Goldman, State Street, NYSE: The TradFi-Crypto Takeover Is Underway

[music] It all comes down to computers communicating. >> The information [music] superighway can be a confusing mix of on-ramps and off-ramps. Bitcoin is [music] worthless artificial gold. >> Is it still rat poison? >> Probably rat poison squared. >> We need to get into [music] the world of Okay, this is actually foundational technology. What the internet [music] of money does is it creates a single network which can do a microtransaction [music] to a giga transaction. [music] The internet is going to be one of the major forces for [music] reducing the role of government. The one thing that's missing but that will soon be developed is a reliable [music] ecash. >> All right, gentlemen. Welcome back to another episode of Final Settlement. Today is Monday, January 19th, 2026, 10:55 a.m. Eastern Standard Time. Boys, how are we doing? Big list today. We've got a big show. Lots of items on the list. We've got gold and silver running uh last night into this morning. Bitcoin's dumping. Um before we get to the news, gentlemen, how are you >> doing? Good. We got to um appreciate you starting off the show, you know, excited with a bang. something that I've instinctually been talking to to Jackson about and I don't know if anybody listened to uh the Matt Damon and Ben Affleck uh Rogan Pod and they talk about >> Yeah. They talk about like how specifically in 2026 how you have to build uh a narrative from reasserting the plot multiple times because people are on their phone to putting the action sequence in the first couple minutes because you got to keep people hooked or they're going to leave. even. So that's why it's important to start this with a bang to really make sure we uh captivate and make a compelling uh case to listen to this for a good hour. So I appreciate the energy there and it's something if Jack Jackson doesn't listen to this, maybe we should make them. Um but we're going to have to uh relay the strategy back on the last trade because sometimes, you know, Jackson might start a little slow and uh then we finish with a bang. So we need to just invert that. >> It's great points, Liam. How are you doing? >> Doing fantastic. Um big big list uh 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 uh with what I think is probably the biggest news from last week, which was uh the Clarity Act. So, the the digital asset um sort of um bill that's been going through various drafts and iterations uh over the past several months um got to a point last week where uh Congress was coming together to do what's called basically a markup period and try to resolve um certain things in the bill that are are outstanding, unresolved um 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 uh didn't go swimmingly I would say. Um there was a lot of retort back and forth around you know various key issues. Um one of the major ones is something that we've talked about on this show uh multiple times which is uh the ability for stable coins issuers in particular um to offer users yield. And so this is something that the banks uh have pushed back on uh you know understandably from their perspective. um they sort of have a monopoly on uh dollar deposits at current and they see stable coins um and the ability for issuers to provide uh effectively pass on treasury yields uh to to users you know so today around 4% or so um they see that as a huge um you know impediment to their business model effectively and we saw um a few earnings calls last week I think JP Morgan and then uh maybe also Bank of America where um individuals, executives from those firms were explicitly calling this out being like this is why we're lobbying um against these things. Uh it will directly impact uh our business model and our ability to um you know basically keep these deposits on platform. Um and so this, you know, uh this among other things triggered Coinbase to basically pull support from the bill last week and and so Brian Armstrong had sort of um hinted at doing this uh if that markup period hadn't gone uh according to plan effectively. Um and it didn't. So they pulled support um and now um it's kind of back to to the drawing board a bit um in terms of what this bill is going to look like. Um so I'll open it up to you guys. What do you guys make of this? Um the stable coin thing I think in particular is interesting as we move to some of the other topics on the list for today, but uh I want to get your initial thoughts first. >> Yeah, I mean there there's a lot here. Um 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. Um I think that there's also an interesting dynamic happening between the banks and then the large brokerage houses. You see this with uh like Black Rockck and JPM are a good example. And then you see this also with like uh the Trump admin and there's an interesting dynamic where he was loud about Brian Armstrong and Coinbase uh you know kind of coming out and what they were what they said but then at the same time he's suing JP Morgan. Um 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 uh CFTC um yeah the CFTC and then the SEC and who gets to govern these assets and then the notion that um there's different ways that different players in this space look at this. So I had some notes like a few examples are rulemaking helps some but doesn't help others right? So when you think about like Coinbase, if Coinbase's ambitions are to do X, Y, and Z, one of the big ones is offering uh 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. Um the deposit flight and hurting banks is a really just fascinating conversation in general because of the cabal that the banks exist in with net interest margin. I think it's close to 300 billion roughly they make on just passing no uh dollar back to clients that are holding 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. But I think once that proliferates, right, it just really threatens the models. Um, and they use the notion that this hurts community banks, but in reality, community banks already hurt. Uh, they actually could be more nimble to offer some of these services and also other digital asset infrastructure to actually differentiate. Um, 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 reddraft that. So, something's already been codified. Now, they want to like bring that back to the table. Um >> well yeah just just a a note on that specifically. So so what that what you're referring to is basically as it was written in Genius there was basically a loophole for Coinbase and Circle um because uh Circle as the issuer of USDC cannot offer the 4% stable coin yield. Uh but Coinbase as a partner of Circle and a I believe they have a a majority stake in the business. um they could offer that same yield to the client that's using SEC or USDC on the Coinbase platform. So it was sort of this workaround that's existed now since Genius was signed. And so part of the the sort of uh hubbhub around the markup period last week was that these things these concepts were being brought back to the table. And there were some thinking that um basically the banks are going to try to get rid of that loophole as well and not even allow um sort of other platforms or basically what it would end up being is exchanges uh that work with the issuers of the stable coins to to provide some sort of yield. Now there's some um negotiation going on on that specific point in the sense that uh one one element that's been proposed is you can't uh earn a yield for simply holding uh a stable coin on an exchange. But if you're doing some activity, right, whether it's trading or staking with other assets, um that maybe that's how you earn the quote unquote reward. So there could still be some loopholes and workarounds with this um even if the banks do mostly get their way on this. So that's just um some other context there. >> Yeah, I mean it's good color. I think um 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 market's doing, 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 differentiated technology that disintermediates all the legacy borders, well then this is just kind of a fool's eron because long term the walls can't be uh held for a long time. you you've seen this like offshore derivatives move, they had to bring them back onshore and they just kind of tightened the clamps. Um but your point still valid that um 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. uh 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 lights to go versus you end up with a bad bill um and then you have a problem. The counter to that is that um if it's not codified then a new administration could come in and just kind of completely uh you know squash that. So it's a fascinating thing. Um, 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 entrant that um that don't that just counterposition to a lot of this legacy muck that exists because you see this already with certain like new banking, neo, stable coin issuers, all the things Brian's alluded to. There's no shortage of them that exist outside the US that are offering these services. because they'll figure out how to get them back in the US. Um, and I think that's the long-term play because you saw this happen. Darabid is a wonderful example. Sat outside the US and then got acquired by whatever what was in total like I think a billion to2 billion dollars from Coinbase and um 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 kind of get bypassed. >> Yeah. One one important thing to note too is just I think it's going to be more difficult for any bill to get passed. uh in the future because there's always been this uh 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 second and third order derivative impacts are. Um but also just now now with AI there is actually a way to instantly read it and understand second, third, fourth order effects for each of uh like a specific business's business line. And thus there's just going to be much more back and forth where in the past it was like it was more difficult for um to really understand and have low-level people who were uh either working at the banks or or lawyers uh 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 uh more difficult for different bills to get passed just because the everybody's going to be more educated and have more and more push back. Um, but at the end of the day, uh, to your point, I think it's just always going to coales 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 um will the the laws will be rewritten around what is actually consu uh politically palatable for the consumers and um relatively safe. Yeah, there's the thread on no bill being better than a bad bill is interesting. That that's explicit explicitly what Brian Armstrong said last week. Um, you know, he'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. Um, but I think everyone's working with the assumption that uh before the end of this year something will be signed into law. Now, Liam, to your point, um you know, there are some sort of governmental uh mechanics that could impede that. You know, just um you know, uh 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 broader push now to get something done as soon as possible. But then I also put it in the context of like you look exus and you already have mika in Europe. You have um I'm blanking on uh what it's called in um Middle East bar is that what it is? Um you have these frameworks that are already law in other countries. And so um I think there is at least on the side of the industry itself um there is some um you know there 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 um that allows a lot of the people who have been on the outskirts um formulating their plans uh to really move fast once uh 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 um I would say despite that I think people are working with the assumption that a bill is going to get done. Um because you know we have a a list today full of whether it's banks, Wall Street, Tradfi, um the FinTechs that are you know putting their chips on the table getting ready um to offer these things and and they're not exactly worried about uh what's in this bill necessarily like 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. May maybe just before transition to that because it's a perfect segue is calling out um or highlighting the two points. one is from a US um capital markets and wanting to win the clarity is needed uh no pun intended to for the market to um capital to come here investments all the things associated with the clarity that's come in in you're mentioning UAE's example there's Abu Dhabi global markets and then uh virtual asset regulatory authority um but then Switzerland has its own ma you look at Singapore um 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 um 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 uh 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 Fidelities, the Morgan Stanley's, the Goldman Sachs that are coming into the space. And so that was the idea behind when we first started on this segment about I do think this gets done because the powers at B want it to get done. They need it 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 how this shakes out. Um, but let's go to the list of what we just referenced. Um, I'm going to start with State Street because State Street's a big name. Um, you know, very typically historically conservative, uh, Wall Street institution. and they are joining the crypto rush as this title um uh alludes to here and rolling out digital assets across their platform. Um Mike, you want to intro this one and and get a get a little more background here? Yeah, the state street um 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 um money market I was looking at this 51.7 trillion uh it's a wild number um I think that's the custody I think that their assets under management are like close to six trillion for for their kind of like practice. But I think then they custody the assets similar BNI. >> That's right. >> Um 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 u outside of bonds and even bonds. And um you saw this last week we talked about with Morgan Stanley rolling out that wallet and you can start to see how uh you're bringing in dollars into digital assets, right? Like we're looking at it from an inverted 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 uh 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 tokenized and with a click of a button you can effectively swap that equity out for BTC or some other derivative. that that's where this is all going and I think they are all uh 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 what you just said reminded me like you know we talk a lot about the crypto industry, stable coins, real world assets or we have for the past 12 months because that's where a lot of the energy and capital is focused. Uh but it's it's important to not lose sight that all of these developments and dynamics are extremely positive and constructive for Bitcoin specifically. Um 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 in tandem building the rails for Bitcoin and allowing these things to sit right alongside each other. Um, 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 um, placed alongside each other and you can have your Bitcoin long-term savings next to uh, you know, the dollars that you may need to spend day-to-day um, and also you know your other tokenized investments that you may have. Um, 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. Um, the next one I was going to go to was uh London Stock Exchange launches blockchain settlements in their deeper crypto dive. Um, I'm not sure who brought this one, but um, London Stock Exchange Group has introduced digital settlement house known as LSEG Dish. This new program will address longstanding delays and risk in post-trade settlement. service will allow payments and asset transfers settle instantly between connected networks where they operate on blockchain systems or traditional rails. Thoughts on this one? >> Yeah, so the core idea um there was a few and we can pick which ones to to riff on were related or or maybe we'll we'll tie the the state was London Stock Exchange 247 blockchain tokenized deposit settlements and then I think it just came out this morning that New York Stock Exchange um is also first turning on 247 trading. I don't necessarily know the the process and risk management around that because it's pretty pretty pretty pretty crazy but they're doing it but then that they're also working on uh tokenized securities platform um uh to manage the 247 trading and so um 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 247 and then integration with dollars via stable coins and traditional uh equity portfolios or financial service firms. That's where this is all going and seeing uh 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 also it says here um they're working with the banks themselves. So including BNY and City to enable tokenized deposits across its clearing house allowing clearing members to manage funds outside traditional banking hours, meet margin acquires, etc. Um, another one related. Um, let's see here. Uh, this was Goldman Goldman Sachs CEO says firm is actively exploring tokenization and prediction markets amid evolving US regulation. Um, 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 um again, just more of the same of of these traditional incumbents getting their foot in the door. Um 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. Um 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 than they're expecting. Um it's very unclear where exactly the chips are going to fall with respect to insider trading on information like this and and how that will be regulated. But um eventually prediction markets have to be um driven by information asymmetric information otherwise why would there be significant capital deployed on any one bet in particular um so I would imagine that it's just on a few kind of highlevel like liquid traded uh 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 uh and also just the amount of compliance in and uh etc. in Goldman, I think we'll see this get a little bit less adoption on the prediction markets. But um on the stable for side and and tokenization um 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 takeaway for at least myself and something we've been noodling on for a while and thinking about the business at On-Ramp and just in general the landscape. Um, 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 um 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 from 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 um 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 it 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 um 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. Um, 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 finan 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 uh the the net new entrance. And I think it's just going to be a fascinating thing to see play out. Um because it actually truly does ultimately end up serving the individual, the client, the consumer best. Now, a little 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 Trady 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 uh 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 overleveraged, and then layering that into digital 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 u 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 the base level of custody because nobody can touch those assets and move them. And we think long term that's the base. Uh, and then you can layer in other things on top. >> Yeah. The the um what you said there just sort of made me 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 [clears throat] inertia was to basically keep these well guarded. So like you know to avoid um client deposits leave leaving a platform let's say um maybe you have a negative opinion on on Bitcoin and crypto generally um so you dis 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 uh 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. Um and so you're exactly right in that the um 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 wall garden and access all these different things without having to go to uh to take their assets, go to Coinbase, go to a river, go to a Bitcoin only exchange. Um, if you can if you can access everything from your Goldman or your BFA account, um, 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 takeaway here is like it's shifting the inertia of of adoption of these things effectively uh by broadening the scope, broadening the aperture um, and putting these things alongside each other. And then also just the the the general vibes from these players, right? Like two years ago Goldman Sachs was extremely anti- crypto. Um and so you know that thing shift th those things shifting also just move sort of the zeitgeist and the Overton window. Um that again that also sort of catalyzes incremental demand um 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. Um, 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 five real large empirical pieces of evidence that we have not had a bull run. And a bull run in this uh example is just net new adoption and demand. And when that takes off, we're just going to get worldclass 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 B2B TOC infrastructure providers, think about Bitco uh as a great example with a state charter or 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 down from stable coins, equities. Point being is there just going to be interesting takes from world class people that have uh 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 uh this stuff but we haven't had any kind of like net new builders like uh you know when we look at some of the deals like Rain is an example like Rain was around pre uh 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 and AI is proliferating the amount of companies that are going to come about are going to be really interesting and which sets up a perfect time for us as we're looking at opportunities and also how do you underwrite it appropriately >> 100%. Um there's a couple couple more headlines from you know what I would call uh more incumbent firms um along these lines. So, standard charter to launch crypto prime brokerage. Um, planning a crypto prime brokerage for institutional clients offering custody, financing, trading, and clearing for Bitcoin, Ether, and other digital assets. Um, and there was another one here. Uh, Visa partners with BVNK to enable stable coin payouts on Visa Direct. Um, stop me if there's any comments on any of these, uh, gentlemen. But there was another one uh Wallet Connect uh announced a partnership with Inenico which I hadn't heard of but um apparently XUS it's a large uh POSOS 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. Um so similar to the you know the square uh block roll out from a few months ago but on a much larger scale. So I think um I could have these numbers roughly correct but I think Square has like 5 million maybe terminals um and so this is 40 million uh so pretty big deal. Um any thoughts on any of those gentlemen? >> Yeah I would just say first on the standard charter and Visa partnering with BBNK those would both be like almost news of the years um like a year or two ago. Um, but on Genico in particular, um, while I'm pretty excited and and bullish on, uh, just factually just where stable coin adoption will go, especially from a B2B TOC 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 and Cash App probably won't get a ton of adoption is just one, the consumer experience for stable coins isn't quite there yet, especially when you can just use Apple Pay or Tap to Pay with your existing card and um the additional friction of using a QR code, I think is going to be um 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. Um, 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 uh really strong adoption straight out of the gate. Um, yeah. Yeah. So I think I think uh with 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 sharing in that I I feel like it was inorganic how this was surfaced to the algo like this wallet connect thing. >> Agree. I had 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 uh MetaMask. It's like a cryptonative 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 uh 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. where we've seen the uh 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 biggest assumptions with crypto and it's the biggest assumption and so it's like the notion of ch using your credit card still takes up like 80 to 90%. tap to pay with Apple Pay 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 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 ad. 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 sits 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 um not 401k because those are 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 uh 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. getting liquidity from your portfolio and then you can use it. And I still think you would use uh 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 construct. 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 uh most people still I mean maybe this is focused outside of the US too. So maybe uh I'm not exactly sure where all of these terminals are located, but I know that uh credit cards are a little bit less widely adopted. So if you're going to like people generally would rather um 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 to the consumer, they're just not going to shift their uh behavior unless they have some real incentive because even especially if you're like a a small store and um taking that few 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 um focus or or advertise it well and 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 um actual practical usage of stable coins, whether it's um at various checkouts uh 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 okay those dollars that were in your checking account those are now stable coins and you can use them anywhere or some other uh you know more UBI style um 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 stable 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 crypton native because the reality is let's call all of digital assets is what 3 to four trillion um let's say half of that's Bitcoin well 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 um or if you're some kind of net you 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 um 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 um and whether it's in the US or internationally. So the fact that you can have US dollar and then go pay in a lot of places and and so there is a flywheel. I do think it makes sense. It's just figuring out like the use cases and that's really goes back to why distribution matters and um it gets lost a lot where like Stripe and 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 a thousand because it's money. Um 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 um globally and so now you just create a whole different level of use cases and um growing markets that people aren't just necessarily ready for or talking about. >> Yeah. Um, all right. We had a couple uh deals or raises on the list that I'll go to now. Um, I'm going to start with uh 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. Um, Rain I think I think super fascinating. >> Just raised $250 million. I think it's their series C. I think their series B they had just raised like four months ago. Their series A was 10 months ago. they were about 100 million I'm sorry a million dollar ARR business 15 months ago. Um and it's the reality of they figured out the easier experience that uh backed by Iconic uh which is very large venture firm and then obviously these other Sapphire first merc but they figured out uh a key value prop is stables are going to stable coins are going to proliferate people are going to need to spend them and u my understanding they have a unique uh relationship with Visa so they can be the service provider and you don't naturally need the underlying bank um 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 one is these cards that um people can use as effectively like debit cards to manage that bank account so you don't need to change the consumer experience uh and I think that this is just really where the market is going in the sense of uh you'll have infrastructure providers that offer the rails in better technology and then you'll have these other end end state um it's very similar to 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 ever 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 um and the beauty of like a model like this in rain it's financial services much less uh capex and topex for building something that you know building data centers. >> Liam, any thoughts on this one or I was going to go to um Alpaca? >> We'll go to Alpaca. >> Nothing else on me. >> Yeah, Alpaca's Yeah, I would be curious your guys thoughts if they were even under radar because Alpaca, I've heard of them, but I I didn't necessarily under even know what they did. They just raised I believe $150 million. Um and it's the same notion, right? like they're effectively taking um technology to integrate different financial products uh mainly equities. So being able to like integrate a brokerage into your fintech uh application. I think they also do cryptocurrencies now and a few other assets. Um, but you can start to see these rails kind of like uh 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 doing in the same way that they can lend against Bitcoin to buy public equities. Having all of that uh onchain to be able to mess with is is you can see very appealing for the market. And then you take on private investments which has always kind of in my mind made some sense around tokenization because private market investments there's a number of reasons why it's always been very fragmented. Um, 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. Um, 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 incumbents and who can move faster and develop a better uh product and service is really who's going to win big segments of these markets. >> That's well said. >> Yeah, I I would 100% agree. I think um 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. Um not I mean that's an exaggeration, but it's getting there. Um there's just so much infrastructure for prediction markets, uh trading digital assets, trading stocks and ETFs. Um essentially every fintech like you're even it's a little hyperbolic, but you're going to have it on like your solitire app and your email uh moving forward. Um it's just really fascinating that the costs are all like not quite going to zero 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 um integrating almost all financial services if you can. Um so just something that I'm watching. >> Well said. Um, move to the Anchorage raise. Uh, and this is on the heels of um, forget the exact number, but Bitco raising a large amount as well ahead of an IPO. Um, so this is sort of following suit there. Anchorage Digital could raise as much as 400 million as IPO rumor rumors swirl. Um, thoughts on this one, guys? Yeah, I um I thought 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 IPOing either this year or next year. It's on the backs of I believe Bitco um is looking to raise 200 to 400 million in a public offering. and Bit Panda, Hashki, and Kraken are all rumored to be going public either in the US or in their respective uh jurisdictions. And um 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. Um you know, you can even look at Sailor as an example. It's rumored it's Fidelity, Coinbase, and Anchorage. that some subset of his personal and public capital is leverage his um custody and Anchorage is one of those big players out there doing a lot and um I still think you will see some of these companies go public and then end up uh acquired by other larger uh firms like BNY Melon's a great example and stage street because while stage street tokenizes and does certain things like there's a reality that these native companies build worldclass 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 Bitco Anchorage in particular because their market caps will be uh like you know a tenth of what Coinbases 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 um and then be able to compete with Coinbase or Fidelity head on. >> Yeah. The one thing to call out here was um [clears throat] Anchorage uh as it states here, they were actually the first federally chartered digital asset bank. They received that designation in 2021. Um and we covered this on the show probably two or so months ago. uh of the OC granting conditional approvals to uh a list or a slew of um or crypto native players who had been uh applying for similar uh registration being a federally chartered digital asset bank and that list includes Circle, Ripple, Bitco uh Fidelity and Paxo. So the competition is heating up. That that's really all I'm saying there is that they had sort of this foothold um with this charter for a few years as um sort of you know one of the only players who had it. And with the new administration uh regulatory surface opening up, you're starting to see basically more competition here um in terms of a lot of those walls being broken down, some of those um sort of early footholds uh being broken down as well. So that'll be interesting to see how that that plays out. Yeah, their wealth management division is definitely pretty interesting to any potential acquirers because um 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 uh customers than you would get at the traditional banks um just because they're going to be a little bit more digital asset forward um and naturally there would be some overlap but not everything. Um but yeah, I would imagine just the fact that they're going public, they have definitely late or not definitely, but I would assume that they have received acquisition offers um and I'm going to be interested to see if they either get acquired um like fairly quick out of the gate or if people try to wait until there's um another digital asset winter and you know their uh stock is potentially impacted by like it like Coinbase was back in 2021 and then go in there. But um yeah, I think that there is just going to be a lot of interest for you know either Hashe, BitGo, uh Bit Panda, Kraken. Um I think some of them will there will be at least an attempt of a hostile takeover this year. >> Yeah. Um 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 Trafi and crypto. So there was this headline Bellarus uh authorizes crypto banks combining token operations uh with traditional banking and then uh there was out of Germany Germany's second largest lender DZ bank secures retail crypto trading Miko license. So everyone's getting their license everyone's uh trying to figure out their infrastructure to offer these things. Um and then another headline I I did want to get to um relates to some other themes that we've talked about on the show. Uh 21 shares launches a Bitcoin and gold ETP on the London Stock Exchange. So a Bitcoin and gold exchange trade product cleverly named Bold. Um offering UK retail investors a regulated physically backed vehicle combining both assets. Um just speaks to what we discussed on the show around uh the debasement trade, it not being a trade, more of a structural shift um towards gold and Bitcoin and sort of this uh this sound money sleeve. There was another headline um along these lines from um Dartmouth last week in 13F filings uh also allocated to IBIT uh and um some gold as well. So we're seeing uh similar um sort of portfolio sleeves being constructed around sound money, gold and bitcoin. Um and I think there's going to be a lot more products like this specifically that um explicitly combine these two assets uh in a simple vehicle to get exposure to both. Um any thoughts on this guys? No, the the Bellarus stuff's interesting from a nation state perspective like you know when money can move as freely uh 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 uh and there's natural second third order effects of GDP and everything else from people moving if you're if you're ready for the future. Um and then yeah, the gold stuff is something that I think a lot of these firms like we talk about equities and bonds and alternative investments that will be um play nice next to Bitcoin. The reality is like gold is pretty pretty competent. Uh especially maybe not on a 12 month but on a 60-month um so on a five to you know it can be 3 to five to 10 year time frame it's going to outperform most assets as it's done the past 5 to 10 years. Um, 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 um for firms to do that because again, if financial services is built on trust uh 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 ripe for acquisitions or just growth. Um and so that gold, Bitcoin aspect is still really widely underdised and built upon, but um fully expected to grow, especially as Bitcoin and gold market cap continue to accelerate. Yeah, we've talked a lot about um all assets kind of getting combined at least into one platform too. I think that one thing that's going to uh grow in adoption too moving forward is just going to be like top 50 assets uh like almost the S&P 500 but diversified across you know gold, Bitcoin, Nvidia, silver um whatever else is in the top 25 there too. I think that people will almost start grouping all of those largest assets together um rather than thinking about them in separate buckets like equities, gold, uh precious metals, um and digital assets. Um so I I would imagine that something else like that would crush as well. >> Yeah. >> One other thing we didn't have on the list, but maybe uh unless Brian there was anything else. I just I I thought um >> it was relevant to uh bring up just the past week the kind of uh conversation and discourse around like Claude um and kind of craziness happening there because um it goes back to the contradictory with the wall connect. There's like everything happening, nothing happening uh at least in the short term, but the long term how crazy this is going to be. Um so I'll throw it back to you guys. Uh 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 uh either fix your life in one day or one hour or uh use these tools to uh you know make a million dollars 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. Um but there's a 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. Um but yeah, that my timeline in particular, I don't know about you guys, but it's just been uh tutorials on on cloud code or or co-work um you know, basically the collapsing of of software to zero. So you know, you can basically create anything um as a oneperson company uh 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 uh 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 um and you know getting something to market and being able to iterate from there uh much faster and more cost- effectively than ever previously possible. >> I think there's two aspects that are interesting. one, you still have to have the ideas yourself and uh 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 uh and think you're being super productive, but in reality it's just like a massive waste of your time. Um but in in there are two aspects here. One, you can really see how much work especially at really large companies and organizations is really just administrative stuff. um whether it's there's just so much administrative stuff to do and over time uh like that stuff doesn't need to be done at an ex excellent job like it can be done okay and you can either do okay things 10 100 thousand times faster in the future and that's fine and that either means uh like you can create more revenue or you can uh allow for fewer people to be doing the job if um that isn't actually something that can generate more revenue for a company if it's just kind of a fixed cost. Um, and so I think that we're going to be in a period of pretty amazing margin expansion, especially for businesses. Um, but at the same time, to to the earlier point, it's just there really needs to be um taste in and 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 uh need to do the last mile in order to do things pretty well because there's a lot of junk that that it can get you out there, too. Yeah, it's um it's a hard one to put at least personally a finger on because there's um 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 um that Ben Affleck I think astutely observed around when you're like an artist and you're writing and and you know these models are 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 in where the market's going around authentic. Um but with that said, you can kind of see how those walls get crushed over time uh 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 uh market and developing ideas putting together a lot of concepts but then like even preunding being able to get more traction lower the time to raise capital dilute yourself and then ultimately with that lens and agency building um 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 uh and Chimath had a great uh I think it was Chimath 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 it 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 entrance 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 fat 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 and 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 there's a certain type of builder and that's really like the underpinning of the notion of early writers as why it's called early writers 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 recognizing that it's can't be that way and it it can't be that way because in the future you will get out competed uh 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 and digital asset infrastructure ructure. Today, the real game in opportunity is how the whole world's capital stacks fundamentally change from technology to um storing of 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 cost or do they um or do they raise their cost and lower the amount of total uh users and potential revenue or do they just have a better um unit and value that they're acrewing in Bitcoin and that allows them to get stronger and that's how we see like this future world emerging. And so, uh, it's just it it's just an insanely fascinating time when you think about across the board, uh, people building and the the tool set that's around from money movement to, uh, the usage of these tools and being able to create things in a V1 perspective and then maybe go get somebody coded up that's more proficient. >> Yeah. And the the the money component, [clears throat] 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 uh as software compresses to zero 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 um I think that's a good it's a good summary. Liam, anything else? >> No. And and the other thing too which I know you guys and and we've been thinking about hard at early riders too is just the differentiation in um not just taste but also the data and framework that is proprietary to each firm with um how they offer and we'll both build tools um and use that in order to understand what the framework is of customers um and what is actually valuable to them as well as um for any company out there in general. Um any proprietary data set will be any sort of mo in a world where the uh so the cost of software and going to market trends towards zero. >> Well said. All right, gentlemen. Bit over an hour here. Anything else before we before we hop? >> Action-packed rip. Uh it was a good one. >> Good stuff, boys. See you next time. >> Thanks, John. >> Later. >> Later, guys. Thanks for listening to this week's episode of the show. 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