Weekly Crypto Check-In

Robert Swarthout: 00:11

Welcome to another episode of the weekly crypto check-in recorded on August '35. I'm your host, Robert Swarta. I'm joined by my cohost, Andres Sanati. How's it going, Andres?

Andres Sandate: 00:20

Hey. Good, Robert. Good to see you again. Hope this sweltering humid August heat we find ourselves in here in Atlanta isn't wearing you out too much. Eager for fall.

Robert Swarthout: 00:32

Yeah, eager for fall. Today's not too bad, but you're right. It has been kind of rough all over the last week. But we're inside, that's the good news. So we don't have to worry about that recorded podcast.

Robert Swarthout: 00:44

We could talk all day and then we don't have to get back outside.

Andres Sandate: 00:47

That's right. That's right. That's good to see you.

Robert Swarthout: 00:49

Well, we can jump in here. So our first topic is from the treasury is it Vicente? I forget how to say his last name. But basically US Bitcoin holdings, he was talking about that. There's been a lot of conversation in really more so just questioning about how much Bitcoin US holds.

Robert Swarthout: 01:09

We talked about it an episode or two ago about how The US did release their crypto. You know, the task force had this thing about bringing out white paper, not white paper, a review to the president. That did. It did not include anything about Bitcoin holdings. We still have not heard anything about that.

Robert Swarthout: 01:26

But the treasury secretary was on I think it was CNBC. And there he was talking about Bitcoin holdings and he I don't know if it's a Freudian slip or is this a true slip up? But he said that The US would not be buying Bitcoin which admittedly that is my belief. But others believe that The US will be buying it. And then he kind of later corrected on Twitter by saying that they would look for budget neutral ways, pathways to explore expanding the Bitcoin reserve.

Robert Swarthout: 01:57

I I I just yeah. I mean, it's a it can be a soapbox topic for me, so I'm gonna step off of it before I even get get going, but here we are.

Andres Sandate: 02:07

Yeah. Look. We we we find ourselves reading headlines about The US potentially taking a stake in Intel. You and I have had these conversations on and offline about The US are picking winners in the crypto space or in the private sector. I think it's a slippery slope once you go down that road, you and I have talked about.

Andres Sandate: 02:29

Yeah, it's all about sort of transparency and what's the signaling strategy here from? Think from the White House and from I guess from a sense standpoint, right? It's kind of where I'm looking at this. I think there's a lot of. Interplay here with what's going on at the Federal Reserve, what's going on with the economy.

Andres Sandate: 02:54

Obviously, there's a lot of geopolitical headlines and, you know, I I am no expert on the economy, but, you know, I I think that there's certainly a motivation. It feels like in in it you know, in DC from the White House to keep keep things as stable as we can right now. So, as far as, you know, the jobs, numbers and unemployment and what have you so that, you know, sentiment stays high. So I wouldn't be surprised if we don't get this Bitcoin report around what The US owns for some time.

Robert Swarthout: 03:29

Yeah. Agreed. And I think that, you know, actually, it's not a headline here, but I was seeing how some of the news today wasn't great about jobs and this, you know, like we're currently at the highest point of bankruptcy since 2020. Yeah. So maybe another signal that the Fed might cut.

Robert Swarthout: 03:45

I could see this administration waiting to do maybe pass through this report when when everyone's paying attention to better interest rates and everything else that might be following. So Yeah. We will see. But, you know, it was, you know, what I couldn't figure out and I kind of alluded to it in beginning when I started mentioning this one is, was it a what is a true slip up when he was on CBC or is it a free slip? It was one of the two and I guess time will tell.

Andres Sandate: 04:15

Yeah, I mean, now that well, was gonna say one last point. Now that, you know, crypto is on the ticker, right, at the bottom of of all these, you know, shows, and there's instant news flashes, and there's all this coverage of what's going on, you know, around ETF filings, etc. It's now almost like if you go on one of these shows, whether you're a CFO, a CEO, a government official, a regulator, you almost have to be prepared because this drives ratings. Like, they're gonna, the reporters, the people on the desk are gonna ask whether it's probably the topic necessarily that they've come on to discuss. Everybody wants to kind of know like what's your take on, you know, whatever's making news at this time.

Andres Sandate: 05:00

So I it would be interesting to know what is it like a slip up or was it something, you know, that he was signaling?

Robert Swarthout: 05:08

Yeah. Yeah. So moving on. Our next next topic man, it seems like every time I turn around there's not a lot of news. Obviously, if if you're watching this on LinkedIn or YouTube, you would see we only have six topics today.

Robert Swarthout: 05:22

And this is over the course of two weeks. I mean, August is quiet partially because the senate is on recess. But it's it seems like every other news item right now is something about stablecoins. Goodness. Over half or over half of our list literally is about stablecoins today.

Robert Swarthout: 05:39

But it's everybody wants to launch a stablecoin. Everybody wants to be part of a stablecoin. I just it seems like a bunch of me too right now. So I guess kind of breaking this down a little bit. MetaMask which is a DeFi wallet is set to announce a MetaMask stable coin that would be used on their platform.

Robert Swarthout: 05:59

And it'd be bridged to Stripe's Stripe new blockchain that Stripe is the payment process they're trying to launch. So that's number one. Number two, Circle recently announced they're like starting Circle chain. They have their own stablecoins. So that kind of fits in the same bucket.

Robert Swarthout: 06:17

And then, you know, I guess we can jump ahead to the to the two topics ahead. I mean, the state of Wyoming launched stablecoin. And, you know, they have a lot they're more blockchain forward, crypto forward out there which has been great. I did not see a stablecoin being issued by a state ever happening. I never really think about it, but it's still surprising.

Robert Swarthout: 06:39

And yeah, it's just it's, you know, a lot of news really quickly about stablecoins.

Andres Sandate: 06:43

Well, I yeah. I'd love to ask you as a sort of a follow-up with respect to the rush from enterprise and government to, I guess, capture and seize seize the moment, issue a stable coin. Have they outlined a lot of the use cases for the stablecoins along with announcing plans to either create one or launch one?

Robert Swarthout: 07:09

I haven't seen much about that much of anything admittedly. It almost seems like, you know, in in another tweet about stablecoins that we could kind of talk about here is somebody hypothesized that it's the year 2030 and you just paid with USDC and Circle Chain but the merchant only accepts Stripe USD on Stripe Chain and BofA. And then they want to transfer to their BofA account and BofA only accepts BofA USD. So we're end up in a world with a bunch of fragmented dollars. I mean, seems to be where we're headed.

Robert Swarthout: 07:42

I'm sure it'll likely shake out in a better way. Yeah. Gonna be messy to get there. It's gonna be messy for a little bit. Right?

Robert Swarthout: 07:49

In assuming that they're all similar, like why do we need so many? I think it really comes down to especially the banks. They wanna have their stable coin with their branding on it. They don't wanna be using a JPMorgan chain coin. It'd be of a, I guarantee that.

Andres Sandate: 08:04

Yeah. Yeah. No doubt.

Robert Swarthout: 08:05

Right now, dollars don't really have any brands to them. They're just US dollars. So

Andres Sandate: 08:09

Yeah. I I think I saw something about how retailers, let's take a Best Buy or say an Amazon, major national retailer in The US, how they would potentially utilize a stablecoin. I could see the headline that I read about it being sort of tied into a customer's rewards program, and they could utilize those points and rewards, if you will, the way that we think about using airline miles or points that we accumulate on our credit card, etc. But yeah, when a state issues a stablecoin, you kind of got me stumped still because we're in the space a little bit, but it just speaks to the gulf between the people that are really at the forefront of innovating for the sake of innovating. That doesn't mean that it's needed.

Andres Sandate: 09:00

It doesn't necessarily mean that it's going to survive, but it just it. I think it speaks to the fact that this is a. A very big, broad, wide space where a lot of stuff is being, I'm gonna say thrown at the wall, but it's being created and how much of it's going to scale, how much will be around in a year, two-three years, how much of it has application to customers and consumers Way more questions probably for the average person than answers.

Robert Swarthout: 09:30

Yep. And it's I think for the in the short term, we're likely to only be getting more complicated, more messy. And then at some point it will shake out. I think around the time where rates really come down and it's not as sexy to have a stable coin. I would imagine that's about the time because it's Yeah.

Robert Swarthout: 09:50

Won't be paying it won't be throwing off as much cash because you know, as a stable coin issuer, you are legally not allowed to pay any sort of interest type situation to a holder. Anyways but you know, it's, I don't know, stable coins are all over place. So here's another example. We're gonna move on to our next topic. So bullish, that was the recent IPO that happened since our last recording.

Robert Swarthout: 10:17

So we'll kind of talk about their IPO first. They they IPO'd on August 12, I believe. The IPO was 20 x oversubscribed. K? Just a little.

Robert Swarthout: 10:29

Offering was upsized from 629,000,000 to 990. And they had planned to price at 32 to $33 of share. They ended up opening at They ended up pricing at $37 a share. So little bit higher, about 20% higher, but they opened at $90 Who failed in this Andres? Are the bankers just screwing these companies or like, why is there such a delta in what the price is and what it opens at?

Andres Sandate: 11:02

Yeah, I think there's a lot of different theories. I'm no expert on IPOs, but I think there's something about pricing it at a range where there's there's access. Let's call it for for investors. And then getting that what what they call that, you know, first day pop. You would think that there wouldn't be as much of a delta.

Andres Sandate: 11:31

It seems like there's more, I guess, egg on the face of the banker when there is this big pop the first day. It certainly is an environment where there's a it seems like there's a lot more tailwinds around technology companies, crypto companies, etc. But it does feel like you, yeah, you maybe left money on the table, right? From the standpoint.

Robert Swarthout: 11:57

Over 100%, just to be

Andres Sandate: 11:58

clear, in this case. From the company. So yeah, it's probably, it's probably out there. Like, if we if we dug in, like, I'm sure there's some pretty good research and, analysis behind why the delta is so big. But, yeah.

Robert Swarthout: 12:14

Yeah. The, so I guess the the second half of why we're talking about this is they received a portion of their proceeds in stablecoins. It's the first time ever an IPO has done this. And Ripple was the one that tweeted about it. I think maybe they've a couple different types of stablecoins, but ROUSD was one of them.

Robert Swarthout: 12:32

And but they received actually, no, a bunch of different stablecoins. I'm looking at a list here. Yeah. It it's kinda cool. Obviously, they're a blockchain company, so it makes a little more sense.

Robert Swarthout: 12:42

But the they they arranged to receive 1,150,000,000.00 of the proceeds in in stablecoins. So they don't have to hold in the bank and they can send a wire very quickly. Think it's or or a a transfer very quickly, not a wire. So pretty cool.

Andres Sandate: 12:59

Yeah. For sure. Yeah. Definitely definitely new and different.

Robert Swarthout: 13:03

Yep. Maybe they're gonna go they're gonna go on Polymarket and make some bets. Who knows? We'll see. Moving on.

Robert Swarthout: 13:13

Well, we already talked about Wyoming so we'll kinda skip this over this one. So an executive order Trump signed roughly a week ago basically guaranteeing fair banking for all Americans. And it really was a signal like don't debank the crypto industry again. And he basically, you know, basically pushed to have regulators be reviewed and also there's some punishment, you know. Again, this executive order, this could go away and if we have a different president in three and a half years.

Robert Swarthout: 13:43

But, you know, this is not the environment that we likely would get debanked in. We've already kind of been through it. We know what it looks like. But hopefully we are past that forever and we can kinda move on. I was this this kinda came out of left field because I figured if he was gonna say this, he would have said this, you know, back in April.

Robert Swarthout: 14:00

Why are we talking about this in August? So it's a little different.

Andres Sandate: 14:05

Yeah, I'm curious. I think we had a headline two shows ago about the lobby for the banks in The US. The American Bank Association had basically put put out like a stall tactic. Let's call it for authorization of a couple of bank charter applications from a couple of companies. Any update on that?

Andres Sandate: 14:27

And do you see this as like another? I guess just another stiff arm move if you will from the White House to the TradFi economy that you're not. We're not going to go down this path again where we shut down. Yeah. Force crypto into the backwaters or offshore, etcetera.

Robert Swarthout: 14:49

Yeah. It's a great question. I hadn't initially thought about this angle. It could be, you know, again, the the Trump family and their orbit definitely is in crypto. So this could be something coming from that angle.

Robert Swarthout: 15:03

That's not how I read this but definitely in second thought it could be. You know, and it wasn't just about debanking crypto. It's about coming up with political reasons to debank a set of individuals or companies in The US is really kind of the language that was used in it. Yeah. It's just all about like follow the laws, don't make them up.

Robert Swarthout: 15:25

Right. Another way that I saw somebody tweet about it.

Andres Sandate: 15:27

Is it is it around the notion of banks and companies can't pick who to do business with based on values, based on Right. You know, etcetera. Yeah. Yeah. They don't get it.

Andres Sandate: 15:38

Crypto is within this whole Right.

Robert Swarthout: 15:41

Executive board. Political beliefs, religious beliefs, or lawful business activities ensuring their access to banking. Right? So if if if this was just for crypto, then they could have been more obvious about it, but it definitely was received in the crypto news cycle as about like we have a little bit of, I guess, we have a little protection of sorts.

Andres Sandate: 16:02

Well, know, on a somewhat similar sort of vein, you know, several years ago. In asset management, there was this big big move into what what you know is known as ESG, you know, and the ESG movement was, you know, around environmental, social, and governance related frameworks, if you will, for investing. And, you know, it's adopted all across the spectrum around the world by different investors. Some are more E, some are more G, some are more S, right? But you don't hear as much about it in the quote unquote mainstream, and even you know some companies have just outright changed their whole.

Andres Sandate: 16:42

Let's call it asset management framework and have no longer or aren't as publicly at least, you know, stating that they are going out and investing along ESG. What I haven't done is I haven't gone and looked at the you know the impact from investors to those moves like because ultimately our investors investing in those funds or are they investing in companies that don't have ESG related mandates? You know, because there was a time when people were, you know, seeing these mainstream asset managers say, you know, carbon neutral funds or, you know, bringing environmental funds, etc. You just hear less of that right now. But around the same kind of idea is, you know, there's a lot more top down sort of emphasis right now on like that.

Andres Sandate: 17:33

That is not gonna be as much in vogue, if you will, from the corporate sector. Yeah. You know? I think we

Robert Swarthout: 17:39

talked about BlackRock winding down or really shrinking their ESG departments. Gosh. Maybe three or four months ago. Wow. Around the same time that there was news that they were hiring a bunch of crypto.

Robert Swarthout: 17:50

So I don't know if they just changed everybody's, job title or or how that worked. But, yeah, it's, you're right. It is not in vogue. And my good friend Casey Smith, he if you wanna get a soapbox topic going for him, ask him to talk about ESG.

Andres Sandate: 18:05

So Yeah. Yeah. Well, I didn't say it was popular and it necessarily made money. I just know that, you know, asset management management and Wall Street, they've never been a product or strategy they wouldn't try to create if they could sell it and make fees. On the subject though, I wanted to ask about my my train of thought is slipping me and I know we have one more topic.

Andres Sandate: 18:30

So go to that one. Let's go to private assets and four zero one k's and it'll come back to me.

Robert Swarthout: 18:34

Yep. So Trump this is another executive order, but Trump signed an executive order easing the path for private assets and four zero one k's. Private assets could be anything from literally private shares in another company to being some people reading this as crypto maybe able to easily more easily get into a four zero one k. I think it can mean a lot of different things. And you know, what is not clear to me is you could do a self directed IRA right now and you could do crypto that way in limited ways but you could do it.

Robert Swarthout: 19:06

Four zero one ks is obviously I think we're out in the cold and there's probably a lot more fun sitting in four zero one ks's at this point. Oh, yeah. Across the whole, I guess, economy here. The you know, is there any other type of retirement account that should have been included besides four zero one k's? That's the one thing that I wondered.

Robert Swarthout: 19:24

IRAs already are there. So I think it seems like it's finished, but I wasn't sure.

Andres Sandate: 19:28

Yeah, I mean, I think the the nature of defined benefit and defined contribution plans, right? Like the defined benefit plan, usually that plan sponsor that retirement board has a governance structure and they'll decide what they can and cannot invest in. I guess if you elect to be an employee of that organization, whether you're a teacher, firefighter, public worker that has that defined benefit plan, could elect to have private assets. In many states, they do own a substantial amount of private markets assets, maybe not necessarily crypto. Although we have talked about that in a few instances where plans have revealed that they do have some crypto holdings.

Andres Sandate: 20:13

We talked about recently the fact that because of MicroStrategy, indirectly Vanguard became one of the largest owners of that stock. Because Vanguard is such a large asset manager, many people own default, if you will, MicroStrategy.

Robert Swarthout: 20:32

Yes.

Andres Sandate: 20:33

Whether they're in a four zero one ks or not. But yeah, I mean, it's qualified accounts. That's how I've always looked at these retirement accounts like qualified money. So I don't know about some of the smaller types of plans. IRA kind of scoops up all of them and then you have nine flavors of vanilla when it comes to IRAs depending on what they are.

Andres Sandate: 20:54

But then there's other things like Kiosan and other qualified plans. I just don't know the nuances of if this EO from President Trump includes all of that. This probably is the biggest category with the most assets, So it makes sense why they would go here. My follow-up question is on this EO is that your understanding that just because an executive order is issued doesn't necessarily number one, make it law. Just starts to create an opportunity, if you will, for industry to try to put in place, if you will, plans.

Andres Sandate: 21:33

But the regulators and all the players in the middle, don't they still have to?

Robert Swarthout: 21:38

I mean, they still gotta do the work. Right? I mean, has to be follow through. So I think it's a couple of things. A, it kinda sets a little momentum in place, especially if they get the regulators to do the rule making around it that they need to.

Robert Swarthout: 21:52

But also, you know, the momentum and just it also gives time for people to go lobby their representatives to try to get this, you know, turn something from an EO into a law effectively. Right? Yeah. So it'll be, you know, kind of back at the beginning and the whole thing with, you know, The US not gonna outright buy Bitcoin potentially. I mean, it could be a budget neutral way.

Robert Swarthout: 22:15

That's the way the president is saying it. But if Congress decides to write a law, obviously, they can try to pass that and then it becomes an issue for whether Trump wants to sign it or not or whoever the president may be. So it it can get there. It just takes longer, obviously.

Andres Sandate: 22:29

So Yeah. I mean, I think the the the headline around private assets allowed in 401s is in and of itself, including the crypto digital asset space, is a substantial bit of news if you think about it. Because for a long time, when you looked at these four zero one ks plans, they historically had a structure and investment allocation, which was mostly made up of stocks, bonds and cash or some type of government like securities that were almost the equivalent of cash, right?

Robert Swarthout: 23:09

Right.

Andres Sandate: 23:09

In terms of a defined contribution plan, like a four zero one ks. So if if in fact, you know, we do see over the next several years, which feels like how long it's going to take broader adoption, it'll be interesting to see what happens because, you know, BlackRock, for example, does a lot in private markets. They've made some big acquisitions we've talked about. Obviously, they've got the most successful ETF out there with respect to, you know, Bitcoin with IBIT. Yeah, Vanguard to a lesser extent, but a lot of the biggest traditional asset managers have been acquiring or partnering with these alternative asset managers.

Andres Sandate: 23:52

And so you have to think those acquisitions and a lot of that M and A activity that's happened over the last five years, ten years and will continue to happen is about growing fee based revenue, right? You're a publicly traded company and the higher fees are going to come from these assets that are in the private markets. And so this is kind of one of if you include private wealth and retirement assets of private wealth or private individuals is kind of the last, if you will, frontier for asset managers, particularly those that are doing private markets that they haven't been able to sort of penetrate. And a lot of that comes down to what does the Department of Labor have to say about this and what is the governance and you know, political will to to really see this happen? I personally think it does happen over time and individuals end up with more choice, but, still a lot to, to be worked out in the coming years.

Robert Swarthout: 24:53

Yeah, and be messy in the meantime is what it's gonna turn into.

Andres Sandate: 24:57

One of the headlines that I wanted to bring up, I guess a bonus one is, there's been this window, call it, opportunity, market opportunity for companies, technology companies, crypto companies to file to go public. The one that I saw this morning is the Gemini, you know, famous for its owners, you know, and founders that the Winklevi or the Winklevoss twins that they were, you know, that they filed late Friday an S1 with I guess the intention of going public, but they revealed some numbers which showed ultimately the news headline is that, okay, they are filing the paperwork to go public. They could always pull reaction to the fact that you know they're financially what we've have access to publicly? Just not as strong of a company, at least when you compare them to a coin base into a bullish or a crack in Like, what's your is this all market timing and and kind of being opportunistic when you look at it?

Robert Swarthout: 26:09

Yeah. And I think we're, you know, it's there's a chance that we would have never seen this one if we didn't see Circle and bullish go crazy. Right?

Andres Sandate: 26:17

Yeah.

Robert Swarthout: 26:19

Circle in particular. But what I would say is I've never viewed Gemini. Mean Gemini is a respectable business. Let me say that upfront. I've never viewed them as some like home run from a VC perspective.

Robert Swarthout: 26:32

You know, they existed. They got brand recognition but they've never like felt like they had any sort of like meaningful market share. And I would imagine that maybe somewhere in that s one. I haven't bothered to like dig through it but it's a I think we're gonna see more of these. There's some other like, again, they've done the hard work.

Robert Swarthout: 26:50

They've started a business. I don't wanna detract from that, but it's a it's there's gonna be more of these kind of coming along because we've seen some really crazy numbers from the ones that were out of the gate first.

Andres Sandate: 27:00

Yeah. Yeah. Interesting.

Robert Swarthout: 27:03

Yep. Cool. Cool. Thanks for joining us on this episode of the weekly crypto check-in. To stay updated on future episodes, you can find us in any podcast player by searching TITAN crypto capital or the weekly crypto check-in.

Robert Swarthout: 27:14

Take care.

Disclaimer: 27:14

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Disclaimer: 27:41

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