ROLLUP: Macro Bearish Report | Biggest Hack In History | SEC Drops Crypto Cases
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Bankless Nation, welcome to the weekly roll-up. Each week I'm bringing on a different co-host to help me go through the news. And this week I have the pleasure of being joined by Alex Thorne, the head of research at Galaxy Digital. Alex, happy Friday. Really happy to have you here today.

Yeah, great to see David. I mean, what a crazy, exciting time. I'm excited for the roll up because there's a lot of wild news happening in markets and in crypto. So this should be a fun one. Yeah, two very big things that really marked the last week are the fact that just markets are down bad. Total crypto market cap is now below $3 trillion. Bitcoin is now below $85,000, which is

I mean, $85,000 is still pretty high, but it's been above $90,000 for a long time now. And so it has broken through that $90,000 number. What's going on? What caused this? We're going to talk about that. Also, the largest hack in crypto's history, Bybit, a $1.5 billion hack exploit by North Korea. So we're going to talk about how that happened and how everyone is responding to this. In addition to all of this, though, there's definitely some good news on the horizon as well. A wave of lawsuits.

dropped by the SEC. Four different U.S. crypto companies got the all clear from the SEC. We'll talk about all the reactions to those different lawsuits getting dropped. And then also some regulatory capture going down in D.C., which stable coin company is playing dirty. We're going to talk about all of that and more, but maybe I just want to get Alex's take here on the markets. Trump confirmed that 25% tariffs are going to be imposed upon all Canadian and Mexican imports.

In addition to that, consumer confidence plunged in February amid rising economic concerns, which you would make it make me think that the traditional equities market really took a beating. And it wasn't green. They were definitely in the red. But then if you look at the crypto markets, the crypto markets were down way worse. So, Alex, how do you just analyze the markets of the last seven days or so?

Yeah, I mean, Bitcoin's down 14 percent. Ether's down 15 and a half percent over the last seven days. Obviously, you can see how bloody the market has been, right? Basically, all cryptos were down a lot. And by the way, stocks have been down, right? Like all markets were down. In fact, on Tuesday, when I was looking at it, it was basically every single asset class was down except for treasuries. Even gold was down. People somewhere were selling gold to...

So it is I would say that like, look, if we think about Bitcoin as the example, like it had touched like ninety one K in this range we've been in since, you know, November, like eight different times and successfully rebounded. And like so even just everything else aside, if it touches it a ninth or a tenth time, it's always possible it doesn't hold. And then you get a little bit of a, you know, a sink that pulls it down further. And like so I'm not surprised, but but beyond that.

You have of a right. I think the Bitcoin and crypto stories are a little bit different in the market at the moment. But still, you also have something like Bybit like we're going to talk about and and then just material weakness. I mean, some softness truly starting to appear in the U.S. economy, which is causing risk assets generally to sell off. So it's kind of a perfect storm. And, you know, markets trade on the margin. And when you're looking here at, you know,

looking for the next catalyst, right? Markets are very frenetic. What's the next catalyst that's going to drive Bitcoin higher? You know, we only got to, only got to, I'm laughing, right? We only got to 109K. Like, it can't go to 150. We need something, the market thinks, and it's not seeing it yet. So now it's like path of least resistance, I think, for Bitcoin was lower. I think, I don't think it goes personally much lower, but, yeah.

you know 200 day moving average is at 81k like there's there's reasons it could go to 75 or 77k people have talked about it's it's hard to know there's a big air pocket and ownership here like we rocketed up to

90 so fast that like nobody owns nobody bought bitcoin in between 75 and 85 like there's literally if you look at the i tweeted this like the we would call the urpd the uh utxo realized price distribution which is basically just the bitcoin supply every unit of supply at the price at which it was last moved really at which the utxo was created but in in sort of simpler terms at

the price at which the current supply last moved on chain. And there's literally no supply that was last moved when the price was that because the price has never really been that. So I think it's reasonable for the market to hunt like why is there demand? What is the level of demand between 75 and 85? It's almost like a CME gap, like it never really traded here. And at some point the market's going to decide now it's trading here a little bit. And so that chart will look different and we'll figure out what the price discovery is in this range.

But I do think there is like a longer term macro question. And then there are two minds of this. But like the bearish one, which I think is, you know, not like long term, but like in this sort of the rest of this year, like there are huge questions about unemployment, because if Doge does cut an enormous number of U.S. job of of government jobs like that's unemployed people. Right. That means they can they will have less money to spend. It can hurt consumer performance.

the consumption sector, which is an enormous part of the U.S. economy, but also if you actually take out government jobs from the employment numbers over the last few years, there hasn't been that much private sector job growth at all, right? It's almost all been governments, the federal government, state governments. So if you not only slow the hiring there, but in fact roll back, right, then that could cause, I think, a lot of, that could make unemployment go up. When unemployment goes up,

People can spend less. They have less appetite. They have less money. They have less appetite for risk assets like cryptos and stocks. Right. And I think that's partly what you're starting to see. And now there's that can be solved, quote unquote. I mean, one, they might not fire as many people from the federal government as it may seem they would.

If inflation, which is mostly under control, it's not quite at target, but I mean, it's not really like a fear. And by the way, on a bad economy is typically deflationary. People have less money to spend, so they don't spend as much. You know, what's inflationary is giving people free money and then they go and spend it. Right. So if we assume that inflation stays relatively under control or even fully like gone as an issue, the Fed has a dual mandate and it's control inflation and inflation.

maximize employment in the economy. So if unemployment goes up and inflation is relatively low, then our old friend is coming back, David. Rate cuts are coming. And I think we think there'll be three or four rate cuts this year.

which helps make things cheaper and can put liquidity into the system. And so where that balance, I mean, the Fed's tools are very blunt in response. You know, they can't make people get hired like literally, but they can make the cost of borrow money cheaper and thus stimulate a bit. So I think you're and there is a whole other view that's more of like what Howard Lutnick and President Trump are arguing will happen and what they want to happen, which is

You know, new skilled labor, bring American jobs back home, have a domestic manufacturing boom, helps us grow, simultaneously cut a trillion dollars out of the deficit while adding a trillion dollars in surplus through new tax revenues from business explosion in the U.S., which could offset it. We just don't really we don't know yet. But in general, like there is significant uncertainty about the U.S.,

path forward. Not that it's like we're on the brink of some disaster, but just like, right? I mean, you're pricing in future cash flows when you buy stocks, right? The question of the future is one that's a little bit less certain now. You combine that with everything in crypto, you know, the fact that David Sachs didn't

you know, buy $5 billion of Bitcoin for a strategic Bitcoin reserve with his checkbook, right? Like the markets are a little like frenetic. There was, I think, room for this. So that's sort of my overall view as to why. I mean, I think there's intra-crypto stuff. We could talk about ETH weakness, Sol weakness, like, I mean, meme coin market ending, I'm not sure, coming down, like that sort of also play a factor. But I would say broadly, this is a risk-off market for traditional assets and for crypto at this moment.

Alex, I think that was a really good just lay of the land of everything. And I think maybe one thing I'm taking away from all of this is there just seems to be a confluence of a variety of different factors that the market still needs to process. We are still on the back of the Libra debacle following the Melania just extraction out of the Solana meme coin ecosystem, which was the hot ball of money and I think

crypto investors are looking at that hot ball of money leaving the arena and thinking that is a sell off event. Like, let's just let's just wait for this dust to settle. We'll see where it settles. Maybe Bitcoin, when that settles, ends at 75,000. Maybe it ends at 85,000. We don't really know. Let's just see what happens.

And I do really take I really like your analysis of the Bitcoin current price. If you look at the Bitcoin chart over the year, it was completely flat from March until November. It just it just bounced around like 58 to 70,000 percent.

until the election came. And then, like you said, it just teleported from 60,000 up to 90,000. And what we're seeing is we're seeing like maybe just a random walk go back down to the election prices. That's where we currently are. We have not seen Bitcoin at 80,000, 5,000 or lower since the election. And so we're just randomly walking back there along with some internal to crypto negative events like the Libra thing, now this Bybit hack thing.

And then in the macro world, I kind of am just personally having a hard time really seeing what is in the driver's seat. Like what's really what's the tail wagging the dog of the markets? My broad stroke analysis is that I think people are realizing that last Trump election.

presidency, not this one, but the one before, he was, you wanted to align yourself with the stock market. You, if you wanted exposure to Trump's policies, you bought SPY, you bought stocks. He wanted the stock market to go up. This Trump administration has different priorities. They are aligning themselves. This is from some of the analysis that I've heard around crypto Twitter and around TradFi commentators is that the Trump, if you want to align yourself with the Trump administration, this cycle is actually long-term treasure yields.

We want not short-term treasury yields, but long-term treasury yields to do well. And that is materially different from buying equities or risk assets. And I think maybe over the last week or so,

Or maybe two weeks or even in the last like three or four days, the market has really started to process that and digest that and price that into the market. This is just kind of my my loosely informed takes. How do you how do you accept that? Yeah, I mean, and I'm not an expert in fixed income, but I sometimes I'm forced to play one. And we've got smart people like my friend Bimnet Abibi, who helps me with this question as well. But yeah.

Look, Janet Yellen created a situation where the Treasury was issuing enormous amounts of short-term paper. And, like, in general, they need to term that out better. They got to get that under control. Because when it's short and rates change and those bonds mature and then, like, they're subject to shorter-term rates. And you want – you also want long-term –

to hold your treasuries. And I think there's been some talk. I'm not sure if this is actually the thing. I know Jim Bianco has talked about this idea of the Mar-a-Lago Accords, which, among other big ideas, could include, as part of negotiations on trade and commerce, such as on tariffs, could include forcing or getting foreign countries to buy more of our long-dated debt, right? So I agree. It's part of the question. We have to figure out a way to...

They got to get the debt under control in general, which they're trying to through the deficit reduction stuff with Doge and and other ideas that I've heard them say, like I said, about like, you know, bringing in high skilled labor that's been on this. Apparently, there's 250,000 incredibly high skilled people that have been waiting in some immigration queue that we have that we could let in that could start businesses and generate revenue and whatever. So I think it's all part of it. And yeah, I mean, what do you want? Do you want a.

uh innate object like gold or bitcoin for that matter that yeah bitcoin has like real appreciation potential it certainly has um but if you're uncertain why not buy something that's backed by the government and pays a good yield i mean that's that's the especially as uh you know rates come down like there's gonna be um i don't know it's it's gonna be tricky though think about this like it's like the scales right i mean if if if rates come down a lot that's

That can be stimulative, right? And that's good. I mean, if we were to chart the Bitcoin price against the Fed's policy rate, you can see a pretty decent correlation that Bitcoin tends to do better when the Fed prints more money or eases its monetary policy. However, if the Fed does have to cut a lot, that typically also might mean that the economy is not doing great, which is also bearish, right? So

I don't know. It's like what Hester Peirce said, like there must be some way out of here. Like I think the market, if you looked at Nvidia's like stock performance over just during their earnings call yesterday, it was just totally frenetic. Like, I mean, it was like the after hours trading I saw was like crazy.

People just trying to figure people don't know how to position right now. I think that's really fair. And that causes uncertainty like, yeah, like literally like this this yesterday. And I mean, it was up a lot to begin on the day anyway. But I just mean, like, people are unsure about how to position because there's a lot of uncertainty, like there's uncertainty in the data, like the macro data. There's uncertainty about the president and their plans, which is.

are very disruptive, maybe good, but certainly not, you know, sort of simple, stay the course, do what we've been doing. Right. So who knows how those play out? Right. All of that stuff is contributing to uncertainty and markets hate uncertainty. And I think that's just what we're dealing with here. And again, like, you know, Bitcoin crashed to 82K, I saw 84K. Crashed. Crashed. All the way down to 82K. Yeah. So, I mean, it's kind of like, look, I think if you're long term in

and you're looking at something like Bitcoin, I think we can get a little more tenuous when we talk about ETH or SOL or others because they have different dynamics. But I think pretty confident that dips are meant to be bought if you're a long-term holder of Bitcoin.

But, you know, if you're an investor, a fund manager, a hedge fund, like sometimes the market tells you, hey, man, we should probably raise cash right now. Right. In which case people also like to sell their winners and not their losers. Right. And so like Bitcoin's been on a huge tear. It's reasonable if you are up a lot and you say, well, you know, 91, like I said, if you look at the chart, 91, like just held for so long. I mean, really not so long, three months or so. It basically went.

You could have done well short-term trading if you bought 91 and sold like first 108, then sold 102, then sold 98, then even sold 95. Like –

over and over again that worked for like eight different times. And then this time it didn't work. And at some point it's just like something's got to give like markets want to go a direction. Bitcoin's not a stable coin. It wants to go up or down usually. Um, and so when everything is flashing, not necessarily red, but uncertain, um, you know, people want to raise cash for that. So I think it is the long bond is part of the, is part of it. Um,

And but there's also just like data and like we're in multipolar world seems pretty obvious right now. And like there's it's just a it's just a weird time.

Something I'm noticing in the market, obviously, this was a red week and there are some very red numbers. I think Mantle, the MNT token, which is associated with Bybit, took the worst of it in the top 100 crypto assets. So down 27 percent. The Trump meme coin down 24 percent. And it's just been going down forever. BitTensor down. Solana down 20 percent. Solana is taking a huge beating. Hyperlink

But then even Dogecoin and XRP and then, of course, Bitcoin are really up there and some of the biggest losers of the week. At the same time, Alex, there are some very strong winners. Story Protocol is on this huge pump. It's a brand new token. So its chart is very recent. But MakerDAO has gone from $900 to $1,700. The Celestia token in the midst of...

The Bitcoin dump actually went up in price. Athena is actually doing OK. So while there's definitely big weakness in some of the blue chips, there's also pockets of strength. And my interpretation of that is that we don't think I don't think this is over. I think there's a lot of vitality found in pockets of the crypto market.

So while some people are, of course, just a complete weathervane about sentiment saying like, oh, it's so over, like bull market's over. I'm actually seeing pockets of optimism in select down market parts of the crypto industry, which gives me some optimism that many different sectors of crypto are very much still alive. Yeah, I think they are alive, to be clear. I think there's a lot of like, I mean, look, Sol went to 290 something, 295 on Trump coin launch, like,

Well, Trump coin was denominated in Seoul, right? So like that makes sense. If you bring in a bunch of new people that want to buy something and they have to buy Seoul to buy it, just like the ICOs for ETH in 2017 or even NFTs for ETH in 2021, right? A lot of what drove, I think, Ether in 17 and 21 and Seoul in 24 was that there were assets net new people wanted to buy that required they buy the underlying token, right? So...

Um, that doesn't mean the platforms aren't vibrant and the rest of the stuff isn't happening. It definitely is. It's just that like, you gotta wonder why people were buying to understand why they may be selling. Right. And so, yeah, there are a bunch of other things. I think that's all. I actually think that nothing is really materially changed here. It's really just like a bunch of money came in and some of that money is looking to come out at the moment. And I think it will come back in across a range of assets, right? It's not.

It won't just be I mean, I do think Bitcoin has shown like just an incredible amount of outperformance versus the others. You can see it in dominance. You can see it in ETHBDC. And but, you know, there's going to be generalized blockchains that have apps on them like we there already are, obviously, and they're going to continue to be. I don't think this changes that.

It's pretty interesting to look at the Solana chart, which on March 1st was $130, March 3rd last year. So one year, Solana is actually starting to become flat. It's at $137 right now. And so while Solana has been like the absolute outperformer, that started a little over a year ago, and then it hit its new all-time high at $262. Actually, I think

I think it's actually even higher. I think CoinGecko is... Yeah, I think that's like a daily close or something. I think it got to like 295 or something. Almost 300, basically. But yeah. Flat on the year is pretty interesting for Solana. It's still up on the year, but it has erased a lot of its gains because I think just a lot of the energy is coming out of the meme coin market. But...

Like you said, this is a very strong dip. I think if you are sitting in cash, this is Mr. Market is coming to you with some interesting offers at this present moment in time. And you can do with that information what you will. Alex, we're going to talk about the Bybit hat next, as well as all the SEC dropped lawsuits. And there's definitely some politics to talk about as well. But before we get into all of those subjects, we're going to talk to some of these fantastic sponsors that make this show possible.

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And we're back going to talk about the largest exploit in crypto's history, the Bybit hack. Of course, on Friday, Bybit, which is an Asian exchange, so I don't think too many U.S.-based crypto participants really know too much about Bybit, but it's a very large exchange over from Asia, suffered a massive security breach, lost about $1.5 billion in ETH, staked ETH, METH, and other ERC-20 tokens, makes the biggest hack ever.

ever. 13% of all exploited funds ever were the recent Bybit hack. It's twice the size of the second largest hack, which was the $600 million hack of the Ronin Bridge in March of 2022. Both the Ronin Bridge and the Bybit were exploited by the Lazarus Group, of course, North Korea. So this is North Korean money now is in the hands of North Korea.

One of the big takeaways, I think, is the Bybit crisis response from Bybit leadership was heralded as the best that we have ever seen in the industry. Ben from Bybit immediately went on a live stream, pretty calm and collected, and just talked about exactly what happened, took ownership over it, talked about the crisis response and really calmed fears around.

And some people were trying to correlate this to SBF's tweet that FTX is totally fine. But I don't really think those takes really age very well at all. It turns out Bybit was totally fine, even with a $1.5 billion loss. I think they had something like

$18 to $19 billion in reserves. And so while $1.5 billion is nothing to scoff at, they could actually handle it. And so Bybit was praised for some of the best crisis response ever in the industry, which to me, it sounds like a sign of growth for the industry at large.

Okay, so let's talk about actually how Bybit was hacked. It was a phishing campaign that targeted Bybit's cold wallet signers using the Gnosis Safe front end. So hackers gained access to the Bybit front end

Specifically on GnosisSafe. So everyone else who used GnosisSafe was totally unaffected. Bybit's use of GnosisSafe was somehow phished or just was given a malicious version. The hackers intercepted a routine transfer from Bybit's Ethereum's cold wallet, which rerouted 401,000 Ether to the Lazarus Group addresses.

Forensic reviews from a few independent auditors found that Safe's wallet credentials were compromised. The attackers injected malicious JavaScript into Safe's AWS infrastructure, deceiving the signers into approving malicious transactions. So Bybit's infrastructure itself was not compromised, but its security controls failed to detect the attack.

Stefan George, which is one of Safe's co-founders, says that the Safe wallet was targeted, but the team has secured and reinstated the infrastructure and also stressed the need for verifiability of transactions to prevent blind signing risks. And I think everyone, maybe not everyone knows what blind signing is, but everyone does it, which is you get your transaction approved on your ledger or on your metamask. You don't really know

The text that is being shown to you, you don't know what that means. It's very complicated. If you're a developer, you could parse it out with skills and time. But I don't I don't know what the hell all that stuff means. Then that's kind of more or less what blind signing is. Hazu criticized Bit by Bit for failing to verify the message integrity on an air gapped machine despite handling over a billion dollars in fund.

And then warned that assuming front ends are secure is a critical mistake in crypto security. And overall, I'll just say maybe the key takeaways here is we are highlighting the importance of message verification, secure signing processes, and we should not treat front ends as inherently untrusted infrastructure. You actually do have to trust that front end.

Alex, what was your take when you saw all of this? Biggest hack in crypto's history. What's your analysis? Maybe the biggest theft in world history, actually. Really? We Googled a lot and did some work. I think there was supposedly a billion dollars stolen from the Iraqi central bank sometime after the American invasion of Iraq.

But like this, this rates in general now, that's not including things like, you know, graft and stuff by government officials of various countries or whatever. But like if a pure like broken, stole money, ran out like this is up there. Very much need to agree with your assessment of Bybit's handling of it.

There were times during the live stream when Ben had to get up and go do something and they would be like, don't worry, Ben will be right back. And he would literally go do something, come back 10 minutes later. Like, like he's not leaving. They're not closing the stream. It was very I think the level of transparency and disclosure in the actual crisis management after the hack absolutely should be praised.

He got he thanked a lot of industry participants, including Galaxy, for helping them with various aspects of this, of the response. Right. And so and also I should point out Bybit has one of the most robust proofs of reserve. They prove every day that they hold in excess responsibility.

for every asset, I think pretty much that they offer on their exchange, they hold in excess of what their client liabilities are. And they did hold in excess. They had all the ETH. Now,

The security part, obviously, they don't. So then they had he had also said that they had Bitcoin in stables as in their own treasury, like they're that's what they keep their profits or whatever in. But they owe a bunch of ETH to clients. And I think what it looks like was happening is that the industry really stepped up and probably lent them a bunch of ETH so they could honor those withdrawals.

And then they have to – now they owe ETH back to, like, lenders. But they have assets. So, like, they have – I think they said their own assets. They're also highly profitable. That's what I'm saying. It's a highly profitable business. They have plenty of their own assets, but they didn't have the units of ETH and Steph and Meth and whatever the other ones were. And so, look, the industry came together to support them, I think, is a –

is materially different than the situation with Sam Bankman-Fried, obviously. Yeah, exact opposite. Yeah, and then, you know, we have a secure multi-party computation style custodian, Galaxy does, GK8, and they did an analysis, I think,

Again, they didn't know and had no way to know exactly how the hackers did got into the system. Phishing was the assumption. It sounds right. They actually but you can see the two transactions. Right. So the first transaction that was signed was extremely subtle. And it looked like this is based on GK's analysis of the of the transactions themselves. It looked like.

No funds were being moved, right? And it was only this one operator changed literally from a zero to a one. But what it really did was reassign the proxy contract of their safe to the malicious hackers one and then two minutes later after that. And so all the – whatever the signing process is at Bybit for this type of thing, yes, I mean they should –

Crypto UX needs to get better. I mean, basically, or you get because they did sign something that effectively handed control over their ETH cold storage safe to a proxy contract controlled by Lazarus Group. And then they just literally swept all the funds out of the address two minutes later. Right. So.

There's security work, I think, that needs to be done in general in this industry to make stuff like that better. Your point about blind signing, you go to OpenSea to buy an NFT and it's like you click the approval button on your MetaMask when it pops up and it's got all this stuff and you're like, well...

You're just making sure you're on real open sea, and it's pretty much all you could really do. That's all you can. Every time I hit an approval today, I am thinking, is this the one? And I go look at the URL, and it's the right URL, and I know that secures me a little bit, but not completely. And so anytime I approve something, I'm like, man, is this it? Is this the one? I think it tells good reason that you should keep your assets in cold storage, right? Right.

Don't go and sign something with a wallet that also has your life savings in it, right? At least separate that, right? Like at least. And I think that's what's so, I mean, normally with these exchange hacks in the past, it's typically the hot wallet that gets hacked. And so exchanges have, and the hot wallet, typically exchanges operate with a sort of two-tiered wallet system. They've got a giant amount of cold storage that's totally air-gapped and safe, like lowercase safe, not no-safety safe.

And and then they have a hot wallet that they do have to that's what they use to process withdrawals and deposits. Right. Like someone's got to. And so they take great care typically to keep much fewer assets in the hot wallet because the hot wallet basically has to be on the Internet in some form because it has to go to Coinbase account and click deposit. It produces a QR code and an address for you that is to their hot wallet.

So they take great care to separate long-term cold storage from a hot wallet. And so, but this isn't that. This does look like their cold wallet, their reserves of ETH or client deposits are

through this, like I said, incredibly subtle and sophisticated attack by North Korea. And this is a state actor. Like, this is... I think there are implications here, like, for national security policy. I mean, I can tell you this is not a great headline in the policy world. No, it's not good. I mean, people are...

rightly wondering, well, wait a sec. I mean, let's say I'm a big institution. Like, how do I know that my crypto is going to be safe if I if I do decide to invest in it? And that that that answering that question definitely got harder after Bybit. I think there are good answers to the question. It's not like this means that all of crypto custody is forever insecure. But I mean, this is a this is a bad look for the industry. I don't necessarily I mean, look, it's also a North Korea story. I mean, honestly, like these are well-funded, deep pocketed

And highly intelligent, highly. I mean, this again, multi-step targeting the right people at Bybit. Like, again, if you look and I don't think I'm not the technical guy for this, but our GK8 guy was explaining to me, showing me the transactions on Etherscan.

This looks like you're signing a transaction that does nothing. And it certainly doesn't move any ETH. So if you were blind signing, you wouldn't know. It's not like, wait a sec, the transaction that they signed did not steal the 400,000 units of ETH. It just reassigned the proxy. It's very sophisticated. So I think a lot of work the industry has to do and –

broadly to improve UX. I mean, honestly, I almost think of this as a UX issue, ultimately. I think this is definitely a UX issue. I know somebody who knows quite a lot about this subject and is trying to tackle this problem head on is Justin Leroux from GridPlus. And he's building this hardware device that has a very large screen, which it's kind of funny how

Having a large screen is one of the biggest fixes to this issue. Obviously, it's not just a fix, but in order to have clear signing and understand what signing, we need a large screen so we can read it. And then we also need some backend standards to be able to parse a transaction so that it can actually tell you what exactly you're signing. So we need some standards. We need tools to help parse transaction data and to be able to interpret transactions.

into human-readable language exactly what's going on. And then we need a large screen to be able to actually read that and say that that's okay. So there's some sophisticated backend updates that we kind of need for this. Particularly with Ethereum transactions, which are very big, like in text, there's a lot of text going on. If you're doing smart contract interactions, it's not a simple Bitcoin transfer, right? And I think one of the other interesting things here is

Like and that, you know, I've explained to people like Bitcoin is not vulnerable to this type of attack. It's certainly vulnerable to having private key stolen. Everything is right. But Bitcoin is not vulnerable to this type of attack.

Bitcoin script is so much simpler and it has native multisig. So ETH doesn't have native multisig Ethereum. So instead, Gnosis Safe, which is widely viewed as the standard for multisig, it has to be built as a standalone application. And that just introduces a lot more complexity. So, yeah, having ways for actual humans to untangle that complexity when they're signing would be is paramount.

Alex, I hate to bring this up, but I'm going to have to do this, which is I don't even know what name to name these specific flavor of Bitcoiners. But there was this like the laser eyed cyber hornet Bitcoiners out there who started like trying to meme this idea of an Ethereum rollback into existence. There's this one tweet, which is completely fabricated. This is not true whatsoever. That tweets out Vitalik announced that the ETH Foundation is going to vote tonight on a chain rollback policy.

or delete the hacker's ETH supply from circulation. Let's make communism great again, which is one of the recent Vitalik tweets. This, of course, did get the community notes on that saying Vitalik did not announce this. Such an announcement appears neither on Vitalik's profile or on Ethereum Foundation social channels. It was just clearly fabricated in a very malicious way by this specific...

like internet trench flavor of Bitcoiner. But then it took the entire crypto community by storm because it got loud because people are saying, oh, like there's going to we're going to roll back the chain. There's Arthur Hayes said it to. Yeah. Arthur Hayes. I don't know if it was a joke or not. What were your what was your reaction when you saw this happening? Yeah, I think and I have to say, I don't know. This is the Bitcoin therapist quoting it. I know that account. I don't know who that person is, but

But there are Bitcoiners that I like and I'm friends with who did this and who also said this. And to me, I think it is it is it's a troll. This is a troll and they're trolling. And it's funny. I think it is kind of funny. But I do think it's very important to debunk because it you know, not everyone knows this hit was here during the Dow hack and not everybody knows the joke.

that Bitcoiners and Ethereums and Ethereums have been trolling each other over stuff like this for years. Right. I mean, remember the troll that Pirochard did really well and humorous where he was trying to supply gate the supply gate. Right. I mean, again, it's like, look, there's there's some truth to it. I mean, it's true. The Dow hack did well.

I don't even say rollback. This is the other thing. It's not even actually true. Irregular state transition. And then people are like, what the hell is that? Which is kind of a funny, it is a euphemism. And like, of course, like they did intervene in the state and take funds from an account. Like, so you can criticize that. Property rights of a hacker were violated. Correct. Correct. And the troll that Bitcoiners have made ever since, not all, but some, is that, well, if sure it was the hackers then, well, by the way, this is hackers now. What? You got to protect the difference here.

Yeah. What's the difference? But also separately, it's a degrading of property rights by having that one precedent ever. Now, again, that was eight, uh,

Seven years ago, right? 2016? No, so it was nine years ago that that happened. It was an enormous portion of Ethereum supply at risk and also only worth $50 million. That's how early that was. Yeah, it was like 15 months into Ethereum's lifespan. Yeah, and look, Bitcoin also had a catastrophic error early on that would have created an unlimited inflation bug that Satoshi themselves had too hard fork to fix. So like, it's not...

I know they're not one and one, but also the Dow hack and this is not one and one. And there is a guy, I'll bring this up a little more deeply when we get to talking about policy and politics, but there is a report circulating in Washington by the Consumer Federation for America written by Gary Gensler's just recently former chief crypto advisor who now works for a consumer advocacy nonprofit called

That is just a giant, mostly incoherent pile of mean things about crypto that they're trying to use to dissuade Democrats from voting on any of these legislations, the stable coins of the market structure. And he fell for the troll. He includes that they are actually talking about rolling back the chain. And he uses the Dow as the example. And I'm saying that is a straight up category error because, first of all, they're not talking about that.

I don't know. Basically, some Bitcoiners trolled this into existence. And I do think that's kind of funny. They are very good at what they want to do. Yes. I think it is pretty funny to me. But I can see how like normal people, they don't know. They might not have been around the whole time. They might not get the joke.

Was Arthur Hayes in on the joke or did he get trolled? I mean, I don't know. Are they just I mean, it's it's look, it's fun to for the tribalism can be fun in all directions, but it also can be damaging. That's not what happened during the Dow hack. There was no this guy was saying in this Consumer Federation for America report that.

first of all, they maybe should be more flexible to roll back fraud and stuff in blockchains. And the fact that they can't is bad. But then he was saying, but actually they, they might, they're talking about rolling it back for this Bybit hack. And that's actually also bad because, um,

When they do that, it would revert normal stablecoin transactions and stuff, and that would hurt mom-and-pop hardware stores. It's a lot of collateral damage. Yeah. So basically this guy, it's a nonsensical argument he's making because he's saying its inflexibility is bad and its flexibility is bad. And so it's like, wait, so you're just saying everything's bad? But even he fell for this troll, so, you know, or was happy to. I don't know. I think it's funny, but again, I also debunk it. Like, it's not true. Mm-hmm.

Yeah. My interpretation of this is that Bitcoiners who are I think you say it's funny. I'm perceiving it more malicious than I think you are. Like some some Bitcoin owners know full well what they are doing. Oh, no, I think most of them do. They're trolling. I think this is a troll, I think. And I think trolling can be funny. But.

But yes, I mean, this is this is damaging. And like if people believe that's true, it's it's totally false and misleading intentionally. So so I agree. It's not it's not just haha joke. I mean, it's the joke. I think the joke is funny because it kind of worked. And I just think Internet trolling is funny. But you are dealing with you are dealing with one point six trillion dollar assets and three hundred billion dollar assets like this can have consequences. It's certainly not the type of way that I talk about.

you know, if I want to, you know, argue about Bitcoin versus Ethereum, I don't do stuff like this. Yeah. And maybe just to highlight why the like kind of the subtext about why this is happening is because one of Ethereum's most valuable properties that

that almost no other blockchains have except for Bitcoin is only Bitcoin and Ethereum have this one property, which is credible neutrality. And Bitcoin gives credible neutrality to BTC, the asset, and Ethereum tries to scale credible neutrality to everything, any tokenized asset, any chain that settles to Ethereum, ETH, the asset itself.

And that is something that both Bitcoin and Ethereum have. And these are decently competitive ecosystems. At least they could be perceived that way. And I think enemies or antagonists to Ethereum really want to tear down Ethereum's credible neutrality because chains like Solana don't have credible neutrality because they're simply more centralized. And this is why I think Raj from Solana tweeted out that tweet that got a lot of flack about how Ethereum should roll back the chain.

And so I think this highlights exactly why Ethereum is so valuable and why competitors to Ethereum are interested in trying to convince people that Ethereum doesn't have the very high levels of credible neutrality that it actually does. That's right. It is competition between tribes inside crypto for the credible neutrality story. That's absolutely right. And that's all it is. I mean, but look, it's also we all...

who were doing the trolling, you and I, all the Ethereans. We're all incredibly online people. So you're just always looking for some... Everyone's always looking for some way to talk about...

their thing. And like, you know, I agree. It's unfortunate. It isn't true. And but that is where it emanates from. It is a competition for mindshare as to what's the best blockchain. Honestly, that's what this boils down to. It's kind of like how David Sachs or I forget somebody reported that like David Sachs is

presidential working group is not likely to do a permanent advisory council because of crypto infighting. So I do think for the broad success of everything in crypto, and I would prefer Bitcoin and Ether to always fight in the market and in the battle space of ideas and not through regulation or outlawing each other. We should come together and not do this type of tearing down. It's not

productive in a net basis, right? At best, it's only productive on a relative basis. But like, I don't I don't want Bitcoin to win at Ethereum's expense. If I wanted Bitcoin to win, I just think it should

It should win. Like, it's not that not that everything else should lose. It doesn't need to be. And so from a from a standpoint of a longtime Bitcoin supporter, that's why I certainly never troll ETH like this, because I just don't. First of all, it's rude and it's false. But also, that's just we can all win. And I think that it's destructive. It's capital destructive. Yes, I believe in growth. OK, like not like growth at everyone. I don't believe that it's a zero sum game and I don't want to play the game like it is. Mm hmm.

All right, let's get into some happy news. Some SEC dropped lawsuits. So Coinbase had their case against the SEC dismissed. Brian Armstrong said this is hugely vindicating, especially because so many people questioned my decision to engage in litigation with the SEC on this matter in 2023.

People told me the courts would give a lot of leeway to the government, but nonetheless, Coinbase has been vindicated. Also, OpenSea. Devin Finzer tweeted out, the SEC is closing its investigation into OpenSea. This is a win for everyone who's creating and building in our space. Trying to classify NFTs as securities would have been a step backward, one that misinterprets the law and slows innovation. Not just that, Uniswap. In April, the SEC issued a Wells notice claiming that Uniswap's labs were

operated as an unregistered broker, operated an exchange, and issued an unregistered security. As of yesterday, that investigation has officially been closed and the SEC is taking no enforcement action. This is a huge win for DeFi and reaffirms what we've always known, that the technology we build is on the right side of the law and our work is on the right side of history. In addition to that, Robinhood, Vlad Tenev tweeted out, the SEC is closing its investigation into Robinhood crypto is a win for justice and the rule of law.

Now it's time to focus on pro-innovation policies that unlock the full potential of digital assets in America, not just Robinhood, but also consensus. Joseph Lubin tweeted out, I'm pleased to announce that consensus and the SEC have agreed in principle that the securities enforcement case concerning MetaMask ought to be dismissed. Subject to the approval of the commission, the SEC will file a stipulation with a court that effectively closes MetaMask.

the case. So some huge wins for United States based crypto companies, all that received Wells Fargo, Wells notices over the last two years and are all being dismissed in this massive wave. I think this is a huge relief off of crypto companies back. We can stop paying lawyers so much money to fight the SEC and the SEC can get back to doing exactly what they ought to be doing, which is to preserve orderly and efficient fair markets. Alex, what's your take?

My gosh, what an onslaught of positivity. What a 180 pivot from the SEC. I think one of the ones that really stands out to me is Robin Hood, because Vlad Tenev had said that they had gone in, hadn't handed the SEC like this was years ago when they saying we want to do this stuff that we're doing and we want to do it legally. How can we do that? He said something like they had like 13 meetings with the SEC back then and were rewarded with a Wells notice, a threat, a

So all the information they gave the SEC about what they wanted to do, Gensler's SEC turned around and sued them for it or said they were going to sue them for it.

So what a turnaround. I mean, that was like coming and talk. And if you do, you might get sued, let alone you might also get sued. Coming and talk, leave with handcuffs. Exactly. So it doesn't surprise me. I think core to this not only is that a lot of these suits were literally rude, like persecuting. They weren't probably going to win all of these suits. The SEC's cases, even under their existing views of the law, were probably not going to win suits.

So they were damaging and oppressive to the industry, no doubt. But also this SEC has said, has made it very clear that one of the very first things they're working on is what is and isn't an unregistered security. And that question in crypto and that question is sort of the foundation from which everything else flows. Right. Because if it's not a security, then you don't need a national securities exchange license to trade it. Right. For example, with like a Uniswap or a

you know, an exchange, right? Like Coinbase, right? And they are materially going to change their view on what is and isn't likely to be a security in crypto. And so that is part of the reason that if the SEC does change its views on what is and isn't an unregistered security, then many of these cases can't go forward because they're based on the idea that Robinhood and Coinbase are trading unregistered securities. Well, if they're not unregistered securities, then the case would fail anyway. So it's very expected and positive, man. Very positive.

yeah just like especially these actors right robin hood coinbase can you know metamask like um

I mean, there's so many I've already forgotten who the other ones were like. These are not these are not criminals like these are not there are criminals to go after. I mean, Hester said in her letter on February 4th, we do not tolerate liar, scammers and cheaters like please. We're all begging you to go after the fraud. There is plenty of fraud and scam and crypto like please go after that. Like it's not saying that every business that does something was never breaking the law. Maybe they were. And you should look into that. And we should the law should be.

be crafted to protect consumers and but be possible to operate like and but please go after the bad guys. Robin Hood, they went in like they went in to say, how do I do this legally? And they said, just kidding. We're suing you for breaking the law. Like, it's just not a way to run a government and it's not a way to run a regulator. And it's just so refreshing that that's not how commissioners purse you Ada and forthcoming chair Atkins are going to run it.

Yeah, there's just the magnitude of the 180 from the SEC post Donald Trump getting elected has been just absolutely astounding. As soon as it was the next day that Mark Ueda was named acting chair. And then that next day after that, Mark Ueda named Hester Peirce head of the SEC's crypto task force.

And then the next day after that, like Hester Purse unravels SAB 121. And maybe just maybe 10 days, two weeks after that, we are getting just the dismissal of all of these cases against United States crypto companies. I actually had the pleasure of chatting with Hester Purse's brother because he comes to ETH Denver every now and then. And he was telling me that Hester's like,

uh optimism and excitement about her own job has gone through the roof now that she has actual like leverage and the green light to do things the right way and so i think we're just getting some a lot of like optimistic excitement out of uh the our regulators uh which is really really good to see so i think just a huge congrats to all these crypto companies that had to go through hell to come out the other side uh and i think alex we had you on

right after Donald Trump was elected. And you called it a golden age for crypto in America. And I think we are still waiting for that to really crescendo. And we need things like this in order to get there. Yeah, we do. It's going to take time for United States builders to really start to build things. But this is just another signal that that's on the way. Yeah, the SEC has so much work to do to like Hester said in her February 4th statement, the journey begins, which was just

Great. Go read these two. She also put out one. Yeah, I mean, beautiful. The Journey Begins is legendary. She put out one this past Friday, last week, that was called There Must Be Some Way Out of Here.

She's looking at all the issue, how did broker dealers and custody stuff and investment companies and investment advisors and securities exchange. There's all these rules the SEC has that it should have been spending the last four years figuring out. If you just scroll this, David, like you'll see how many questions there are. They're bucketed into categories, but it's like –

Like scroll even more where you get to security status, all these questions. The SEC is asking the industry and any person, the public, public offerings, custody, investment company, trading, secondary. There's all these questions in order for the SEC to disentangle the position that it previously held. You list out every single question and I'm continuing to scroll. I'm down to 32, 34, 35.

39. Oh, my God. 48. 48 total questions. I think this is maybe a really good article just for help her to think clearly about what she needs to do. That's what it is. That's what I'm saying is that she's taking stock of all the things the SEC needs to figure out in order to allow and incorporate blockchains into capital markets. Right. Just in general.

It's not saying these are the only questions. She's also saying, by the way, if there's any questions I'm forgetting, please let us know. But she's also begging the industry and the public to help them answer these questions. These are complicated questions. In some cases, she's like, which word in this rule should be changed to allow? Yeah.

Like, right. We don't know. There's so much work to do. The title, there must be some way out of here. I imagine her. She's finally been given the keys to go into the basement of the SEC and the lights are out and she's got a battery with like, you know, low. She's got a flashlight with low battery and she's looking around in the flashlight. She's just like, oh, my God, look how much stuff we have to figure out. Oh, my God. How am I going to get out of here?

And so what I'm saying is, thankfully, we have such an astute and intelligent and intellectually curious and honorable person like Commissioner Purse to actually be the one undertaking this effort to disentangle and operating this crypto task force at the SEC. Because good good lord, there is a lot that they should have been doing.

I don't know why. We've never really found out yet why exactly the SEC under Chair Gensler took the approach that it did. Like, we don't have emails or like he hasn't done the interviews to actually explain really. All he said was there's a lot of fraud and 99 percent of these things are unregistered securities. And but that's OK. A lot of these questions, a lot of these questions aren't about unregistered securities. He just sat on his hands and said, we're not going to do any of the research as to how

to how. He didn't do any work. He did no work. That's what I'm saying. That's what I'm saying. They didn't do the work to even just figure out how a registered broker dealer might touch cryptos or how a national securities exchange like NYSE or NASDAQ might touch cryptos. Other jurisdictions did do the work. The Financial Conduct Authority in the UK has done a lot of this work. The thinking about it, not even saying when you get to a point where you say you're going to allow or disallow.

There's all this intellectual work and regulatory legal work that has to be done that for some reason they just didn't do. I don't know why they didn't do it. Yeah. It's truly shocking. Asa's term ends in 2025, I think in the middle of this year, maybe longer. So she has like six or seven months left in her term. I don't know what happens next. She can stay on, to be clear, until she is replaced. Yeah, she can stay on for longer. So that's just...

Yes, but that's right. I mean, they're moving fast. I mean, look at this. The first one was, gosh, we have all these big categories to think about in The Journey Begins. That was February 4th. I think this was February 21st, right? So you're talking about 17 days later.

She's got now a giant catalog of all the stuff that they're thinking about. Like, what do we think is going to happen 17 days from now? I mean, like they're they're asking right now, by the way, you can go on the SEC's website and see the disclosed meetings that have already occurred between outsiders, many of them crypto funds or advocacy groups or crypto companies and the SEC. People are going in to help answer these questions like this is all happening right now.

And the work that's done here could set the regulatory and legal framework for the capital markets, including blockchains, for the next 50 to 100 years. So it is a beautiful and exciting thing in the world of crypto policy. And Commissioner Peirce is right in the center of it. Yeah. And I think the best thing is we also get to watch this live because she's so transparent. She's already been on two crypto podcasts. She came on Bankless. She came on Castle Island. She was on mine.

Oh, yeah. She came on last week, too. She's just talking directly to us and being fully transparent and being highly collaborative, which is just exactly what we've been looking for. And not to like, you know, simp too hard, but she's quite famous for this view. She wrote a great piece in like 2018 or something when she was on the commission called The Secret Garden, S-E-C-R-E-T Garden. Mm.

Literally criticizing the commission's approach to just transparency in general. And so she's long been an advocate for working in public, doing as much work

to the extent possible, as much signaling about what they're working on, why they're doing it, what their line of thinking are. And so she is a very transparent and intellectual. She's an intellectual giant. I want to loop back around, Alex, and actually kind of bring this conversation into the markets section. So this is a tweet from Eric Conner. He's kind of summarizing some a lot of the current events, especially right after all this wave of dropped lawsuits by the SEC. So he goes, the regulators, bullish crypto.

Institutions, bullish crypto. Asset managers, bullish crypto. Crypto Twitter, bearish. Retail, bearish. And he concludes with, one of the most interesting spots I've ever seen crypto in. Because it's rare that crypto Twitter is bearish. We are usually relentlessly bullish. And retail usually loves crypto. But like a lot of TradFi, a lot of traditional Wall Street finance, very excited about crypto. If you go out of the crypto Twitter bubble, people are excited about crypto. What's your take on this?

I think it's true. I think Eric's right that that is kind of the sentiment right now. I think, you know, retail, look, I hate to blame it on this, but I do think meme coins have done an enormous amount of destruction on a net basis to sentiment with retail. So many of them, the chart looks exactly the same, right? Spikes up, dumps to zero. And like speed running it too, like very quickly, sometimes in a matter of hours, right?

Um, sometimes in days, I think, I think, you know, certain incidents like Libra, this thing with, you know, what's the guy's name? Hayden Davis, like the brazenness of him just admit it's like that scene in the big short when he's like, why are they confessing? Right. Uh, Steve Carell. And they tell him, they're like, dude, they're not confessing. They're bragging. Right. Like the brazen nature of some of the fraud and scams that we've seen in the meme coin complex, I think has really contributed to a lot of the bearishness. But, uh,

But but also look, I mean, there is I think I had this I've been thinking about it like this, like crypto is kind of like the dog that chased the car. The dog doesn't know what to do once it catches the car. Crypto has been saying, you know, to your government, if only you would take this boot off our neck, we would have like tons of value add to society.

And now the government's kind of saying, OK, well, the boot is off your neck. And a lot of cryptos being like, actually, we need more time. Right. So I think there's some disillusionment, especially in areas like Web3, NFTs, Metaverse, D-PIN, D-SOC, all these like truly decentralized like sectors. The idea of expanding the use of decentralized blockchains to do things other than finance, other than tokens, other than crypto.

Those may or may not happen, but it's not related to a regulatory boot on their neck that they aren't happening. It's really like you can't time when someone's going to invent something. I mean, it's just it. They probably can be launched faster than products can be built. And that's the thing. You have Bitcoin that's widely owned now and the digital gold story really working at the institutional level. And it's deep and it's liquid and it's good and stable coins. Also, I think.

They'll really have caught the car if the legislation passes that will create an absolute explosion of stablecoin issuance and adoption. But still already at like $216 billion of circulating tokenized dollars, like pretty well entrenched. But that's number stay flat technology, not number go up technology. Right.

Right. So you can't like really invest in stable coins. I mean, so and then outside of that, you're looking at like technology platform competition between ETH and Solana. And like, by the way, both of them are pretty cheap to use. It's the thing about ETH is that I've been thinking about is like.

They kind of have solved scaling, at least for now. I mean, you got an enormous amount of block space now with all of these L2s. That makes it really a pretty good UX to use, even on the L1, right? Like it's cheap again, right? But the problem is if it's cheap, you don't need to hold that much ETH in order to use it, right? And so like that's this...

Same thing throughout this entire meme coin run. Solana fees, to their credit, especially after they figured out that localized fee market thing, for like a normal transfer have remained low. So like it's cheap to use. People aren't buying Sol because they need to use Solana, the network, so much and use Sol to be consumed as gas. They're buying Sol because the assets that they want to buy are denominated in Sol. Just like the assets on ETH and 21 were denominated in ETH and the ICOs on...

in 2021 were denominated need. So to me, this is this conundrum outside of the Bitcoin and the stables where it's like we're not really sure what assets need to be valuable, I think. And people are sort of realizing that without the regulatory headwind,

Well, gosh, now the market's going to have to figure it out. And the market doesn't know. And I think that's where a lot of the when you say crypto Twitter, like these are people like us that are very online. I've thought about this deeply and I think they're coming to this realization that we really don't know where value is going to accrue. Like with this amount of scaling in Ethereum, the product, the fat protocol thesis seems demonstrably, demonstrably wrong now. Right. Because you don't need that much to use arbitrum or optimism or.

or base, you don't, it's cheap. And some of the newer Layer 2s are using abstraction, like currency abstraction, so you can pay for gas in USDC. That's on ZK Sync, there's the Paymaster accounts, and I think that's going to become standard for Layer 2s, is just

Gas abstraction. And like Sol and ETH, like broadly at the highest level, they work, right? They work. The things are working. So now I think the focus is really turning to like, OK, well, what are we going to do on these things? What's the durable, fundamentally valuable thing that's going to be doing? And you're back to that like crypto use cases question. Like I said, dude, if Call of Duty added like NFTs to that game, NFTs would be back in an instant, right? In an instant, yeah.

Or if like, you know, like a Farcaster or like some kind of DSOC or D-PIN thing became literally like widely adopted, that would be huge and it would be back. And that can happen. We just, you can't time it. You don't know when it happens. That's just innovation. You don't know when Thomas Edison is going to invent some new thing. Like it just, it happens or it doesn't happen. Right.

Right? So, like, the regulatory – this is why you see a lot of activity now in tokenization, like, right? Whether it's RWA broadly or, like, even tokenized equities because that actually has a clear regulatory catalyst. Something – they used to say, no, you can't do it. And now they're saying, now you might be able to do it. And so that people are getting really bullish about, like, well, wait a sec. Why couldn't, like, NVIDIA or Tesla or Galaxy stock be on the blockchain? Mm-hmm.

Now, there might be reasons why I couldn't, but we've never been able to ask those questions and try. So now people are all asking those questions again. And that has and by the way, like that probably if it does happen, happens on ETH and Zeltos and maybe Sol. So like maybe there's an answer there. But again, it's there's a lot of uncertainty. And I think that's people who follow the space really, really closely just see how much uncertainty there is. And I think that's partly where the disconnect is.

And I think that brings us to the last part of this roll up, which we're going to talk about politics. So former Congressman Patrick McHenry is getting a job, a job in crypto. There's some regulatory capture maneuvers happening in D.C. And then OKEx has also settled with the DOJ. So there's going to be the last topics that we talk about. But first, before we get there, we're going to talk to some of these fantastic sponsors that make the show possible.

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And we're back to tweet from Patrick McHenry, who used to be, of course, our favorite Gary Gensler bully whenever there was a hearing with the SEC. Bowtie Pat McHenry, he said, he tweeted out, I'm excited to share that I'm joining A16Z as a senior advisor. Technology is the future of economic growth, and I'm eager to help innovators navigate the policy landscape so that they can build. So is it interesting about A16Z? They are losing Brian Quintenz, who used to be a CFTC commissioner. Brian Quintenz was nominated by the

by Donald Trump to be what cabinet position was that? The chair of the CFTC. Chair of the CFTC. So he's back in the SEC. Yes, he is. And so A16C is losing Brian Quintenz to the government, but they are capturing, they're getting a Patrick McHenry on their board. So the revolving door continues to revolve. Alex, what's your take on this?

I mean, Pat McHenry is also an intellectual giant in crypto policy. So, I mean, he as chair of the House Financial Services Committee and as ranking member before that when Democrats controlled Congress, was an important intellectual steward of stablecoins and market structure legislation and is a, I mean, is a longtime dude. Pat McHenry was a member of my Bitcoin club on Clubhouse in 2021. Wow. Which I, not the backstory, but like, you know, people remember Clubhouse before spaces. Yeah.

Super early, I'm on this app and I'm like, oh, you can set up clubs. I guess I should park Bitcoin. So like, you know, the Bitcoin SV people don't steal it. That grew into a club. Still, if you go on there as 500,000 members and we used to do a weekly meetup and Pat McHenry would be there. So he's a longtime supporter of digital assets and crypto. He's a very smart guy. I think it's a huge win for the industry that he's coming to work directly with us. And you've talked to him.

Yeah, yeah. He's one of those guys that loves to talk to the crypto community. And so I kind of feel like Patrick is one of us. And now he actually is one of us because he's joining A16Z on their advisory board. Something maybe not so great that happened this week. Vance Spencer tweeted out a tweet that I think rocketed around the crypto Twitter community. He tweeted out, I don't comment directly on regulation.

But I would like to flag an emerging regulatory battle that is happening in D.C. The soon to be revealed stablecoin markup apparently has a requirement to shut off access to the treasury market to centralized international stablecoin issuers, which is straight up batshit crazy.

This is a blatant attempt at regulatory capture by U.S. players done at the expense of U.S. national interests. Please tell me how limiting access to hundreds of billions of dollars of demand for treasuries helps us preserve dollar hegemony across the globe or fix our debt problem. The largest stablecoins today are built overseas. They are the largest source of demand is overseas. That is not changing no matter what. The net effect of a continued hostile regulatory stance towards stablecoins will only be

to regulate ourselves out of the picture like Europe did with AI. The future of stablecoins can be US dollar based only if we allow a broader competitive set of stablecoin issuers to flourish and deny gatekeeping slash gaslighting by those interested in regulatory captures.

A Bloomberg article, I think, made things a little bit more explicit with a headline says Circle says stablecoin issuers should be U.S. registered. This is the circle, the issuer behind the second largest stablecoin USDT behind USDT, which is Tether, which is, in fact, a offshore stablecoin. So this is a bill that was introduced by the United States Senate, which I think Circle has done a lot of lobbying for.

And this is, of course, being pointed straight at Jeremy Allaire in some of his statements about how stable coins should be built and issued inside of the United States. Alex, what's your take? I think this is a real thing. I agree generally with Vance's take as well that it would be bad. I will say a couple of things. One, this emanates from a very clear question that is a genuine policy question. It's not solely a political lobbying effort. What to do with Tether?

Right. In general, if we think about that, we know that that's effectively what this is. I mean, Vance is quite, I think, polite to not name circle or tether, but like one's in the U.S. and is, you know, domiciled here. One is not.

Right. And I think the issue, first of all, I don't even know what Tether would want to do. I think when that headline, the quote from Jeremy Allaire that they should be registered in the U.S., that isn't. And I think he's quite smart to say it this way. That doesn't preclude Tether, to be clear. But they would have to have at least some entity that registers under the new bill. Right. That comes in and and does it. I think it's in everyone's interest for them to do that. Right.

Right. I mean, maybe not tethers. I don't know. That's the thing. We haven't really heard what tether may or may not do, given a new legal regulatory framework in the U.S. for stable coins. I will say it is batshit that what he said, that you can't turn people out of the U.S. treasury market. That would dramatically harm the U.S. treasury market. It's not a real thing. So I don't know what markup he has seen. I would doubt that that I would bet that that never enters this market.

That is not a bill that would be signed. And I'd be shocked if it's even put forth ultimately, literally like excluding preventing them from owning treasuries. We don't prevent the Chinese from owning them. And they're supposedly our greatest geopolitical foe, you know, like antagonist, whatever you want to say. So I think that's probably not going to go in there. But what to do with Tether? And I agree with Vance that like we.

We if you want dollar based stablecoin dominance, but in general, you don't want to create unenforceable prohibition with law. It's bad law. Right. It's the reason the war on drugs hasn't worked. Right. I mean, it's obvious. It's why you couldn't if you banned Bitcoin. Like, does that mean you're going to get everyone's Bitcoin? Absolutely not. When they banned gold, did people melt that and bring in their jewelry? Absolutely not. They didn't actually get all the gold. Right. So.

That's just stupid law, and you should construct law in a way that recognizes the reality of the world.

Right. So if you want to exert more control over Tether, you should try to figure out how to get them to come in and register. So I think that this is a big question about what would happen. Like if we get like the let's say the Genius Act as it was initially proposed, which is the Senate bill about stable coins or whatever it is we get. If we get something, who's going to be allowed to register onshore or offshore? But also, is it banks? Is it state banks? Like this is all sort of being worked on and thought about now.

in Congress. And we don't really know. And honestly, this is the funny thing, too. This is a massive, massive question. It's not just a 146 billion dollar question. Yeah, but it's not even just a crypto like circle versus tether type question. This I think if if banks are going to be able to issue cash like stable coins, if they look like the ones we use now in crypto, it's

that this has the chance to solidify dollar dominance for the next 100 years. This is a game changer for how money works in the world. And it could be massively disruptive to banks or to settlement systems or to capital markets. There's a lot of thinking here that's like, it's not totally clear what this is going to do. And I do think this, I think there are even bigger questions than that one that people are thinking about related to this bill.

By the way, if it disrupts banks, that could be a good thing. It's not saying it's good or bad necessarily, but like,

People tend to think that like stable coins is easier than the market structure bill. And I actually think it may be easier politically. It may be more bipartisan. But I think it's actually like an absolutely massive like you would hear of all of issues. I mean, I said the Mar-a-Lago Accords related to Jim Bianco's idea. But like this, this you you need an accord. I mean, this is like Bretton Woods level stuff. Mm hmm. Mm hmm.

And maybe the last political thing of the week is a tweet from you, Alex, that I saw when I was scanning your feed, which you tweeted out. Congrats to my friend Tyler Williams, Galaxy's now former head of public policy, for being chosen to lead digital assets policy work at the United States Treasury Department. I think it's just amazing that we are getting a digital policy agenda out of the United States Treasury. I don't know much about Tyler Williams. Maybe you can kind of color in

my understanding of Alex and then maybe what you're hopeful about his role at the U.S. Treasury Department.

Yeah. So Tyler is a great man. He's one of my best friends. See, we're friends. We drink beer together. This is one of these pictures. And no, he is an expert in digital assets. He's a lawyer like everyone in Washington is, but a policy lawyer. He worked in the Treasury Department under Trump's first administration, primarily on home finance and digital assets. So overseeing Fannie and Freddie and mortgage stuff and domestic finance, but also on crypto, what

you know, I think little work that was done there back then.

He's worked for he worked for Speaker John Boehner in the House when John Boehner was speaker. He worked for Senator Tom Tillis on the Senate Banking Committee. And yeah, he ran he was head of global head of I think we called him senior regulatory counsel or something like that. But basically global head of policy at Galaxy. He is a big supporter of digital assets and Bitcoin and crypto. And he think about this. The Treasury has some of its own issues, right? The presidential work, the executive order.

It assigned the members of the presidential working group, which include the Treasury, to look at your whole jurisdiction and portfolio of regulations or whatever it is that you do and bring us back a list of recommendations of what you should undo or do for the first time as it relates to digital assets. So the Treasury Department has a few directly. The IRS, anything related to tax can come out of Treasury. The OCC, the Office of the Control of the Currency, which is a primary prudential regulator for national banks.

OFAC and FinCEN, so issues around Tornado Cash and Samurai Wallet type stuff. Who can be sanctioned? The Bank Secrecy Act is enforced.

by the Treasury Department. So who needs to register? Remember Elizabeth Warren's horrible idea of making perhaps even software developers have to register like they were financial firms? All of that stuff falls directly under Treasury. But also the Treasury Department is the primary economic spokesperson and think tank for the U.S. government, right? So the Treasury Secretary, although there are other centers, right? There's the National Economic Council, the White House, and

And whatever else, right? Like the Council of Economic Advisors, which is literally another White House one, the CEA, the NEA, the NEC, whatever. Sure, there's the independent commissions like the SEC and the CFTC, and they have their own sort of areas to work on. But the Treasury Department typically is the leader of financial policy for the government.

And Tyler's role as, I think, counselor to the Treasury Secretary for digital assets, I think, is a very central role for shepherding, stewarding, being the forcing function across the government to help get work done on digital assets. So, yeah.

I mean, we're very excited. We're sad that it doesn't work for us anymore, but at least we know we're in good hands, I think. And we've spent the last three years. I mean, I've done people can look on the Galaxy Brains feed. I've done a dozen interviews with Tyler over the years. So there's plenty. You can hear plenty of his views on crypto and digital assets. And obviously he's supportive. So.

I think that's maybe a perfect plug to read the last tweet that I'm going to read out on this weekly roll up. So thank you, Bankless Nation, for sticking with me and Alex all the way to the very end. This is a tweet, another tweet from Alex Thorne saying, Good morning. After eight years with a public and doxed account on this app, the app is Twitter, 50,000 of you have deemed me worthy of a follow. That is very kind. I am definitely one of those followers. I'm a pride follower of Alex Thorne. So Bankless Nation, if you're on Twitter, give Alex a follow.

He's a great account. He's a wealth of information. And like he also just alluded to, he does the Galaxy Brains podcast where he just talked about interviewing the individual Tyler Willans that we just talked about just now, which we will also link in the show notes. So Alex, if people want to just hear more of you, they like your takes, they like the sound of your voice,

Where should they go to listen to Galaxy Brains? Yeah, you can go to galaxybrains.io. It just gives you all the links and stuff quite easily. You can follow me on Twitter, Intangible Coins, galaxy.com slash research. My team at Galaxy, we produce a lot of written research content about crypto markets. We've got a newsletter, gdr.email, galaxydigitalresearch.email, gdr.email. You can sign up. We've got plenty of stuff on there.

Feel free. And David, thank you, because I'm a big fan of the weekly roll up and Bankless and the education that you guys do. And it's one of the the weekly roll up is one of the few podcasts that I as a podcaster also listen to. So thank you for having me on.

I really appreciate it. Yeah, you definitely make it easy to help go through all the news. Alex, thank you. Bankless Nation, you guys know the deal. Crypto is risky. You can lose what you put in. But nonetheless, we are headed west. This is the frontier. It's not for everyone, but we are glad you are with us on the bankless journey. Thanks a lot.