But what are your thoughts about seeing that out in the wild?

Well, I was going to say, let's specifically say they're using a permissioned token within a permissionless world, which is, I think, something that's important for people to understand is JPMD is JP Morgan's deposit token.

It kind of works like the tokenized equities, which is to say you need to be able to be on the whitelist.

And in this case, being on the whitelist is pretty intense as you must be a current live customer of JP Morgan Chase Bank at A. right, to be very specific about this one.

So I think what JPM is looking at there is saying our risk is somewhat limited in this case because we're doing the simple part of being on a public blockchain.

JPMD is not going to become a permissionless part of like Aave.

It is not going to become a permissionless part of Uniswap.

But talk to us a little bit about you know we understand stable coins in the permissionless world but what about tokenized deposits and especially this new sofi product

Does this stuff actually make a difference?

So I think as Shelby was saying earlier, you're trying to persuade a small group of voters who are undecided because this is very unlikely to make a difference with the hard partisans who have already made their mind up.

those voting preferences are quite sticky.

The marginal people you find often vote for reasons that are full of recency bias, the last impression, which candidate they liked in a debate.

It's more art than science if we're being totally honest.

So the answer is, Yes, sometimes they can work.

Politics has been a dirty game, but sometimes they work in unexpected ways.

Is that a asset or a liability?

I mean, what do you think it is? It's going to get crazy out there.

So I guess I would say a couple of things about this.

Number one, equities historically have not traded 24-7.

So we're definitely going to change the volatility profile of stocks when we move from call it 9.30 to 4 p.m. style trading.

to, hey, we're going 24-7 globally in these markets.

Liquidity gets thin, price movements get amplified.

Whatever people thought about volatility and margin of safety, throw that out the window for these markets.

And I think that's where it'll end up flowing to.

But how do you see the events of last week impacting midterms and where some of these hacks are spending money?

So There's going to be a natural inclination from the crypto industry and from the PACs to pick a fight with the Democrats in particular over the result.

I think some of them will try to do that.

I think it will also turn out to be a strategic mistake to do so.

There are many Democrats who are working on this bill, right? Like Gillibrand has been a long-term supporter of this industry, but you had Gallego, you had also Brooks, you had Cortez Mastro.

You actually had a surprising number of people who were willing to move things forward if and only if the ethics thing could get solved.

And the reality is there's two layers of fights here.

Where do you stand?

the, the theoretical future deposit flight

flightSo the big banks have been stealing all the deposits from the small banks for about 20 years now, and now they are acting as the champion of the small banks to protect them from deposit flight from stablecoins, which can't even cause that, right? Like, this is an abusive relationship.

It's somebody who's been beating their wife for 20 years and then saying that they're gonna protect her.

So what the hell are we doing here? And by the way, anybody listening to the big banks on this in policy space, you're being played.

And, like, I, I know I've got some friends there, but, like, we gotta call it like it is when it works that way.

And so really, the community banks need to understand if they unionize on this and build a widely acceptable, widely usable, interest-paying stablecoin that they can back with deposits across all of these community banks, it becomes a way for them to bundle all of, like, the tiny community banks together and become one mega bank to fight against them.

This is the smartest possible thing they could be doing to compete against a JP Morgan, a Bank of America, a Citi, a Wells Fargo, and they need to get this right because it's existential.

So what else is on your mind, uh, before I let you go there? I mean, there's no, like, specific news topics here, but I know there's gotta be something.

Yeah.

But, uh, Community Fly Fishing, so it's a nonprofit, and our biggest thing is we wanna introduce individuals to the outdoors for free, zero barriers of entry.

And really it kind of started actually, you know, in different parks, uh, throughout the Denver area.

Um, it was myself and a few other individuals.

You know, we kinda came together, and really we started teaching people how to cast in parks.

Um, and from there, you know, it was like, "Hey, you know, this is amazing.

You know, how can we really get an individual onto the water and really allow them to kinda have that, um, that true kind of fly fishing moment?" You know, and it's, I think, amazing with fly fishing.

Yeah.

Based on your reporting, do you think that the senior leaders view violence against women and sexual assault and domestic violence as a readiness issue? Or are they thinking this is something for the sexual assault office over in the corner to deal with?

I would argue they view it as a non-issue.

Over the past year or so of my reporting on the different service branches, Army and Air Force in particular, and as you made mention of your service background, both Daniel and I are veterans ourselves, so we have some individual background and knowledge on the matter.

But I don't think the current leadership in the Pentagon focuses on any issues that could deal with retention and recruitment rates if that if that tracks with you i think fundamentally speaking they try to diffuse and shift blame to be in a way that like it won't come up When we ask questions, Daniel and I are both sitting on an overwhelming amount of data, data provided to us firsthand by the DOD.

And when we approach them with the same data they gave us, they kind of have this walk around pattern of answering as minimally as possible.

So I don't one of the things that we saw in the reporting that was alarming and it's been reported by other outlets as well is the minimization of.

resources for family and women and the access to actually seek counseling or what have you and then a recurring topic that we have come up are fap and idc committees and basically the preponderance of evidence that is needed in order to get a proper attribution to the case for what's going on can be different from what's happening with civilian investigators.

Austin, do you want to add anything there?

Based on your reporting, do you think that the senior leaders view violence against women and sexual assault and domestic violence as a readiness issue, or are they thinking this is something for the sexual assault office over in the corner to deal with?

I would argue they view it as a non-issue.

Over the past year or so of my reporting on the different service branches, Army and Air Force in particular, and as you made mention of your service background, both Daniel and I are veterans ourselves, so we have some individual background and knowledge on the matter.

But I don't think the current leadership in the Pentagon focuses on any issues that could deal with retention and recruitment rates, if that, if that tracks with you.

I think fundamentally speaking, they try to diffuse and shift blame to be in a way that, like, it won't come up when we ask questions.

Daniel and I are both sitting on an overwhelming amount of data, data provided to us firsthand by the DoD, and when we approach them with the same data they gave us, they kind of have this walk-around pattern of answering as minimally as possible.

So I don't...

Austin, do you wanna add anything there?

He has friends at Coinbase, respects what they've done for the industry, and then went in.

I don't give them the benefit of the doubt.

I think what's happened on base was both an intellectual and a moral failing on the part of Coinbase.

So meme coins are gambling.

They have no core utility.

They have no fundamental social purpose.

If you look at most people trading meme coins, they lose money.

The question on the table, does that prove BASE was wrong to walk back Neem claims? Austin had a sharp answer and a direct example from his own past.

I can also break down what it is if people don't know, but maybe just give your thoughts first.

Yeah, I mean, fundamentally all of this is just managing a math problem that Strategy has, right? Like, let's, as you said, remove the emotion from it and think about what's going on.

You have a large stack of Bitcoin behind the company's balance sheet, and then you have a set of debt obligations, convertible debt at the top of the stack, and then a bunch of preferred equity.

And you have cashflow requirements coming...

Well, cashflow requirements coming out of the debt, cashflow requirements at some indefinite point of time coming out of the preferreds, 'cause I will remind everybody in extreme situations they can pause the dividends there.

But fundamentally you're asking, is Bitcoin going to go up faster than their cashflow obligations are going to run? Because Strategy does not really generate cashflow from, like, operations in the traditional sense of the thing.

So part of the problem I think that Saylor and team created for themselves issuing the preferreds, and to some extent the converts, is it changes Strategy from being a bet on Bitcoin over an indefinite timeframe to a bet on Bitcoin over a definite timeframe, because now you have these cashflow requirements.

Exactly, yeah.

I mean, or I can go into the question that came after it if you want, if you don't like that question.

No, no.

I would say in terms of building things that people don't give you permission for, that has kind of been the course of my entire career, especially in the context of running into burning buildings where the previous thing there has burned down and having to rebuild it.

Um, One of the things that nobody had really thought a lot about until maybe early 2000s is there's this gnarly market most people don't think of, but actually is kind of essential to the functioning of the world called reinsurance, which I will describe for you as insurance for insurance companies, right? That is to say, when a giant hurricane or fire or earthquake happens...

The insurance company that sold you your policy is bankrupt because all of their policies just exploded at once.

And so there's another layer behind them called reinsurance.

And that historically was a very cartel like business.

Or is it all in gold and

So why are they doing this? Is that roughly correct?

I think that is roughly correct.

And I guess the best way to distill my criticism of the bank policy lobby into like a few sentences is...

I am a former fixed income trader who ran major funding desks at the banks.

And if I were trying to sabotage the U.S. banking system and cause the banks to fail, I would be lobbying for exactly what they are lobbying for right now.

That is not a good sign.

So...

Helped out.

Over 200

people.

267.

And by the way, there are connections between these two things, which is to say, If you look at a lot of the analytics around this stuff and crypto is guilty of primarily looking at on chain analytics for these.

But if you look at open source intelligence data like social media data, dark web data, other data sources and combine it with blockchain, you start seeing that a lot of these scam networks have links to each other, right? Like they're laundering money for each other.

They're passing dirty money back and forth.

And one of the unpleasant lessons that criminals in crypto are learning right now is that if you use a public blockchain, everything you do is public.

justy um but uh so listen but this is a signal right and and to what i read it's via usdc i cannot confirm that but not their own definitely not their own token yeah it says usdc on flana and polygon solana is crushing right now in stable coins by the way that western union announcement uh the other day was solana as well

First of all, were you surprised? And what does this mean? What does this allow them

to do? So zooming out on the problem with many of these things, it helps not to start with crypto.

What's going on here is more similar to the original version of PayPal.

And there's a thread that goes through American economic history here that leads to an accident that has created a monopoly for the banks, which is to say, Paul, if you and I transport ourselves from the present day back to 1970, the overwhelming majority of our economic activity does not touch a bank.

We are paying for things mostly with cash.

Nowadays, even to buy coffee, you're probably using your bank account with digital payments.

Banks have inadvertently been given a monopoly over the payment system in America in a way that quite frankly, they were never designed to have.

How do you translate this? Because this could be big.

So speaking of the collision, do you see that this convergence over time will blend the markets where it won't be the TradFi markets and the crypto markets, it will just be the market?

Correct.

Yeah, because like, let's zoom out here for a moment, right? What is the value of a blockchain? So not Bitcoin specifically, but like any blockchain.

All right.

It is more decentralized for some definition of decentralized than central ledgers, because if it's a single company running a blockchain, that's not a blockchain.

It's a database, right? You have unilateral control.

So to be a blockchain, I'm gonna subscribe to, you've got some theory of call it credible neutrality.

So do you see that being the model? Institutions have the internal chain, but settlement and the transactions have to happen on public.

And we need to be very engaged in this discussion going forward in order to make sure that this technology remains for everyone and not just for the same financial institutions that have been screwing everyone for the last ever.

Well, first, let the record show that Eric just called stablecoins meme coins, which I know is a bit of a tongue, but you totally did.

We have the audio.

On the record, Bitcoin maxi right there.

Joking aside, though, that is something that I think is really important for everybody to understand that it has to do with the adversarial nature of competition and development of good products writ large.

right like there's again i teach at a business school so like i kind of think of things this way but monopolies don't produce good products right like competition produces good products and one of the things that happened with genius was this was actually the product of like multiple rounds between republicans and democrats across multiple congresses to get that bill across the finish line Right.

You have like Maxine Waters, both when she was chairman of financial services and then ranking member and vice versa for Patrick McHenry.

We don't think this should be partisan, but that's sort of one example of how things are going.

Okay.

... a partner, purporting to bind the partner could be incredibly difficult.

That is like saying because Amazon banks with Chase, we can apply banking regulations to Amazon.

The answer is, no, that's not how that works.

And then number two is that if you read the actual text, there is a very important qualifier in there, which is solely as to whether you can pay yield or not.

And what, I think, if you read it clearly, Congress was trying to do is prevent the creation of either narrow banks or an arbitrage around government money market funds, because it says you can't pay interest solely for the act of essentially holding or using the stablecoin.

But that's what it says.

Hmm.

Do you think that rate cuts could actually signal that things aren't that great and we can see a dip?

I mean, exactly as you've described, that's a pattern that you've seen before.

And it's one of the things that people over-focused on, call it the monetary side, miss out on is that markets are fundamentally in many ways about expectations.

And if the Fed is telling people we're cutting rates because we expect the economy is some flaming garbage, that is not a reason for stocks to go up.

I know it's almost 20 years ago now, but if you look at 2008, let me remind everybody, boy, did rate cuts not really particularly help stock prices at that time.

And I guess what I would say is this.

There are many kinds of rate cuts.

Austin, you were at Paxos as well, right? So, I mean, you have quite a bit of insight here into tokenization stablecoin side.

Mm.

It's an economic substance test.

And the theories promulgated around this have been overly focused on the ledger, and you need to ask, tokenized gold is pretty obviously not a security, but tokenized Apple stock pretty obviously is.

And where is the dividing line between these two sorts of things as you start mixing stuff? That question we need answered.

Then the second question you need answered is crypto dispenses with some of the traditional functions of a securities market.

Like, we don't need a clearing agency when we have a blockchain.

The blockchain does the clearing.

[laughs]