Miners Summit 2022 Interview: Michael Saylor and Natalie Brunell

well thank you so much to the bitcoin

miners summit for having us i'm with

michael saylor always an honor to speak

with you michael thank you for joining

me yeah thanks for having me natalie

well i guess we'll start off with sort

of the the price falling again with

bitcoin this week so what's your

reaction to the current dip in the price

and what it really means for bitcoin

mining companies

i think that the crypto industry is

going through growing pains and

over the long term it'll be a good thing

but in the near term it's a painful

thing

um

there's about 90 what is the

what is the number like 19 000

let me pull this up um

there are 19

839 cryptos on coin market cap right now

and uh there is one bitcoin

and that means there's 19

838

other things that are all thrown into

the same bucket

so everyone in the marketplace and

everyone in the mainstream media is

trying to figure out what's the

difference between bitcoin and ethereum

and what's the difference in bitcoin and

celsius and tara and luna and

d5 and

and uh what's a currency and what's a

stable coin and what will happen to

these things

and so at the micro level um

a lot of learning and rationalization

uh as the industry goes across the chasm

from the

entrepreneurial offshore

wild west routes

to the onshore

institutional

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public

public visage our public image is about

to become

and it needs to evolve and change in

order for the big banks and the big

investors and the big institutions to

become involved

and there's a lot of uncertainty

as it changes

i i see the industry is going is going

to a very critical transitional period

and then if we overlay on that

uh the macroeconomic environment which

is just brutally

painful right i think

today the nasdaq is down

362 basis points right now which is

which is uh extreme red right there's

extreme red across all asset classes a

big risk off day

swap rates are

leaping

and

so

that's a lot of stress

that's being placed on the entire

financial economic system

and in the midst of all that stress a

couple of breakdowns

uh one the famous one being tara but but

the secondary one being the celsius

breakdown that took place in the last

few hours

those are causing a lot of skittishness

and a lot of panickiness amongst people

they're short-term traitors or they

don't have conviction

if you're a bitcoin hodler

right then

then all of this is just volatility if

you have a long time horizon but if you

have a short time horizon or you're

trying to divine things week by week day

by day then

clearly a lot of anxiety in the air and

all of those things are a perfect

cocktail for volatility

well you know bitcoin is really the

phoenix that sort of rose out of the

ashes of our last recession our last

financial crisis so how do you think

bitcoin will perform in this one

especially versus traditional assets the

stocks real estate precious metals and

commodities

well if i uh if i look back to uh the

first of the year 2020 and i compare

bitcoin's performance versus

everything else

i think uh i think it's it's 10x better

than most conventional assets so so i

think it's already been doing very well

in the past few years i think it'll

continue to do very well and and the

primary driver is going to be education

as more and more people understand

what it is as they understand

a digital monetary network and they

understand

its status as a non-sovereign store of

value deflationary synthetic

bearer instrument right as they

understand that then it's it's going to

gain more adherence and it's going to

continue to monetize

it'll do it with fits and starts

well one would argue if you are educated

in bitcoin you're not selling so who are

the sellers right now

traders

right you i've classified all the all

the people in the market is five

categories you've got the deniers the

skeptics the traders the technocrats and

the maximalists

the deniers and the skeptics don't put

money into the market they just hate on

it

the traders

are the ones that are attracted by the

volatility of the market

and uh clearly they're having a field

day

today

if i look at binance the spot volume and

finance is six billion dollars which is

triple quadruple any normal day it's

like this is probably one of the biggest

days of the year if it's not the biggest

day of the year

so if you are a trader

then you want something with a lot of

volatility the trades 24 7 365

and they're going to trade the momentum

of it

uh the traders you know they'll they'll

trade it with with risk assets as long

as it's correlated to risk so today's a

risk-off day and they'll think it's a

risk-off asset and on risk on days

they'll trade it the opposite direction

at some point now the way they figure it

out is not through thinking from

fundamentals

uh fundamentalist uh that the

technocrats will look more at the

fundamentals and the maximalist will

look the most

i can almost think if you spend 20 30 40

hours maybe you can be a technocrat

investor and if you spend hundreds of

hours you'll become a maximalist

investor

but if you're a trader

they're not going to spend more than a

few hours what they'll do is they'll run

back-tested statistical models

and they'll say well we back-tested

bitcoin versus the nasdaq index and we

determined that it trades with three

times the volatility

or two times you know

the uh the amplitude and then they'll

adjust their models accordingly and

they'll look to arbitrage that

the traders have all the money in the

market right now because the maximalists

are all fully invested their dollar cost

averaging

the technocrats will uh will become more

prominent but right now the technocrats

are investors and all the tech investors

are are bearish they're all afraid

of everything right if apple amazon

facebook google are all trading down the

technocrats are in a bad mood and

they're feeling a bit uh skittish

so the people in the market right now

are the traders they're always going to

have more money

and less fundamental conviction

but the traders um

what they do is they provide liquidity

right there though

they'll uh and they will um

they'll expand uh the amount of asset in

the place and then at some point

uh

some fundamental investor

like you know some big technical

investor will go and buy five or ten

billion dollars worth of bitcoin and

declare it to be a big tech monetary

network that will move uh the chart

that will break all the models it'll

modify the models of all the traders the

traders will then go

oops it looks like it's negatively

correlated to this or it's it's

correlated differently

and then they will unwind their trades

or they will uh they'll cover their

short positions and that'll cause a

squeeze up so

uh you know when you're a young investor

you hate the shorter people that short

your stock you know when i was a when i

was an early ceo i used to hate the

short sellers

but um then i began to realize that

people that sell your stocks short are

are gonna buy your stock they've just

got it in reverse order

so people that short bitcoin will

eventually buy back bitcoin to cover the

short they've got in a reverse order

the danger is not the traders the danger

is having an asset that is of no

consequence to anyone

right that is not interesting

so the market's being driven by the

traders right now it's it's the most

exciting market in the world it's the

only thing you can talk about on

saturday afternoon it's the only thing

you can trade on saturday afternoon and

yeah in times of risk off you know when

everybody's bearish and they're and

everybody's kind of bearish right now

because of fed policy and inflation and

fears about the future when they're when

they're bearish they'll act bearishly on

the weekend and and they'll amplify that

but uh when that sentiment changes then

uh then it'll work for us in the

opposite direction

and uh even if it doesn't

i think it's just a matter of time

before more of the fundamental investors

uh come into the space

right there the the life cycle is going

to be the deniers will become skeptics

the skeptics will become traitors the

traders will become technocrats so the

technocrats will migrate to maximalist

in the same way that water flows

downhill

in the same way that people were

originally skeptical of using steel and

aluminum

and electricity

but 20 years later many of the skeptics

had you know buildings made of steel

with electricity in them

and they were flying in airplanes with

aluminum in it so

so their progress can be counted on the

only real question is over what time

frame is it is it 10 years 5 years or 20

years that it takes

and that's where

if you're a trader right the traders

kind of want to get it right

if you're a maximalist and your time

frame is is 20 years then it doesn't

matter to you right you already know the

answer

if you're an investor with the time

horizon of four years well maybe then

you're going to wait on the sidelines

until you think that

that you're within four years of hitting

your goal

if you're a trader their time horizon is

four weeks or four days and so

they're always going to be

concerned about taking a big commitment

no matter what

well you know bitcoin has been such a

beneficiary of this qe environment that

we were in for so long and obviously

bitcoin adjacent companies bitcoin

mining companies benefited from that as

well but now that we're entering into

this um this tightening mode

how do you see this really playing out

in terms of bitcoin becoming an

uncorrelated asset because right now

mainstream media says it's all

correlated equities are falling so

bitcoin falls it hasn't fallen as as

much as some stocks have i think it's

outperformed them hasn't fallen as much

as it has in previous bear markets i

think it's down in the 60 percentage

range as opposed to in the 80s uh 80

percentage range when it when it fell in

like the 2017-2018

bear market so when will it be a really

truly uncorrelated asset or an inflation

hedge

i think

this is the decade

that it um that it

institutionalizes so we're 20 22 right

now and

i think over the next eight years

you see it progressively every year move

from being a

speculative

you know risk asset

to a less speculative store of value

bearer instrument

it'll probably take that long to mature

um i got a set of milestones right

there's

they're they're the regulatory

milestones

uh

if fazbee addresses the accounting issue

and gives it fair value accounting that

would be um a step in the right

direction

that's one

you know one milestone forward if the

sec approves a spot etf that's a second

milestone if they approve a dozen is the

third milestone

if uh if uh senator lumis's legislation

uh gets finalized and approved and and

provides a sort of regulatory framework

for

cryptocurrencies crypto property crypto

securities crypto exchanges etc that's

another big milestone

i think the fdic uh providing guidance

to banks would be another big milestone

i think that um there's an entire class

of of traders that are entering the

market right now that are getting

comfortable you know every day you read

a story about citadel trading or goldman

sachs trading

two years ago even a year ago they

wouldn't have so as they get more

involved and as big banks offer coverage

like now you see bank of america and

citigroup and

others offering coverage of the space i

think that's another

milestone

so you'll see a lot of those kind of

regulatory milestones i think

a lot of the states as they start to

embrace bitcoin mining they create a

degree of clarity to it

and then you've got on the other side

the institutional investors and i think

that um

that uh

as you see investors take very big

public positions

in the bitcoin marketplace that

establishes a sort of sort of milestone

and as the bitcoin miners mature

and get stronger

and continue to come public that's

another milestone

so there's a

you know never-ending you know parade of

those milestones each one of them uh

seasons the asset class or matures it

and as you can see it's

it's uh two three four years of

excitement followed by another four

years

of people just working their way into

these positions

but i think by the time we get to the

end of the decade

you'll have

90 90 90 of the regulatory clarity

people would like and you'll see a much

broader base

of public companies and institutional

holders and and uh institutional

supporters and organizations uh that are

that are maturing or providing support

for the entire network

i didn't mention one last thing which is

the companies

like nida

or fidelity

right um you know

as they provide support for banks and

for 401ks and as they provide custom

custody relationships and banking

services companies like silvergate

as those companies start to offer their

applications

all of those things cause the network to

mature and stabilize and they reduce

volatility

and they

and they encourage

uh they encourage the public to

transition their view of this from a

speculative asset class to a store of

value network

yeah i know that's a great point i

remember your your tweet where you kind

of touched on the different tiers of

bitcoin the bitcoin network and these

different layers as they grow um but i

want to talk a little bit about bitcoin

mining and energy costs uh we had a cpi

inflation print 8.6 but energy cost

skyrocketing so there are a lot of

almost macro forces that are converging

that are against bitcoin miners energy

cost inflation obviously miners are huge

energy consumers so as the costs go up

and as the price of the asset and

revenues fall it almost feels like a

perfect storm so if costs keep going up

and bitcoin keeps falling how do you see

that playing out and how do they hedge

um

if you have antiquated

mining equipment

then

your uh your bitcoin mining is

electricity intensive

right so if you're

if you're running at uh 99 joules per

terahash

you need to buy a lot more electricity

than you're running at 30 joules per

tera hash

so the older mining rigs and the older

mining companies have to have extremely

cheap

equipment or sorry cheap electricity and

their breakeven points

right are um are different

uh they're lower yeah

at some point if you don't get one two

cent electricity

you can't stay in business the newer

mining rigs

have a much higher break-even point

because

they're much

less electricity or energy intensive and

they're much more technology or capital

intensive

so uh as

you know as this evolves

i don't think

i don't think that the

the increase in the price of energy to

consumers is a first order issue for

miners because most miners have

relocated to the edge of the power grid

and they're sort of running off of

stranded

recycled wholesale energy that nobody

wants

right that's where you would go if

you're a miner so if you're going to be

a miner you have to have these long-term

electricity contracts that lock in at

extremely favorable price

you would never sign 10 cents a kilowatt

hour contract you would go for two cents

or one cent

or you would look for someone that

literally wants to give you the

electricity for free because they see

other benefits to doing it

so

so really what happens is as the bitcoin

price comes in

and as the network gets more competitive

as the hash rate grows

if the if the hash rate doubles and the

bitcoin price is cut in half

it squeezes uh all the miners running uh

antiquated equipment or the al the third

generation equipment

um and they'll just get squeezed off the

network when their breakevens or when

their electricity cost you know is above

the breakeven point

and uh

you would expect that you know you

almost have like these bootleg miners

that are sitting in jurisdictions where

they're literally getting free

electricity like in china it wouldn't

surprise me that they weren't miners

getting literally zero cost electricity

they were given the electricity by the

province

as local businesses so occasionally

you'll see some of those businesses

continue on old equipment but if you're

operating in western europe or the or

the united states or north america any

any

maine western regime

then anyone running on obsolete

equipment is just going to shut down in

difficult times in really really good

times

if the bitcoin price skyrockets like

when it skyrocketed to 60 000 a coin

people actually do the opposite they

bring online antiquated bitcoin mining

equipment because the break-even point

uh has risen above their cost of

energy

and uh

then i'm not bothered by the network

dynamic because the network is in

essence uh self-healing and organic

and naturally healthy

uh when you take all this in the

conclusion you come to is

the network is is moving from being

energy intensive to being capital

intensive

but it's not any kind of capital it's a

it's a sha 256 hash capital or another

another way to say it is if you didn't

have

asics you would need a lot of

electricity

but the better the asic the less

electricity you need for exah

and in the extreme if you go out another

decade it'll be all about the a6

so the so the competitive dynamic in the

marketplace is shifting from

who can get the cheapest electricity

and where can they get it

to who can get their hands on the best

asics

right the best semi-conductors

and um

and

and then how fast will the

semiconductors improve

so if they improve fast enough right and

if they're good enough then uh

the electricity is less important it'll

never be not important i mean if i'm if

i'm looking at the the ways that you can

fail as a as a bitcoin miner

one way you can fail is you can't you

can't secure electricity at two cents a

kilowatt hour for the next decade

or

the the power provider renegs on their

deal like what we just heard about in

washington state

and they just jacked the price on you

right and that's happened

in the history of bitcoin mining a

number of times where they secure a

certain deal

if it's a short-term deal

well that's like kind of setting up a

restaurant with a one-year lease and the

restaurants are screaming success and

then your landlord triples the price of

the lease and you're screwed right

so short-term electricity contracts can

can undo you a long-term contract though

is only it still has counterparty risk

you could sign a 30-year contract but if

it's with a non-trustworthy counterparty

and they renege on the deal you're still

screwed so

the first challenge is secure the energy

supply

the second challenge is secure it in a

politically supportive jurisdiction

you can have the energy supply but if

the province or the country

triples the price uh that the tax or or

passes a anti-bitcoin law right you're

still out of luck so you have to

navigate that that risk factor as well

if you manage to navigate those two risk

factors and manage them

and and by the way you can't be 100

certain of anything right so that means

that if you're running a bitcoin mining

company you would be wise to diversify

your mining centers across multiple

political jurisdictions and multiple

energy providers

assuming

that you're going to get you're going to

have a counterparty

failure right someone is going to

disappoint you at some point and you'll

have to relocate your mining rigs or

relocate your operation

so you have to be thinking about those

two things but then the third thing

is can you actually maintain uh a modern

uh semiconductor infrastructure

if we get to equipment that is running

20 joules per terahash and you're on

100 joules per terahash you're not

competitive but what if someone comes up

with a five joule per terahash

you know a chip

or a one jewel per terahash chip

and so

there's that and of course there's the

countervailing risk that what if you buy

into a new vendor the promise you

promises you a ten tera a 10 joel patera

has chip and then they don't deliver and

they keep your money

so

so bitcoin miners are businesses

they really are the line of first

defense of the network

they are like the skin

of bitcoin just like your you know your

skin uh takes the infection first

and it's part of your immune system and

if i if if you didn't have a skin right

then the rest of your immune system

probably couldn't save you

bitcoin miners are that uh are that line

of first offense for the network and the

way that they defend the network

is the same way that a crumple zone in

your car defends your structural

integrity you don't defend the network

by being rigid you defend the network by

by uh crumpling or by failing

so you can see where you know where

certain jurisdictions turn against the

network like china

right and and so yeah we lost 40 of the

hash power for a while right and then

you can see when energy providers turn

against you and you see lots of examples

of defaults of bitcoin mining rig

manufacturers where they promise

something they can't deliver it

and the reason that uh none of this

is

none of this is really threatening to

the the bitcoin network in general

is because uh

the bitcoin miners are fighting a battle

to defend the network

four years into the future

so the network is is perfectly secure

now and it's possible the bitcoin miners

will

be attacked but bitcoin will be fine and

of course if all of the miners are

attacked

everywhere

consistently for a decade then we

probably have a problem

right but

if there's sort of if there's an

infection of the bitcoin mining network

and it's affecting five or ten percent

of the miners and it takes two or three

years to run its course

right the network simply you know

reconfigures itself

to better power sources to more reliable

semiconductors

and

to more reliable political jurisdictions

in order to maintain the security the

integrity of the network over the long

term

so

summary uh

owning bitcoin is easy

running a bitcoin mining company is hard

the bitcoin miners pay

in capital and stress

right and you know they they pay with uh

with their attention to duty

right

continual operational engagement

in order to provide the security and the

integrity of the entire bitcoin network

if you want a full-time job

uh fighting

in defense of bitcoin then you become a

bitcoin miner and if you want to retire

comfortably and not worry about your

money ever again you become a bitcoin

huddler and they really are two extremes

right in one one ecosystem

and and of course they they need each

other

but it would be a mistake to think that

owning a bitcoin miner is just the same

or as safe as owning the bitcoin it

isn't

right there there's potential upside and

there's potential downside

and uh

and it's

easily

if it's a thousand times as complicated

i might be understating it bitcoin

miners are securities

bitcoin is a commodity or property and

we say over and over again

securities are complicated full of risk

and and they're they're an investment

that you can lose everything or or you

can make a lot and you can you can make

the right decision

with the wrong timing like you could

pick the right miner but have bought the

stock at the wrong time and you can lose

money right that's the characteristic of

securities

and you're dependent upon the efforts of

others

that may that may delight you and may

disappoint you

whereas bitcoin is a is a property a

commodity and and you're really uh

you're investing in a much more

complicated decentralized ecosystem that

is self-healing

very true i always appreciate your

metaphors michael uh what do you think

is the most misunderstood aspect of

maybe the business of bitcoin mining or

that economy

the most misunderstood aspect

um i i think that uh

to the outside world uh

some people think that it's energy

intensive

and it's really not it's technology

it's a

it's and it's becoming more technology

intensive so i think the people don't

realize

that success is a function of

raising capital

to acquire technology

and it's also

if you're going to be successful you

have to be good at raising capital you

have to be good at

acquiring semiconductors you have to be

good at

building and operating uh bitcoin mining

centers

and you have to be very politically

astute

and and getting the support of

the public sector and also you have to

be very vendor astute at getting the

support of your

power provider your electricity provider

and so ultimately

all of those things are what make you

successful i think as a bitcoin miner

you know the outside view is oh bitcoin

is just secured by energy or secured by

electricity

it's it's actually secured by ingenuity

right and and entrepreneurial ingenuity

at that

i think the other

other misnomers are that

people keep thinking that uh

that this is about um

it's about doing transactions but of

course bitcoin mining is really about

generating security

and integrity

for the network

um

and uh and

another interesting uh

misnomer people don't they keep saying

bitcoin's not backed by anything or

they'll say it's backed by energy what

they don't realize is the bitcoin

network is really backed by about 20

billion dollars of special purpose

hardware proprietary hardware

proprietary capital

and you're feeding 20 billion dollars

worth of of energy

into that proprietary capital over the

course of four five six years

so

there's uh there's an extremely large um

a large amount of

hash capital

or or uh or computational capital

that the bitcoin miners secure and

provide

and

you can value that you could probably

value all the sha 256 hashing over the

next

six years

like the useful life of you could you

could sort of value the network over a

time horizon six to eight years and if

you actually calculated that value

how much money what's the replacement

cost of all the mining equipment plus

all the additional equipment which will

be installed plus all the electricity

which will be

will be acquired

you put all those things together you're

going to get to a number which is

somewhere between 40 billion and 100

billion dollars

something like that

and then you could ask the question well

so

if that is the security budget

of bitcoin then what is the security

budget of the next best thing

right and and um

you know if if you started looking like

that then i think you start to realize

that bitcoin really is unique and

irreplaceable

and can't easily be replicated like so

many people argue but um you know we've

also seen recent examples of bitcoin

mining operations

being harnessed to strengthen and

stabilize the power grid right in places

like texas we saw that this past week so

how important do you think of how

important of a role do you think bitcoin

miners will play just in terms of the

future of energy supply

i think you could think of bitcoin

miners as shock absorbers for the power

grid

right you would it would almost be

irresponsible for you to roll out a

power grid without without shock

absorbers or

or the like it just like it would be

irresponsible to create a car you know

without shock absorbers or or the

appropriate springs

i think that people are gonna are gonna

gradually understand this better

um

it's pretty clear that bitcoin miners

are strengthening the power grid

wherever they are

because

they're big buyers of marginal

electricity that has no other buyer

so they're they're increasing the

marginal revenues of the power companies

and and in times of stress like the heat

wave this week in texas

they're the one buyer that can power

down quickly and in an agile fashion

so if i was building a power grid i

would want uh to have a bitcoin miner as

part of it in the same way that you'd

you would want to put a battery

or a capacitor of some sort any

electrical system

in order to avoid um

wasting

energy

so

another phrase that pops to mind is

reservoir

every utility system

needs a reservoir i mean imagine having

a water system in a city and no

right which which means that you have to

exactly synchronize the water coming

from the external source with the

consumption of water and you can't deal

with any volatility

so bitcoin miners really are the

reservoir

of a power grid i'm hard-pressed to

think of another thing

that serves as a reservoir

of of power

and if i could think of another thing uh

it would be probably 100 x more

expensive or money like if i just went

and bought a huge battery of us

like skyscrapers with batteries in them

and i plugged them into a power grid it

would be fiendishly expensive

and batteries are fiendishly inefficient

and so there's no way that you would

want to use lithium-ion batteries as the

reservoir for a power grid for the city

of dallas

right and unless you're selling those

batteries right

that that company might like the idea

but

i think bitcoin miners are

are critical um and

they're going to continue to expand in

that way

and everywhere where there's a renewable

energy especially where people are using

wind and solar which are extremely

fragile

renewable energy

systems i think you're going to need to

pair that with bitcoin mining in order

to have any hope of uh resilience in the

network

well i want to talk a little bit about

just policymakers and their takes their

views on bitcoin mining there still

needs to be a lot of education that

happens in that realm this month the new

york senate passed the first bill in the

u.s that would ban proof-of-work mining

operations that two-year moratorium on

new pow mining projects powered by

carbon-based energy sources what are

your thoughts on that that's a really

hot topic in this industry what do you

want people to know

i don't think it's quite as bad as as

banning proof-of-work it's more like

wrapping a bunch of red tape around the

expansion of

a proof-of-work facility

based on a carbon electricity source so

it creates more headaches for the the

fossil fuel factories if if you're going

to do any bitcoin mining or bitcoin

expansion if you're going to expand a

bitcoin miner in new york the obvious

answer is you're going to do it with

renewable energy from this point forward

so it's more of a marketing uh debacle

for new york than it is and you know an

inconvenience for bitcoin because it

just it makes new york appear to be

unfriendly to bitcoin but but if you're

a miner operating

outside of new york and you were to

enter new york you would obviously only

do it with a long-term

contract with a renewable power source

and if you're in new york you're going

to have to you're going to have to

convert your growth toward renewable

power sources

i i don't think it was a wise

bill

uh for obvious reasons

and uh at the same time i don't i don't

think it's gonna have that much impact

one way or the other on bitcoin mining

and the rest of the world

and i think in time in time

you can expect that people are going to

fight political battles

most uh

most of these political battles are one

competitor trying to undermine another

competitor by getting some kind of

asymmetric rule or prejudicial rule pass

that that advantages them over their

competitor

this was just a minor i call it a third

order

example

of of some of the crypto proof of

stakers wanting to make life

inconvenient for proof of work miners in

new york but it's it's such a third

order thing that i i don't think it has

much impact long term one way or the

other and i think it's more important

for us to focus upon first order

issues

the first order issues are just

understanding the difference between

digital commodities and digital

securities

and the impact of of uh

you know legislation like the llamas

bill how how it will impact the entire

crypto industry

and even more important than the

legislation is

the most important thing is just

educating the general public on what is

bitcoin

and and why is it a rational thing so

so the education will drive intelligent

regulation and the regulation

of the asset class and the normalization

of the asset class will accelerate

institutional adoption

and in the periphery you'll see various

provinces jocking back and forth on the

periphery over these things

and

you can fixate on them but probably they

could be a distraction too if you're not

careful

i want to touch on that lummus and jill

brand build just a little bit more

because you've often said in public that

bitcoin will benefit from regulatory

clarity and when the you know altcoins

are deemed securities and right now

there seems to be more of an accelerated

push for that regulation we just had

that legislation introduced the

responsible financial innovations act

from senators lummus and gillibrand so

what do you see happening from a policy

perspective maybe in just the next year

and how will it really facilitate more

adoption from traditional banks and the

public companies and institutional

investors

well i i think that um

the world needs a clear definition of a

digital currency versus a digital

commodity versus digital security

and

and uh the world wants stable coins but

they want stable coins that act like

dollars that move at the speed of light

on computer rails

and so

one could one could say well maybe the

closest thing they have to that right

now is the circle coin of its circle if

it's fully backed

and tether is opaque so people aren't

sure because it's not clear what it's

backed by

and then

ust wasn't really backed by much of

anything

so

if there was um a fully backed

normalized stable coin that would be a

digital currency it'll have to

it'll have to meet banking guidelines

and so an fdic insured bank that issued

that thing would probably grow that

market by a factor of 10 to 20 in a

hurry it would go from 150 billion to

one and a half trillion or something

that will be good

because there's still a lot of people in

the crypto market that think that

somehow

bitcoin is a risky thing to hold as long

as tether might crash or as long as ust

might crash right and you know

maybe they're not wrong in the near term

over the long term

i don't think it matters but in the near

term when there's instability with um

a digital currency it creates

instability with a digital commodity

like bitcoin

the meltdown of um

of uh

terra

kind of introduced an entire generation

of crypto bros

to the idea that there is a difference

between a security and a commodity

everyone wants to treat these things the

same but i noticed people on on crypto

twitter tweeting that we need more

disclosure

from all those coin teams etc it's kind

of a laughable thing because of course

the whole point of the security is

securities have risk factors and that's

why you have to take the company public

and that's why you have to publish 100

pages of disclosures because the only

way

you can ethically and properly

promote a security is when you make full

and fair disclosures

so

i think these meltdowns will accelerate

the transition of the industry to uh to

appreciate that securities need full and

fair disclosure and and most of all the

crypto tokens are all securities

like 90 to say 99 of them securities