BTC230: Bitcoin's Political Shift w/ Brian Estes and Perianne Boring (Bitcoin Podcast)
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You're listening to TIP. Hey, everyone. Welcome to this Wednesday's release of the Bitcoin Fundamentals podcast. On today's show, I have Perri-Ann Boring and Brian Estes to talk about all things policy and regulation currently happening in Washington, DC. We talk about the swift change in stablecoin legislation, what it means for legacy banks,

the steps that Congress is taking to potentially pass a Bitcoin strategic reserve bill, which goes beyond the executive order that was issued by the president. We also talk about whether there are certain agencies potentially selling Bitcoin, like the Department of Justice,

and that there's a current audit that's taking place that we're going to learn about very soon. So just a whole host of different things that we're going to be covering on the show. And so without further delay, here's my interview with Perianne and Brian. Celebrating 10 years, you are listening to Bitcoin Fundamentals by the Investors Podcast Network. Now for your host, Preston Pysh. Preston Pysh

Hey, everyone. Welcome to the show. I'm here with Perianne Boring and Brian Estes. Guys, welcome to the Investors Podcast and Bitcoin Fundamentals. Hey, Preston. Good to be here. All right. So this is going to be an interesting one. Perianne, last week, I was up in DC. You invited me up to do some hosting for your digital chamber conference that you had. The vibe was very different than what I've seen in DC with respect to Bitcoin and digital assets and just the whole vibe was very different. What's your take? Well,

Well, I love your take on what was different about it. Oh, I was just amazed at, for example, there was a new senator, Senator Marino. I think, is he out of Ohio? Yep. So as an example, he goes on stage and I mean, he was just the amount of knowledge he has in this space with respect to the stable coin legislation, with respect to Bitcoin oil.

underpinning the backbone of global finance and going deep on some of this stuff. And he was just one of many. There was a guy that went up on stage, I forget, you might remember, I think he was out of the house. He goes on stage and he's introducing ideas around the strategic reserve and says, "Oh yeah, I had 300 coins, Bitcoin, on Mt. Gox before it got hacked." And I'm thinking, "Well,

what is happening? Where did all these politicians come from that are truly in this space? And you had, what, 20 different representatives from Congress, members of Congress there in that ballpark? Yeah, we had 25 members of Congress. But yeah, I love that. That's kind of one of your big takeaways is that we have people serving in office that are one of us, that are Bitcoiners, really a part of the community. And that

That's really been a huge part of just my life mission as the founder of the digital chamber is to be an advocate for Bitcoin and be a part of the public policy discussions and getting really strong champions and advocates serving in office. It's just so important to the future of our community. So it was great to have you really appreciate you coming and supporting and being a part of it. Preston, you did a great job. Preston emceed for on our main stage for

for a good part of the day. And he led some interviews on stage and he did an amazing job. But the DC Blockchain Summit is one of the longest serving conferences in the entire industry. We launched it in 2015 or 2016. It was our 10th annual. We've been holding this event for 10 years. So it's one of the original industry events, but it's really the go-to platform to bring together the

digital asset, blockchain technology landscape with the policy-making community and bringing those two communities together. And this year, the energy was just really unmatched. It was a lot of fun. It was the most attendees we had ever had. It was packed. It was packed. Yeah. We were a little stretched at the venue. We were definitely hitting our max capacity there. But you mentioned Senator Bernie Moreno. He

He's spoken on that stage before as Mr. Bernie Moreno. He's actually a former member of the digital chamber. He started a blockchain company called Onum and Champ Titles that put car titles on a blockchain. Okay. And did a verification and issuance of car titles on the blockchain to make it a lot more efficient. He owns a very successful car dealership in Ohio. Okay.

One of the biggest friction points was having to get the titles issued by the local authority. They literally have to send people in line at the end of the day to go get the titles. And it really held up the whole process. So doing it more efficiently using the blockchain, that's what his company...

set out to do. He stepped down for that company to run for Senate. And then he became he was sworn in in January. And he is on fire. He's definitely on fire. The thing that he beat out, Perri-Ann, he beat out. He beat out Jared Brown. So that was the most expensive Senate race in the history of the United States. So he beat Jared Brown. Wow.

who had been serving in office, at least in US Congress for over 30 years, but he's a career politician. He was one of the most senior Democratic members of the whole party. He was the chair of the Senate Banking Committee. And Bernie, just this young guy who's not a politician, never served in office before.

And that is a huge testament to the power our community has. Yeah, no, I agree. And the thing that I guess was really impressing me with his comments is he's on stage and he's talking about the stable coin bill and he's talking about other things, but

He's like, look around. How in the world can members of our Congress not realize that you have Tether, which is the seventh biggest buyer on the planet of US treasuries, that is like, look at this trend line, and we're trying to not embrace this technology when we literally have no buyers of our sovereign debt.

And this is a conversation on stage with three or four other members of Congress and everybody in the total packed house of people in attendance listening to this. And I'm sitting there and I'm just kind of having been in this space for a while.

and seen some of the talking points of members of Congress on this, it's always been just like, they're very fringe. They don't understand the nuance of how the technology works. And you have people on stage saying things that are stuff that we would talk about on a Bitcoin Maxi podcast, literally on stage. And I'm like, wow, what has happened? Because it's very different than what it was, call it two years ago. But-

Yeah, it was awesome. And you have some stats about how many members of Congress are pro Bitcoin versus not pro. We have. Yeah. In January, there were over two hundred and ninety members of Congress that were sworn in that consider themselves pro crypto. So they either voted for pro crypto legislation

They ran on a pro-crypto platform. They publicly supported the technology through various speeches and statements. But that is the majority. There's 535 members of Congress. So to have almost 300 that support this technology is absolutely massive. And when I first got started, which has been...

Over 10 years ago now, I worked to recruit our very first congressional blockchain champion, and that was Congressman Mick Mulvaney. He was the very first congressman to come out and support the technology publicly. But to now go from one to almost 300 in a decade is massive, and you feel it. Preston, you felt it when you were on the ground in DC with our community. We now have a lot of champions sitting in the highest office

Yeah.

and it's titled strengthening american leadership in digital financial technology and you know i think a lot of our policy makers particularly the trump administration understand that this is a strategic asset bitcoin's a strategic asset but also the blockchain will be an advanced technology that's going to help us win and compete globally for the next generation of americans

And that's really what the conversation is about. More people are starting to understand that. Something I've been saying for a long time. But this is probably, in my opinion, the most important policy issue we can be focused on here in the United States. Yeah, totally agree. One other comment I would say is representative Warren Davidson. He had deep technical understanding of how all this works. He's unreal. He's up on stage talking about self-custody and why it's important and how it needs to be incorporated into politics.

all of the policies from the ground up. And I don't know, there was people there that I was just like, thank God these people are sitting in these seats to help assist in the decision-making process. Anyway, let's- If you don't know Congressman Davidson, to anyone that's listening, definitely get to know him. He's great.

I've brought him to a ton of industry events over the years. I've done some fundraisers for his campaign. He really cares and he really gets technical level, but he'll come to events. He'll take off his congressional pen. He's like, I don't want anyone to know I'm a member of Congress. I just want to be

treated like everybody else. That tells you everything. That tells you everything. He's truly one of us. He's a true believer in Bitcoin and in blockchain. He's an advocate for all the right reasons. Yeah. Bro.

Brian, I'm distracted by the journey record that is sitting behind you. I don't know if you realize. Yeah, I put it there on purpose. We are on a journey. I got four and a four on that side. I'm a big journey fan. So yeah, seeing that there is pretty awesome. Help us figure out what's going on with the tariffs. This was announced just recently, yesterday. By the time this airs, it's going to be five days, six days old.

But help us understand what the president's trying to do with tariffs and how does this fit into the broader economic macro setup that we're looking at? Yeah. So Trump understands the way the US economy used to work. So pre-1913, before there was a Federal Reserve and before there were income taxes, America, we sourced the majority of our income from tariffs. You've heard Trump say this numerous times, that

But we had so much money coming in that we had commissions set up to figure out how to spend it. And then what happened in 1913, the Federal Reserve was created, and then the income tax was created, and we got off of the tariff system, and we went to an internal revenue system instead of an external revenue system. And so Trump wants to get us back to the external revenue system.

And when he does that, we could hopefully reduce the income tax burden on Americans. So Howard Ludnick was on the All In podcast a few weeks ago. This was a really, really good interview. One of the best interviews I've ever heard. Yeah, this was amazing. Yes. Yeah. And so Howard said that he has this agreement with Trump that once they balance the budget, which they think they can do in one or two years,

then they'll reduce or eliminate income taxes on everybody who earns less than $150,000. And that's how the income tax was originally set up. The original income tax was for people who were in the top 1%, and the other 99% didn't have to pay income tax. And then now everybody pays income tax. And so Trump wants to get us back to hopefully none of us paying income taxes.

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All right, back to the show. One of the things that I think is lost on a lot of people that are just looking at this from a myopic, just in the last 60 to 90 days window of their sight picture of economic history, the thing that got us here was just dollar dominance. Everybody in the world was arbitraging the value of the dollar relative to their local currencies, which in my, and this is just Preston Pish's opinion, I'm curious if you agree,

which created this dynamic where we have massive trade surpluses with every single country that we interact with. So much so that for some of the countries that were on the list, this trade surplus is 10 to 1 or 9 to 1. And so when we're an economy built on overconsumption and aren't delivering more exports than what we're consuming, and the dollar is driving all of this, and then we get into a situation where the dollar is

in this catch-22 scenario, to me, it makes sense that a policy like this is now being introduced to try to start spinning that wheel the other way than what it's been spinning for the last 40 or 50 years, which is an ever-expanding larger trade deficit with each one of these countries. And they were incentivized to do this. When you look at the tariffs that we had, it was like, we don't charge anybody to import. And so they've been incentivized to have this set up. And we were being taxed with tariffs on

on the other side of the countries that we were. So of course, you're going to have this overconsumption that's built up. But now that they're trying to get interest rates down, I mean, that's my understanding, that's like the number one thing that they're trying to do because they got to roll, what, $7 trillion, $9 trillion of debt in the coming 12 months. I forget what the bogey is, but it's somewhere in that ballpark because Yellen was doing all of the note issuance. So when you're looking at all this and you're saying, well, how are they going to come up with this? What needs to change?

it seems kind of like it's just a natural incentive that's driving this, even though I think a lot of people are really struggling with the why on it. I think the incentive is the trade deficit is just absolutely blowing out of control because we don't put any tariffs on anything. Would you agree with that, Brian, or do you see it differently? Yeah, 100%. And you have someone who's really smart running the treasury. It's

Scott Bassett understands this. He's a macro guy. So what he's doing is exactly what you said. He's trying to rebalance the trade deficit. So what that will do is it will drive down interest rates, and we've seen it happen already. So the 10-year US Treasury bond has gone from around 4.6% to around 4% just in the last month or so. And so this is working. So they're trying to drive down interest rates in

in order to refinance our debt at a lower interest rate. Preston Pysh : Yeah. Because before the new administration, I don't remember the exact number, but Yellen issued, what was it? $7 trillion in the previous year, and it was all duration of less than a year in issuance. Because I think if they tried to issue anything with duration, it just would have been a no-bid market. So they were forced into this. It was very high interest rate, as you were saying, 5%.

And the fact that they're sub, I saw 3.9 this morning, and it seems like the trend could potentially push lower with some of this. If you got to refinance your credit card, you want to do it on a lower interest rate than higher interest. And I think that that's the play that's happening right now. Now, with respect to what does that mean for liquidity in the overall system, risk on assets seem to be...

And I think this is one of the reasons they're able to get the dollar down is the bill payer in here. Is that something that you would agree with? And if so, like, you know, how long does that mean? What do you mean by bill payer? Well, so like the markets, the equity markets have been punished through all of this because they're looking at it as

Maybe this is going to be inflationary or some type of higher cost in goods because we're slapping all these tariffs on things. And so as everything gets repriced because your interest rates are going, well, I can't say the interest rates are going higher, but inflation is going to potentially be higher. The PE on all these companies are getting punished. So I think the market is front running that by selling off risk on assets like equities. Preston Pyshenko

which is a suck on liquidity, global liquidity. And so we've been seeing Bitcoin struggling. It peaked out at like 108, and now it's in the low 80,000 range. How long does that persist with this tariff talk? Do you think that they're going to be making adjustments in general?

what's your global macro perspective for risk-content assets? Trey Lockerbie : Yeah. So I think it depends on what asset class you're talking about. So you're right, the stock market's gotten hit a couple trillion down in value. So that money has to move somewhere, right? I mean, you're selling your Tesla stock or your whatever, Nvidia stock, and you got dollars and the dollars have to go somewhere. They either stay in dollars or they get reinvested back into bonds or real estate or Bitcoin or some other asset. So the money's moving around. And so

Yeah. Interest rates are coming down because people are seeking safety, right? Yeah. Yeah. More money goes into treasury bills or treasury notes or treasury bonds. It drives up the price of those which drives down the yield. So we're seeing that with respect to Bitcoin, the drop from 108 down to the

Initially, I think that was just technical issues. But then when Trump announced the strategic Bitcoin reserve, Bitcoin went from like 99,000 down to 77,000, 78,000 again. I think that was because a lot of the agencies that own Bitcoin are selling their Bitcoin.

I don't know if it was a mistake or an oversight, but the Strategic Bitcoin Reserve executive order did not instruct the agencies not to sell their Bitcoin. What it said was the agencies need to turn over their Bitcoin to the treasury and then it'll be held permanently in the Strategic Bitcoin Reserve. But if I'm the FBI or DOJ or US Marshal Service, I look at that Bitcoin, those seized assets, they use those seized assets.

to fund their operations. The FBI uses seized assets, they sell them off and then they use that to fund their agency. And so if they sell off the Bitcoin and turn it into dollars, they get to keep the dollars. But if they don't, they have to turn it into Bitcoin to the treasury. And so, and we're going to find out on April 5th, which is March 5th,

Tomorrow. Tomorrow. Tomorrow. Tomorrow. Tomorrow. Tomorrow. Tomorrow. Tomorrow. Tomorrow. Tomorrow.

Come on. Are you being serious? Are these rumors you're hearing? No, no. This is just my own theory. Just looking at market action. Because as soon as Trump announced the strategic Bitcoin reserve, Bitcoin dumped. Come on. Perian. Do you agree with Brian? I think it gives the government a little bit of credit or maybe a little too much credit. I don't really typically see agencies thinking this strategically, particularly with their Bitcoin strategies. But you

You can't rule it out. And I mean, Brian and I have been working, we've been sending FOIAs to these agencies for years, trying to get them to disclose how much do you have. And you wouldn't believe the types of hoops we've gone through with our legal teams that the agencies are going to keep confidential what their Bitcoin holdings are. So you can't put it past them. But

But I also think we're giving them a lot of credit for being very strategic on an issue we really haven't seen much strategy before. So I've seen David Bailey post a lot on this idea of like, we got to audit the coins that the DOJ, Department of Justice are holding. Yeah.

and that they can't get a real number or i mean you would think this would be so easy to audit well there's other things we've seen too well one of the you know one of the theories why we don't have a clear audit a clear number clear understanding of exactly how much money the federal government has in bitcoin is because some of it's been potentially lost very poor custody solutions put in place don't know where the keys are have no real key management system in place

So I think that's very possible as well, where you've had agencies, they've seized very real money in terms of Bitcoin and other cryptocurrencies. They have other cryptos as well. And they didn't necessarily know exactly how to manage them appropriately. And it's kind of a mess. And they don't want to have a PR situation where that comes out into the light. Well, we're going to know this weekend. We'll know soon. Yeah, it will be made. That information will be made available soon. But

I think we all are asking the same questions and we have been for quite some time and it's time to get some real answers on what exactly does the US government's crypto holdings look like. Preston Pysh : Brian, if you're- Brian Feroldi : Brian mentioned this, we've been FOIA and the agencies for probably three years now. And the only one that would answer was the US Marshals. We actually got an answer from the US Marshals, but the FBI, the DOJ, the Federal Reserve, the IRS, the Treasury, they would just give us the runaround.

Yeah, they essentially said, you fill out the form wrong, you got to send it in again. Like they kept coming back with technical reasons not to respond.

or your question is too broad. And then we would resubmit it and say, "The Bitcoin you hold at Anchorage on December 31st," because we know it's at Anchorage, what's the number of Bitcoin that you own there? And they just won't answer. Preston Pysh : What is this process that you're going through? I'm assuming this is through the digital chamber that you're asking this, but what- Kate Grim : It's just the Freedom of Information Act. Yeah, you can submit what's called a FOIA to receive this information and they do have to respond. And

But they have a lot of tools to kind of dodge the questions, to draw out the process. Oh, my God. That's basically what's happened to Caitlin Long with her legal issues. They're just basically doing. If that's truly the case, don't you think this is going to be? I don't know. I would think that there would be hell to pay if a president that's coming in saying, I've got all these policies, I've got these executive orders that we're going to take these coins. I mean, he's given political speeches in Nashville saying that this is what he plans on doing with those coins. And

And if the people that are inside of his administration, now they might've sold some of them before that aren't accounted for before he came into office. But I would be shocked that that was happening after he was elected president. Don't you agree? Like that doesn't seem to add up. Like that would be very plausible. I would be shocked too, but it might upset him too. And might say, well, if we sold them all, we need to buy them all back too. Right. Well,

Well, it sets the stage for the Bitcoin Act. So the executive order, what Trump has put forward is the strategic Bitcoin stockpile, where we take all the Bitcoin that we have already accumulated through the law enforcement process, and we move that to the treasury and we don't sell it. That's what Trump is putting in place. But that's limited to however much Bitcoin we have, which is going to be a limited amount. And we'll know soon how much that is, but it'll be...

something less than 200,000 Bitcoin. What Senator Lum has put forward is we're going to purchase 1 million Bitcoin, and that's the Bitcoin Act, and getting that through the congressional process as opposed to doing it through an executive order. So I think this really is setting the stage for the Bitcoin Act, which we're expecting to see movement on later this year. Yeah, I would say also in the strategic reserve, it authorizes the treasury secretary and the commerce secretary to

about find budget neutral ways to buy Bitcoin. So that's on the table too. So a budget neutral way would be using some of the tariff money to buy Bitcoin, maybe sell some of the gold to buy Bitcoin. There are budget neutral ways to accumulate more Bitcoin. - Lots of money in the federal government for sure. But the other thing that's important about getting it done through congressional statute is it's future-proofed for a future administration.

So whenever Trump leaves office, if a new administration comes in, doesn't agree with what he did through an executive order, you could just undo a lot of this stuff. But if it's in statute, it's way harder to undo and it sets it in stone. So we want the legislation, not just doing this through executive order. Yeah. One of the topics also that I heard when I was in DC was revaluing the gold that's currently on the books. And it seemed like...

I feel like my understanding is that Bested is not a fan of this, but I'm curious what you guys have heard and the mechanics of how something like this would work. And my understanding that this would be a budget neutral 600 billion plus windfall that would be paid to the treasury. Preston Pysh : It's such a good question. I've heard Senator Lummis talk about this, how our gold certificates are valued at $42 each, whereas they should be valued at close to $3,100 each. But I don't know.

What's a gold certificate? I don't even know what that is. So I was having a conversation with Sam Callahan about this, and we were both looking at each other while we were there in DC, and I was like, this doesn't make any sense. How does that even work mechanically? So we AI'd it, and what I got back was something, people, you might want to double check what I'm about to tell you, but what I got back was...

The treasury initially issues a certificate to the Fed for the value of the gold. So they would have initially done this at $40 or whatever. And then the Fed basically gives that certificate back to the treasury and they're able to fund the treasury's general account.

the TGA, for the amount of gold that they had for that amount. They basically just print the money, they put it into the TGA, and then they can spend it however they want. So if they were going to revalue this, they would basically take those certificates that they currently have for 40, and they would reissue them at 3,100. And the difference between the 3,100 and the $40, whatever that amount is, is how much they would just fund the TGA with, again, freshly printed fiat cash. No gold leaves the vault. The certificates

In my opinion, it's akin to this idea of this trillion dollar coin thing that was being floated around a few years back where it's just an admin paperwork drill for them to print a bunch of money and stick it in the TGA.

Preston Pysh : So it sounds very inflationary. Nick Neuman : Very inflationary. The amount that came back with what that delta was, it was over, I want to say it was over $600 billion that they're basically able to replenish the TGA with. And yeah, they're just debasing the Fiat units, the base one M0,

monetary units in the system all in the name of revaluing the gold. Yeah. And that all assumes that we still have the gold too, right? Yeah. Right. Right. So yeah, you don't hear much about going into Fort Knox anymore, do you? Yeah. Isn't that weird? Elon and Trump were talking about that, then they kind of shut up about it. I don't know. There's so many weird things happening right now. And I'm told that that would be a quote unquote budget neutral thing to do and that they could buy Bitcoin with some of the money from the TGA. But-

Anyway, let's talk about the stablecoin bill. So this one, the other one that we were talking about as far as the strategic reserve, the earliest I had heard when I was in DC, and correct me if I'm wrong, Perri-Ann, was like maybe August at the earliest that something like that could get pushed through. But the stablecoin bill seems like it could happen within a month or two. It's happening now. It's happening right now. Okay. Yeah. So we have two versions. We have a House version and a Senate version. They're both making their way through the legislative process.

process. It's expected that those two bills are going to be completely reconciled, to have the same version on both the House and Senate in order to send it to the president's desk. And we're, in terms of timeline, all this could be done within one to two months. And there is a lot of pressure coming from President Trump directly on Republican leadership and Congress to get this done quickly.

And then he wants to, right after that, move to market structure. And he wants the market structure legislation on his desk before they leave for August recess. And then when they come back from August recess is when the Bitcoin Act to create the strategic Bitcoin reserve would have an opportunity to be taken up. So stablecoins is imminent. It's very well set up to be done, to get this across the finish line.

We support the bill at the digital chamber. We think it's going to be really a historic moment for the industry. What it does is it creates a federal licensing framework for stablecoin issuers, including banks and non-banks.

So as it currently stands, only non-banks have been able to issue stablecoins. Circle is the biggest issuer here in the United States. You mentioned Tether, they're not regulated here, but they're actually the biggest stablecoin issuer in the world, but they're not operating in the US. But the stablecoin issuers are subjected to a state regulatory framework, which is extremely onerous because you have to get a license in every single state you want to operate in.

So you're going through this huge patchwork to get to market. This creates a federal licensing regime that will take away a lot of that, those friction points on the regulatory side. And then it also makes clear that banks can issue stablecoins.

And we just saw the CEO of Bank of America give an interview this week saying if we had legal clarity on how we could issue a stable coin, Bank of America would be very interested in doing that. So to have very large commercial banks issuing US dollar coins

will be, I think, a game changer for the US dollar. And our view is that stable coins are extending the dominance of the US dollar because it's putting the US dollar into new hands of new communities around the world that it couldn't reach before. The big rub with the bill that a lot of people in the industry have is that it specifically prohibits the issuers from being able to provide the yield back to the user, the stable coin user, which I personally...

I think that's a big loss ultimately for the retail user that the yield can't be given back to the people actually using the tech, the stable coin. And it really limits the reach of the stable coin space. I think it will stifle innovation. So that's definitely a drawback. There's a lot of benefits. I mean, I think the bill, it's probably 75% really good. That last piece is, it's a big one, but still having that federal licensing framework is ultimately...

a massive enabler for the ecosystem. But there are some additional ways it could be improved. So why is that, Perri? And why do you think the government wants to limit the yield? It's a conception that was made with the banks. I do think there's- I mean, the banks have to be thrilled, right? Because they can just sweep all the profits. No, I mean, my understanding is that this was really the American Bankers Association that pushed this. And they said,

we will do everything we can to tank the bill if you don't prohibit the ability to offer yield. So I do think Congress is somewhat still subservient to the big bank cartels. Personally, I mean, that's kind of what I'm seeing. I think this was a concession made for the banks.

And it was a concession that people have been willing to make in order to get the bill done. You know, it's a challenge because ultimately, we will create very real commercial opportunities for stablecoins here in the United States, but we've limited it successfully. But, you know, in the end, I also think the free market will figure it out. There'll be new ways for yield to be offered. I mean, what we've seen in previous cycles in the industry is

People use DeFi protocols to get yield. So that could be risky, because now you're parking your money with a whole other entity that's not regulated and different things can happen. Also, in the last cycle, we saw the rise and the fall of all of these lending platforms like Celsius and BlockFi. And people were using these third-party platforms to get yield and they became extremely popular, but they all went bankrupt.

So hopefully we've learned from that lesson. So there will be opportunities for yield and just the issuer can't give the yield directly to the user. And in a regulated setting, that would probably be the safest way to get the yield to the user. So...

That's the big debate the industry folks are having. Preston Pysh : I'm just surprised that they can't look at this and say, "Well, how are you going to compete against, call it any other country that has a stable coin that does allow this?" Like let's just, for example, let's say we go to Australia or we go to whatever country

and they're issuing their own stablecoins by buying US sovereign debt and backing it, and then issuing out some of the coupons that they're receiving from the backing. Who's going to want to hold the US version when they can hold this other version that's backed by the same thing, but is actually paying a yield and that's

completely falling under the policy of that local jurisdiction. I just don't see the competition aspect of this, of them thinking through the global competition of stablecoin. It seems like they're totally missing the boat. Yeah, I agree.

Ultimately, it'll make these US stablecoins less competitive. Preston Pysh : Less desirable. Yeah. To me, if I was one of the big banks, I guess I would be very happy about this because then I can just sweep all the coupons and keep it all for my own profits and jam coupon-less or a yield-less stablecoin down the throat of the buyers.

I'm assuming this is all going to be falling under like KYC, like the banks are going to have to KYC who's holding the actual stable coins. Is that correct? Yeah. Yeah. Well, and then they also get to keep the yield. So instead of distributing it back to the customer, they get to keep it. So it's, you know, in some eyes, that's a win, but I think it's really a big loss for the retail users who don't have access to that.

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All right, back to the show. Well, here's where this is interesting, is when we look at the Silicon Valley bank meltdown that happened, what was it, two years ago now? And how it exposed just fractional reserve banking. Like your deposits, the FDIC will only shore up to this small threshold. And some people had $10 million deposited in the bank. Now that you start getting into stable coins and they're fully backed by sovereign debt,

it's going to be interesting to see how checking accounts work moving forward. Who would want to have more than $250,000 in a checking account when you fully know that it's been fractionally reserved

And there's not actually money there. Are we still going to expect the federal government to bail out accounts in excess of the FDIC insurance level if somebody has $5 million in their bank account when they could go out and buy stable coins that don't yield anything, by the way, and they're keeping it in that?

because it's fully backed, it really kind of exposes going back to Caitlin Long. Her argument was the Fed wouldn't allow her to play in the space, or I suspect this is her argument, is that the Federal Reserve wouldn't allow her to play in the space because she was going to fully back every deposit. And you can't have one honest broker in a sea of

Ponzi scheme brokers, right? That's effectively what it is. And so by passing this legislation, you're now introducing this wedge that your deposits are actually fully backed if you're holding them in these types of tokenized sovereign debt coins. Do you guys agree? Totally agree. It's such a cool conversation to have. And when you really think about it, we're in such an incredible time in financial and monetary history. This is going to change the way

the entire financial system and monetary system works. What you're pointing out is exactly right. There's a lot of risk in our current banking system where we have rehypothecation. And the Silicon Valley bank collapse was probably a huge eye-opener to a ton of people of, oh, if I have more than $250,000 in my bank account, which if you're

If you're fortunate enough to have that, I know many people don't, but for those that do, it's not actually insured. And then when you actually look at the FDIC insurance program, there's not enough funds in the insurance program to cover the whole banking system either, which is a whole nother kind of can of worms to open. So if you're looking for something that's safe and you understand the risk of our typical banking system,

Why would you leave your funds in a system where they're not fully backed, but now you have another option that's

that's regulated by the same group of regulators and everything is backed one-to-one full reserves. And that's what Caitlin's been trying to do at Custodia is create what's called a full reserve bank, which is different than we don't have any of those in this country. And it's for this exact reason, because I think most people would see that as a superior product because there's significantly less risk for

for the user. So I do think the whole financial system is ultimately going to change. And I guess not having the yield bearing piece, maybe it will put the thumb on innovation, it'll slow things down a bit. Maybe that could be a good thing, because what we don't want to see is huge chaos in the banking system. When you're seeing these big changes that are going to be happening, you don't want that to happen overnight. That's how a lot of people can get hurt.

So a very smooth and steady and controlled transition to a much more safe and a lot less risky system over the long term will be better for the users. But it is a tectonic shift that is happening. And when we talk about the price of Bitcoin, I don't think these big concepts are priced in. I don't think most of the markets really understand

how much of a shift is happening across the financial system because of this technology. Preston Pysh : I'm a little concerned about how KYC'd these tokenized dollars are going to be stateside versus outside of the US system, that they're less KYC'd and that bifurcating

almost like a black market and a pristine, like that's what you should be using is the KYC version of these dollars. And if I'm not getting those, well, I won't accept your tethers or your whatever. And I'm not trying to make a case for one company or the other that's tokenizing the sovereign debt. I'm just saying that the KYC piece can really bifurcate the network. And I'm kind of curious as to like what that's going to mean moving forward. Is that a talking point? That's a very deep hole we could go down, Preston. Preston Pysh :

Lynn Alden wrote a really good essay on this called

I think it's like the centralization issue of stable coins. That may not be the exact title. She put it out a couple of years ago, but it has stuck with me and I've shared it with a lot of people over the years. But the issue that she really pointed out really well is, so yes, these stable coins are KYC. So the users are known in terms of issuance. Once they're issued out, the person who's bought them, that transaction is going through a fully regulated process. Right.

Most stablecoins are operating on proof-of-stake networks like Ethereum, Solana, others. So let's fast forward this, what's happening here by a couple of years. So say the stablecoin bill goes through, which we're expecting to happen. We now have a federal license for stablecoins that potentially could bring...

Bank of America or JP Morgan or Citibank could now become an issuer of a stable coin. We certainly expect to see at least one of them to do so probably in short order. Think about just the type of demand that's going to create for that product. We talked about why it's superior. It's backed one-to-one. It's fully regulated. It's issued by a known financial institution, really different than dealing with

like a circle or a tether, both good companies, but they don't have the same type of brand awareness or reputation as a bank, as a prudentially regulated bank. And I would also assume once this bill goes through, there'll probably be a couple companies that would likely get the licenses. I don't think we'll see a huge amount of companies all getting licensed all immediately. There'll be some kind of a very thorough process to get the licenses issued.

So whoever gets out first, and maybe there's two or three, or maybe just one person gets out first, and they have this huge economy of scale for getting to market quickly. And these are tokens issued on a proof of stake network. Well, we know how proof of stake works. The more you're staking, you could have more control over the network. Is this a backdoor way for the government to then control proof of stake networks? And there is real risk there.

It's a technical risk, and Lynn Alden has really been credited with being able to outline exactly how that would work. But the KYC piece is real, and it's not just being able to track and trace everything you're doing. It also could be used to control these blockchain networks. So that's...

Protecting the open and the permissionless nature of all blockchains really needs to be at the heart, at the principle of policy and regulation to prevent something like that from happening. Preston Pysh : This is one of the reasons I'm so excited about Tether experimenting with the Taproot Asset Protocol on top of Lightning to issue their Tether tokens. And I haven't thought this through enough, but I'm curious, and I opened this up to the audience, hit us up on X with your comments or your thoughts on this.

Preston Pysh : Perianne's point about proof of stake systems centralizing is such an important and sound technical point of view. And I'm curious if people would think that that would do something similar to the Lightning Network, or if they have concerns about that, doing it to the Lightning Network, if we start doing dollar stablecoins on top of it.

I tend to think the answer is no, simply because there's not a token associated with the Lightning Network like there is Ethereum or Solana or whatever, where there's economic tokens underpinning the blockchain, where with the Lightning Network, you don't necessarily have that. Because I could just run a node. I guess I'm still opening a channel or a connection. But my understanding is that you almost have to have no economic

channel to pass the data of a stable coin. So I don't know. If you're very technical out there, I would really encourage you to think through that and whether you think that those centralizing forces happen on top of the Lightning Network. And if they don't, which my sneaking suspicion is that's the case, if they don't, I think it really talks to why Lightning is so important on the Bitcoin, on top of Bitcoin, because I think it's a much more technically sound solution than existing blockchains. Preston Pyshenko

we'll outsource that to the deep thinkers listening to the show and see what they think brian i want to talk about bit bonds you perry and david bailey i think there was a couple other authors in there maybe

Eric Weiss, maybe some others had their hands on this. Help explain this and what you think the viability of maybe it actually happening is and why you think it's important. Yeah. The history is a few years ago, I think it was probably three or four years ago, Perianne and I were out in San Francisco and she was heading to a meeting with the mayor of Salina, California. Was that right? And she asked me like, yeah, the mayor was interested in like

I could use Bitcoins to help her town.

And we came up with this idea of Bitbonds. And we kind of just sat on it for the last couple of years. And then when Trump came in and we saw the problem that was created with the former Treasury Secretary Janet Yellen, she had basically taken the debt that has been coming due. And instead of reinvesting it back in the mid and long-term Treasury bonds and notes, she

you rolled it into short-term treasury bills. And so there's this huge amount of money, the treasury bills that are coming due this year, and it's estimated to be close to $7 trillion. And then we're currently running a $2 trillion deficit. So you have to add that in too. So it's really around $9 trillion. That needs to refinance. And if you try to refinance $9 trillion, it's going to blow out the interest rates. It's going to cause bond prices to

to go down and the yield to go up. So we're paying more in interest and we don't want to do that. So we thought it was a good idea to actually share this idea with people, this BitBond idea. And so if you think about it, the reason people buy bonds is for safety, to get income and to guarantee a certain principle back to them in the future.

And the problem with that is that as we print more and more money, that future principal you get back is going to be diluted. You're not going to have as much purchasing power. And so how do you offset that? How do you create more demand for the bond?

And you go back to the way it used to be. What it used to be, pre-1971, is that when you borrowed money or when you loaned money to the government, you could get paid back in dollars or you get paid back in gold. There was a gold covenant attached to the bonds. And after 1971, that went away. And so we're going back to the way it used to be. You put hard assets in a covenant and signed up the bond.

And so the Bitbond idea, in very simplistic terms, is that, let's look at a 10-year treasury bond. The government issues out $100 billion worth of 10-year treasuries. They take 1% of that, so $1 billion of the $100 billion that they just borrowed. They go out and buy Bitcoin with it. And if Bitcoin was $100,000, that would give you 10,000 Bitcoin. So when that bond comes due, you get your face value of your bond back.

plus your proportional share of Bitcoin that was purchased. And you're not getting the dollars of Bitcoin back, you're getting the actual Bitcoin. So it's kind of like a kicker. And if I'm a bond investor, I'd rather get a little bit of Bitcoin back with my bond than not get any Bitcoin at all.

So, I'm incentivized to bid up the price of the bond. I'm going to pay more for that bond. And when you pay more for the bond, the yield that the US government has to pay, the interest rate the government has to pay those investors, that interest rate goes down. And Michael Saylor has been doing this for the last couple of years, and he's driven the rates down to close to 0%.

He was issuing out convertibles on MicroStrategy, 0% interest, zero covenants, and he was borrowing money basically for free. And so that's the idea we wanted to share with Scott Bassett at the Treasury, Howard Ludnick, Donald Trump. Let's just try it. Let's do out some bonds.

with a Bitcoin kicker in there and see what the yield comes out at. And I would expect it's going to be very, very low. And that's great for the US government. We have to pay less in interest. It's great for the bond investor because they're getting this Bitcoin kicker. And it's great for the taxpayer too, because we're not paying so much to cover interest expense and we can use that money for other productive purposes.

And so in Trump terms, it's a win, win, win for everybody. On the face of it, I'm looking at I'm saying, why would they not try this even in the smallest bit and just kind of see what the market reaction is and see if they can drop yield maybe 100 bips or something? You know, I would suspect that the demand for this would be through the roof.

Especially if, and this is the part I love about Bitcoin, is you could make this a time-locked multi-sig delivery of the Bitcoin at the maturity of the bond. So if I'm China or I'm Russia or I'm some other country that is probably very suspect of whether they would actually, let's just say you did this with gold instead. I would be extremely suspect if I'm one of those countries that the US is actually going to deliver the gold at the end. How are they going to deliver it? Are they going to deliver it?

all of those things. But if I have a time-locked multi-sig Bitcoin kicker, and I have the private key, and it reverts to a single key withdrawal, or a one of two out of the escrow, or whatever, however you want to set it up, I can then assure my delivery

as this other nation state at the time, it wouldn't happen until the bond matures. And then I can take custody of the Bitcoin that was tied to it, whether it's 1% or 2%. I just think that demand for this would be crazy. And I think the yields would get compressed on whatever the issuance was as a test bed. This is my concern. Let's say they do this. What type of market signal does this send to the rest of the world if you're trying to assess how the US views itself and its ability to return payment?

Do you think it sends fervor throughout the market and concern throughout the sovereign debt markets that the US debt is bad at this point and that the US views itself as being unable to repay? That's why they're doing this?

Or do you think that it might be much more subdued? No, I think you're collateralizing the debt. You're backing it with hard assets. I mean, I don't think there's any downside to this. Just think about it. You're taking 1% of the bond, the loan value that you're taking, and you're buying Bitcoin with it. It's the minimus risk.

It's really no risk to the government. And even if the Bitcoin eventually, let's just say, worst case scenario, it goes to zero, you're on 1%. But if it works, just think about if it works, like you're lowering the interest rate on hundreds of billions, if not trillions of dollars. And take that savings and reallocate it.

to education or reallocate it to building airports or roads or doing productive activities with it instead of just paying it out in interest. Preston Pysh : So I made a video, I think it was like a 10-minute video, just highlighting the points of this proposal that you guys put forth. And Senator Lummis replied on X to the video and said that they're looking into something like this, which I was pretty dang excited about. I'm curious, Perry-Anne,

And being there on the ground, is this a real idea that's being kicked around? Is this something that they are considering? And if so, what do you think the odds are on it actually being- It's under consideration. It's been looked at at the highest levels in the US government and the US Congress. It is being looked at right now. In terms of legislation, the priorities are the stablecoin bill, the market structure bill, and then the Bitcoin Act. And then I think

the Bitbond potentially legislation could come after that. So this isn't something I'm expecting to see movement on like this summer, just because President Trump and the Congress are very, very much focused on getting the stablecoin bill and the market structure bill done. But this does have real legs to it. This is being considered by the most serious players.

And we're doing everything we can to push it through that process because we do think this is worth trying. There's not a lot of downside if it doesn't work out, but there's potentially a huge benefit for the American financial system. And it goes very, very well with Trump's executive order of association.

establishing American leadership in the digital financial technology space. Preston Pyshenko Yeah. Guys, I love this conversation. We need to have this more often, especially with how dynamic everything is in DC. There's so much changing, there's so much happening, and you guys have your ear to the ground better than anybody I know as to what's happening there.

And Perianne, all your work up there through the years, can't thank you enough. You're just a wealth of information with respect to what's happening up there. And Brian, obviously, I bring you along for the journey, records behind you and your keen insights. So thank you both of you guys so much for making time. If you guys want to give a handoff to the audience of where they can learn more about you or anything that you want to highlight, Perianne, take it away. You go first.

Thanks so much, Preston. Yeah, you can follow me on X at Perry and D.C. or digital chamber dot org. I'm sorry. I've got one other question before we go. I forgot about this. The movie. Thank God for Bitcoin. I want to make sure that we cover this before we go to the final hand. You mentioned Warren Davidson earlier. And yeah.

Warren Davidson's in the movie. You and Perri-Ann are in the movie. Thanks for bringing it up. The movie's had over 6 million views around the world. We have ambassadors in Africa showing it at local universities right now. We're trying to educate people on the moral and ethical reasons around Bitcoin, not just the monetary and the money reasons. Preston Pysh : I saw there was some influencer, I don't know who this guy was, but he has a massive, massive following

And he, I guess, has been writing off Bitcoin as not being anything worth looking at. And he recently made this whole video on how he watched your movie and completely transformed his opinions on Bitcoin. And I'm obviously biased. You included myself in there. But what an amazing effort. If somebody's trying to really kind of wrap their head around all the nuance and the technical nuance of Bitcoin...

within one sitting. This does a pretty good job of getting you there most of the way. And I know that was one of your intentions with making it. Jason Lowery : Yeah. The movie is free on YouTube. So just go to YouTube and type in God Bless Bitcoin. But if you want to take a deeper dive into the movie, we released what's called Layer 2. And if you go to Apple TV or you pull up your phone and go to the app store on your phone, and you could download the God Bless Bitcoin app or use Apple TV,

We put 27 of the interviews in there. So there's 16 hours of content and it's nine bucks, $9.99. And it gives you access to an extra 27 interviews. And they're the full length uncut, unedited interviews.

And so there's a lot more information in there. I don't know if I want my full length. I made a lot of mistakes in my interview. You guys did heavy editing on me. Okay. That's awesome. And I also want to highlight this too.

One of the things that I found most amazing of what you and Kelly did with the movie was you open sourced the final full movie itself. If anybody wants to take the movie and run it on whatever channel they've got, if you're a content creator or whatever, you can take the full movie and upload it into your channel and share it. Kevin Kennedy : Yeah, you go to our website, click on resources. The movie's there. You can download it for free. We also dubbed it in seven different languages.

It's in Hindi, Mandarin, Russian, Spanish, French, and Portuguese. And so, 85% of the native language of the world, we've dubbed the language into. And it was important to us to do that so that people who don't speak English could watch the movie in their native language. Yeah.

It was kind of funny when we first dubbed it, when we talked about bearer bonds, the people that were translating for us, they thought it was a bear bond, like a bear, right? Like an animal. And we're like, no, it's a bearer bond. And we had to explain the difference between a bear and a bearer. So there are these little nuances in there. But yeah, the movie's, like I said, dubbed in seven languages. You could download those versions off the website too. Yeah.

God bless Bitcoin.com. I love it. Anything else you want to highlight, Brian? You good? Nope. Okay. Awesome. Thank you for making time, Brian. And obviously thanks to Perianne as well for joining us and we'll definitely have to do it again soon. So thank you so much. All right. See ya. Thank you for listening to TIP. Make sure to follow Bitcoin Fundamentals on your favorite podcast app and never miss out on episodes.

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