some like one time.
• 46:17
  [SPEAKER_01]: They're actually relieved for something like that for this one time special event, right?
• 46:22
  [SPEAKER_01]: So that's sort of one example of it.
• 46:25
  [SPEAKER_01]: The other one, what we've done at Medilex is we've done these East rounds as a conversion to equity, which is basically saying, like, we like our token, we also like our equity, whoever's bullish on the project, we want to try to give them the opportunity to own both.
• 46:42
  [SPEAKER_01]: We think they should own both.
• 46:43
  [SPEAKER_01]: And so that just basically means offering periodic rounds where instead of the round being denominated in USD,
• 46:50
  [SPEAKER_01]: and accepting U.S.D.
• 46:51
  [SPEAKER_01]: as the purchase price for your securities, you denominated in your token and you accept the token as the purchase price for your securities, right?
• 46:58
  [SPEAKER_01]: With the idea being that people should own both, right?
• 47:02
  [SPEAKER_01]: And so that that I guess might also be called reverse tokenization or partial reverse tokenization, and you can also combine that with the security itself being tokenized.
• 47:13
  [SPEAKER_01]: if you're doing metal acts.
• 47:13
  [SPEAKER_01]: So like for example, you know, we had pump cade, which is a very good project.
• 47:19
  [SPEAKER_01]: They start the bootstrap with the pure token, then they did a venture route and they said, okay, well, we ought to give token holders access to our equity as well.
• 47:28
  [SPEAKER_01]: And so they took pump cade tokens and they sold them tokenized safes.
• 47:33
  [SPEAKER_01]: right.
• 47:34
  [SPEAKER_01]: And so those people now hold most likely, still hold some pompake tokens, and then they also have an NFT representing, you know, effectively an equity position in pompake, right.
• 47:45
  [SPEAKER_01]: So I think that's a very good approach also and can be being example where you talked about it.
• 47:51
  [SPEAKER_00]: That's awesome.
• 47:53
  [SPEAKER_00]: Well, Gabe, first off, this has been incredible.
• 47:56
  [SPEAKER_00]: And I really do like genuinely hope that we could have you back on whether it's next quarter or the quarter after that, or maybe there's going to be some big bomb shell announcement and we could get you on.
• 48:04
  [SPEAKER_00]: So I know our viewers are going to love this.
• 48:07
  [SPEAKER_00]: So I got one last question for you for today's session.
• 48:12
  [SPEAKER_00]: But essentially, you know,
• 48:14
  [SPEAKER_00]: you're fighting for a certain view of the future.
• 48:17
  [SPEAKER_00]: You've got your vision of this is how the future should look like.
• 48:20
  [SPEAKER_00]: What are the most important things for regulators to get right and for entrepreneurs in the crypto space to get right?
• 48:28
  [SPEAKER_00]: In order to make your vision of the future actually come true or set another way like what can we really not screw up?
• 48:36
  [SPEAKER_01]: Well, it's sending the right incentives and I do have some concerns about that, you know, in the current regulatory direction, because basically the SEC, the way they're trying to draw the line now between tokens and securities is they're saying, well, if you promise something, then you're in the securities laws.
• 48:58
  [SPEAKER_01]: uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh uh
• 49:21
  [SPEAKER_01]: right, and so they'll be outside the security as well as those all are choking and the it will end up being that the regulator set up perverse incentive of providing less information.
• 49:36
  [SPEAKER_01]: being less transparent, committing less to a roadmap, and it will have made the market worse, and that actually means even though it's more liberal, and people can, you know, in theory, people can sell to people who are freely, which we like.
• 49:51
  [SPEAKER_01]: In the long term, it will just erode the value of this market, right, because the trust will just become less and less and less and less and that that's not where we want to be so the biggest issue becomes, you know, can regulators understand not just the technology, but also the culture of crypto enough, you know, to set the right incentives and I'm a little bit.
• 50:12
  [SPEAKER_01]: disappointed in where that's going, but I think Builders will, well, good Builders will always find a way to build good, right?
• 50:19
  [SPEAKER_01]: Better Dow, you know, is an example of that and some of the stuff we're doing at Metal X. I hope is an example of that.
• 50:25
  [SPEAKER_01]: So we don't need the government, but it certainly can slow us down if they do their own things.
• 50:31
  [SPEAKER_00]: Yeah, I love it any um with any any last words like, you know, while we still have a couple of minutes before we let you go, otherwise.
• 50:40
  [SPEAKER_01]: Well, my last words would just be a shameless plug to be honest, which is that.
• 50:45
  [SPEAKER_01]: Please.
• 50:46
  [SPEAKER_01]: Medilex, we're we're trying to.
• 50:49
  [SPEAKER_01]: make everyone's life.
• 50:49
  [SPEAKER_01]: Entrepreneurs life especially much easier and cheaper in terms of getting a company started, right?
• 50:57
  [SPEAKER_01]: So you don't need to pay $50,000 for a payment foundation and all this stuff, especially at the beginning.
• 51:04
  [SPEAKER_01]: Come to Metal X, pay 1,000 bucks, you get a corporation or an LLC very quickly.
• 51:10
  [SPEAKER_01]: You get a half hour free legal advice, you get free, you get cap table stuff thrown in, and then you also have this bonus of being able to do anything you want with tokens at any time, so you get all the normal card of functionality, stripe Atlas stuff, with tokenization bonuses, and you get me in your corner and the team in your corner, and it's kind of a no-brainer.
• 51:30
  [SPEAKER_01]: So check it out.
• 51:32
  [SPEAKER_00]: beautiful.
• 51:33
  [SPEAKER_00]: Everybody those links to that will be in the show notes.
• 51:36
  [SPEAKER_00]: So make sure you check it out.
• 51:38
  [SPEAKER_00]: We really, really hope that everybody enjoyed this conversation as much as I did.
• 51:42
  [SPEAKER_00]: This was a huge highlight of my month and it's been a great month.
• 51:46
  [SPEAKER_00]: So it just goes to show how much I really enjoyed this.
• 51:49
  [SPEAKER_00]: So Gabe, thank you for your generous time today and we hope to see you back again soon.
• 51:54
  [SPEAKER_01]: My pleasure, man.
• 51:54
  [SPEAKER_01]: Thank you so much.