Tether's Sovereign Empire, Collapsing Bank Barriers, & AI Bots Using BTC

We are so early. We'll talk about some things and things we're looking at investing and building that if you're ever looking to build join a company like this is really the tr the time because the noise will come again as a price appreciates and then that's when everyone's looking for jobs and all this stuff like this is really the time while everyone's not paying attention. It's but it's also the hardest time because looks like you know we're we're going to be in a bare market for four years. We're not going to be in a bare market for four years. [music] It all comes down to computers communicating. >> The information [music] superighway can be a confusing mix of on-ramps and off-ramps. >> Bitcoin [music] is worthless artificial gold. >> Is it still rat poison? >> Probably rat [music] poison squared. We need to get into the world of okay, this is actually foundational technology. What the [music] internet of money does is it creates a single network which can do a microtransaction to [music] a giga transaction. The internet [music] is going to be one of the major forces for reducing the roll of gun. The one thing that's [music] missing but that will soon be developed is a reliable ecash. Alrighty, gentlemen. Welcome back to Final Settlement. Today is Monday, February 9th, 10:38 a.m. Eastern time. Michael said I'm in a tunnel. I'm actually at an equinox. Having some internet problems and uh you know, we must the show must go on. So, uh we are here. Got a weird blur that looks like I'm perhaps in heaven or somewhere else. Uh gentlemen, how are we doing today? >> I'm good. I mean, I appreciate you sharing uh that you're at the Equinox in the shower recording this pod. Um, I mainly wanted you to share it. So, if any New York listeners want to meet up with you for a coffee after, not in the shower, but just for a coffee, uh, you know, you can reach out to Brian at brianhonorbitcoin.com uh, and he'll meet up. >> Yeah. Good uh, good time to plug. Actually, anybody that's in New York um, and going to be at Bitcoin investor week, too, please reach out to either Brian or myself, too. Um, you know, we'll be around all week in New York. >> What are we uh before we lose, Brian, just in case, what are we kicking off with? We, you know, we we launched this one hot. It's been a wild weekend. We got malt bots, claw bots flying around. There's a lot lot going on. >> We got we got a big list. >> Price action. >> Big list. Price action. I don't know if we're going to talk about price action. You know, we're we're hanging out around 70K. Um, you know, big dump last week, but uh, you know, fundamentals have not changed. Um, we had Eric Balcunis on the last trade last week. He had some great commentary around, uh, Bitcoin is is like Rocky. You know, you expect him you expect him to die in the next movie. No, he's going to get beat down and he's going to come back uh, even stronger the next the next time around. And so, uh, nothing's changed in my mind. Um, before we get to the list, I I think there's a lot of Tether news. So, I was thinking we start with sort of a Tether Roundup, but I was curious if you guys saw the the Coinbase commercial last night during the Super Bowl. Um, not great. Not a great look. >> I didn't, but I saw Fred Ursam. >> I didn't I saw Fred Ersam and Brian Armstrong with like a a selfie um with their like little like, you know, bopper jackets like from the 50s uh Letterman jackets. And I assume that the commercial was as cringe as that. And yeah, I didn't even like look for it. It was it was cringe beyond your your wildest imagination. It was basically a >> sing along to a Backstreet Boy song and then it it's like oh it's a Coinbase hat at the very end. And um the reaction on Twitter I saw multiple like reaction videos of like normies sitting in a room who are like super excited about the singalong part and then when they see Coinbase at the end like vicious booze like people flipping off their TVs vicious booze. So I think it's just, you know, it's important to put in context like the damage that the broader crypto space has done to what people think of uh in Normland when they think of Bitcoin and crypto. Um because for the average person, they they can't uh disentangle Bitcoin from crypto because they haven't seriously looked at the space, understood what, you know, these assets are. And so uh just a reminder that uh we're still pretty early to all this stuff. Yeah, I mean that's a good call out in the sense of um the reality is you know there there's a discussion that happens around retail traders and they really the reflexivity uh specifically right now with um uh commodities being interested in that market and that's just what they they're you know that reflexivity and um just getting involved and the point being is that we just haven't had that kind of uh market come back even from the the 17 lows in 22. And so if you're listening to this, like I know it feels like we're late and there's all this stuff happening, but we're so incredibly early based on like just Brian's anecdote that most people just think this whole thing is a grift. Uh and think about people that got in between, you know, X and 124 and watching it just crawl back down to 60K and have no understanding of why. You don't watch assets do that, right? with no fundamentals, with potential ties or whatever they're touting out with Epstein and all this other crap. And so to the where that's relevant here is that is we are so early. We'll talk about some things and things we're looking at investing in building that if you're ever looking to build join a company like this is really the tr the time because the noise will come again as a price appreciates and then that's when everyone's looking for jobs and all this stuff like this is really the time while everyone's not paying attention. It's but it's also the hardest time because you know the it looks like you know we're we're going to be in a bare market for four years. We're not going to be in a bare market for four years. >> The only thing I I wanted to mention was um >> famous last word >> given given the uh what happened to price last week. It was you know on Q you had the the haters and the dunkers of which there are many coming out writing articles in the Financial Times uh and other places. one proclaiming Bitcoin's dead again for the 500th time. Uh but there was one in particular that caught my attention that was basically saying like basically saying we're late like it it's late stage on this whole crypto thing. So if they don't have a use case or a new catalyst like it's over. And I thought that that really missed the mark in the sense that what he was saying was that we are late in terms of access. Like yes, everyone's heard of Bitcoin. They probably know how to get exposure to it whether it's via Coinbase or via an ETF in their brokerage, but we're still extraordinarily early to people's actual understanding of Bitcoin. Um that's where the big gap is. that's where the opportunity is. Uh, and the Coinbase commercial and people's reaction to it is an example of that. Um, but people need to disentangle access versus actual understanding of what's going on here. Um, so that was the only other thing I had on that note, but maybe we'll go to the links here. >> Yeah. >> Um, well, maybe this will Yeah. And this will tie this will tie into the the to the links. It's just the notion of u access and the version of like companies having to become uh internet companies and we know companies having to become AI companies. Everyone's just going to utilize this these tools. It's the same notion of like no every company's not going to be a crypto company but every company will be a stable coin business meaning that they will use stable coins for money movement because it's just fundamentally better rails. And so those are the angles that I think a lot of cryptos coming to towards and this ties in to tether. But then we'll talking about how some of crypto is dying with Sani leaving and others. But I think like that's the good mental model to use and why a lot of crypton natives are leaving is because they came for this like version of decentralization which ultimately was always only Bitcoin. And so now they're like oh god this is just going to be corporate 2.0 closed loop networks which it always was going to be because there's only one asset that sits outside that system and Tether's obviously gone very deep there. Yes, very well said. So, this first link here, Tether, the largest stable coin issuer in the world, retreats from their $20 billion funding ambitions after investor push back. Liam, maybe I I'll kick this to you and and if you could just give some context around, we talked about this a few months ago when these numbers came out around uh their forthcoming raise and the valuation and um what happened here with some investor push back around that. >> Yeah. Um, I think that now that they're now they're uh looking at a $5 billion fund raise, their valuation, I believe, is still $500 billion. So that puts them up there. It's, you know, I think one of maybe top 10 or or top 20 companies in the world globally. Um, which I think, you know, may be a little bit aggressive, but I don't necessarily see anybody going out and unseeding them anytime soon. um you know, everybody's going to seemingly try to issue their own stable coins, but Tether has um really done an interesting job, and we'll go into this more later into the show, too, but they just have strategic investments in almost every single company in the um digital asset space. And they will, despite having to have to bootstrap USAT, um they have investments in pretty much all the companies in the space, whether you think that's a good or a bad thing. And so they're going to be able to get distribution because they have a vested interest in all of their partners um you know using them. Um, in addition to that, like they've just really done a fascinating and and great job of really becoming the the the sovereign company of using gold, Bitcoin, and land um in order to just really have the essentially wildcat bank that will allow them to um you know, monetize the reserves even as US treasuries really do start to lose a little bit of flame. I think that uh those will obviously last a lot longer than we really think. Um, but they they've done a really nice job of diversifying outside of that. I am surprised that no uh folks have really come in and uh invested yet. That probably shows that there is something that, you know, everybody knows they have some of their skeletons in their closet and maybe um just the fact that they aren't quite trading at par or there's probably something else that's coming up on the DD side there. Um >> I think yeah, I think there's two aspects to the what you described. like there's a version that we talk a lot about and this is a good just again from an investor joining the space mental model is there's uh two sides of the barbell that are converging and there's the crypto natives Bitcoin natives whatever you want to call it Tether Bitfinex were one of them a lot of them died some others didn't they got stronger they were nimble they moved Tether was one of them and then you have the other side think of it as Fidelity is a great example there's no shortage Morgan Stanley and they're coming at it from the other side of the barbell And ultimately they're have their distribution. They have their um portfolio ratios between bonds, equities and how they're thinking about the landscape and money movement and new administration. And then you have the other side which is coming at it from new design surface, new way to issue dollars, playing outside of the the bounds. You think like tether and Uber like being offshore and then coming back on shore and playing within the apparatus once you get to a certain scale. And so to Liam's point about where people haven't come in, I can imagine that takes a big component of that because you're looking at this firm and you're like, are they strategic or are they going to eat me? Um, and to to Liam's other point, I do think it's interesting because it's not like they have this quasi feel of are you a tech and financial service company or are you a sovereign? Because if you're a tech and financial service company, then you look a lot more um accretive and um uh strategic versus if you're a sovereign because if you're a sovereign you start issuing your own currency and you're competing with everything else that it looks like a dollar. Uh but the interesting part as we know without going too far into it is their relationship from Bohines to Lutnik. Funny funny random note, Bohe supposedly had like 20 plus offers that he was uh contending for when when he when he joined um Tether. So yeah. And then the last part is on the strategic opportunity. Like these guys are savvy. You know, you look at their equity profile and who owns it and what they do and the need for capital. They went for a grab. The price tanked. You know, it is what it is. Um but yeah, it's fascinating to see what they're doing. I don't know. Tether has an interesting dynamic of like mass market commercialization and appeal that I think in the US I still I don't actually see it having a real viable path long term as compared to USDC strike tempo fidelity like from an American perspective. Um it'll be interesting to see what Airborne I know we're going to talk about who they're going to predominantly push. I think it would be Anchorage, right? Because they have a lot of ties uh to Anchorage, but I guess Anchorage has USAT, but they also have their own version. >> So, it's going to be fascinating to watch. The the angle I would say, the last thing I would say for Tether, though, is that they are actually like get Bitcoin. Uh so, that that's helpful because a lot of these stable coin companies don't and they don't realize I think that Tether realizes on a long enough time horizon, you're going to need your stable coin backed by hard assets like gold, Bitcoin, uh and potentially other things. >> Yeah. I mean, frankly, that's that's why I've always been interested and impressed by Paulo and the team at Tether is because at least he does seem to have a real understanding of Bitcoin. Um, and it's been sort of a part of their treasury uh strategy since day one. And um to Liam's point, they do have their hands pretty much all over the ecosystem when it comes to the broader crypto space. And so, this was um a headline from last week. Tether announces a $100 million strategic equity investment in Anchorage Digital. Uh Anchorage as we know is a a leading digital asset platform uh focused largely on custody. They serve a lot of institutional players. Um but any any thoughts on this this component of of what was announced last week around uh Anchorage? I mean they they also um partnered with Anchorage to introduce USAT um if if my understanding is correct. So their sort of US doiciled version of Tether, they partnered with Anchorage to do that. >> So I didn't Can you confirm that because I didn't see that. I mean it would make sense. >> The issue >> the the conflicting area there is that Anchorage has their like consortium play. Okay. So they are introducing it. I mean there's multiple things happening here. Like Anchorage has their consortium with um I want to say it's like Paxus and a bunch of other firms to like issue stable coins. Anchorage is an interesting business because of their banking charter which is now kind of you know slowly being commoditized where others have had it but they still have that inertia and then on an institutional space they're right there after Coinbase and Bitco I'm sorry Coinbase and Fidelity from a real institutional level like obviously Bitco plays there but Anchorage they've always had interesting technology uh and they they're obviously multi-asset um the dynamic around they push their stable coin but USAT is going to get pushed is interesting. There's like a full circle when you go back to Kevin Worsh was on the board there and now he's you know incoming Fed chair and then they got Bo Hines who was whatever he was doing on the crypto council sitting there like you you can kind of see like I'm taking the other side of what I said contra myself like you can see how they're going to try to push the USAT um but it's just going to be interesting to see like what kind of actual scale um they're able to get and how fast they can go. But yeah, I don't know. Like it's it just contradicts what like they were initially doing Anchorage. >> Well, I think part of the part of the USAT deal is that basically they needed a Genius compliant version of Tether. Um, and so I think they have some lead time, right? Like it's 12 months or so from when Genius was signed for them to get compliant. So they do have some lead time to sort of uh start bootstrapping USAT specifically. Um, and you know, I think this announcement of the strategic investment is, uh, you know, probably one of the first steps to doing that. I was I was kind of surprised Tether didn't have a Super Bowl commercial like that. You know, I would have expected them to maybe go that route in terms of getting some more interest in in USA. Um, because they've had some some advertising and marketing just but mainly on like socials. Um, but if you really want this thing to be like mass market and people using it instead of, you know, dollars, like you got you got to make people aware of it. >> I think, um, two notes on that. I mean, they've been generally been pretty pretty savvy on ROI, right? You probably Super Bowl is the least ROI. It's very like just regular uh, and versus like they put up the AI slot that cost a couple tokens and they throw it online. That's just more their speed. But this also is really highlights the the true kind of like um you know economic or monetary space race that's currently happening because the thing you were mentioning is they needed a genius compliant stable cocoin. They needed a bank, right? And so they needed a bank that was strategically um uh sound or made strategic sense for them to partner with. It's interesting because it's double if not like triple now where Bitco stock is in their valuation because Bitco is like I think 1.3 1.5 billion now where it's trading versus this is a $4 billion valuation. Um, but it's also interesting because they partnered here and uh, Fidelity had just come out two weeks ago or a week ago with that where you can really see like there's a lot we talked to banks, there's a lot of um, just momentum with people trying to figure this stuff out and who's going to issue and who's going to go and get that like flywheel around the um, network effects of the movement of this. And so that's kind of where I think the consumers will end up winning and also a lot of the companies because a lot of companies you can expect to start to integrate stable coins across whether it's adding value to their end clients or for their own B2B because the economics are going to get eaten here. All this capital getting thrown around is very similar to like the model you would think about and when Uber or Door Dash first came about it's like they paid you to use it effectively. Um so the end consumer I think wins a lot. The people that don't win are the the the traditional banks. Um which I think is also by design because this all these dollars are just going to go into treasuries and just intermediate a lot of what's happening at the Fed and that doesn't get talked about enough. Yeah. >> Um the other Tether related headline from last week was another investment they made strategic investment in gold.com 150 million uh expanding expanding global global access to tokenized and physical gold. Um very interesting again in the context of is Tether a banking financial services business or it is or is it a sovereign? forget the number uh of tons of of gold that they own, but it's uh pretty enormous, you know, on par on scale with other sovereigns. Um, and so I I actually didn't know a ton about gold.com specifically. Um, so I'm not exactly sure like the impetus for this strategic investment, but um I think it's it's really more just about again expanding that base of reserves outside of US treasuries. Like Paulo is a Bitcoiner. He understands the writing on the wall for debasement treasuries in general um and real yields uh sort of you know compressing over time. You know rates are likely to come down with uh Kevin Worsh being implemented in in May I believe. And um so the sort of the backing of Tether is increasingly looking uh more like you know a hard asset backed uh stable coin as opposed to just purely US treasuries. Um and so I think this is is part of that story as well. >> Yeah. Ju just one thing to call out here is um I think like the same thing that's happening to money is very similar happening on the AI side and I think a lot of people listening in here get the AI stuff in the sense of just how fast it's moving and then companies that incorporate that and how they'll benefit. It's the same thing with money movement. Like I think there's a component of backing treasuries that's a long-term play as a viability of the dollar and treasuries or backing the the stable coin that tether issues. But I think in the short order they just understand that the same way AI is moving and there will converge but like money's moving. So gold is appreciating and generally most people it's the same reason why we invested in Argo is um gold is changing. There's not really best-in-class ways to have SMA style products where you can view. Think about it in the same way you would think about an onchain address titled to yourself, take delivery. All these things just don't exist because of the way the system was set up and GLD was just a deacto way people got gold. So from a global perspective, and then you're going to digitize that because you're naturally not going to want to move gold around. So they have tokenized gold um and then stable coins and then obviously Bitcoin. So they're just playing at the the race of like we're going to build this infrastructure. We're doing these things because the market's going there and there's just speed to it that is important because whoever's first here and they have like best-in-class from the custody all the way to um the interoperability and APIs and ability to like just work on a on a B2B perspective for other clients uh consumers. They just get it and they they see that there's a window here to operate. >> Yeah. Liam, any any other tether tether related thoughts before we move on? No, I just think uh similar to the AI piece, I don't know how much of this information they actually get in general too, but there's so much that they can get from uh investing in all these companies in the space and then getting the information around uh either like you know investing in digital asset lenders and understanding where people are taking out loans and when um understanding where the actual like um who who's buying, who's selling um understanding the flow flows of capital etc. and being invested in many companies across both the gold and digital asset space in general gives them a lot of that information asymmetry that just like not everybody has access to in an age where you know the AI is is starting to get incredibly important in terms of using it to train data they're just going to have a lot more data points in order to actually understand and and front run any kind of moves globally which is kind of what you want if you're a sovereign uh like or or pretty much acting as one. >> Yeah, >> well said. Um all right, moving on. Uh Michael, you alluded to this earlier. uh the Palmer luckybacked Arabore uh receives a US national banking charter and this is sort of you know a broader story around what a bank is is in real time changing uh by the day in terms of being able to spin up stable coin access uh bank accounts through a few API clicks um and Arabbor I think um is going about it in a little bit of a different way but they've uh very quickly received received a national bank charter. So, uh add them to the list uh that we mentioned a few months back of I think Ripple, Paxos, BitGo, uh maybe a couple others that received national banking charters um that were more sort of crypton native in nature. Uh but m maybe I'll hand this to you uh to talk about Arabore. >> Yeah, I think this is really fascinating. I mean TBD on the success of this firm but I think from a meta example this is something that we've been looking at been thinking deeply about for a while now is the convergence of both sides of being native to the space and then the banking and fintech side but then there's just this realization that most of traditional finance and VCs do not know is that fintech fundamentally was just lipstick on a peg of like a real fat nasty pig which is the banking rails like they just do not work. It's hard to become a bank. they were an issue and I think there was like before um well I forget what it was it was like 2020 when when Anchorage was approved by the Trump admin but like since then there was never another banking charter that was like issued so that's like 5 years right of stagnation and then before then you've seen like this crazy kind of like drop off and even net new banks the real um the reality is in the same way decentralization and nodes and private keys are good for Bitcoin is the same thing as banks and the number of banks that exist um because they fundamentally banking in its truest sense is being able to take deposits safeguard them and then somebody else that needs that to go and build a business or whatever they do. You're creating this economic connectivity. And when you see that centralization go away, you're ultimately just disintermediating kind of like the lifeblood of an economy. And this is really where like I think I'm just talking about this out loud, but we should probably do some work on this is like the direct correlation around the amount of banks. Like the US has the most banks and people look at as that as a bug. I think that's a feature where you look at some of these other countries like I think Canada as an example only has like a certain level. So point being is what it looks like to be a bank is fundamentally shifting um because of whether it's the Genius Act and then they're working on some stuff where you can have like a narrow account with the treasury so you can issue like stable coins so you have like a narrow bank access. Um but then the other side of it is this realization that most people and I just took it for granted until you kind of like take a step back to hate their bank. Like when you think about Wells Fargo, look at Mercury. Mercury is the best example of their growth. They don't do anything really special except like think about the client and offer a better um experience from a user interface to how they manage fees and they had a issuer bank that we're partnering with. I don't know who it is now because I think it's evolved. I think they're actually got a banking license or in the process too. And so in the same way Mercury started with startups and grew, what Arabore is attempting to do and they're backed by obviously the ABCs and Palmer Lies and I think Joe Lonzil sits on their board, Peter Seal is working with three key market segments that had not been served or really underserved which was defense contractors uh firms and then AI companies and that's not only from like banking and then also lending because when you lend against these assets you have to fundamentally understand them uh you know you i.e. Naidig and whatever happened in 21, there's crazy amounts of loans lend against the depreciating assets and miners and when the market falls out, you have to go and figure that out and you can really lose your shirt there. So, when you think about lending against that and then also money movement because these firms are operating at the bleeding edges of this stuff, uh SpaceX is a great example with their global growth and having to pay out via, you know, borderless money like stable coins. And so, um you add that all together and I think we're going to see a lot more of this makes complete sense. And uh it's funny because this industry is so small that there's a guy that I knew uh there's two guys I knew. I back in the day in 2018 when I first got in the space I interviewed with uh Genesis and they were had a small shop. It was only three people that had spun out of I forget what it was like Genesis Prime or it was Genesis and it was uh Michael Morrow who who since left and then it was uh this guy Roshan Patel and then Matt Mullen's way who's at BCO now leading their OTC team and I just saw Roshan on my LinkedIn. He just joined Airbor. reached out uh because this industry is so small that once people get in like you know you're just stay around the puck long enough and so yeah it's going to be fascinating to see where they go but it's pretty cool. >> Yeah, similar a similar headline that or go ahead Liam. >> No, I was just going to say uh very interesting especially um just their focus on digital assets. sounds like they're going to be the or they say that they're going to be the most conservative uh bank in the industry when it comes to lending rehypothecation. like they say that they want to have 60% in cash equivalents and other liquid short-term assets on their balance sheet and just get I think it makes sense it the people are really underestimating um the amount the velocity at which money is going to move with uh AI agents increasingly becoming a larger part of the economy and how that will necessarily make it more difficult to plan for long-term from cash and assets on a balance sheet of banks. Um, and on a related note to this one, I I don't know if we got to talk about it last week, but there was that Pave Bank that raised $39 million, and they um they're doing something similar right now that they're only um based over in Singapore, but they have plans to expand to the US. They are going to be um they're primarily catering to um digital asset firms and specifically a lot of those that are OTC desks, market makers. They have yeah investments by like Wintermute, Tether, uh Excel, like a few other interesting VC firms. Um but if you go down a little bit, Ryan, it's essentially doing everything that you would want from a bank like deposit accounts, international payments, foreign exchange liquidity, card issuance, treasury management, digital asset management, instant settlement, over-the-counter trading. um in in a single asset and they're not going to be um lending out client assets at all. Um which you know if you're somebody who's in the digital asset space and saw what happened to SBB um Silvergate Signature all those folks like you're going to want to work here and uh it's not to say like people will inevitably come here overnight because there's information asymmetry and uh things will only happen on the edges. Um but it's you can see a world where banks are going to really have to kind of change and and be um cater to less or or more conservative um lending uh out of client assets as well as um the ability to offer stable coins and and be digital uh digitally native first just because I do think that um the speed at which all this is going to change is really going to just accelerate from here. Check out early riders.com for all the latest in Bitcoin investment research. Now, back to the show. >> Yeah, just to call out uh there's a few things like at the end of the day, all this actually is TAC and it's APIs. Like you could throw 80% of what we said related to all these banks and it's just APIs. Like banks historically when it comes to their like cobalt and all their architecture, most banks don't even like run their own kind of um front end backend. they leverage like the Fiserves and the um there's a few others the names are escaping but there's like three large like core systems that will help and so these APIs into spinning up virtual accounts and everything that's related haven't existed and um it reminds me of a a quote Nick Carter using it actually comes at two sides it's apt around stable coins are effectively just like Starlink right because you're taking like these rails because the dollar and this is the fundamental like deal is the dollar is the, you know, you travel globally and it's generally accepted everywhere. Um, and so now that you don't have the legacy rails and you can connect, it makes sense and you're seeing these arbitrageages take place. Pave, I think it's pave, but maybe it's pave bank. Um, you have Slash that we didn't cover last week. Uh, but Slash is another company, um, doing more businessto business. I think they're like at 150 million in ARR. Um, they leverage bridge. And then there was rain that we talked about about a month ago and they're effectively letting people use these stable coins and and have payments and they've gone from a million to you know 150 million roughly in 15 months. And so it reminds me very much of u the telco industry because the telco industry had this like legacy kind of u inertia with the infrastructure because you basically had to have the rail. So you had to like lay that fiber and it was very expensive to go retrofit in a city and then I was part of Google and Google fiber. So I just remember specifically how hard they made it from a bureaucracy to go into the city and get access to the telephone poles blah blah blah. Point being is they needed to do that because it showed the market like it put the market at its heels of okay we need to be competitive again and so they went in kind of further. That's why you can get you know 100 megabytes 200 megabytes up to gigs now for relatively low cost. But then Starlink completely changed that game where they effectively just went to space and now you can anywhere in the world get access to like gigabit speed at kind of 50 to 70 uh dollars and it just you know when you look at like I haven't looked at their stocks but I would imagine like spectrums and the comcasts of the world have not done well the past call it 5 to 10 years and so it's very similar with banking where banking has had these historical uh walled gardens that exist have existed with very little um uh investment in capex um to compete and now that's what's happening so fast and that's why you see a lot of this kind of like growth across the the sector and it's only going to increase because again I think a lot of this stuff's more by design than um just happen stance that regulation changes at the same time that the US government needs more uh demand for sovereign treasuries >> yeah and you you'd mentioned rain um I thought uh this was interesting in that context because rain um partnered with visa I forget the the nomenclature for what um their relationship is, but they're basically >> primary issuer. >> Yeah. So, so they're actually, you know, that designation is historically uh been for banks effectively. And so, RAIN, I think, is the first sort of non-bank um entity to get that designation. And then, uh this was just some some data from Visa with uh stable coin volumes now up to 4.6 billion run rate, up 4.6x uh from just September. for an 18x from the start of the year. Um, so yeah, this this stuff is accelerating fast. Um, and I think I also wanted to show this. Uh, let's see. It sort of speaks to, you know, what we've sort of been discussing at a high level here is that a lot of the crypto space has effectively just turned out to be financial services focused. You know, I think over the past 5 to 10 years, there's been a lot of stories and narratives told around the broader crypto space um in terms of decentral decentralizing everything. Uh when ultimately like you're a lot of this stuff is at the end of the day just making centralized systems more efficient, cheaper, faster, using stable coins, tokenizing the world. And and so this was some data from Alex Thorne of Galaxy saying Q4 2025 was the biggest quarter for crypto VC since 22, but most of that capital went to late stage private companies with some plans to go public. So many early stage narratives have failed over the years with few exceptions. Nearly all companies to reach late stage are financial services firms. Um, so that kind of speaks to a lot of what we've discussed here is that like um a lot of what the crypto space has has sort of uh transformed into is effectively making the traditional financial services uh ecosystem more efficient. Um and so you could say Trafi is sort of eating the the broader crypto space uh in real time. Uh any thoughts on this guys? >> I mean I think it's the same for for Bitcoin. I think um ultimately you could have narratives in crypto pre-administration and make up why like you know there's a lot of notion that people believe in crypto that it was a regulatory apparatus and blah blah blah that didn't let us and then you this new admin and there was still no growth in that sector because the reality is it was just mainly uh speculation and and gambling but then when you take the other side specifically around Bitcoin financial services you got to really it goes back again to that barbell and convergence that if you offered a Bitcoin native of buy brokerage well you can yes definitely create a better experience but if Bank of America Morgan Stanley where everyone else keeps all of their wealth has it there you got to look differentiated hence behind you know multi-institution and having that focus because everything wraps around that because it's ultimately where we think that the end state is for all these institutions so it's a differentiated view but not only that it's still margin I mean it's it's a step function better but for a lot of people that aren't deep in the weeds it's like okay I get how this is better but I can get uh a loan or leverage against my ETF or I can just buy it through Fidelity who already is holding my IRA and they have um you know my 40 or my 401k, they have uh my traditional assets. Do I really want another account? And so for some people that the answer might be yes, but the reality is that for mass market adoption, you're going to have the large institutions that are going to incorporate these assets. And here's the kicker, they can actually undercut most of the market because they have other ways to monetize the client. And so then on the other side, if you're going to be a Bitcoin native firm, you fundamentally have to offer a better client experience and offer other traditional financial products if you want to stay alive long enough. Even from an M&A perspective, because if you have this singular view, a lot of these firms don't understand that it's only Bitcoin. And it really isn't only Bitcoin. It's at least Bitcoin and stable coins. And then in a future state, there will be security tokens that are um you know, tokenized securities. And so this is just something again as we look at the space and we look at investments. I mean there's a reason why we went into a gold firm while we obviously focused on Bitcoin infrastructure and then we're looking very heavily uh at stable coins is because that whole profile it's not theoretical. We already talked about what Tether's doing best in-class and where the market's going. Um so I think this applies across the the space and you see this in crypto VC where the winners in digital asset VC will be generalist people. There will be people that fundamentally like have experience in the real traditional like tech or financial service world and then know where those like gaps are like the cobalt like we talked about and and then understand how best-in-class example background was previously in like traditional tech had built that unchained understood that there's a market dynamic where when people hold material balances they will not trust a single entity so they have are stuck holding a hardware device that doesn't scale Traffy doesn't know that yet, but they will. And so we built solutions for that. And over time, as Morgan Stanley, Fidelity, and other clients recognize that, will they have an opportunity to partner and then retain the client relationship and balance or they'll leave. Uh, and so that's our thesis. That's the bet we're making. And it's contrarian right now, but if it's right, that's how you actually get returns and build, you know, generational businesses. And so like that little angle is they're they're all over their pockets everywhere. The problem is that you can't just be a VC that went to like worked at a private equity firm and launched a VC because he's like what do you know that's different than the market other than that Bitcoin's cool. You have to fundamentally like understand the industry and then have like gotten your hands dirty. So that's why we get excited what we're building and um it's a huge opportunity right now. >> Yeah, very well said. Um Mike, this was a late late ad to the list. I hadn't seen this um but this is pretty interesting. CME Group says tokenized cashcoin developed with Google to roll out this year for crypto collateral. How is this any different than a stable coin? Why are they saying it's a tokenized cash coin and what iscoin? [laughter] So maybe this is after this unless there's something big we can do uh you know some uh open claw stuff because I was late to putting links in because my brain's like fried because openclaw took over. Um which is very wild and and I'm sure a lot of people are following what's happening there that would love to hear you know how we're thinking about it or looking at it. Um but so this is I think uh I didn't fully understand. So the difference between tokenized deposits and stable coins is fairly straightforward uh I'm sorry and u like Genius Act and and treasuries Genius Act and stable coins are backed one to one it's part of it US treasuries where banking whether it's 10 to I think like Arabbor can can use like 70% leverage I have to hold like 39% but either way general banking you can hold like 1 to 10% of dollars and then you're basically lending out the rest that's effectively what tokenized deposits are. So tokenized deposits are effectively taking the banking deposits and then making them and there is some I would imagine optimization and productivity that's gleaned from uh moving those dollars whether it's through investments, money market funds to other banks. So that's the just delta between when you hear tokenized deposits and like what JP Morgan's doing. The problem is that uh again, if people are smart, why would you want a tokenized deposit that you're effectively only have $250,000 insurance uh versus something that theoretically should always be there via US Treasury in the backing of the government? Now, what CMEcoin is doing, I don't fully know. I thought it was interesting because it sounds like again postfidelity, they launched this. could imagine that whether I don't Yeah, I would let Liam talk more to like if he knows the traditional flow of funds from any like cash settled there held leverage for margin. I would imagine that's the play is it's just giving you more efficiencies on like leverage and margin if you have cash equivalents and you're a registered broker dealer using a CME. Overarching notion is that everyone again is going to get here because it's it's just like turning on the internet. Why wouldn't you not uh turn on the internet versus like go and write the letter and put it in the mail? That's effectively what the difference is between having to send a wire versus sending um assets. And you brought up rain, that's a great example. So RAIN in traditional uh issuers and credit cards, you have like three or four days worth of deposit settlement because you have like a loan, right, effectively against what the person's using on credit where uh and so now you have like operational capital constraints that you have to deal with. This is like Amazon's, you know, fundamental reason they were able to scale is the way they they played with those economics. Point being is rain only has one day settlement because everything that they're working on with Visa and that relationship. So you can just start to extrapolate the efficiencies when you do not have these legacy rails that exist on you know Friday the wire doesn't hit and then you're waiting till Monday morning before any money moves. >> Interesting. So my if would I be understanding this correctly is basically like a sort of leveraged or marginable stable coin like that's the that's the distinction is that they can create these give them as margin instead of them being fully backed. Yeah, I think it would just basically optimize and bring efficiencies to their already existing flows which again is pretty scary because if you think about bank runs and movement of flow funds but yeah I mean that's effectively what a tokenized deposit is. So without I didn't fully dive into this. Um but I would imagine that you're taking the existing like leverage and then you're just you're just making it move faster. >> Got it. Makes sense. Um all right, Mike, you want to do a deep dive on uh on your bots on your droid army that is uh coming together. >> When it comes to holding Bitcoin securely, peace of mind starts with architecture. On-ramp's multi-institution custody distributes control across three independent regulated key holders in a two of three quarum. No single point of failure, no pulled or omnibus exposure, segregated client titled vaults. You retain full legal ownership while on-ramp coordinates security, compliance, and operational workflows behind the scenes. It's strength of many delivered through the simplicity of one. Multi-institution custody is the foundation for everything we build. Sound infrastructure that distributes counterparty risk and provides fault tolerant resilience with clear audits and institutional controls. And now on-ramp is piloting flat, predictable pricing, making best-in-class Bitcoin custody and financial services more accessible now than ever. On-ramp strength and many simplicity in one to learn more, check out onrampbitcoin.com. >> It's not necessarily a deep dub. I can I'll I'll it probably better if you guys give the the questions. The thing that I will share is um really got a glimpse into the it's very similar where I think like crypto and bitcoin and people have latched on to this because there's an area of something in your brain there's poker too where like a lot of people play poker we're in Bitcoin but there's an area of the brain that's on the like fringes of being interested but then where it goes a step further is the like sovereign aspect of now I fully Brock where like at the end of the day the commod or the um this kind of ties what we were talking about with Braum offline like the real currency is attention and so we know this with like ads and u the monetization of Google and Facebook but when you think about like all this BS happening at the model layer I don't think it's like speculative to say that like a lot of this stuff ends up compressing very little from like the open- source models um even to the ability to I think the understanding is you'll be able to host a lot of stuff on your phone. So the point being is like well what's where's the value and the value is like in your prompting in your memory and all the information you're giving and so when people try to discern well what's the difference between you know uh open call versus just prompting well there's this brain that you're effectively storing all that memory because these prompts don't hold all the memory because of the amount of tokens it requires. So, not only do you get the memory and you own the memory, um that sits there, but then it's compounding and it's growing and it's understanding you and then it's able to work on your behalf, uh, and you got to be very careful with this stuff and park it completely isolated. It's kind of crazy to me a lot of people saying you're setting up virtually because just parking it on a separate computers and setting all that up was already like there's a lot of gaps you can mess up. So, I can't imagine if you're using your daily driver and then getting a a cloud server and then you have to connect all this stuff, you you'd also be significantly limiting like the things you're able to do. Um, so there's that component, but then there's the form factor component, which is that you can um effectively integrate it into almost any uh app. So, I did Telegram. And so, you're just like in real time prompting, getting stuff done, having it done back at home base, which is whatever you're running it on. Um, and it has access to all these things. So, you're able to like, you know, I created this unique uh, and there's a there's a guide. If anybody wants this, you shoot us an email. I sent it to the team because you're going to see the crazy amount of efficiencies gleamed from individuals leveraging this. And I want our whole team to effectively get there. And this is why I had to do it because I just want to know where the market's going because you can't really understand it how you scale a business if this is the tech that exists. Um but the point being is that um the the so you have it you you create these different profiles like Gmail even phone numbers um but then you can give it shared authentication so it can start to go create other accounts for you um and then that's when things get really interesting because it can start to create your folder structure can start to build things. It can start to like park a lot of the data that it's already servicing. they can go build those accounts and then the beauty is that you don't need any technical uh component because you're it's teaching you in real time. So a lot of the way that a lot of the data works is you need API tokens and API tokens are generally available but then you need the way to speak to it and so it's able to go get that and then build what you need in real time to start to bring more connectivity. Um and so it's it's super fascinating. It it it's going to be it's it's wild. >> Yeah, it's a wild it's a wild new world. I'm curious, have you have you given it any Bitcoin yet? Because that's the other I think big talking point around a lot of this stuff with the bots and um the fact that they often prefer to use Bitcoin because it's a native currency of the internet and they don't need a bank account and they can just transact use Noster things like that. So curious if you've gone down that route as well. >> It's a great question. And so I think of it in the same respect of um it's a long game and that you're going to have the traditional incumbents and that convergence where you're just going to have platforms, businesses that are native that will adopt Bitcoin and make it more preferred because of the movement. But then the reality is everyone doesn't understand Bitcoin. Everyone's going to get pushed into stable coins. And so that plumbing and tooling is more than likely going to be like dollar stable coin wallets before it gets to BTC. But an example of where uh to your to your question is when you get the the bot going out to create a lot of these accounts, there's a lot of capture to like make sure that it's not a bot. So you either have to go log in or you have to do like screen share so you can help it. But then there's these third party platforms that will take Bitcoin to do it. I think they pay a human uh to go do it. And so while it was doing it, he's like, "Hey, like you know, that's going to take some time. I can build you the wallets, but maybe you should just, you know, set it set it up real quick because that takes you 30 seconds. Um, and so then I was like, okay, well, build me uh let's download Bitcoin Core and then let's also uh set up a Bitcoin wallet and then a Lightning wallet, go look at the SDKs that exist. And then it started to like build that. And so I haven't gone to it yet, but I just need to get the addresses and I'll go deposit a little bit of BTC in those addresses and then let it go run. Um but yeah and anybody that does this one big learning is uh really just do a prompt to understand optimization because like for a lot of people listening to us we use claude and really claude is at the very like highest levels of the frontier models by the way I knew nothing about this [ __ ] like I'm just like one week into any of this but so anyway so like the claude at the frontier especially like I think it's 4.6 six opus. Point being is like you don't need all of that and you don't need a lot of like it'll spawn sub aents and those sub aents uh you can just kind of like calibrate the the way that it spins these things out that you can just save on the amount of tokens you're using cuz I like flew through uh API credits yesterday and then I was like oh [ __ ] because I I was just like in this other mental model of using claude for just regular like searches. Um so anyway that's just something to call out. >> Fascinating. Liam, anything you're thinking about there that you because I fig >> What were you saying, Michael? >> No, I just didn't know if you had anything um that you had a question or any notice. I just figured that it'd be easier if you guys had thoughts on like experience versus if I had a because there just too much. I don't I wouldn't even know where to start. No, I think it's a fascinating thing. And um yeah, I I don't know um if they'll actually like I would like to just be a complete optimist and say that they're only going to use Bitcoin, but the reality is it's probably it may be a little bit of a jump for them to only be sitting in Bitcoin just given its volatility over time, especially when it has like only a certain amount of capital. So, I I really am interested to see um how often it will go in Bitcoin and stable coins or other just native currencies of the internet and and what it will really use in order to um both hold and spend money over time, too. I um I'm really following this closely. >> Yeah. Real quick before we wrap, um I don't know if you had anything else, Brian, but there was there was basically the DPIN. I don't know if you guys have followed this, and I just thought it was interesting because um I saw I saw this a couple weeks ago. It was a fund for $62 million and effectively DPEN is like just decentralized uh tokens for like real world infrastructure. So it's like this blending of like tokconomics uh but for like real world is like helium was an example of this and I thought yeah if you go Google what was it say like telescopes and other like decentralized infrastructure I think anybody like following the space already knows that you don't need to uh put a token to any infrastructure like bitcoin is the token that would uh provide the incentives to run it and there's a lot of really good writings that I do the the meta analogy is the centralization around servers whether it's like Facebook and you you can see how like Noster plays that role or like even Netflix on the centralization you're paying somebody to like route that data to different servers and then having to route it back to you where it does make sense on a long enough time horizon to push the data as close to um the edges because that is the quickest most efficient way to route that data and then you can incentivize that via payments and then it's it's uh calibrated via tokens not having to pay via monthly like this is understood. It's just topography and internet and we're, you know, probably decades because the internet's relatively new. Point being is in that world of understanding, it's understood that like yeah, Bitcoin will just do that because that's the natural money. But it was funny because Deepen raised his funds and then with Smani stepping down this past week, he had to leave with like one of the things he's still interested in is like Dpen and it's just like fascinating because while the world is still under waking up to like crypto's BS, they're just going to replay these like different tokconomics and things that you're attaching it to. Uh I just thought it was fascinating to to see it in 2026. Um people still get excited about something like this. >> No, I mean and this has kind of been around for a while. Like I remember back in 22 when I was uh still at Coinbase like it was kind of heralded as the next narrative in the broader crypto space. Like after DeFi summer like it was like oh everyone's going to be interested in in deep and all of these different networks. Um and I was always very skeptical of it because all of them had a token and there's a line right in this article here. A lot of what you've seen in the last three years are deep projects that have launched tokens before they have anything. They're launching tokens on the basis of hype and on the basis of an idea. And so, yeah, I think you're I think you're spot on that if people build these um types of infrastructure networks that just use Bitcoin as the base layer uh as the unit of value, I think that could make a lot of sense. Um, but I don't know if anyone's gone down that path yet or if people are still just um >> hyping token or just dollars like stable coins because I think that's the big problem is like if you're how do you like me interesting sort of uh mental model. Sorry, I think we we kind of over overlapped, but I was basically saying agreeing with you and effectively saying like it's the streaming of capital, whether it's stable coins or Bitcoin is what you need and they built tokens because they think that's what people want, but you're effectively just meter metering the financialization and the utilization, right? Because like some of these things I think are capitalized with these tokens and then some of them are paid for it. It's all comes back to incentives, >> but it goes back to like well what are the things of money that everyone accepts >> and like it's just a funny it's a crazy thing where $62 million woke up and said yes we're just going to like need tokens for every piece of infrastructure. It's It's very interesting like so. All right. Good stuff, guys. Fun one. Good luck. Good luck in the shower. We'll see you later. >> Thanks, guys. >> Thanks. >> Thanks for listening to this week's episode of the show. 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