Transcript+
It all comes down to computers communicating. The information superhighway can be a confusing mix of on ramps and off ramps. Bitcoin is worthless artificial gold. Is it still rat poison? Probably rat poison squared. We need to get into the world of OK, this is actually foundational technology. What the Internet of Money does is it creates a single network which can do a microtransaction to a giga transaction. The Internet is going to be one of the major forces for reducing the role of gun. The one thing that's missing that that will soon be developed is a reliable E cash. All right, gentlemen, welcome back to another episode of Final SETTLEMENT. Today is Monday, January 19th, 2026 10:55 AM Eastern Standard Time. Boys, how are we doing? Big list today, We've got a big shell, lots of items on the list. We've got gold and silver running last night into this morning, Bitcoins dumping. Before we get to the news, gentlemen, how are you? Doing good. We got to appreciate you starting off the show, you know, excited with a bang. It's something that I've instinctively been talking to to Jackson about. And I don't know if anybody listen to the Matt Damon and Ben Affleck Rogan pod. And they talk about, yeah, they talk about like how specifically in 2026, how you have to build a narrative from reasserting the plot multiple times because people are on their phone, to putting the action sequence in the first couple of minutes because you got to keep people hooked or they're going to leave. And so that's why it's important to start this with a bang to really make sure we captivate and make a compelling case to listen to this for a good hour. So I appreciate the energy there. And it's something, if Jackson doesn't listen to this, maybe we should make them. But we're going to have to relay this strategy back on the last trade because sometimes, you know, Jackson might start a little slow and then we finish with a bang. So we need to just invert that. That's great points. Liam, how are you doing? Doing fantastic big big list. A lot of things to get to, but we'll make sure we repeat ourselves a few times for the folks who who aren't listening either too all. Right. So we're going to start with what I think is probably the biggest news from last week, which was the Clarity Act. So the the digital asset sort of bill that's been going through various drafts and iterations over the past several months got to a point last week where Congress was coming together to do what's called basically a markup period and try to resolve certain things in the bill that are are outstanding unresolved in terms of different people on different sides of the fence in terms of how they think the bill should be structured. And so that markup period didn't go swimmingly. I would say there was a lot of retort back and forth around, you know, various key issues. One of the major ones is something that we've talked about on this show multiple times, which is the ability for stable coins, issuers in particular, to offer users yield. And so this is something that the banks have pushed back on. You know, understandably from their perspective, they sort of have a monopoly on dollar deposits at current and they see stable coins and the ability for issuers to provide effectively pass on Treasury yields to to users. You know, so today around 4% or so, they see that as a huge, you know, impediment to their business model effectively. And we saw a few earnings calls last week, I think JP Morgan and then maybe also Bank of America where individuals, executives from those firms were explicitly calling this out. Being like This is why we're lobbying against these things. It will directly impact our business model and our ability to, you know, basically keep these deposits on platform. And so this, you know, this among other things triggered Coinbase to basically pull support from the bill last week. And and so Brian Armstrong had sort of hinted at doing this if that markup period hadn't gone according to plan effectively and it did it. So they pulled support and now it's kind of back to to the drawing board a bit in terms of what this bill is going to look like. So I'll open it up to you guys. What do you guys make of this? The stablecoin thing I think in particular is interesting as we move to some of the other topics on the listed for today, but I want to get your initial thoughts first. Yeah. I mean, there, there's a lot here. I think the general consensus is this could take longer than we want or expected, and that still a very likely case. My instincts tell me that this will get shoehorned in because there's a lot of very powerful people that will want this in place for obvious and unobvious reasons that this gets done this year. I think that there's also an interesting dynamic happening between the banks and then the large brokerage houses. You see this with like BlackRock and JPM are a good example. And then you see this also with like the Trump admin, and there's an interesting dynamic where he was loud about Brian Armstrong and Coinbase, you know, kind of coming out and what they were, what they said. But then at the same time he's suing JP Morgan. So that's kind of just a backdrop. Now there's the other angle in understanding that Bitcoin being a commodity, when you start looking at CFTC, yeah, the CFTC and then the SEC and who gets to govern these assets. And then the notion that there's different ways that different players in this space look at this. So I had some notes, like a few examples are rulemaking help some but doesn't help others, right? So when you think about like Coinbase, Coinbase's ambitions are to do XY and Z1 of the big ones is offering tokenized securities as well as the the yield. The understanding is that this bill as it's written isn't favorable to that. Now if you're out raising capital looking for regulatory clarity, you would love the bill because it just opens up capital markets from raising money or getting introduced to the market. The deposit flight and hurting banks is a really just fascinating conversation in general because of the cabal that the banks existing with net interest margin, I think it's close to 300 billion roughly they make on just passing no dollar back to clients that are holding the capital there. But there's, there's already precedent for this because we see a lot of the money market funds where you can go to different businesses and get 3% yield. So it's an interesting dynamic. And I think once that proliferates, right, it just really threatens the models and they use the notion that this hurts community banks, but in reality, community banks already hurt. They actually could be more nimble to offer some of these services and also other digital asset infrastructure to actually differentiate. And then it's there's this notion of like, I believe they're wanting to go back to the genius bill and kind of redraft that. So something's already been codified. Now they want to like bring that back to the table. Well, yeah, just just a note on that specifically. So, so with that, what you're referring to is basically as it was written in Genius, there was basically a loophole for Coinbase and Circle because Circle as the issuer of USDC cannot offer the 4% stable coin yield. But Coinbase as a partner of Circle, and I believe they have a majority stake in the business, they could offer that same yield to the client that's using STC or USTC on the Coinbase platform. So it was sort of this work around that's existed now since Genius was signed. And so part of the the sort of hubbub around the markup period last week was that these things, these concepts were being brought back to the table. And there was some thinking that basically the banks are going to try to get rid of that loophole as well and not even allow sort of other platforms or basically what it would end up being is exchanges that work with the issuers of the stable coins to to provide some sort of yield. Now there's some negotiation going on on that specific point in the sense that one, one element that's been proposed is you can't earn a yield for simply holding a stable coin on an exchange. But if you're doing some activity right, whether it's trading or staking with other assets, that maybe that's how you earn the quote UN quote reward. So there could still be some loopholes and workarounds with this even if the banks do mostly get their way on this. So that's just some. Other. Context there. Yeah. I mean, it's good color. I think there's really two sides of this discussion and it's the side of like Fed speak in my mind of let's talk about what the markets do and what's happening and it's relevant and a lot of people are interested. And then the other side of the brain is like, and none of it really matters. It truly doesn't because when you have a differentiate technology that disintermediates all the legacy borders, well then this is just kind of a fool's errand because long term the walls can't be held for a long time. You've you've seen this like offshore derivatives move. They had to bring them back on shore and they just kind of tighten the clamps. But your point still valid that the, the, the issuing yield. There's a reality though, because when we start to talk about different participants in the industry having different preferences that the issuers theoretically don't care because they get to retain the yield. And because that's the thought is that it gets more competitive if the issuers are, you know, generating the yield and then whoever the, the distribution channels like a Coinbase is having to pass that through. So that's just something to be cognizant of. And then there's just the notion of it's understood in the industry that a bad bill is worse than no bill at all. Because if there's no bill, then you basically have these different governing bodies and it's still all, all light to go versus you end up with a bad bill and then you have a problem. The, the counter to that is that if it's not codified that a new administration could come in and just kind of completely, you know, squash that. So it's a fascinating thing. But I, I think the, the net net on the other side of it is you build products, you build services that are best in class differentiated and play to your advantages. If you're a net new in Trent that that don't that just counter position to a lot of this legacy mock that exists because you see this already with certain like new banking neo bank stablecoin issuers, all the things Brian's alluding to. There's no shortage of them that exists outside the US that are offering these services. They'll figure out how to get them back in the US And I think that's the long term play because you saw this happen, Darabit is a wonderful example, sat outside the US and they got acquired by whatever what was in total like I think a bill into $2 billion from Coinbase. And because the market is going to go there, it's just a matter of time and it looks like it's going to get accelerated. And I think a lot of these things we're discussing how to get bypass. Yeah, 11 important thing to note too is just. I think it's going to be more difficult for any bill to get passed in the future because there's always been this framework of just kind of doing things very at the last minute and not everybody can read all of it. There's so much gunk in there that you don't even know actually what it is and what the 2nd and 3rd order derivative impacts are. But also just now, now with AI, there is actually a way to instantly read it and understand 2nd, 3rd, 4th order effects for each of like a specific businesses business line. And thus they're just going to be much more back and forth where in the past it was like it was more difficult for to really understand and have low level people who are either working at the banks, Oregon or lawyers really relay what the critical information was to the top folks. And so I mean, outside of this bill in general, I think it's just going to be more difficult for different bills to get passed just because everybody's going to be more educated and have more and more pushed back. But at the end of the day, to your point, I think it's just always going to coalesce around consumers will use better experiences and and people can block them out for a certain period of time, but ultimately the market demands it. And we'll the the laws will be rewritten around what is actually politically palatable for the consumers and relatively safe. Yeah, there's the thread on no bill being better than a bad bill. Is interesting that that's explicitly, explicitly what Brian Armstrong said last week. You know, you'd rather have no bill than than a good bill. I think that rests on the assumption that you eventually get a bill, right? Because if there's no bill, then like, maybe a bad bill is better than than no bill at all. But I think everyone's working with the assumption that before the end of this year, something will be signed into law. Now, Liam, to your point, you know, there are some sort of governmental mechanics that could impede that, you know, just, you know, Republicans, you know, losing the House, for example, in the midterms like that could put pressure on the ability to pass something later in the year. So I think that's why there's a a broader push now to get something done as soon as possible. But then I also put it in the context of like you look ex US and you already have Mika in Europe, you have, I'm blanking on what it's called in Middle East borough. Is that what it is? You have these frameworks that are already law in in other countries. And so I think there is at least on the side of the industry itself, there is some, you know, there's, there's a lot of motivation to get something done, even if it's not ideal, because you're right in that it does give that sort of green light stamp, similar to the ETFs when they went live, that allows a lot of the people who have been on the outskirts formulating their plans to really move fast once the, the full regulatory green light is, is, is there. And so I think that's, you know, a lot of what's being waited, waited on here. But I would say Despite that, I think people are working with the assumption that a bill is going to get done because, you know, we have a, a list today full of whether it's banks, Wall Street, Tradfi, the fintechs that are, you know, putting their chips on the table, getting ready to offer these things. And, and they're not exactly worried about what's in this bill necessarily like that. They know that they need to put their foot forward on this stuff regardless of of if this bill gets passed this month, next quarter or next year. Yeah, Maybe just before transition to that, because it's a perfect segue is calling out or highlighting the two points. 1 is from AUS capital Markets and wanting to win. The clarity is needed, no pun intended to, for the market to capital to come here, investments, all the things associated with the clarity that's come in, in you're mentioning UAE is example, there's Abu Dhabi Global Markets and then Virtual Asset Regulatory Authority, but then Switzerland has its own Mika, you look at Singapore. But then the other side of that is, to your point, all the different large players, it's astonishing, the list we're going to go through and the moves that they're making and the realization that from a geopolitical and administrative perspective, they want this moving forward. Because I think a lot of it just comes down to dollar demand. And if every entity can issue some form of dollars, what that means for that along with the financialization of, you know, equities, bonds, digitization, like this is a big push of effectively exporting dollar dominance in US political or capital markets to the rest of the world. And because of that, that is like the subtle hand that's been pushing a lot of the Fidelity's, the Morgan Stanley's, the Goldman Sachs that are coming into the space. And so that was the idea behind when it we first started on this segment about I do think this gets done because the powers that be wanted to get done. They needed to get done. And we're just kind of in the traditional political theater of like, whoa, I don't know. Yeah. And my base case is like something does get done and it's relatively advantageous to the banks. Like that would be my base case of of how this shakes out. But let's go to the list of what we just referenced. I'm going to start with State Street because State Street is a big name, you know, very typically historically conservative Wall Street institution and they are joining the crypto rush, as this title alludes to here and rolling out digital assets across the platform. Mike, you want to intro this one and get a get a little more background here. Yeah, the State Street, I think it ties into a lot of these that they are ultimately the big thematic across. I think every institution at at this point is tokenization of either money market, accounts money market. I was looking at this 51.7 trillion, it's a wild number. I think that's the custody. I think that their assets under management are like close to 6 trillion for for their kind of like practice. But I think then the custody, the assets similar to B&Y. That's right. But point being is that at a very minimum the, the main theme I look at is like the market is going to tokenize equities and dollars, which is where the vast majority of capital sits in the world outside of bonds and even bonds. And you saw this last week we talked about with Morgan Stanley rolling out that wallet and you can start to see how you're bringing in dollars into digital assets, right? Like we're looking at it from an inverter perspective because you know, most people listening here are long BTC and probably some other cryptocurrencies. And when you think about traditionally when Bitcoin ran, then you had this like offsetting into other assets. Well, think about the opposite of that. When you have traditional portfolios that are holding, you know, vast majority in traditional assets tokenize in with a click of a button, you can effectively swap that equity out for BTC or some other derivative. Like that's where this is all going and I think they are all on board and get it. And so State Street is a big, you know, announcement, but there's a bunch of others as well this week. Yeah, this is sort of high level, but it just remind what you just said reminded me like, you know, we talked a lot about the crypto industry, stablecoins, real world assets or we have for the past 12 months because that's where a lot of the energy and capital is focused. But it's it's important to not lose sight that all these developments and dynamics are extremely positive and constructive for Bitcoin specifically. And the reason that is, is, is what Michael was just articulating is once you, once you digitize everything and you basically build the rails for these things, you're also intended building the rails for Bitcoin and allowing these things to sit right alongside each other. And it just, it creates the, you know, it, it massively widens basically the aperture or the funnel for Bitcoin adoption. Ultimately when everything gets digitized and it becomes very cleanly. Place alongside each other and you can have your bitcoins long term savings next to you know, the dollars that you may need to spend day-to-day and also, you know, your other tokenized investments that you may have. So all of that is super constructive for for Bitcoin specifically and so I think it's just important not to lose sight of that as we as we think through these developments and and what they mean. The next one I was going to go to was one in Stock Exchange launches blockchain settlements in their deeper crypto dive. I'm not sure who brought this one, but London Stock Exchange Group has introduced digital settlement house known as LSEG Dish. This new program will adjust long standing delays and risk and post trade settlement. The service will now payments and asset transfers so instantly between connected networks where they operate on blockchain systems or traditional rails. Thoughts on this one? Yeah, so the core idea there was a few and we can pick which ones to riff on. We're related or maybe we'll we'll tie the the state's trade. It was London Stock Exchange 24/7 blockchain tokenized deposit settlements. And then I think it just came out this morning that New York Stock Exchange is also first turning on 24/7 trading. I don't necessarily know the the process and risk management around that because it's pretty, pretty, pretty crazy, but they're doing it. But then that they're also working on tokenized securities platform to manage the 24/7 trading. And so I think that is just a core thematic that we have to pay attention to is a lot of the technology that allowed for crypto assets to proliferate the notion of perpetuals 24/7 and then integration with dollars via stablecoins, the traditional equity portfolios or financial service firms. That's where this is all going. And seeing the New York Stock Exchange and then also the London Stock Exchange getting into that game, I think are the the big signals there that tie into what we're talking about with State Street. Yep, absolutely. And it also, it says here they're working with the banks themselves, so including BNY and City to enable tokenized deposits across its clearinghouse, allowing clearing members to manage funds outside traditional banking hours, meet margin requires etcetera. Another one related, let's see here, this was Goldman, Goldman Sachs CEO says firm is actively exploring tokenization and prediction markets amid evolving US regulation. So prediction markets was a big hot button topic from last year, the explosion of, of those. But really, I think what this is more about is again, just more of the same of, of these traditional incumbents getting their foot in the door, you know, putting, putting chips on the table to be able to offer these things, digitize the world, tokenize the world, however you want to phrase it. This is where it's headed. And, and Goldman is the latest to to put out some comments on this. Yeah. I think that this one's going to be a little bit more difficult for them on the prediction side that they're expecting. It's very unclear where exactly the chips are going to fall with respect to insider trading on information like this and how that will be regulated. But eventually prediction markets have to be driven by information, asymmetric information. Otherwise why would there be significant capital deployed on anyone bet in particular. So I would imagine that it's just on a few kind of high level like liquid traded vehicles before not kind of everything like Coinbase is doing. But I would imagine that there is additional regulation that comes out related to prediction markets that we can't yet foresee just because and also just the amount of compliance in, in etcetera in Goldman. I think we'll see this get a little bit less adoption on the prediction markets. But on the stable foreign side and and tokenization fully expect that to be a big focus here moving forward because you know, outside of AI that is kind of the hot category that everybody's paying attention to. Yeah, I think the big take away for at least myself and something we've been noodling on for a while and thinking about the business and on ramp and just in general the landscape. I think we we really and ideally the value from from a show like this is to help mental models of where we're going, but also like what we're seeing. And, and I think one of the big things and this happened on the the crypto builder side and Bitcoin builder side and this translated to the venture side is people got really myopic at the point at the time in delivering services just around that singular asset. And the thing we forget is that the vast majority of the world, like vast, vast majority of the world has no exposure to those assets. And they generally take time for risk management to diversification. And so now with this new administration, it was probably always going to play out this way. But with the new administration and the traditional asset managers, financial service firms integrating tokenized deposits, money movement equities, real world assets and turning on crypto trading, the only way to win in this future world is effectively to build a best in class experience. Now it's not to say you can't differentiate and then have a focus on one area, but then also serve others. But if you think about a Bitcoin only brokerage as an example, well, that kind of starts to look a little bit different from a client or consumer preference. If your Bank of America offers tokenized equities, tokenized dollars not only from a yield, but to move around access to buy Bitcoin theoretically should be cheaper than anywhere else because they're not having to subsidize their whole business on offering lower cost Bitcoin fees. And so the angle is you have to really start on the other side of that barbell if you're Bitcoin only to think about what are the products and services that are going to map to what is a consumer preference. And it doesn't have to mean porting over a lot of those things, but it's just differentiated or how do you manage more of a user's daily consumer balance when it comes to money management. And I think that this is going to be the story over the next decade is those businesses, it's just the convergence of the native firms and how they can differentiate, have a taste for the segment of the market while incorporating more of the traditional financial system. And then you're going to have the other side that has the mass distribution that is ultimately also going to be converging because there's going to be the competitive landscape in that. If they don't offer wallets and all the things that like Morgan Stanley understands they need to offer, they're going to be usurped by the the the net new entrance. And I think it's just going to be a fascinating thing to see play out because it actually truly does ultimately end up serving the individual, the client, the consumer best. Now will caveat that a lot of things we're talking about here will blow up because money movement has never been seen like this at this scale. And we already saw this happen in crypto. That's where like I think a lot of crypto, I'm not saying this happened this way, but how like one of the analogies we say crypto is like a test net for Bitcoin because there's a lot of things that are happening there for Bitcoin. I think it's like crypto was a test net for tried by because we know a lot of that stuff was BS, but they're going to layer in the traditional financial markets into like digital asset infrastructure and the movement of it. But we've seen that crypto is very fragile and volatile because of all the different aspects. And we're effectively taking already a fragile and volatile system, which is the traditional financial system that's over leveraged and then layering at individual assets. And so to Brian's point, it's going to be very nice because those assets can go to Bitcoin, but at the same point, if you can go from Bitcoin to those other assets, it's just going to create a a lot of opportunity and then a lot of, you know, noise and losses. But then on the other side of that, the market is just going to coalesce around best in class. And best in class always relates to trust and counterparty risk reduction. And that's why we focus on their base level of custody because nobody can touch those assets and move them. And we think long term that's the base and then you can layer in other things on top. Yeah. The, the we said they're just sort of maybe think like a lot of a lot of what we've seen historically in terms of banks being involved, their opinions on the industry. Like previous to, to now, effectively the inertia was to basically keep these wall gardens. So like, you know, to avoid client deposits leaving a platform, let's say maybe you have a negative opinion on, on Bitcoin and crypto generally. So you just, you know, you disincentivize your clients from taking assets off the platform. But now if you're offering these things yourself, you're basically exploding the Tam of Bitcoin adoption by by putting these things next to each other and removing those walls and allowing the inertia to actually flow where it wants to be. And so you're exactly right in that the Bitcoin only specific business is going to struggle to compete with these incumbents because basically the inertia is going to now allow that client to stay in that walled garden and access all these different things without having to go to to take their assets, go to Coinbase, go to a river, go to a Bitcoin only exchange if you can, if you can access everything from your Goldman or your B of A account, that takes a lot less effort for the, the individual who's new to crypto or digital assets or, or wants to buy Bitcoin for the first time. It really reduces the friction by a lot. And so I think that would be the big take away here is like it's shifting the inertia of, of adoption of these things effectively by broadening the scope, broadening the aperture and putting these things alongside each other. And then also just the, the, the general vibes from these players, right? Like 2 years ago, Goldman Sachs was extremely anti crypto. And so, you know, that thing shift, those things shifting also just move sort of the zeitgeist in the Overton window that again, that also sort of catalyzes incremental demand and adoption of these things because it's just now more accessible. There's way less friction to access these things. And that's kind of the world we're headed to. Anything else there? No. I mean, I just think that this is a incredible time to be building. I think that personally, really excited for the when this bull run really takes off. We've talked about it. If you've been following these podcasts, there's like 5 real large empirical pieces of evidence that we have not had a bull run in a bull run in this example is just net new adoption and demand. And when that takes off, we're just going to get world class people recognizing this asset class exists and they're going to start building products and services with an insane amount of tooling that hasn't historically exist, whether it's B to B to C infrastructure providers. Think about PITCO as a great example with a state charter or a federal charter banking trust charter that you can now leverage for offering buy, sell other services directly. And then you think about the other things that are coming out from stablecoins, equities. Point being is they're just going to be interesting takes from world class people that have learned secrets in their own craft that are going to be layering on. We just haven't seen a lot of this because again, we've been in this really weird period since the collapse of FTX to to now where they turned on this stuff. But we haven't had any kind of like net new builders. Like, you know, when we look at some of the deals like rain as an example, like rain was around pre they pivoted multiple times, but they've been around since like 2122. So a lot of the companies have those same mental models. What happens when everyone's friendly and there's all this tooling that exists in a is proliferating, the amount of companies that are going to come about are going to be really interesting, which sets up a perfect time for us as we're looking at opportunities. And also how do you underwrite it appropriately 100? Percent, there's a couple couple more headlines from, you know what I would call more incumbent firms along these lines. So standard charter to launch crypto prime brokerage planning a crypto prime brokerage for institutional clients, offering custody, financing, trading and clearing for Bitcoin, ether and other digital assets. And there was another one here Visa partners with BB and K to enable stablecoin payouts on Visa direct Stop me if there's any comments on any of these gentlemen. But there was another one, Wallet Connect announced A partnership with Ingenico, which I hadn't heard of, but apparently X US, it's a large POS terminal company. And so they have 40 million point of sale terminals that are now going to be able to basically turn on stable coins through Wallet Connect. So similar to the, you know, the Square block roll out from a few months ago, but on a much larger scale. So I think I could have these numbers roughly correct, but I think Square has like 5 million maybe terminals. And so this is 40 million. So pretty big deal. Any thoughts on any of those gentlemen? Yeah, I would just say first on the standard charter and Visa partnering with BB and K, those would both be like almost news of the years like a year or two ago. But on the Geneco in particular, while I'm pretty excited and bullish on just factually just where stable coin adoption will go, especially from AB to B to C perspective, I don't think that this is going to get quite as much traction as most people would have anticipated just because for the same reason that Square and cash out probably won't get a ton of adoption. It's just one. The consumer experience for stable coins isn't quite there yet, especially when you can just use Apple Pay or top to pay with your existing card. And the additional friction of using AQR code I think is going to be more difficult to retrain consumer behavior unless they're specifically seeing the benefits. And usually it's unfortunately just the merchant that bites the bullet and pays for the extra credit card fees cost. And so while I think that stable coin adoption is is definitely going to proliferate at a very fast rate, I think that it has to be at least as good or better than the existing experience for the consumer in order to get really strong adoption straight out of the gate. Yeah, yeah. So I think, I think the the the hesitation of like contradicting myself, I think that this is nothing today but the future tomorrow. And it kind of ties into what Liam's sharing in that I, I feel like it was inorganic how this was surfaced to the algo, like this wallet connect thing. Agree. I'd. Never heard. Of wallet connect yeah, I had I had they were more of like crypto. It was like very similar back in the day to Metamask. It's like a crypto native like browser extension initially. I don't know how they pivoted to this, but point being is I do think there's something interesting to if it's on your phone and then you have a bunch of merchants that have it and you bypass a lot of the natural need from the PSP to like changing because like the Bitcoin thing is really hard because you're having to think about the mental model of using Bitcoin. We're seeing the lack of adoption with Bitcoin payments that there's something interesting there. I think where the gaps exist are what Liam alluded to is the tap to pay, like the, the notion of consumer behavior is the hardest thing to predict and change. And that's always one of the big assumptions with crypto and it's the biggest assumption. And so it's like the notion of using your credit card still takes up like 80 to 90%. Tap to pay with Apple Pay is a very small percentage, but it's growing and it's very convenient, but it's still hard for people to change that. So that's why I think like there's an aspect of the card utilization and that's why we'll we'll go and talk about rain and and just seeing that adoption because if you have exposure. And then there's the other aspect, which is you have to, it has to be true value add. So if it's just your bank account, that's if you're just getting stable coins from a crypto provider and you can tap, it doesn't really make a lot of sense because that's it's almost like outside of your walls of your traditional financial experience. But if you are at a Bitcoin company or a better example is if you have a traditional portfolio, not 4 O 1K because of their tax advantage, but think about, and I don't even know if the regulations would allow for it. But if you just have a traditional equity portfolio and you can get some margin on that and now you can get stable coins that you can use to live your life and lend against it to get dollars, that starts to get more interesting because now you're getting value if you're getting liquidity from your portfolio and then you can use it. And I still think you would use a card to like use those dollars, right? Because that's how you're generally using your bank account experience. Now, if you can use your phone to tap to pay, I think that makes sense. But does is what I'm outlining like congruent, does it make sense that like you're not going to go out of band just to get this experience, It's going to have to add value to your traditional financial experience. And then that's how it ends up. And then I think the tap to pay makes a lot of sense because eventually people like, why do I need this card that seems like a legacy contract. I would just tap to pay there. But it's still so early that it'll probably manifest in a completely different way. Yeah, for sure. And I. Think it'll be there will be stable coin focused credit cards, but most people still I mean maybe this is focused outside of the US too, so maybe I'm not exactly sure where all these terminals are located, but I know that credit cards are a little bit less widely adopted. So if you're going to like people generally would rather pay with net 30 days and you know, get some points back or whatever it is with their existing credit card. And so until that is quite as seamless as or you get all the benefits to the consumer, they're just not going to shift their behavior unless they have some real incentive. Because even especially if you're like a small store and taking that view extra 30 seconds to a minute, especially if somebody's like older, not quite as phone savvy, like them, like having issues with the QR code, like that's just going to cost you business too. And so the merchants won't necessarily focus or advertise it well and kind of push it directly to the consumer. That's what that's kind of where I was going to go with this. Like I think the big turning point for a lot of actual practical usage of stable coins, whether it's at various checkouts or, or what it may be, I think it ultimately comes down to like the banks like it going back to what we were just discussing, like comes back to where are the dollars sitting today? And ultimately, I think it's more of like a push game where like the bank just like says, OK, those dollars that were in your checking account, those are now stable coins and you can use them anywhere or some other, you know, more Ubi style implementation where like you just get these new digital dollars for free. And then that is the natural incentive to go use them. So I, I kind of think that that's what's going to turn on a lot of this actual practical usage is the banks getting the clarity from ideally the clarity act and then just actually turning the stuff on. And it'll probably be like opt in. Like if you don't want simple coins, you can likely opt out. But like, I think they're just going to be able to turn a lot of this stuff on. And then the natural incentive is to use it because it's just, it's what's in your wallet. Yeah, I, I think with the caveat there's like the barbell, which is what you just described. And then there's just a better experience with like a crypto native. Because the reality is, let's call all of digital assets is what, 3 to 4 trillion, let's say half of that's Bitcoin, but the other two trillion exists somewhere and people want to use it. So if they're able to get some nominal leverage on that to use the dollars? Or if you're some kind of net new insurance or legacy firm like an Amazon that wants to become a bank and they incentivize people to have deposits there and then they need an ability to spend, right? Like I think it's going to come at the, the, the two sides, which is traditional incumbents leveraging it and need to add value. And then like, think about again, this isn't our focus in the area of the market, but like there is a reality that there's a bunch of people that can't get banked and whether it's in the US or internationally. So the fact that you can have AUS dollar and then go pay in a lot of places and, and so there is a flywheel. Do you think it makes sense? It's just figuring out like the use cases. And that's really goes back to why distribution matters and it gets lost a lot. We're like striping Coinbase are the only winners of these, you know, areas. And it's just so far from the truth because money touches everything. And the reality is when people touch their money, they want to know them, they want to speak to them, they want them to be localized. And so this like landscape has so much more room to run that when people look at total addressable markets, they usually get captured in like the original already people get captured in false mental models. Uber is the greatest example where people underwritten, underwrote that for taxis, when in reality it was much greater than that. Because once you create a better user experience and this is like that times 1000 because it's money. And so and then it's the proliferation of dollars, which is another like, you know, tailwind because you have the money movement that's historically been kind of really fragmented and walled. And then you add that dollars are going to be proliferating globally. And so now you just create a whole different level of use cases and growing markets that people aren't just necessarily ready for, we're talking about. Yeah. All right. We had a couple deals or raises on the list that I'll go to now. I'm going to start with Anchorage. Sorry, where do you want to start? I was just going to say maybe we do the rain one before we go to that just because it's it relates to this directly rain. I think, I think super fascinating just raised $250 million. I think it's their Series CI think their Series B they had just raised like four months ago. Your Series A was 10 months ago. They were about 100 million. I'm sorry, $1,000,000 ARR business 15 months ago. And it's the reality of they figured out the user experience that backed by Iconic, which is a very large venture firm. And then obviously these other Sapphire first Merck, but they figured out a key value prop is stables are going to stablecoins are going to like people are going to spend them. And my understanding they have a unique relationship with Visa. So they can be the service provider and you don't naturally need the underlying bank to issue that. So they can allow for different partners to effectively offer stable coins on their platform and then give better ways to move send. But the real 1 is these cards that people can use as effectively like debit cards to manage that bank account. So you don't need to change the consumer experience. And I think that this is just really where the market is going in the sense of you'll have infrastructure providers that offer the rails and better technology and then you'll have these other end, end state. It's very similar like AI, right? Like, you know, AI, these large firms are creating the models. The reality is that capital spend, we don't know if it'll be returned, but there's a bunch of application layers that are, are on the other side of it that are able to leverage it both on other financial products and really create consumer experiences that haven't been developed. And the beauty of like a model like this and rain, it's financial services much less CapEx and OpEx for building something that you know, building data centers. Liam, any thoughts on this one or I was going to go to alpaca look at Outback. Nothing else on me. Yeah, Alpacas, OK. Yeah. I would be curious to your guys thoughts if they're even under radar because alpaca, I've heard of them, but I didn't necessarily even know what they did. They just raised, I believe $150 million and it's the same notion, right? Like they're effectively taking technology to integrate different financial products, mainly equities. So being able to like integrate A brokerage into your fintech application. I think they also do crypto currencies now and a few other assets. But you can start to see these rails kind of like merge and the walls that traditionally had existed move away. And especially when you layer on the tokenization aspect, because when somebody there's like public markets, which are, I guess, historically not interesting. But when you can integrate public market exposure into the ability to lend against that to buy Bitcoin, which is what like Morgan Stanley publicly came out so that doing the same way that they can lend against Bitcoin to buy public equities. Having all of that on chain to be able to mess with is, is you can see very appealing for the market. And then you take on private investments, which is always kind of, in my mind, made in some sense around tokenization because private market investments, there's a number of reasons why it's always been very fragmented. And I yeah, so I just thought it was very fascinating to see how that will come about because then that ties back into the earlier statement about never being a better time to build because there's a lot of connectivity. And that's really the commodity. You'll have players like this that will, you know, make their bets on the trades and offering infrastructure, but the real level is how do you like layer these things into a segment of the market and deliver a best in class experience. And that's that other side of the barbell that's going to start challenging the incumbent and who can move faster and develop a better product and services. Really who's going to win big segments of these markets? It's well. Said yeah, I would 100% agree. I think it's fascinating just to see how many it's, it's every almost every single fintech is an everything app now, not just Coinbase, not I mean that's an exaggeration, but it's getting there. There's just so much infrastructure for prediction markets, trading digital assets, trading stocks and ETFs, essentially everything tech like you're even it's a little hyperbolic, but you're going to have it on like your solitaire app and your e-mail moving forward. It's just really fascinating that the costs are like not quite going to 0, but going very low. And if there is any sort of distribution with anything related to financial services, I think that the trend is just going towards integrating almost all financial services if you can. So just something that I'm watching well. Said move to the Anchorage race and this is on the heels of forget the exact number, but Bitco raising a a large amount as well ahead of an IPO. So this is sort of following suit there. Anchorage Digital could raise as much as 400 million as IPO rumors swirl. Thoughts on this one guys? Yeah, I, I know this is fascinating because we, you know, capital markets, capital formation are key to any growing industry. And so this is on the backs of they're looking to raise 200 to 400 million before IPO in either this year or next year. So on the backs of, I believe Bitco this year or this week is looking to raise 200 and 400 million in a public offering. Bit Panda, Hash Key and Kraken are all rumored to be going public either in the US or in their respective jurisdictions. And yeah, it's, it's, it's a fascinating race to go public, raise capital and try to grow to challenge the incumbents or get acquired because I think that there's probably three major blue chip traditional regulated custodians. You know, you can even look at Sailor as an example. It's rumoured it's Fidelity, Coinbase and Anchorage that some subset of his personal and public capitals leverage is custody. And Anchorage is one of those big players out there doing a lot. And I still think you will see some of these companies go public and then end up acquired by other larger firms. They're like BNY Mellon's a great example and State Street because while State St. tokenizes and does certain things, like there's a reality that these native companies build world class infrastructure across these segments. And you can't do that overnight and you can't get the liquidity you need overnight. And so I think like a bit go in a Anchorage in particular because their market caps will be like, you know, 1/10 of what Coinbase is, is they'll be ripe for acquisitions to go compete. And I think you'll also see it make sense because Coinbase just continues to take more and more market share that you'll realize it's better to, you know, get that integration acquisition and then be able to compete with Coinbase or Fidelity head on. Yeah. The one thing we call out here was Anchorage, as it states here, they were actually the first federally chartered digital asset bank. They received that designation in 2021. And we covered this on the show probably 2 or so months ago of the OCC granting conditional approvals to a list or a slew of or crypto native players who had been applying for similar registration being a federally chartered digital asset bank. And that list includes Circle, Ripple, Bitco, Fidelity and Paxos. So the competition is heating up that that's really all I'm saying there is that they had sort of this foothold with this charter for a few years as sort of, you know, one of the only players who had it. And with the new administration regulatory surface opening up, you're starting to see basically more competition here in terms of a lot of those walls being broken down, some of those sort of early footholds being broken down as well. So that'll be interesting to see how that that plays out. Yeah, they're both. Management division is definitely pretty interesting to any potential acquirers because just getting close to those types of customers who are likely seeing their assets grow pretty quickly, you're going to just want to be close to them. They're a different, usually a different subset of customers and you would get at the traditional banks just because there could be a little bit more digital asset forward and naturally there would be some overlap, but not everything. But yeah, I would imagine just the fact that they're going public, they have definitely later, not definitely, but I would assume that they have received acquisition offers. And I'm going to be interested to see if they either get acquired like fairly quick out of the gate or if people try to wait until there is another digital asset winter and you know, their stock is potentially impacted, but like it like Coinbase was back in 2021 and then go in there. But yeah, I think that there is just going to be a lot of interest for, you know, either hash G bit go bit Panda back in. I think some of them will. There will be at least an attempt of a hostile takeover this year. Yeah, I'm going to rattle off a couple other headlines we had on the list that sort of relate to to what we've been discussing the the whole episode around the merging of of Tratfi and crypto. So there was this headline, Belarus authorizes crypto banks combining token operations with traditional banking. And then there was out of Germany, Germany's second largest lender, DZ Bank secures retail crypto trading, Mika license. So everyone's getting their license, everyone's trying to figure out their infrastructure to offer these things. And then another headline I did want to get to relates to some other themes that we've talked about on the show. 21 shares launches a Bitcoin and gold ETP on the London Stock Exchange. So a Bitcoin and gold exchange trade product cleverly named Bold offering UK retail investors A regulated physically backed vehicle combining both assets just speaks to what we've discussed in the show around the debasement trade. It not being a trade, more of a structural shift towards gold and Bitcoin and sort of this this sound money sleeve. There was another headline along these lines from Dartmouth last week in 13 F filings also allocated to I bit and some gold as well. So you we're seeing similar sort of portfolio sleeves being constructed around sound money, gold and Bitcoin. And I think there's going to be a lot more products like this specifically that explicitly combine these two assets in a simple vehicle to get exposure to both. Any thoughts on this guys? No, the the Belarus stuff's interesting from a nation state perspective. Like, you know, when money can move as freely as we're we're heading, it just makes sense to again, get the regulatory climate in your sovereign nation aligned here. So you can really be a place where capital goes and there's natural 2nd, 3rd order effects of GDP and everything else from people moving if you're, if you're ready for the future. And then yeah, the gold stuff is something that I think a lot of these firms like we talked about equities and bonds and alternative investments that will be play nice next to Bitcoin. The reality is like gold is pretty, pretty confident, especially maybe not on a 12 month, but on a 60 month. So then A5 to, you know, it can be 3 to 5, five to 10, your time frame it's going to outperform most assets as it's done the past five to 10 years. And so whether it's putting best in class gold products next to your financial institution and then the blending of those products together as well. I think there's a huge opportunity for firms to do that because again, if financial services is built on trust and long standing reputation, if you're early to doing this, over time, the market's going to understand that. And as the market understands that like these assets, while they go up in nominal terms, these are the ones going up in real terms, people will start to look for those products and services and they'll be right for acquisitions or just growth until that gold Bitcoin aspect is still really widely under discussed and built upon, but fully expected to grow, especially as Bitcoin and gold market cap continue to accelerate. Yeah, We've talked a lot about all assets kind of getting combined at least into one platform too. I think that one thing that's going to grow an adoption too moving forward, it's just going to be like top 50 assets, like almost SMT 500, but diversified across, you know gold, Bitcoin, NVIDIA silver, whatever else is in the top 25 there too. I think that people will almost start grouping all of those largest assets together rather than thinking about them in separate buckets like equities, gold, precious metals and digital assets. So I would imagine that something else like that would crush as well. One other thing we didn't have on the list, but maybe almost Brian, there was anything else? I just, I thought it was relevant to bring up just the past week the kind of conversation and discourse around like Claude and kind of craziness happening there because it goes back to the contradictory with the wallet connectors like everything happened and nothing happening at least in the short term, but the long term how crazy this is going to be. So I'll throw it back to you guys. I'll share some thoughts, but just curious like how you guys are thinking about it? Yeah, the time the timeline's been flooded with either fix your life in one day or one hour or use these tools to, you know, make $1,000,000 in a week like things like that. And, and I would say you're right in that there is, there's substance to a lot of these tools, but there's a lot also a lot of noise associated with them. And I think we're just in the very, very early stages of, of people figuring out how to leverage these things in an efficient way. But yeah, the, the my time in particular, I don't know about you guys, but it's just been tutorials on, on clock code or, or Co work and, you know, basically the collapsing of, of software to 0. So, you know, you, you can basically create anything as a one person company that you might need to, to at least get an idea off the ground, right? Like I think there's still a ton of room for improvement in terms of like actual usable outputs, a lot of a lot of these things. But you can at least iterate and get ideas off the ground much faster and more efficiently at lower cost than you ever could at any point in human history. And I think that's, that's the excite, that's where the excitement emanates. I think right now it's, it's very useful for iterating and getting an idea off the ground and, you know, getting something to market and being able to iterate from there much faster and more cost effectively than ever previously possible. I think there's two aspects that are interesting. 1, you still have to have the ideas yourself and have to have like the good taste, because if you don't like any tool will tell you that's a great idea. And you could go down the rabbit hole and and think you're being super productive, but in reality, it's just like a massive place of your time. But in in there are two aspects here. 1, you can really see how much work, especially at really large companies and organizations is really just administrative stuff, whether it's there's just so much administrative stuff to do. And over time like that stuff doesn't need to be done at an excellent job. Like it can be done OK and you can either do OK things ten, 100,000 times faster in the future and that's fine. And that either means like you can create more revenue or you can allow for fewer people to be doing the job if that isn't actually something that can generate more revenue for a company if it's just kind of a fixed cost. And so I think that we're going to be in a period of pretty amazing margin expansion, especially for businesses. But at the same time to to the earlier point, it's just there really needs to be taste in in different ideas. And it can help automate a lot of getting from A to to Z. Like not Z, it can get from A to X. But you're going to at least need to do the last mile in order to do things pretty well because there's a lot of junk that that I can get you out there too. Yeah, it's it's a hard one to put at least personally finger on because there's there's multiple aspects of like the notion of the taste isn't there for a lot of things. And this was part of that, that podcast that Ben Affleck I think astutely observed around when you're like an artist and you're writing and, and you know, these models or they, they regress to the mean and the mean is not that interesting for a lot of people. That's where like the content and and slop around not being personal. Doesn't gravitate and where the market's going around authentic. But with that said, you can kind of see how those walls get crushed over time because of the acceleration of this specifically like Claude as an example. But then the other aspect is something from just an entrepreneurial bent where to the point of it's never been, you never been able to get quicker, faster to market in developing ideas, putting together a lot of concepts. But then like even pre funding, be able to get more traction, lower the time to raise capital, dilute yourself. And then ultimately with that lens and agency building with super constraints around using these tools from the from the foundation up. And I think that's really where this all goes is while the incumbents are and Chamath had a great, I think it was Chamath on his newsletter, he was basically like showing an adoption wave. I think it was technology in a large enterprise, but specifically related to AI. It's like you have this is like not really doing anything for large companies. And then they kind of like regresses because when you adopt it, people have to learn and then they don't use it, right? So you have to clean up the mess. And then ultimately you come out the other side. Well, like while that's happening, you're effectively just going to have net new entrants come in and then just like run it back turbo without any of that muck. And I always go back to the what's the Bezos quote of your margins? My opportunity. It's like your fad is my opportunity because while you layered in all these assumptions and things that were legacy needed, and then now you're trying to come back in like retrofit for this new model. Like the net new companies are going to be like, why am I doing any of this? Because there's a certain type of builder. And that's really like the underpinning of the notion of early riders as why it's called early riders and why the companies are built this way. And how we built on ramp is because of all the knowledge and all the fat of building in the previous world and recognize that it's can't be that way. It can't be that way because in the future you will get out competed by the others using that. And then you layer in holding Bitcoin. And that's when this whole thing gets super interesting. And that's the thing that most people don't know. Like while we focus on Bitcoin digital asset infrastructure today, the real game and opportunity is how the whole world's capital stacks fundamentally change from technology to storing a value. And while others are just focused on technology and being more efficient, inflation's still going to be crushing them and they're still going to be having to deal with, you know, do they lower their costs or do they or do they raise their costs and lower the amount of total users and potential revenue? Or do they just have a better unit and value that they're accruing in Bitcoin and that allows them to get stronger? And that's how we see like this future world emerging. And so it's just it, it, it's just an insanely fascinating time when you think about across the board people building and the the tool set that's around from money movement to the usage of these tools and being able to create things in AV1 perspective. And then maybe go get somebody coded up that's more proficient. Yeah. And the, the, the money component, the importance of the money and storing value actually accelerates as this is all playing out too, because basically the, the barriers to entry for anything as software compresses to 0, like the barriers to entry are lower and lower. So things become, even though you can move faster, get an idea to market much faster, so can everyone else. So the competition is much stronger in that world. And so then the, the, how you're actually preserving and storing value matters even more in that world. So I think that's another big part that that most are missing looking at the landscape today. But I think that's a good, it's a good summary. William, anything else? No, and no other thing too, which I know you guys and and we've been thinking about hard early riders too, is just the differentiation and not just taste, but also the data and framework that is proprietary to each firm with how they offer. We'll both build tools and use that in order to understand what the framework is of customers and what is actually valuable to them as well As for any company out there in general, any proprietary data set will be any sort of Moat in a world where the the cost of software and going to market trends towards 0 all. Right gentlemen, a bit over an hour here. Anything else before we before we hop? Action Pack RIP is a good one. Good stuff, boys. See you. Thanks, Jones. Better. Bye, you guys. Thanks for listening to this week's episode of the show. If you found the information valuable, please share the episode with a friend or leave a rating on your favorite podcast app. All the links we discussed in today's show will be in the show notes inside your podcast app. Before we finish, a quick reminder that Onramp Media is for informational and entertainment purposes only, and nothing should be construed as investment or legal advice. Regardless of where you are on your Bitcoin journey, we'd love to hear from you. Visit onrampbitcoin.com/contact to schedule a consultation with one of our private Client Advisors.
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