Why Crypto Keeps Going Up Anyway

Transcript

Bankless Nation, it is the third week of September. It is bullish once again. Clarity died, but all the crypto prices are higher. Just 21 hours later after Clarity dies, the SEC ships the innovation exemption, a legal lane for tokenized stocks, effective immediately. So, crypto lost, but we're winning. We still are winning. The tokens are up. We are getting what we wanted. It is a bullish season in crypto. It was actually double bearish news last week for crypto and yet prices are upish. The Fed also hiked. This is the first time since 2022. Fed chair Walsh moved the rates up. My question coming to this

week was how mad was Trump about this? We'll talk about that. Also, David, you think options might be the next big thing in DeFi? I want you to tell us why >> potentially. Yes. And then Kraken is bringing Hyperlid to America via a compliant front end for Hyper Hyperlid on shore. Basically, Hyperlid with a CFTC license in front of it. Is this how pers make it onshore in the United States? That and so much more to talk about. But I think Ryan, I think the way to summarize the last week in crypto is just very strong confirmation of a bull market. And the reason why is that good news is making prices go up and bad news is not mattering. And that we saw this

in the two things we talked about. The we had the rate hike, we had the clarity failing. Prices are either flat or higher than both of those events prior. And so this is just a telltel sign of the bull market is that we are the market is sensitive to good news and it is insensitive to bad news. And I think that that is just even further confirmation that we are in the earliest innings of a bull market. Well, Eric Connor, crypto investor agrees with you, David. This was his tweet. Kind of nice to flush the double bad news of no clarity and rate hike in the same day to be honest. Yeah, I think I see that.

Especially clarity, although one might argue to push on that a little bit, both were kind of priced in. I mean, who in crypto actually thought clarity would pass? And then as to rate hikes, I mean >> there was good there was the market was was expecting rate hikes to actually increase and so maybe no surprise there. It's not like QQQ or S&P took a nose dive on the back of this news. Um there there is a price band that uh TDR Michael NATO is watching for confirmation of the early bull market.

and he's got two numbers here. Basically, if we stay trading in these two numbers, he feels like we are pretty close to confirming the crypto bull market. And this is Bitcoin price numbers. So, the number you like this, David 69.9K. All right, >> nice. >> So, if we stay from 69.9K to 80.4K, we stay in that band, we should be good to go. Both those numbers represent moving averages. So 69.9K, that's the 200 day moving average. And the 80K number, that's the 50WE. We stay in that band. We're still undecided. It's not breaking bearish. If we go up higher and we start breaking the um the 50WE in a

decisive direction and we sustain that over multiple weeks, he thinks from a price momentum perspective, that's kind of early bull market confirmed. So, we're in this middle period of like we don't know yet. >> Oh, interesting. Okay. So, he is saying that so long as we don't go down, we are allowed to be bullish. And then he's waiting and patiently waiting for us to break through $80.4,000 on Bitcoin to confirm a bull market. But he's saying that like if we hold it's still bullish. He's saying if we hold and we don't break down, >> then the probability points that the low was in on June 30th of this year and

we're not going to lower lows. >> I see. I did invite uh Ben Cowan on the podcast for when he gets back from New Zealand because I want to ask him this exact same question. It's like we bounced off the 200 week. Bitcoin bounced off the 200 week. It does that all the time in bare markets. Sometimes it does it twice and if it does it a second time that means we are going down to you know the the high 60s I believe 65 66,000 uh which I think the at least the participants on crypto Twitter are not positioned for that for that move. >> One thing you observed to me is that blue chips on the week there they were somewhat flats. They're not down on this double dose of bad news, >> but actually we've had some nonblue chip

coins massively outperform lately, particularly on the week. So Zcash all-time highs, am I correct in that? Yeah, Zcash alltime highs broke $1,500 and it was just $1,200 last week. So the momentum behind Zcash is just absolutely astounding. >> And what is this? like absolutely there's like no reason why was there something about the clarity vote that was bullish Zcash no clarity vote we're b we're going to buy Zcash there's two different takes my initial first reaction was that this is Zcash moving higher on no news whatsoever it's just momentum like Zcash earned momentum because it's an insurance on Bitcoin

like the fundamental uh reasons why you would buy Zcash you know is it an insurance on privacy on Bitcoin like Naval likes it like all this kind of stuff. Then there's another take which is that actually the crypto market participants are doing the normal thing of like the Fed hike was actually bullish. It's actually good for crypto and Zcash is the way that the crypto market is expressing that trade because it's a faster horse than Bitcoin. So one if you are particularly bullish on Zcash, you would say that Zcash is actually stealing Bitcoin's thunder. This is a bit abnormal behavior because Bitcoin is supposed to go first and then altcoins follow in most early bull phases. And the fact that Zcash

outperformed during the bare market and can you continues to outperform is somewhat abnormal from previous cycles that we've seen. It's not the only one, right? I think Hyperlid you mentioned hit all-time highs. Near is at $3. I'm not sure if that's an all-time high yet. That's doing well, >> too. Near has been around so for forever. So they have the 2021 god candles that they have to recover which was like at $30 but >> 2021 >> those times those times of rational uh bull market behavior in crypto right >> yeah but as far as near goes like $3 is the highest it's seen in in quite a while and it's had like a lot of momentum I think like last week or two weeks ago it was at $2 and so you probably remember me 6 months ago 12

months ago I was just talking about like the middle of the market is drying out. We have memecoins and the blue chip barbells. Blue chips are doing well. Memecoins are doing well. But the middle of the market, which is people's jobs, that's the startups, that's people doing BD efforts that has just been drying up. >> It seems to be that this is we are having a middle of the market recovery in this era of crypto. not globally like not every middle of the market token but the tokens that have deserved to do well are like living under their own weight are growing are doing well. So it is really nice and optimistic to see the middle of the market recover specifically is just seeing adoption of

their confidential intense products. So, $30 billion crossed uh by Near in their confidential intents, which is I kind of put it shoulder-to-shoulder with Zcash in the privacy angle of things. Like this is $30 billion of confidential private cross-chain transactions facilitated by Near and then and they also have $70 million in Near TVL. So these are the numbers that like Near has pushed recently that are doing well that show adoption and it's also along in like the whole privacy trade privacy tailwinds.

>> Yeah, the pivot to privacy and the pivot to per has been a major theme during this bare market and I guess it's worth maybe doubling down on the winners for the bull market. At least that's what investors seem to think on this week. Uh, speaking of doubling down, not one to ever not double down, is Tom Lee, and he had some predictions for trad. Let's hear what he has to say. >> Yeah, I think post midterms because uh this year has been very challenging and I know it's not been fun for a lot of viewers. I think the fourth quarter could be one of the biggest rallies and I think it continues to next year to one of the biggest rallies of our lifetime. What what's a a real

number do you think that we're at 7585 on the S&P as as we have this conversation? >> Not that there's not that much of the year left. >> What seems reasonable to you between now and then? >> I think we could easily be above 8,200 by the end of the year. And that's because tech is going to be doing a lot of the heavy lifting. The Mag 7, as you mentioned earlier today, are starting to come back to life. And the software names, which have been important names to be held, are doing better. So, as long as the AI trade isn't extinguished, which we don't expect, I think it's going to come out of this correction, we've got a big rally into your end. So, if anyone else, David, had said the biggest rallies of our lifetime in a quote, I wouldn't feel great about it.

I'd feel like, but like it's just the way he says it. Tom Lee has this like calm demeanor and when he he says bullish stuff, I'm just like, "Oh, yeah, I could see that, Tom. Sounds like that could happen." It's something about the tone of his voice. Maybe he's not like emotionally invested. >> My parasympathetic nervous system just loves Tom Lee. Like Tom Lee is just like reaching around my portfolio and just giving it the most comforting hug. I was like, "Hey, man. That's a great 200 by the end of the year."

>> Well, thanks for the hug, Tom. Maybe uh maybe Tom could go hug the bond market. Okay. because uh yields are going up. Whereas Bessant, of course, he's been a war on bonds. He wants yields to go down. This is the tweet. The US 10-year Treasury yield breaks 5%. First time it's done that in a while. I mean, not in forever to be fair, but in a while. And it keeps lifetimes. >> No, no, not the 10 year. The 10 year was like just a few years a Look, look, here's a chart of the 10 year. Uh well no >> 2008 2007 >> okay yeah it's been a while >> I was I was playing Runescape back then I was not paying attention to broad

market >> this year this is really this 10 year okay and the third year as well >> um a little down >> 54% it touched >> yeah it touched pretty high though it's trending up in a very dangerous way >> so you know the scoreboard I guess this week is I don't know if Bessant won or Bonds won but it feels like bonds continuing to win whereas Bessant is um you know he did six billion last week uh in buying the long end there and not really quelling bond market yields at all.

>> Yeah. I think for a moment people were like no Scott Besson he's the house the bond he said he was the house and then people realized oh this guy is >> tiny is a tiny man going up against the gargantuan barn market. He's not the house. I don't know. He's kind of the house. He does. He is kind of the house. He could be the house if he wanted to be the house. >> The market is the house. No, not if he's like trickling in $4 billion. He needs to like 100x that to actually have durable market.

>> David, you never know. He could do it. >> Okay. If he does then the debasement trade, my god, Bitcoin will be $2 million. >> He's threatening to do it. I I think there's a question that I've had every week of this bond market war is is this more debasement or is this more just a hot economy and cost of capital going up because of investment in infrastructure and AI data centers and all of these things. And I'm not sure I'm fully resolved on that. Of course, the debasement narrative has been pretty hot the past four to five weeks and you've seen obviously crypto had that repricing event. gold was up a bit and people were like, "Ah, it's debasement once again."

But I'm not sure that's the real reason for the yield rising. I think the real reason might just be back to the 1980s, we are in a hot economy. GDP is humming, at least from a nominal perspective. Yes, inflation is still high. We'll talk more about that in a second, but the economy is doing pretty well, at least in the US as well. And I don't think people are used to that type of investing environment, right? Because they haven't seen it in their investing career very often and certainly not within the last 15 years. Yeah. I'm trying to get a grasp on is it all of the economy? Is it like all of America

is doing well or is it just like the capitalist side like investment is doing well? If you're an investor, you have you are trying to get your hands on capital to invest it. Maybe that's trickling down to Main Street, but is like globally all US citizens doing well cuz inflation is also still hot. And so we have a hot economy and hot inflation and a hot bond market. All of these things. I don't know how to interpret all three of these things like coming together. >> This is why, by the way, David, I think you should have Michael How on the podcast on the main feed. um because he has takes on all of these things and and largely he does think that what he calls Treasury QE the regime we're entering is going to be more bullish for Main Street

than it will be for Wall Street asset prices. Okay. So he sees a real shift towards the real economy and Main Street with the shift from Fed QE to Treasury QE. And I think you should get him to explain why to the bankless audience. He's got lots of reasons for it and interesting takes. >> I'm not used to the main street winning. Like usually always Main Street gets like the short end of the stick. It's like it's it can good things happen because of downstream of the stock market.

>> Yeah, that that is still a question in uh in this era. So it's unresolved question. Um the Fed funds rate also went up. This is for the first time since 2023. So Walsh, we thought David, we were speculating that the new Fed chair Trump appointed would be I think in your words Cuddy Mcut face. Well, he is not Cuddy Mcut face. Okay. He he was Cuddy McCutace while he was presenting to Donald Trump. He was presenting as Cuddy Mcut face. >> Oh, wait, wait, wait. Did he trick Trump? Was this a bait and switch?

>> Yeah. Well, I the the thought is that he did not want to explicitly bait and switch Trump. So, he did the thing by removing forward guidance and not having all the Fed governors fall in line so that there could be a diffuse set of people who think that we should cut, think we should hold. So, he's passed on the buck. So, it's like don't look at me. I'm just one of the Fed governors. Also, we're a democratic institution. It's a decentralizing of the Fed while Donald Trump comes in and demands Cuddy McCutace. You know what's hilarious is um Trump might be buying that. Actually, the the narrative that you just spun up, he might be buying it. So, uh I should say the target rate is now 3.75% to 4% and it was a open FOMC committee

vote. Of course, it's who decides these things. 12 to zero. Wasn't even one to center in order to raise rates. So, 12 to zero. And yeah, I was kind of expecting Trump to just be like, I was tricked. It's the new Powell. Worsh like, you know, bring those rates down. What are you doing? But Trump kind of covered for him. He was like, >> yeah, >> the vote doesn't even matter. It's a 12 person, you know, vote. So Wars may as well have voted. Uh he does think though, he said this on Truth Social, I believe. Uh what's the quote? You might as well vote with the board because it's not going to matter. The board is very hostile. He's talking about the FOMC board, but he did say interest rates in

the US should be 1% or less because we are the best credit in the world by far. So, I guess he still thinks that, but he seemed fine with war raising rates. >> Screen him out. Is this just noise from Trump? >> I I don't know. There was a there was a prediction market about whether Trump would call Kevin Worsh a name like a bad name and like you just use that you know on Truth Social Trump throws Kevin Worsh under the bus like he did with Fed Chair Drum Powell. He did not he did not call Kevin Worsh a bad name. Wow. What explains this?

I have no idea. I have no idea. I I wonder if Trump can actually rationalize why uh why it no longer matters if Wars is making the decision. This is uh maybe because like Worsh and Trump and Scott Besson are taking meetings. They they are talking to each other seemingly collaboratively and so maybe War isn't like bending the knee but it but it seems to be that they >> they're up to something. >> So you think maybe there's a bit of coordination behind the scenes where Besson's like, "Yeah, you know, Wor's got to do this. Trump, we got it covered. We're all kind of synchronized." whereas pal was a bit more independent because >> that's one interpretation of things that they're all kind of coordinating that's

why Trump is fine with it another interpretation is just if you just kind of read the letter of what's happening oh no this is take this proves fed independence they're not just going to do whatever the president says this this proves that the Fed and the FOMC works because it's not going to bend to the politics of the day it's going to optimize for its own goals Uh so you could interpret it that way too. >> Yeah. Yeah. If we're going back to the conversation of like is this a hot economy or is this a debasement trade, you have to take the bit of evidence uh out that this is a corrupt Fed out of the debasement trade. The the corrupt the Fed is legitimate. It's not bending

to the fiscal policy of Congress and what the president wants is remaining sovereign and that is should be good for the soundness of the dollar. And so if you take that variable out of the why are bonds going up, you would it would actually point further to it's a hot economy. >> Well, it does lend evidence to the fact that the Fed is serious about fighting inflation because this is totally the reason Marsh said he was doing it. Um he said that this was a sober decision, a serious decision, a responsible decision and that the plain fact is that inflation is too high and has been for too long. So this is the US fighting inflation now.

>> What do you think? Is this good or bad for crypto? I think in previous eras whenever like the the kind of the generic investor take is if Fed funds rate is going up that bleeds risk on capital out of markets and so risk on assets go down and yeah crypto is somewhat of a debasement trade partially but it's also a risk on asset class as well and so risk on goes down if Fed fund rate is going up. Do you think that simple explanation is valid moving forward?

>> Um, I mean, if we go back to the fundamental like simple bull case for Bitcoin, it's that we print more money than we take in as revenue. So like there's always debasement. There's always inflation. And if you cut yields to zero, then people move just down the risk spectrum because there's more capital out there. But if you raise rates, then the government can't pay its debts and so there's going to be disbment. So like Bitcoin wins either way. And so if you ask a question, it's like, okay, we raise rates. Is this bullish or bearish for Bitcoin? You know, to your point, it makes risk capital harder to access, but the government's debt comes due faster.

I don't really know. I'm not sure I care. All I know is that we raise rates and crypto prices went up. And so the I've been saying this on Twitter, I'll say it here again. Good news is good and bad news doesn't matter. That's just the phase of the market that we're in. Well, we are in the heads I win, tales you lose regime, I guess. David, speaking of losing, we got to talk about the Clarity Act next. So, it failed, but before it failed, it seemed like some good news. What happened there? And I know you've had some conversations with representatives at the SEC about um what is it? Did they >> innovation exemption that was dropped this morning?

>> The innovation exemption. So, I'm wondering, does Paul Atkins love crypto more than Gary Gendler hated it? What's he going to give us? What are the goodies? We'll talk about all that and more, but before we do, we want to thank the sponsors that made this episode possible. I've been trading crypto for almost a decade. And I've used so many different wallets, exchanges, aggregators, or frontends. And I'm basically always looking for the same thing, just one interface with a deep liquidity across a bunch of chains and assets where I can access markets like PERPS, earn yield, trade confidentially, and still control all of my funds. and I've never really found it and I'm just always switching wallets, juggling gas fees or getting eaten by slippage. But near.com feels fundamentally different to me. I can do anything I want from any chain and keep all of my activity

confidential. Crypto, tokenized assets, per payments. I can even earn yield confidentially. One account over 30 chains confidential by default. It's the way that crypto ought to work and it's powered by Near, which has moved over $30 billion crosschain, uses postquantum signatures, and has run over 5 years on mainet with zero downtime. Near.com is the best way to be onchain and be in control. Get 20% of your trading fees back on near.com using the bankless link in the show notes, not investment advice. Banklist Nation, we've built something for you. Introducing the Bankless MCP. Chat GBT and Claude are great at a lot of things, but ask them anything beyond the basics of crypto about protocol mechanics, tokconomics, or just what happened last week in crypto, and the gaps will start to show.

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a thousand times better. So go check it out. There is a link in the show notes and once you become a bankless premium member, you can hop into the banklist discord and let me know how you like it. Cheers. So early this week, it was announced that uh Trump actually agreed to the updated clarity act ethics provision which was considered to be the final obstacle to getting the clarity act passed. This was a surprise. Everyone on Twitter got really excited. Odds of the clarity act passing on poly market doubled. Bitcoin jumped from 77 to 79. ETH jumped from 2,400 to 2,500. Things were looking pretty good. We were thinking about getting a surprise clarity act. Then the Senate procedural vote came on Tuesday and it seemed that the compromises from Trump and the

Republicans were just not enough. All Democrats voted no to the procedural vote. The final tally fell 11 votes short of the supermajority needed to proceed. Okay. So why did all the Democrats vote no if Trump relented on the ethics thing? I thought that's what they said they needed. Give us ethics provisions and we'll vote yes. >> I think that the Democrats feel like they are in a very strong position to win the midterms and so they don't need to compromise. And the Clarity Act passing is a Republican win no matter what. Like it's not a it's not a bipartisan win. It is a partisan win for the Republicans. And so like why the the

Democrats win out why give them a win at all? It's not their bill. It's not their constituents. They don't care and they're just going to wait this one out until they control the House. And so they're just not motivated there. There's no carrot for them to vote. Also, I think a lot of the provisions here and the specifics of the ethics provisions was was Trump agreeing to things on a go forward basis. So the deal didn't really touch the $1.4 4 billion of all of the Trump family crypto dealings in the past. So >> you mean like trying to claw back money from the hands of the Trump family, >> right? So from a a cynic perspective, right, if you're just like optimizing for Trump, then you could be like, "Oh, we've already got the things we wanted

out of out of uh crypto, so we're fine with you signing something that talks about ethics for moving forward, but like there's no way you're touching what we already have." So they weren't really losing anything either, were they? >> Yeah. Yeah, that's fair. I will say that like I do think Donald Trump does have a very large role in why the Clarity Act did not pass by just not agreeing to the ethics provision and doing all the drifting in the first place. >> Like imagine a world where he didn't do any of that. None of it. >> Totally.

>> Do you think it really passed? >> I think a lot of crypto Twitter is blaming the Democrats for voting no. And I think we should also be blaming Donald Trump for just making this such a big issue in the first place. Like Donald Trump is the biggest reason why Clarity Act did not pass. That is a true statement. >> And yet, David, and yet his administration with Paul Atkins and Mike Celig continues to deliver on promises for crypto, not in a legislative way because they can't because they are regulators, but in a way that also matters with some of these proposed rules. So, this is Mike Celig on the back of this. He is the chairman of the of the uh CFTC and of course he had this tweet I'm sure prime to go on. That's right.

>> He said the outcome of yesterday's Senate vote was unfortunate. Americans deserve regulatory clarity, legal certainty and consumer protections in crypto asset markets. And he continues to say the US is and will remain the crypto capital of the world. Um Paul Atkins made similar statements when it was announced that clarity was not going to pass. He said, "I have been unequivocal with or without legislation. We will act decisively within the SEC's statutory authority to deliver certainty for American investors shaping the future."

And then he ends the tweet with stay tuned in bold. And so the crypto industry did stay tuned. First, I think HB put out a tweet that I did I think did a very good job talking about, okay, we're not getting clarity. What can we get? What can we get from the SEC and the CFTC? Uh he says nothing stops them from doing rulemaking now. Rules aren't as durable as a law. True, but the best defense against a hostile future administration isn't a law or regulation. It's adoption. Do you think C wrote that or AI wrote that?

This is what protected Uber and Airbnb. Fantastic examples. Adoption is now the mandate for the industry. And so he he lists out what agencies can do. exemptive relief, so like carving out exceptions for things, no action letters, like telling companies, hey, we're not going to come after you if you go do this thing. Uh, registration pathways, project crypto, and rulemaking. Those are like the big things. So, when Paul Atkins at the SEC says, stay tuned in bold at the end of his tweet, what are we saying for? Yes. Oh, so this morning, the day of recording, September the 17th, this morning the SEC releases the innovation exemption.

This is an exemption for allowing tokenized stocks to trade on AMMs and other dexes on public permissionless blockchains. Now, this is >> this is unique and not the same as Robin Hood tokenized stocks. you know, Kraken X stocks or backed oro. Those are tokenized stocks in like kind of backtory ways. These like tokenized debt securities, things that that have onetoone economic representation of the stock. What the SEC is talking about is things that are truly onetoone tokenized stocks that have KYC and whitelisting and they are giving uh an exemption to dexes, things like unis swap, things

like aerodrome. So that those um dexes, those trading facilities, those exchanges are not considered exchanges as broker dealers. So these are not dealers. UniS swap is not a dealer. Aerodrome is not a dealer because that's what this exemption says. >> They're a TSV. They're a trading venue. Wait wait. >> They are trading venue. >> Yeah. What's the TSV stand for again? >> The the SEC added a bunch of acronyms onto our acronyms. Uh the TSV I think is like a DEX.

>> Okay. Okay. It's like a it's like a DEX. And so some of the I guess would these be brokers that might be first users of the exemption could be a securitize or a Coinbase or a dinari or Robin Hood or an Onondo or all the tokenized stock providers that we've talked about in the past, right? Those those could be users of this exemption. Is that right? >> That's that is correct. That is correct. Now, if you go and look at the securitiz asset price on the on the public stock market because it they went public a few months ago. Securize is up like 30% today on this news because securitiz specifically is best enabled by this because they are trying to do the onetoone actual tokenization of a real equity as opposed to just economic

rights. And so this is like a this is onshore and offshore. And so all of the tokenized stocks that we're talking about being paired with memecoins on Robin Hood chain or the tokenized stocks from Ono that have been online for forever, those are offshore. Those are offshore instruments. Those are in not impacted, not relevant to this exemption. Those will still run. Those will still exist. We with this exemption, we have the first foot in the door to onshore versions of these things that are KYCed, whitelisted, governance rights, economic rights, all that stuff.

and that the exemption allows them to trade on things like Uniswap and Aerad Drrome and other other exchange facilities on public permissionless blockchains. >> Now, you told me that was actually uh you found that out because that was your first question to the SEC after you got a call from what? Washington DC. >> You get a call from the SEC. >> Yeah, probably in a good way. I got a call from the SEC yesterday saying, "Hey, we're we're hosting a little Q&A session for people like you to ask questions like this." And so I was asking like Laura Shen asked like took my question and like drill down even further like is are we're still cool with the offshore tokenized stocks and I was like does this pertain to the existing tokenized stock things that we

already have and they were like no no no so those are offshore and United States investors are not allowed to access >> we pretend they don't exist right this is about getting all of that activity onshore in a compliant and regulated way and that's great. Uh I think the KYC whitelisting burden is going to be just a non-negotiable to the market. The market doesn't want a whitelisted tokenized stock. It wouldn't say permissionless tokenized economic rights. No one cares about voting. Uh and we already have those. But there's no way a company wants a permissionless like okay there's no way an actual company with shareholders wants token holder shareholder votes in the hand of

some hacker from North Korea right >> that's probably true. >> Yeah. So that's why these more legitimate tokenized um like shares with all of the shareholder rights including governance votes that's why the SEC is going to bless those and the others will be available for offshare offshore non US participants. Um, there's also some language in here in innovation exemption, which by the way, innovation exemption, it sounds a lot like Hester Pers's innovation sandbox idea that she's been talking about for like seven years.

>> This this is Hester Pur's efforts coming to fruition. >> Thank you, Hester. People don't remember enough and and thank her enough. Uh, permission. Uh, also I I guess for the TSV to receive this exemption, the AM AMM has to be on a on a permissionless public blockchain. I think there's some language in the actual um provision about this in the actual token exemption. Smart contract. Here's some language. Smart contracts must be auditable, public, and deployed on a public permissionless distributed ledger, which kind of implies a walled garden chain where there's not a distributed validator base would fail

that test and so wouldn't be eligible. The AMM on that chain would not be eligible for this type of exemption. Was that covered in your call? >> Uh that is a really good question that was not asked or covered. uh the definition around what is a public permissionless ledger was not specifically hashed out but I think >> we haven't hashed it out in crypto have we like we know Bitcoin is permissionless we know Ethereum is permissionless we kind of think Salana is right >> yeah uhhuh >> what about network >> what about what about single sequencer L2s >> what about base what about Robin Hood chain who decides that some more gray area to work through right >> yeah uncertain these questions will need

to be hashed out as this comes online. >> There was also something I found I guess somewhat sandboxy but also still somewhat annoying or a little bit of cold water splashed on this is there's going to be caps too. >> So for a given asset there can't be more than 0.25% of daily volume >> uh or else it kind of breaks the the the exemption here. So, >> so the way the way that that works is that if there is a thousand shares traded on a day in the normal public equity stock market, then in the this version with the exemption on chain, only uh 25 shares can trade as a volume cap per day. Yikes. I mean, that makes

it like so you can't have size, you can't have large institutions. It really limits this to kind of a small retail type environment. So truly is a sandbox and this is not going to be massive volume. Um like I mean even compared to per you can't really get massive volume if you're only 0.25% of trading volume daily. >> Yeah. Yeah. This is this is like I think the offshore permissionless ones are going to work. And this is like I'm sorry I don't want this. I don't want a KYC. I want to be able to go straight to unis swap and I don't want to be capped on the volume and like size is not size here.

>> Yeah. So are you somewhat worried that yes they've legitimized this approach >> but this got too many rules and handcuffs to make it actually practical versus trady. It's the expected approach. Like they were like the SEC is never going to do away with KYC for tokenized equities. It's just like they're they're competing with some of the fundamental properties of what makes a blockchain a blockchain. Permissionlessness, you know, global access, uh, you know, instant settlement, and the current versions of the offshore tokenized stocks have all of those things. And the KYC onore compliant ones are strictly an inferior product. Maybe I say that as like a

retail participant and somebody at Black Rockck can come and tell me like why I'm dumb and wrong. But like I I know me and all my friends what our answer is if which to which product we prefer. >> Uh Nick Dy has a take that might signify this is just a sign of things to come. He said this. >> I think there are a number of politicians who are going to wish they passed Clarity Act by the time regulators are done pushing crypto forward. So what he's saying is basically all the people that voted no because they don't want tokenization or don't want crypto infused into the traditional finance system. Well, it would have been much more conservative for them to pass the Clarity Act because regulators are just full steam ahead now on everything. It's almost like Atkins and and Seague just got out their capes

and they're like, "We'll save the day. We'll do clarity and we'll do even more than clarity. We'll go above and beyond is what Jerasi is saying here. We have an early rumor. This didn't get any sort of official press release by the CFTC. Not one that I found yet, but uh Justin, this is from Watcher Guru. CFTC permits developers to build passive derivative software without registering as brokers, including for crypto markets. And so the CFTC also has their thing ready to go. Same with the SEC. >> And there's also this uh round table um for 24hour trading that's happening as well from the SEC. Yeah, that's happening today. There there's a discussion with industry participants from the crypto side, but also from the

Treadfi side simply to discuss what 24/7 365 trading looks like in market structure. And so things are moving, balls are moving. >> This also might be a type of answer to the concern that the AMC CEO had last week with the fact that AMC stock was tokenized in some form on Robin Hood chain. Um he clarified his concern by the way. He said his biggest concern was that Robin Hood stocks lack the voting rights that token holders had. So that was the thing he really wants token holders to have voting rights.

>> He's very disappointed that the people buying AMC shares on Robin Hood chain aren't aren't able to vote in AMC governance. That's what he's concerned about. >> That's what it came down to once pressed. All right. remember he had all of these paragraphs of tweets about how much he hated >> lots of words >> how vile and disgusting it was and it came down >> so right before hopping on to record with you I was talking to Johan Johan from Robin Hood >> yeah I I brought this up I brought so like the AMC CEO called you guys like vile and contemptable what do you think about that >> well he thinks an asset without any voting rights is just disgusting it's just like vile just like should should not should not be allowed to exist anyway it's interesting because um the SEC exemption

also says the same thing. All of the SEC exempted tokens would also uh include shareholder voting rights. So he gets it gets it that way. Also Vlad said that he would do that too, right? >> Yeah. So he's just making So Vlad said Robin Hood tokenized stocks, the offshore ones, will also have inind redemption and voting for Robin Hood stock tokens. >> Okay. And so like we're basically approaching feature parody with real equities except for the KYCing which like Crimea River. I don't want that. Like don't it's a feature to not have KYC.

>> Well um I guess that's resolved then. I don't know what the AMC CEO was was so worried about. It almost feels like a big like attention hijacking game. You think this was like an underground thing to like you know put some more light on Robin Hood tokens. So it's like a PR campaign to have the >> I don't I don't think so. I don't think so. I do kind of we are in the very early stages of something that may never manifest, but something that could manifest is like all of these tokenized stocks coming on chain and then DJ's doing weird things with them and then grabbing the attention of the relevant CEO in question. If if like crypto ever got big in a cycle once again, like that would be a fantastic movie to watch and I hope it plays out. What's coming up

next? Coming up next, uh, I'm going to give a take about why options might be the next meta in the crypto industry. A lot of attention is going on options these days. It's actually a pretty competitive field. Hyperlid is trying to build options. Lighter is trying to build options. Derive is already building options and already got options. And options are kind of like the last derivative that we haven't really produced on the crypto industry. So, we're going to talk about that. We're going to talk about Hyperlid coming to the United States. We're going to talk about growth in Venice and also the Archain launch. But first, let's hear about some of these fantastic sponsors that make the show possible. Some exciting news. We are launching a new podcast to help people figure out the crypto cycle, how to navigate it.

The best cryptocycle investor I know, his name is Michael Nato. He runs the DeFi Report. This is the guy that sent me a sell alert before the 1010 price drop happened. His cycle analysis has been absolutely on point. I've been following him for years. And this year, we started recording weekly podcast episodes. Each one we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin and Ether, and where we are in the cycle. There's new episodes that are released every Wednesday. They're 30 minutes, they're short, they're punchy. I think this crypto cycle is harder to navigate than most.

So, let's do it together. Go subscribe to this podcast. Search the DeFi Report wherever you get your podcast, YouTube, Apple, Spotify, or find a link in the show notes. There's a new episode waiting for you now. Okay. We've had pers in crypto for a while. decentralized per hyperl liquid lighter they have popularized that um massive successful products we've never had successful options in crypto I mean previously it's been like illegal but there have been a lot of teams that have really tried to do this nothing has taken off >> there has been a graveyard of startups trying to build options in crypto uh and so you know but maybe >> this time is different this time is different >> uh and so uh I recorded with the drive

team. Uh that episode came out on Monday and I I asked him this question like why why haven't options worked in crypto? The perpetual has worked so incredibly well. We have other derivatives. We have we have other why why not options? And like his answer I thought was actually pretty good. Like for the first time you need a pretty diverse set of market participants with different directional opinions that all cross in a double coincidence of wants. But you need like a large set of very diversified opinions. And we don't really have that yet. we've really just had kind of concentrated retail and then crypto native funds. The the claim now from Nick is that we are finally in an era in crypto where we have a sufficiently large set of market participants. And then also this was also probably the

most interesting take of that episode that he gave me was that 1010 showed a lot of perp traders how much extra risk encumbrance a perpetual position has >> that an option does not. Okay. >> And so an option, you pick your asset, >> you prick your price point, you pick your date of expiry, >> and that's it. You don't get liquidated along the way. So with a perpetual, you can be directionally right, but still get liquidated due to volatility, >> right? Whereas an option, you can be directionally right and not get liquidated along the way because you can go deep, you know, deep out of the money, deep in the red, but so long as you have time left in your option contract, you can wait it out in a way

that a perpetual can't. And so you also you also remove yourself from risk from the platform itself. Yeah. So, like if if your platform goes down or there's there's contagion or ADLing or whatever, if you own an options contract, you don't have that worry. Uh, and so >> that was like my big question going in is just like why do we need options when we have per? Aren't better? But Nick's answer was that they're different. This almost reminds me of like the gang learns about options, right?

>> That's exactly what's going on. Oh, that's why options exist in trades can't do everything. It's like a different product >> cuz drive also has pers as well in a small. >> They also have pers as well. Yeah, they are they are domin ironically they dominate on hype options and so the most liquid hype options volume is on derive. Okay. >> So the derive token has done incredibly well this last week. It is up 150% in the last month and 50% in the last two weeks. Um, and so I kind of think this is like a starting pistol for the options race. Lighter is definitely trying to get into the options world.

Hyperlid has enabled options. So they are like derive is kind of like this David versus Goliath versus Hyperlid. I don't know if lighter counts as a Goliath yet. Uh, but there are three players in the options world and and I think like the the options meta could could be like a theme for the rest of the year. >> It's like everyone is converging into onchain Robin Hood. Even Robin Hood is converging into onchain Robin Hood. >> That's right. That's right. That's right. Uh-huh. Meanwhile, still on the hyperlquid front, uh, Kraken is bringing per to the onshore US market via a compliant KYC permissioned HIP3 marketplace. And so you come like onshore US citizens and entities are going to be able to trade per that

basically route through that are hyperlquid but through Kraken as a front end. >> Wait a second. That's pretty cool. >> Is this similar to the lighter and Robin Hood relationship or is it different? >> Yes. >> Uhuh. Different in the sense that that was not Robin Hood core app. That was Robin Hood wallet and I think that's only available to people in the EU. I could be wrong about that. Um, but this is like the Kraken exchange whereas Lighter and Robin Hood was on the Robin Hood wallet app which is everyone wants to be in the Robin Hood core.

>> Wow. Okay. So, that's a big deal. Uh, >> big deal. Onore purpose coming to the US. >> Yep, that's right. Uh, the other cool bullish chart that I saw was this chart from Eric Borhees talking about uh the rate of token consumption on Venice. It is a waiterating >> which tokens which tokens we talking about AI token consumption on uh Venice and so I was just I kind of loosely did some math on this chart. The chart is doubling every two months. So it was like 6 months ago it was at 50 million tokens a day or is that billion 50 billion tokens a day and we are now at 250 billion tokens a day. So I think

like the game is can you model the growth of Venice token consumption to VVV because it's like reductively one to one in terms of token consumption versus VVV value capture. And so if this continues to accelerate up and to the right you would see like a repricing of VVV to account for like this accelerated growth. I'm really hoping for some superstar tokens to just like that have strong value acrruel properties investor alignment to just >> dissolve the current >> narrative >> and token curse that all of these things are lemons >> and they they can't be owned they're uninvestable we have to make tokens

investable again and what that requires is tokens like VVV tokens like hype tokens like lit value cruel tokens to be successful. >> Even takes 25% of their fees to buy the token. >> That's the model. And we need to have some successes, huge successes there, not just one or two, >> more than a handful. You have like a dozen, two dozen kind of just successes there. Then you got the market back and you have the asset class back. And that's what it's going to take to rebuild from the sins of our past.

Speaking of rebuilding from the sins of our past, Arc Chain has launched with about a 100 memecoin launch pads on day one. Oh, wait. Doesn't seem very rebuildy. That's a That's a corpo. >> Isn't it Isn't it kind of a Isn't it oxymoronic to have ARC, the USC basically fedcoin chain, launch with like a 100 memecoin launch pads? You got to give the people what they want, David. How are you going to get product market fit? That's what we do here. So I I was kind of wondering like is ARC going to take the tempo path and like integrate into e-commerce website optimize for payments just like not compete in the alt layer 1 landscape or is it going to try and compete in the

alt layer 1 landscape and the answer is firmly it's trying to compete in the alt layer 1 landscape and I don't think they should be competing there at all. That is not their arena. It's interesting because it seems like they're doing the Robin Hood play, but they don't have their Robin Hood distribution, the Robin Hood front-end user interface. At its core, USDC is a backend asset >> and backend bank plumbing >> and it doesn't have the front end experience. So, it seems a little followery like fast followery to try to diagram between USC as a product and ARC as a product

overlap very little. Like I I get the all tech companies want to have like a second season, like a second act, but >> yeah, >> what I don't I don't get what arc really you could just say it's permissionless. This is what permissionless things do. That's, you know, that hot bubbling vapor is going to boil off. And once it boils off, then we'll have all of the infrastructure for aic economic workflows and trading and liquidity and payments and settlement and tokenized assets, all of the things that Arc is advertising that they want to do in the future. So maybe it's just a short-term speculation thing that allows them to build the plumbing for later. Okay.

It's hard to build a layer one. It >> is really hard to build layer one. Yeah. Yeah. Uh, last bit of news before we close the things out. Uh, S&P Global acquires Open Zeppelin. Open Zeppelin. Probably some of the best smart contract writers and auditors in crypto. They've been around for forever. Uh, purchased bought by S&P. >> Do we know how much? >> No. There's a number here. It's uh 37 trillion. But that is not the number they were purchased for. That is 37 trillion in value transferred from Open Zeppelin.

>> You know what? >> That's how you know we're at the end of the episode. >> A headline like this though, seriously, would have blown my mind, I think, in original bankless thesis decentralized finance circa 2021. And if you gave me the headlines for, you know, September 17th, September 18th, 2026, and you said Bank list was reporting that S&P has acquired Open Zeppelin, I'd be like, wow, we have really made it. I'm glad ETH is at 10K. That's fantastic.

>> I was about to ask you, does it feel like we made it? >> You you get, you know, like one or two of those. Uh, at least we've we've we've kind of made it. And that feels very much like crypto in 2026, doesn't it? It feels like we kind of made it. >> We didn't like make it make it, but we kind of made it. >> We kind of made it. >> Yeah. We made it in a way that a little bit different than I think the >> And we made it in a way that kind of hurts. >> It took longer. >> It took longer. Yeah. >> But that doesn't mean we can't make it more.

>> Yeah. Yeah. Yeah. Yeah. Yeah. I think that's the big question I think for me as we close out September and move to Q4 is what the are the blue chips going to do? Where are the blue chips going? >> I know where they're going. If it's early bull market, we stay in that band. They're going up, David. >> Okay. All right. I'll see you in a week. You guys know the deal. Crypto is risky, but not risky enough. The institutions have landed. So, we are going even further west. This is a frontier. It's not for everyone, but we are glad you are with us on the bank's journey.

Thanks a lot.