Joe Carlasare (Partner at Amundsen Davis LLC) and Bitcoiner joins me to share his legal expertise and opinions on:

  • Why you shouldn’t expect the Bitcoin spot ETF soon
  • The SEC Ripple decision
  • SEC Binance and Coinbase
  • Bitcoin and stablecoins
  • Macro thoughts



Stephan Livera links:

Podcast Transcripts:     

Stephan Livera 00:01:39  

Joe, welcome to the show! 

Joe Carlasare 00:01:40  

Good morning, Stephan. How are you doing? 

Stephan Livera 00:01:42  

Doing well? I am, yeah. Excited to chat with you. I think there’s a lot of things going on in the space. I appreciate some of your takes that I’ve seen, at least on Twitter and things like this, so thought would be good to chat with you. Do you want to just give a little bit? Of a background on yourself for people who don’t know you. 

Joe Carlasare  00:01:57  

Yeah, absolutely. And again, thanks for having me on. Definitely a lot going on. So it’s Joe Carlasare, I’m commercial litigator and partner with the law firm of Amundson Davis. We just switched names in Chicago. I am a Co-chair of our cryptocurrency fintech and Blockchain practice group. Also sort of a amateur macro thinker and investor. I’ve been investing in capital markets since I was trading with a custodial account with my father in the 90s, so I’ve definitely been through a few cycles on my own, managing my own money and. Helping friends and family, but definitely someone who’s interested and passionate about Bitcoin. I have had some of the earliest litigated matters in Cook County, Illinois, involving Bitcoin involving custody and getting orders regarding the turnover of assets. So definitely somebody who is passionate about this space and I’m it’s an absolute pleasure to speak with you and given your background and knowledge in the space. So thanks for having me on. 

Stephan Livera 00:02:51  

Well, hey, thank you. Thanks for saying that and. Yeah, I think you have a lot of interesting perspectives and obviously the legal expertise that you can share also I think one area that’s interesting is this whole ETF idea, right? So obviously there’s been this big narrative recently of Oh wow. Look! Black Rock and these big they’re going to do a spot ETF and it’s going to be quote unquote, physical ETF. And it seems to have been a big Hopium pumping narrative, and it just seems like what I see. On Twitter and what I see and when people are talking about it, it just seems there’s so much Hopium about it. What do you think is more the reality of It? 

Joe Carlasare 00:03:26  

well, you can’t say that an entity like Black Rock filing is a negative, right? That’s clearly, The brand that comes with it, the prestige of the institution as a whole filing, that’s a positive and that alone coming out and signaling to the marketplace that yes, we support this through the filing through making a registration statement which they previously hadn’t done that as a positive. But you have to really go back to structurally what was the impediment. Towards an ETF being approved and you start from the standpoint that there have been many such registration statements filed with the SEC, the SEC has denied all of them. And currently the SEC is in an active litigation with Grayscale. I don’t know if you’re familiar with the case, but up on up, it’s up on appeal right now and the position the SEC has taken is that well, we have confidence in the future ETF, the future structure because there’s surveillance sharing agreements with the CME. We know how those contracts are traded.  We don’t have confidence at all in the underlying spot market why that is germane to the Black Rock discussion is because in the Black Rock filing, which we get into, there’s an attempt at trying to overcome what the SEC’s concerns are. We can discuss whether it’s going to be sufficient or not. That’s sort of a whole separate question, but what I would say is that for me, from my standpoint, I look at structurally, has there been a market change? The answer is no. There’s no structural market change. Has there been a form change in the filing? Yes, there is, but the question is, is that going to be sufficient? So, you know, you really have to separate those two things. You have to separate out that what you were talking about, which is the Hopium over Black Rock. You know the masters of the universe filing this, of course they. Get it approved. I keep seeing these, you know, reports that, you know, they’ve gotten 500 plus ETF’s through that. So, this one’s gonna be no different. They’ll get this one approved as well and. And I’m a little bit more hesitant on that because this is a very different vehicle. It’s a very different marketplace. Bitcoin is, you know, distinct and dissimilar to a lot of other ETF’s that have been approved in the past. In fact, all of them. So, I really am just cautious, OK? I’m not. I’m not a negative on the ETF. I definitely think we should have an ETF. It’ll be positive, but you have to really just pump the brakes a little bit, because really what you’ve seen is you’ve seen the only reason why things have changed is because someone else has slapped their name on the application. And by the way. Like all the other applicants, basically pivoted and adopted similar structures, and they filed the same thing. And I will tell you this one thing I can for certain is that if the SEC were to approve one of them, they’re not just going to prove they’re going to prove several of them in mass is going to be a shotgun approval process. So it won’t just be Black Rock. It will be numerous ones. And even the ones that get denied, all they have to do is change their paperwork, effectively change the structure of their ETF. And they’ll get the same green light. The SEC cannot pick and choose favorites. In other words, we won’t have a situation where there’s a single spot Bitcoin ETF in the United States. 

Stephan Livera 00:06:17  

Yeah, Interesting. And you were touching on this earlier around structural, what has structurally changed and what has not structurally changed? So, could you explain for us what are you referring to there? Is it the number of exchanges, the liquidity of them, the amount that are onshore this offshore, what do you mean when it comes to structure there? 

Joe Carlasare 00:06:34  

It’s a great question and you start from the benefit of having the heard the arguments in the SEC versus Grayscale appeal, right? This is on appeal. And there’s very prominent lawyers that are arguing this case in the appellate courts, basically saying the SEC’s denial and refusal to allow us Bitcoin, spotty theft, that’s arbitrary and capricious, meaning there’s no rational basis for why you would allow a futures ETF but not a spot ETF. So, because that’s the argument. Stephan, what the SEC has had to do, they have had to go through and explain just why they think these two markets are dissimilar. Meaning the spot market from the futures market. And what they basically come down and say is listen, our job is not to prevent fraud in marketplaces. That’s really not what the SEC. It’s not. There’s no way to prevent all fraud and manipulation in marketplace. Our job, is enforcement right to be able to come in after the fact, detect market manipulation, detect spoofing and other ways of manipulating. The actual order books and we can’t do that with the spot market. We can’t understand what’s in the spot market because the majority of the liquidity in the spot market is ex United States outside United States. So, the SEC’s argument is, until there is a market of sufficient size that has surveillance sharing agreements that we can detect and monitor fraud. Until that occurs, we’re not going to be able to approve a spot Bitcoin ETFs so that they’re basically just telling you that’s their test. Their test is a market of sufficient size, so the next question logically, if you’re trying to meet that standard. You say, well, how do we get to a market of sufficient size? What does that mean? And the SEC has actually spelled this out in their briefing in the appellate court. They have said that a market of sufficient size is effectively 1, where if someone were attempting to manipulate the marketplace, they would necessarily have to trade on that exchange. So, let’s unpack that. Little bit what that would mean effectively is that if someone were truly trying to bounce Bitcoin around and you know jack it up $10,000 and drop it $10,000, they would necessarily have to trade on that particular exchange to affect the spot Bitcoin market. So, let’s apply that to the filing by I shares by Black Rock what the filing by. 

Joe Carlasare  00:08:47  

BlackRock, I share as is which is the same entity. Essentially, they are filing and claiming that their surveillance sharing agreement with Coinbase and the NASDAQ that would be enough to meet the SEC’s test. The market of sufficient size where there would be someone who would need to trade on it. I don’t know how that meets their own the. SEC’s test, I mean, you’ve got in terms of volume global volume, majority of it is offshore, majority of it is in places like Binance and these other exchanges which are black boxes, and we don’t know what’s true or not true about their order books and Coinbase. If you take their percentage of the global volume, global volume, spot volume, I think I was looking at some data. That showed it was like less than 10%. So if you were a market participant and you were trying, you were just, let’s play an exercise. We’re trying to manipulate. Spot market, would you have to trade on Coinbase? Probably not. Would you necessarily have to go on there? I don’t think so. So, I don’t think it meets the SEC’s own test. Now we can debate whether the SEC’s test is wrong, Or it’s supported by the law or it’s good policy. I tend to think it’s not any of those things. I think it’s poor policy, and it’s a misreading of the appropriate sections of the Exchange Act. But from just a market structure standpoint, if that’s the test, I don’t see how the I shares filing meets. I could be wrong, but that’s just my reading of it. 

Stephan Livera 00:09:59  

Yeah, And then even from a US perspective, let’s say Kraken or cash app, even like there are other big US exchanges and brokers who maybe there’s nothing, you know nothing to be said about them either. And I think to what you were saying as well, it seems a little odd now. Maybe the CDC doesn’t care about this, but it seems odd that. We have physical spot Bitcoin ETFs in other countries, but not in America, and so is it just. Do you think that maybe the regulators in other countries were maybe a bit? Or lacks or what do you think is going on there? 

Joe Carlasare 00:10:35  

Well, I think there’s two things going on. Number one, I do think there’s different laws that apply in some of these states in in countries right outside the United States, they’re applying standards in the from the in at least in the case of the SEC that are very heightened. And this is the argument that. Grayscale has been advancing in the appellate court that you’re misreading and applying this heightened standard to a commodity for no reason. It’s arbitrary and capricious right and that basis is that like it’s a misreading of the law, effectively you’re misreading and misinterpreting the law. That argument is probably not going to fly for the simple reason that Congress gives the SEC a lot of deference. OK, there’s been some recent cases that have sort of pulled that back, particularly the Supreme Court case about deference to. Particular federal agencies, but just from a concept standpoint, I think that’s the main reason between Canada and the United States and why some are getting through, and some are not getting through. The second reason I think is that they’re very focused on precedent. Right. And if you are going to approve a Bitcoin spot ETF, OK, then the question becomes OK, we’re gonna get applications. We know we’re gonna get applications, but for a whole lot of other quote unquote digital assets, digital commodities, other things that are gonna try to get through and get their own spot structures, body to have structures in place. So, I think with the SEC is trying to lay down the groundwork force until there is a market for these things that we understand, and we know and we’re comfortable with and we’re comfortable that there’s consumer protection. We’re not going to let it through, and I think with Bitcoin there clearly is a robust, liquid deep market, right? I mean you. We can execute trades with minimal slippage for, you know, 8 figures without moving the market very much. The problem, I think from their standpoint is well, how does that apply to other assets, and we don’t want to set a precedent where suddenly we have to approve an Ethereum ETF, we have to approve, approve a Cardano ETF for all these other things out there. Because if we don’t. Apply the rigorous standard of a heightened market. Then anyone who launches a token that has some liquidity at all could probably get it through for a spot ETF. 

Stephan Livera 00:12:43  

Yeah, and when it comes to surveillance and surveillance sharing agreements, can you elaborate a little bit what exactly does that mean? 

Joe Carlasare 00:12:50  

Yeah, so it can vary depending on the institution. I know that the CME has, for example, very robust sharing agreements where they’re preserving data, they’re flagging suspicious activity trading that’s inappropriate and they’re tendering it over to the regulator. So, they’re working hand in hand with the SEC to say this looks a little funky. This smells a little weird. This user is doing something inappropriate and what that does is that allows the SEC to come in, review the case and potentially bring in enforcement action or the CFTC as applicable, right? The problem is that in this particular circumstance right, the majority of the volume and this is just the fact and as much as I’m passionate Bitcoin or I just admit it, you know, because it’s true. Theory of liquidity and volume in Bitcoin is outside the United States. So, you have to start from the standpoint of if you’re a regulator and you’re concerned about quote unquote, manipulation of the price, how do we know it’s robust trading or it’s not or it’s Binance trading its own customers? I mean there are serious allegations, particularly in the SEC versus Binance suit about how buy Binance had these you know in house desks? That we’re trading against users without even without their knowledge. If that’s happening in mass across most of the Bitcoin volume. That’s clearly concerning, right. And I can just tell you anecdotally from someone being involved in the space and I’m sure you’ve seen similar things, it is very frustrating, and I’ve had clients that have come to me and. Had issues with this where you’re trading on major exchanges and you see these Darth Maul Wicks, right where it can bounce up, you know? $2000 and go down to $2000 in a very short period of time. And you have to wonder what’s driving that price action. Where is that coming from? There used to be old accusations against one of the major offshore derivative exchanges, about how they would do that trade against their customers and stop hunt and literally just tap their own customers for liquidity. You have to at least acknowledge that there’s a possibility that that’s occurring in the Bitcoin market. 

Stephan Livera 00:14:44  

Yeah, for sure. I think you’re right there. It’s definitely evolved a lot over time. And as you say. There is a relatively low fraction of global Bitcoin trade based in the US. So, then I guess that also raises the question, does that mean the US number has to go up relative to the rest of the world before the SEC would be comfortable with approving a spot ETF? 

Joe Carlasare 00:15:07  

So, there’s three ways right that I see a path forward to getting this spot ETF which, by the way I’ll state again for the record. I don’t want my position to be misinterpreted. I really want to spot a Bitcoin ETF. I think it would be great for a lot of reasons. So, the way I would map it out, There’s the main way to do it is exactly what you said. Very easy if you get a ton of volume and liquidity into United States for spot purchases. If you were to do that and say let’s just throw out numbers, say all of the US based. Changes you named a bunch earlier, all of them amount for 50 or more percent of spot volume. OK, in that hypothetical world where all the US based exchanges amounted to, you know, the majority of the volume and they had agreements with the SEC surveillance sharing agreements that would report data and suspicious activity. In that environment, yes, there would be a green light. I think the SEC would say that’s enough, we’re comfortable. These are US based exchanges. We know who’s running them. We have agreements in place and the applicant for a spot at the ETF can actually tender those agreements and show. Here’s what we’re talking about. Short of that the other way I think it gets approved is just a change in policy, right? There’s nothing that would prevent. The SEC from actually pivoting and saying we’re not going to apply this test anymore. We think there’s sufficient liquidity in the markets. We don’t think that this standard is correct and part of that may come from the grayscale versus SEC suit. OK, so I mentioned earlier there’s a suit that’s going on and one of the things that was again giving me pause about the approval chances is that. If I were the SEC and I were facing a potential loss in the appellate court in the Grayscale for SEC case, I would and at the same time I intended to approve the Black Rock ETF. What I would do in that situation, Stephan, is I’d say, OK, we’re gonna make a filing with the Appellate Court. We’re going to say this is moot because we’ve changed our policy on this. We’re going to allow. spot Bitcoin to come in. In other words, you wouldn’t. You would save the SEC, that embarrassment of a loss just coming after the Ripple case. You’d save them the embarrassment of the. That by just telling the court don’t rule on this, we’re withdrawing the our denial. We’re effectively letting grayscale convert. We’re going to let Black Rock through. We’re going to let anyone else through and this is the announcement and change of policy. So, change in policy change in liquidity in the United States or the third thing, it is conceivable theoretically that you can get some of these offshore exchanges if they were to. Really want more liquidity in the space they could voluntarily tender some sort of agreement and subject themselves to. The US regulators in in terms of sharing data, that’s probably the least likely scenario, but it is possible and you should put it on the table as something, or if Binance truly wanted this to get through they could, you know, show what’s behind the books here show the trading activity, share it and comply with US regulators. 

Stephan Livera 00:17:48  

I see. And so, as you boil all of that down, it sounds like. You are. You believe it’s unlikely to happen soon but going to happen eventually. It’s more a question of when a US spot Bitcoin ETF occurs when one of those three events happens, let’s say. 

Joe Carlasare 00:18:05  

There will be a Bitcoin spot ETF sometime at some point. I strongly believe that the question is when. And in my view the genesis behind the Black Rock filing is really the SEC versus Grayscale case because I still I think there are some folks that are bullish on the fact that grayscale may prevail They may get some ruling from the court that there was an arbitrary capricious distinction that the SEC is applying A heightened standard without precedent Under 6B5, I think that’s might not be the right section, but one of the applicable section of the approval process. They are applying a heightened standard, so if that is the case, if the heightened standard is really not with good support legally, and the court says no, we think you need to take another look at this SEC. It’s an easy hedge. For BlackRock, I shares to make a filing like this and as well as the other entities Stephan, because basically what they can do is they can say listen, the SEC has just gotten kicked again in court. On the Grayscale case, we have an application in line, so we’re not going to miss our chance to get early action early approval, right? Because this stuff does take time, it doesn’t just you know get approved overnight. 

Stephan Livera 00:19:17  

Right, and as you probably would assume, it’s maybe there’d be like a winner takes most kind of dynamic here that if you are one of the most well known Bitcoin spot ETF’s. You get a lot of the trading volume and you get obviously the fees. So maybe that’s why they want to have that put that one in there and have it ready to kind of be ready when the SEC in the broader market. Is ready to take it  

Joe Carlasare 00:19:39  

Well, yeah. I mean, Look at the futures as an example, right, they’re the majority of it. I think the Futures ETF volume is still on BITO that’s the in terms of ETFs, right? That’s the more liquid volume that’s being traded on BITO that ETF. There were other futures ETF’s for Bitcoin that were approved, right, but I think its branding is really important with ETF’s. As you may know, you know from study markets, you’ve got, you know, the many ETF’s that track the. P500 but they all have varying degrees of liquidity and varying degrees of you know, market penetration. So that’s going to be a big issue, right? But I guarantee you there will not just be one Bitcoin spot ETF, there will be. Numerous ones. 

Stephan Livera 00:20:18  

Of course, And when it comes to the SEC’s actions against offshore exchanges, as I’m sure you’re following closely, things going on recently like the SEC Binance lawsuit, I’m curious if you have any thoughts on, you know if that sort of changes the dynamic like, let’s say, the SEC successfully goes after finance and. Maybe get some kind of serious penalty against them. You know, does that then even change the dynamic and maybe make it more US centric? 

Joe Carlasare 00:20:49  

Potentially, I mean so let’s talk about these two suits very briefly. So, there are two suits out there that I think are not getting enough attention. In my opinion. The coin base suit and the Binance suit, we’ve kind of been wrapped up in the ripple suit recently, but in both. Those suits to find there’s parallel allegations, OK, that they have many theories that they’re raising but in both suits the SEC has taken the position that Coinbase and Binance US are not authorized or not registered to operate as exchanges in the United States. So, let’s just take that and unpack it. Number one, keep in mind that what I just mentioned earlier about the I shares in the Black Rock filing at the core of their entire premises of why this will get approved is this notion that well the surveillance. Sharing agreement with Coinbase in NASDAQ that that is enough to get approval. Well, if that’s true, how can the SEC at the same time in their enforcement division ignore the fact that they’re saying, well, this exchange in and of itself is not authorized to operate in the United States. I mean, I that seems like an inconsistent position, either you’re going to say in improving the ETF with BlackRock, you’re going to say this exchange that underpins the surveillance sharing agreement. This is a solid, robust exchange. It’s liquid and deep and has everything we need to put us at ease. In approval. But you’re saying it can operate in active litigation. Those two things cannot coincide. The same goes for Binance. I mean their theory against finance, like I said, is copy and pasted in both suits. They say Binance US cannot operate in the United States because it doesn’t have proper registration and it’s not a broker dealer. It’s not a valid clearing house. It can’t engage in exchange related activities because it doesn’t have. Compliant regulation. So, I think those are inconsistent. You can’t have both of those, one of those arguments has to fail. Either the SEC is going to lose in its case against Binance and Coinbase on that issue. And potentially you get the spot Bitcoin ETF, or they succeed. And if that is the case, I don’t see how spot ETF as filed by BlackRock gets through but the larger question is can this suit against Binance? Can that affect the overall crypto market? And I would say potentially because what the allegation is in the Binance suit. Is that there was commingling between the US based entity and the foreign entity. Why is that significant? Well, if I’m a Judge and I am trying to figure out is that exactly true? What’s there commingling? Was there assets just shifting back and forth between Binance US and the international? What do I have to do? I have to allow discovery from Binance on the entirety of finances operation in my world. If you’re a litigator and there’s commingling of assets. Anywhere there was a potential money trail that becomes discoverable, that becomes something where the documents have to be produced and in the Binance case I will. I’ll go on record saying I predict that one point where it really comes to a head is when the international entity is going to be forced to turn over records that show their potential holdings. At that point if I’m CZ in the Binance crew I cannot live with that order because they’re so guarded about what information they have and what they’re releasing that I think that it will be. It will present serious risk to them, potentially systemic risk to them, because who knows if they have the assets to back everything they claim on behalf of customers, there’s reports that they’re on. You know the under collateralized and they have obligations out there that exceed their actual holdings. So that’s a big question, right. So at some point. They’re going to fight that really hard now. I’ll tell you in the motion practice we’ve had so far the focus of Binance. The Binance team has been preventing discovery and preventing production from the international. They really don’t want to have to turn over anything international. They want to focus on the US based repository of information Binance US. 

Stephan Livera 00:24:35  

Yeah, that’s interesting and really good context around what’s happening. Certainly as you, as you say, like there’s been rumors going around that maybe there and have the assets that they should have or that maybe they haven’t been strict about segregating the customers assets from company assets and that’s also another whole aspect I guess while we’re here as well, I know people talk about the idea of market structure. And if we all, if you’re looking into the. Parallel of financial markets, there’s this idea that the exchange should not necessarily be the custodian in, you know, normal assets, right, not Bitcoin. Do you believe that a similar market structure will eventually come to Bitcoin that Bitcoin companies will not be able to be both the exchange and the custodian as an example? 

Joe Carlasare 00:25:19  

Do I believe it? Probably, I think that will be forced upon the market at some point. Do I think that’s a good thing? Not necessarily. And for a variety of reasons, we can get into, but I can just tell you that there’s still a lot of angry people in, high level circles that have had conversations with about what happened with FTX and what happened with other exchanges? So, I think you haven’t seen the end of that. The fallout of that will continue to come. I think that if the SEC is not successful and the CFTC also has a suit against Binance, by the way, the folks don’t talk about. But if those if our regulatory enforcement agencies are not successful, I think that’s the greatest motivation. You could have for Congress to act. I mean, if you for example in this SEC versus Ripple decision which you know many in the ripple crowd are championing. And as a huge victory, which it probably is, is a significant victory, I would say to you’re gonna be. Fair if that Holds and there isn’t reversals on appeal and there isn’t alternative case law that develops that gives the SEC more ability to control the market. It’s very easy for them to go and say to Congress we need some sort of bill. We need some sort of package to take care of this. And if you remember what we were building towards for several years now was some omnibus crypto bill that was going to get passed. I think that there was plenty of folks that. SBF was marshalling on the hill and then there was a huge lobbying effort to try to get some big crypto bill package through. There’s also a recent bills that have been promoted. I think what you saw is that after FX blew up and this is the overall theory on what’s occurred basically the last year after it blew up, I think there was an outcry to do something and do something now and that we can’t wait for. For legislation. So that’s why the SEC. happened to have this huge, you know, tsunami of litigation that I’ve called it for the last 6 to 12 months, right? They’ve really ramped up their filings and who they’re going after many years of doing nothing. I think that all comes back to FTX and SBF and a lot of people with their egg on their face. And I think the politicians that were associated with SBF, they didn’t want to pursue crypto legislation at that point because they were afraid that. You know they have. They’ve got egg on their face from supporting him and being close to him and taking his money and those sorts of things. The opposite may happen in the near future if the SEC continues to suffer defeat. And in an inability to handle the market, you may hear outcry from the Elizabeth Warrens and others on the hill. To say we need a bill now because consumers aren’t protected and they’re getting hurt. So how that bears on your questions about this, the market structure, the custodians versus the exchanges, I think you’re going to have every aspect of the exchange activity in the United States. Eventually regulated. If the SEC fails in these suits, I think they’re going to be omnibus bills that put in clear guidance. And I mean you know how when Congress gets involved, they make a what should be simple solutions? They make it entirely too difficult and very, very onerous. And I think that’s going to change the entire market structure and what it may do it, if it may just tell major liquidity providers, you know, we’re just all fleeing. The United States. We’re just all getting out and the similar example is to, you know, what happened with bit license in New York. Tons of companies just said we’re done. We’re not. We’re not operating here. We’re gonna leave, and I don’t think that’s good for Bitcoin or quote unquote crypto either. I don’t think that’s a positive for everybody. Just flee the United States and operate offshore because it will get worse in terms of, you know, the shenanigans. 

Stephan Livera 00:28:38  

I see, so I’m curious then, if they were to, well, let’s say hypothetically the SEC were to win some of these suits, let’s say they win SEC against Binance SC and Coinbase. Do you think that itself could also drive a lot of the volume offshore? 

Joe Carlasare 00:28:53  

Yeah, absolutely. I mean. So you have to really and it pains me to say this as a Bitcoiner because I really don’t believe in many of the other project, if not all the other projects  But you have to really look at the role that crypto plays and it’s interchange with Bitcoin, like crypto is a is a huge source of liquidity for Bitcoin. When you when a lot of these altcoins. Which are boom and busts right. They never come back. They pull in the newbies, they pull in the retail, they allow the VC’s to have early exit liquidity and they pull in that capital. And I think a lot of that capital does end up in Bitcoin eventually. So why is that relevant here? Like I think that if these companies can’t operate here and they’re pushed overseas, you’re going to continue to see a fragmented market where the US is basically very, I would say, hostile towards the entire thing, the little lump in crypto. Bitcoin, everything. They’re very hostile internationally. It’s where it’s all playing outside the purview, US regulators and then US retail has to sort of skate this very difficult path to get access to this through Dexes or through other means. And ultimately, I think that hurts US consumers. I don’t think that’s a I would much rather them be traded if they’re going to do this and much rather be trading on US based exchanges for the simple reason that you can bring suits against these entities. OK. In the United States, if you’re overseas outside the jurisdiction United States, good luck ever seeking any relief against. These folks. 

Stephan Livera 00:32:08  

Right, and so, I think that’s also brings up this whole debate about what which some people say. How have some of these crypto coins and tokens have they sort of distracted people from Bitcoin and that you know, what would the world have been like if more people had just come straight to? Bitcoin, but also a related question is stable coins because Bitcoin used to be sort of seen and I mean personally, maybe you and I think of Bitcoin as our unit of account, but for a lot of people they are still stuck in a U.S. dollar mindset and for that reason they are, let’s say shifting to using stable coins and U.S. dollar as their way of getting money. Around across different exchanges and so I guess that also is kind of in the air about if the US government, if regulators go after stable coins really hard as maybe they have done with say BUSD, then maybe some of that volume actually does come back to Bitcoin in a paradoxical sense. I’m curious, what do you think? 

Joe Carlasare 00:33:00  

Yeah, I mean, it depends on what you mean by go after really hard, right? I mean you can easily see a scenario where I think you at the US says we want stable coins to register and go through certain limited processes and once that gets through that would be very bullish, right. You know for example without naming any. There are stable coins that are ostensibly on paper, fully backed by treasuries and cash and cash equivalents, right? Those particular types of stable coins, if there was some sort of clear approval process, clear ratification that this is, you know, this is enough that it’s not going to draw the ire of. US regulators. If that were the case Stephan, then I think that would be hugely bullish for that particular stable coin, right? If there was a compliant way to get a stable coin through that, everyone could go to bed at night and have clear confidence in that the US regulators have stamped it, sort of, you know, this is OK. This is good. Then I think that would be a major source of liquidity abroad. For that coin it would, it would have some confidence to the marketplace. And that could, I think, give a lot of confidence to Bitcoin because, you know, it’s very difficult if you’re in the developing or emerging markets to withstand the 20% down swings in Bitcoin when you have very limited savings anyway, right, you’d much rather hold dollars to reduce your volatility, and that’s what you’re ultimately trying to do. You’re trying to reduce your volatility. You just don’t have that much money. To swing through a 50% or 20% downturn, but to your point though, there’s limits to that, right. And I think that if somebody got it clear and compliant, a clear and compliance stable coin and that was approved by the United States and there was a bill that came through Congress that said, here’s how you do it. Here’s the approval. Here’s the regulators you need to get registration for. That would open a lot of doors internationally. A lot of capital internationally because of that confidence behind it. But still as we as we’re it’s constituted right now. A lot of these are just private actors using self-enforcement rules trying to give confidence to the market, trying to publish audits, to say, here’s what we have. If other ones have not published audit, so we don’t know if what they have is truly back. So again, the failure of Congress to act is really just causing problems for these folks. 

Stephan Livera 00:35:11  

Yeah, and let’s talk a little bit about this SEC Ripple XRP decision as well. Could you give us a bit of an overview there from your perspective? 

Joe Carlasare 00:35:21  

Sure, so you start with the premise of what test was applied, which as many know from being around these circles before and being in Bitcoin the standard test for what is a. Security in the context of crypto has been the Howey test, right? This has been applied in various decisions so far and really what Howey is it’s an implied contract. It means that effectively, even though there’s no formal contract between various part parties where the courts will. The contract, which will effectively transform the transaction into a security. So, you start with the premise that Howey has always been sort of a transactional analysis, and I think this is confusing to a lot of folks because when you and I talk about, well, that is or is not a security, we’re really talking about the thing itself, right? We’re talking about that share of stock we’re talking about that bond. That instrument, that financial instrument, is a security. Well, that’s true. And there are certain specifically delineated types of securities. What Congress did in, in other situations, they created what’s called an investment contract. Investment contract is a. Broad analysis, broad review of the transaction to say are we going to transform this transaction into security, and many had hypothesized for years. I’ll credit one of the other crypto lawyers I know quite well. Louis Cohen has said. Well, the thing itself in crypto is not really a security. What it is the transactions, the buying and the selling of these types of things, they can constitute a security and what happened in the SEC versus Ripple case is they said, OK, we’re going to apply Howey, Howey is the law. Howey is only law. We’re not going to develop some new tests. We’re going to look at specific transactions and we’re going to try to determine does this fall as an investment contract where we’re going to transform it into an unregistered securities offering or does it not? And the judge split. Her analysis in sort of three separate ways. She first says XRP. The token itself is not a security, it’s just alphanumeric cryptography it’s just basically, you know, numbers and codes strung together and that in and of itself is not an investment contract. However, the original sales, the institutional sales of the XRP token, was an unregistered offering. People were buying it within reasonable expectation of profit. They’re were gonna get the tokens and they were gonna rely on Ripple Labs. And the CEO to develop the protocol and that’s why they bought it, right? So that is an investment contract, the classic investment. The most interesting part of the decision though, is the next part, right? The Court then looks at what are called programmatic sales and what these were. Is Ripple Labs over a period of several years, they were after they did the initial ICO effectively and raised the token.  

Joe Carlasare 00:38:04  

They did this general regular sales automatic that accounted for about 1% of the daily volume. And the court looked at that and said these programmatic sales on centralized exchanges they are not investment contracts and that you may be scratching your head. How is that possible and the analysis the Court does is effectively this the buyers of those tokens number 1 don’t know they’re buying from Ripple. We don’t know who’s selling on a double-blind order book. Like, you know, Coin base or any other centralized exchanges. So they can’t reasonably expect that they’re going to enter into some transaction with Ripple just because they’re buying in a centralized exchange. The second thing, the judge says, is that, you know, from Ripple Labs standpoint, there were no promises or representations made about how they’re going to promote the token, unlike the original institutional sales where they. You know, the early money say, buy this token. Here’s how it’s going to 10X or 20X. There’s no direct communication between Ripple and the consumers buying on these centralized exchanges. So that’s a huge distinction in the courts mind. And then the court takes this analysis and says, given all this and applying to how we test, we think that it fails. That we don’t think that there’s a clear meaning of that. It clearly met the test, therefore this is not an investment contract. This was not an unregistered offering. So those programmatic sales. They’re OK. Now, The confusing part about that is that if you apply that logic to other tokens, it’s very easy to come to the conclusion that, say, any secondary market sales after the original launch of any token, that those are non investment contracts. OK, so if you’re with me so far, basically the lawyers have read that passage and said, OK, all we need to do is make sure that. The secondary market participants don’t know they’re buying from the original issuer. It’s done in a double-blind way and there are no representations about this token. The interesting part though, is the judge includes A footnote and the footnote creates even more confusion. The judge says at the bottom. This is not meant to suggest, and I’m paraphrasing, but that all secondary market sales of the token are not securities, so you start scratching your head and saying, wait a second, you just described how secondary market sales work and now you’re including a footnote saying that I don’t want to make any ruling on secondary market sales. That’s for another judge for another day that’s not properly. For me, so that’s created a lot of confusion because you can read. Need the decision in a very bullish way for altcoins. You could basically say all the issuer needs is to be careful with how the original launch is done They need to do that with a credit investors or use RegD or you know, make it so that that that transaction, the initial launch is. Not a security. And then you’re free and clear on the secondary market. You have to worry about anything. Conversely, people have been more cautious and said, look, you know that’s not really what the judge is necessarily saying. And there are other facts you could put together which may change the judges ruling and potentially the judge may have just gotten it wrong and it could be reversed on or looked at differently and with respect to other tokens, you’ll. Recall that there have been other decisions that have been made with altcoins where the judges have come down the other way. They supported the SEC’s position, not finding the protocol itself was a investment contract, but finding a more broad application, broad reading of the securities analysis. So, there’s a lot of gray area, there’s a lot of ambiguity. There’s things for both sides to argue, and this is how case law develops. 

Stephan Livera 00:41:20 

Yeah, Interesting because what we were seeing is a lot of people sort of jumping on a headline. Obviously, the more the crypto you know, Ripple XRP army types would say, oh, look, XRP itself is not a security. Oh, look, we’re safe. It’s all good. And then on the other side, you have people saying, well, hang on, what about the overall scheme? And what about certain aspects of it that did qualify as a security, as you said? And so, it’s kind of confusing to pick apart exactly what’s going on here, but anyway, enough about all coins I think, yeah. No, I mean not your fault. I’m saying I think that’s one thing. But at the. End of the day. It’s more about what’s happening with Bitcoin. Where is it going, and I think it might be interesting as well to talk a little bit back and forth about even if we did get a Bitcoin spot ETF in your view. Why would that be a good thing? Because some people have made arguments that oh, OK, there might be, you know, paper coins made or people kind of don’t know what they’re buying. But on the other hand, you could see an argument of OK, a lot more people are aware about this thing. Maybe it’s it. It gets that stamp. It gets that approval and maybe that then gets them to go buy their own self custody Bitcoin. So, from your perspective, why is it a good thing? 

Joe Carlasare 00:42:26  

I think a spot Bitcoin ETF is a is a good thing, mostly because of how retirement accounts and various other accounts have huge pools of trapped capital, and right, because we’ve been forced into this situation where many people have accounts in, and I run into this all the time with clients that are asking for advice. Which I can’t get financial advice. Of course, but I can. I can just sort of navigate the legal landscape and it. It is frustrating when people have put their entire nest egg, their hard-earned dollars into trapped accounts which force you to buy only certain assets, right? And this is the problem. When you have you know accounts that only have access to stocks and bonds and maybe some REITs. You don’t that you’re deprived of access to this asset class and for those people that would love to be able to buy spot Bitcoin. I mean, I talk to people all the time who would absolutely love to hold spot Bitcoin. And they’re forced to do 2 things. They either just ignore it in those accounts, or buy things like GBTC, which is a significantly diminished mark. I mean, it’s a, I would say a negative structure compared to other opportunities. And I think the spot beat Bitcoin ETF would give them an option. Again, it’s not going to be the same, you know, the equivalent of. Building regular Bitcoin holding spot Bitcoin itself, which is always preferable, but if you can provide that capital to come into the marketplace, I don’t see that as a bad thing. A negative thing. There’s always going to be risk with any institution, any custody provider that they don’t have all the coins or that the coins have been stolen, that that will always persist whenever you don’t take custody of your keys. So, you know, Bitcoin is like myself and you, we generally recommend people take their own ownership, take their keys, you know, manage it, learn it’s a little bit of a learning curve, but you’ll get there. It’s not too complicated for. I mean I have friends and family that are seniors that have helped set up, you know multi, you know solutions with them for that purpose. It’s not so onerous that knowing that you can’t do it, I would say it takes a little bit of a learning curve, but there are people that just can’t do it. For the account. So that’s why I think it’s generally for those people that it’s a good thing. 

Stephan Livera 00:44:35  

I see. And I guess also there is this idea people are talking about just saying, OK, just buy micro strategy, right and that’s kind of like a proxy. Yeah, obviously it’s not the same, but that’s like another way that maybe people who are stuck in stocks, they’re trying to get exposure. Even if imperfect. 

Joe Carlasare 00:44:50  

Yeah, no I mean, so, so micro strategy and nothing against Mr. Saylor, But I mean ultimately, I think you you’re pinning your hopes on a handful of folks in the leadership there that you know we know leadership changes over time, human beings you know they go their different ways, they change strategy, they’re fickle, right So you have an implicit additional risk factor where you’re relying on the MicroStrategy leadership not to have a change of heart. So if you’re building, you know a significant holding in micro. Reggie, you’re. You’re basically not only betting on Bitcoin, you also have the additional risk of betting on sailor and those around him to follow through with the Bitcoin strategy, which I hope they do. I think that they’re very likely to do, but it’s just another risk factor. You’re just taking out. So to me, if I were to have to pick between a spot Bitcoin ETF that has auditors that has lawyers that have lawyers, that people that look through all the paperwork. That, you know, they’re going to have insurance for that entity, you know, in their holdings. Depending on how it’s constituted, you can have varying degrees of confidence, but to me I would rather have that vehicle than in vehicle where I have the additional risk factor of a leadership team that may change. I mean, I would rather take a trust perspective where you have a clear, defined goal. This thing is a trust that’s holding Bitcoin, that’s what the ETF would be put together. That’s its goal. That’s its purpose. Doesn’t have any other commercial purpose of existence. 

Stephan Livera 00:46:12  

Yeah, and I totally fair I think because at the end of the day, the institution is designed in a different way. And as you said, it’s there’s multiple risks at play. Even if Michael Saylor and the team are, you know, fully orange build, you know it’s there’s this different risks associated I think one other area that might be interesting to talk about is just. The interaction of Bitcoin and stable coins, right? We’re seeing a little bit of I’m going to call it hand wringing a little bit because we’re seeing people sort of saying oh, look, people who are in let’s say poor. Countries and maybe they can’t afford to save and therefore look, they’re using stable coins which travel on Shitcoin rails per say, right? Like as an example, people are doing tether on TRC 20. The Tron you know chain, let’s say and so I’m curious what your thoughts are on some of this interaction and how to sort of. Proceed I think the way I’m seeing it. Is like that. We would promote the idea of Bitcoin. If you can save Bitcoin is great. Long term it’s a it’s a great long-term savings vehicle but for people who fundamentally you know because of the system they’re in because of the government because of the rules that they have to they’re or they’re trying to get some kind of USD exposure, that’s why they’re going for stable coins. So, I’m curious how you see that interaction of stable coins and Bitcoin and further growth and what are the main pathways for growth here? 

Joe Carlasare 00:47:34 

Yeah, it’s a great question and to be quite honest, I go back and forth on it because what I want to be and again, no one cares what I think. Individually, I think that people are going to do they’re going to do right, people want to build stable coins on Bitcoin. They want to build stable coins on Lightning. Do all these things. That’s the beauty of Bitcoin, right? Everybody can go forward and do that. And see what gains traction and see what gains market penetration. I do think there is demand for U.S. dollar pegged stable coin that’s clearly out there. You hear it all the time from Folks. So, if you’re a bitcoiner you have to basically do the analysis like this. You have to say, Is the demand for this thing in the marketplace. Is it sufficient so that we should devote? Resources to it and is that going to drive Bitcoin adoption? I think the answer is that probably yes, I think you can develop it on Bitcoin rails and on Bitcoin secondary. 2nd layers in a way that would actually get people to embrace Bitcoin. The downside is that if you start doing these things with stable coins on Bitcoin and interacting on secondary. What you potentially do is you potentially trigger more oversight from regulators. So I think the push and pull of it in my mind in a cost benefit, if I were advising folks trying to get in into that marketplace and trying to promote solutions to get it off Tron and these types of things, I would try to say, How can we do this in a regulatory compliant way and fully acknowledging that the regulation on stable coins is changing as we speak. Right, Like there’s been many bills that have been proposed and there likely will be a bill come down at some. So you really just have to be careful about how far you push it, because you don’t want to draw unnecessary attention. There’s already, you know, cross hairs on the backs of many other providers and other stable coin issuers because of the simple fact of what they’re doing and its threat to capital flows and so forth. So, I would just. Say, tread carefully and do it in the best way and again you it’s all the devils in the details, right? How you’re actually constituting that, you know, if you have a stable coin, if you have a stable coin on Bitcoin. Bitcoin as a protocol is inherently stable, right? We know exactly how many Bitcoin are out there. It’s fully auditable. But once you’re introducing anything exogenous to the chain, like a dollar, OK is some sort of dollar equivalent. What you really need at that point is you need some sort of repository for dollars, right? Which means you’re crossing the chasm back into. Banking sector, traditional finance, heavy regulation, money transmitter laws, all those sorts of things. And once you do that, you’re opening such a big can of worms. So, you know, I’ll defer to the more creative, brilliant developers and folks that are pioneering solutions on this to figure out a way to do it in in a very soft footprint type. Manner, but I can just tell you these things. The more complexity you add on to it, the more issues you will have And I think that’s the beauty of Bitcoin. Bitcoin has made so brilliant with its simplicity that it doesn’t have a lot of these issues. It’s much more clear cut. 

Stephan Livera 00:50:37  

Yeah Interesting, And I guess I can offer a few reflections on that. I think there’s some aspects of it where we can’t stop them, right? So as a. Example, RGB or what used to be called Taro is now called taproot assets. Some of them are kind of we can’t really stop them, right? Like there’s just developers are making this stuff and there are people out there who might try it, who might try to put some kind of stable coin on these things and we can’t really stop them. So, I guess that’s one thing, but then we’ve also got other people who are doing a different approach. So, for example, stable Sats is an approach by the gallon. Name with Blink and there’s this idea of like a synthetic short and basically there’s no dollars. It’s just like going synthetically short. But the downside here is it’s custodial and there’s a little bit of, you know, you’re trusting that exchange not, you know, rub you, etc. And so there’s kind of the synthetic approach. And so I guess some of it is you can’t really stop people, but at the same time, maybe it is, we could argue that it’s like we’re having a smaller attack surface. If you just promote the idea of saving Bitcoin right, you don’t even try to do this stuff like you could just say look just. Hoddle, your coin and maybe there’s less reason that regulators and the government will go after you because if it’s seen like, OK, it’s just a little saving, it’s your savings. It’s like your digital gold. Then maybe there’s less reason that you know, you’re not inviting too much of the of the governor attention. 

Joe Carlasare 00:52:00  

Yeah, and then I think just from a macro standpoint, if you’re just looking at this, the effect this will have, let’s assume Stephan, that we have broad proliferation of stable coins. Well, in my mind, The who that’s most negative for are foreign governments, right? You’re taking away the money printer. Quote unquote from many foreign. Governments out there across the world that it’s going to be increasingly harder for them to service their debts when their own citizenry wants to hold the dollar. And what that does and in my view is I think that ultimately promotes a strengthening dollar. You know it, it’s very bullish for the dollar and it’s very bearish for every other asset and I think. If you get. That’s the general trend. I think this thing will take over the next 10 to 20 years, so. You will have coexistence between Bitcoin and the dollar and once people will get more comfortable with the digital asset like a digital dollar like a state, whether it’s a stable coin or a CBDC.  Once that takes flight and really strengthens abroad, I think it’s a very easy jump for them just psychologically to move to Bitcoin like this is all. Something as important and profound as money, which plays such an integral role in our entire. World it. Will take time for folks to transition to Bitcoin. I’m very bullish on Bitcoin long term, right? But the I sort of always have a sort of. A cringe reaction when I hear these things that you know we’re going to go to Hyper Bitcoinization in the next two or three years and Bitcoin is going to be at, you know, $20 million a coin. I think that would be a very difficult world to live in if that truly did happen, it would be a very negative world in the short run, just because people didn’t have time to adjust to a huge, profound shift in. In global monetary networks.  

Stephan Livera 00:53:40 

And it also might drive a lot more custodial use than we would like, if maybe hyper. Critically, Bitcoin users in the network can agree to, let’s say, upgrades. Things like APO or CTV, and maybe that helps enable more non-custodial use. Maybe it that you know on a longer time horizon could make it more decentralized in that way, but of course we don’t. We don’t get to choose these things, right? We don’t get to choose when it happens. It could happen tomorrow. For all we know, obviously unlikely, I think it’s more likely that it’s. And to be just like we’ve seen before, I think we’ve seen cycles before. We’re going to see cycles happen in the future and I’m always a little skeptical when I see people say things like, oh, it’s the Super cycle, we’re not going to have a bear market again or this is it, this is the final one guys. No, I don’t think so. I think we’ve got, we’re gonna have this natural kind of, whether it’s four-year cycles or not. I don’t really care about that, it’s more just that we’re going to see the human herd mentality come in. All of a sudden, and then we’re gonna see them kind of come out and we’re gonna see a few more of those. And so, it’s more just like how do you navigate those without getting wrecked right from a personal perspective, from a business perspective, how do you survive? That’s probably the key. That I would see it, but I guess turning to kind of our you know, more macro thoughts, I’m curious if you have any thoughts on you know things like where rates are going, is inflation coming down, do you have any, you know just off the cuff opinions? 

Joe Carlasare 00:55:03 

Off the cuff, I’ll just tell you that I think the easy sort of disinflation has sort of has run its course at this point, barring now, the big caveat, you always have to say is barring a credit event, right, If you get some type of credit event at this. Point that could really seize up in the credit system, the credit apparatus United States, which I think there’s some evidence to suggest in the senior Loan Officer survey and others where they’re tightening standards, but you haven’t had anything extreme, right? And I think the concern coming out of SB, one of the reasons why you saw rates like come crashing down after SUV and. Bonds really get bit hard is because people thought that the SB could trigger a system. Comic credit tightening that was significant. I mean, even Chair Powell came out and said some of the pressures that it’s very hard to measure what the fallout from SB is, are the credit markets really going to seize up and banks are just going to refuse to lend. What I will say, depending on your perspective, maybe a good thing or bad thing, but that is not materialized right? You still have OK-ish Lending. Out there. There’s some data that shows recently that there’s been, like I said, slight tightening, but nothing to the extreme where you’re seeing, you know, credit origination fall off a Cliff. Now, so from my standpoint, I think that continues to sort of suggest that we’ve got a road ahead of us and one of the things that I think is most puzzling is why. You haven’t seen certain markets respond to these elevated rates and what I think you have to pull under. Hood and look at is actually when companies are going to have to roll their debt and there’s some great charts floating around. I’ll try to throw up a few on my Twitter if anybody’s once this podcast comes out, but they show that there’s a ton of junk debt that needs to get refinanced in early to middle of 2024, and then it escalates and ramps up. Really all the way through 2025 that’s going to be a very difficult period. And what I think is interesting. That you don’t really want to wait until the last minute to start rolling that paper. You really need to sort of give yourself a runway. You don’t want to be forced into it, and I think over the next 12 months or so you’re going to see a lot more companies that are forced and including. I’ve talked to some of my clients about this. They’re forced to have to accept these higher rates. In other words, they had a long runway. Of low rates, they took out a lot of debt and the short-term rate increases just haven’t affected them. And I think if people are being honest, there are a lot of industries where they had excess and individuals, by the way, that had excess savings. That had refinanced over the last several years at very low rates and. The short term. Rate increases may have affected asset prices. We obviously saw that through 2022, but they did not actually affect, they haven’t yet affect and been felt by the overall marketplace. So, you know the old famous saying long and. Variable lags of monetary policy. I think we’re about to see the long lag finally start to hit the economy over the next year. Now that doesn’t have to mean some doomsday scenario. What that effectively means is it’s just going to slowly and steadily have cause unemployment to rise, and I think that it’s not going to be a rise in unemployment across all sectors that many are thinking. I think it’s going to be isolated to companies that are very sensitive to interest rates and you’ll start to see that slow trickle. But again, you know, there’s a lot in these situations, there’s always the unknown unknowns, right? And that’s the issue with the credit event. So, if you do get a credit event, this thing can fall off a Cliff very quickly. But for the short term, barring some, like I said exogenous event, I expect yields to slowly head higher. From here, you know closer to I think. What was it 10-year trading at? So like the 10 years at 380, you know it’s been bouncing around in this range here for a few months now. It hasn’t made a new high. The two year did make a new high right? Post SVB. It went above five 10, 5, 11, somewhere about there in the yield that that just tells you that, you know, we might still have a little bit of a runway. Year where before people have to roll paper and before the excess savings are in fact depleted. 

Stephan Livera 00:59:13  

Yeah, one of the questions that comes to me as well is for most of Bitcoins life, let’s say. It was in an environment where rates were coming down or rates were low, as rates are rising, we have, you know, people were saying oh look, bitcoins, bull run was only driven by low rates. But now we I guess we could say we’ve seen Bitcoin start to rise even in higher rates scenarios. I’m curious, do you think? That continues to play out. 

Joe Carlasare 00:59:40  

I think Bitcoin can succeed in any environment. The big difference is in the short run, is the leverage, right? So, one of the reasons why Bitcoin goes on these parabolic runs and why asset prices in general, I don’t care what you’re talking about. Real estate, stocks, whatever they go on these parabolic runs is really just excess leverage in the system. If you’re talking about margin debt, that’s one of the things I look at frequently with the stock market. And as you create a higher cost of capital, obviously that prevents sort of some of those, it makes it more difficult for those parabolic runs to occur in, in any asset class, right. So, it’s interesting because with Bitcoin, OK, Bitcoin is trading in the same range it was last. June right around 30K roughly it. It’s had a lot more stability here, which tells me the following tells me that there are still some modest passive flows to Bitcoin. You still have some of the and there’s data on chain that talks about this. Like, you know the fishes and the smaller you know, whatever these crabs gobbling. 

Stephan Livera 01:00:37  

The shrimps that are accumulating and stuff, yeah. 

Joe Carlasare 01:00:39  

Yeah, shrimps accumulating. Now, if there’s a credit event, I would expect Bitcoin in the short run to struggle with this price action. However, if there’s not a credit event and you just have a general tightening in terms of the cost of capital, which you may in fact see is, you may see Bitcoin relatively stable and trend upwards over time. It’s not going to have a I don’t expect it to have a parabolic run. Unless there’s really the, quote unquote money printer, go burn or really major stimulus inflows. But that’s not necessarily a bad thing. You know Bitcoin having relative stability in a time where you know people are trying to get more comfortable with it and institutions are starting to play in it. They would much rather have that than Bitcoin. Bouncing from 100 to 20 to 15 where wherever it is you want to see the relative stability and inflows. So, to me, I don’t think low rates are a necessity for Bitcoin to perform well. I think it more it’s more of a question of overall liquidity conditions, which in a tightening liquidity environment, I think Bitcoin could struggle. But that again, what happens after they tighten liquidity? Comment you have a credit event. You have some sort of recession, and you have more liquidity coming in and most folks that have day jobs, they can’t time all this thing. So, I always tell friends and family, you know, with Bitcoin, don’t you? You shouldn’t time it there. There shouldn’t be. I’m going to try and get it at the bottom of the liquidity cycle. I’m going to try and sell it at the top of liquidity cycle. It’s not worth it. It’s too difficult. And if guys that are focused on this is their full-time job and they still get it wrong, so don’t mess around with that. Just understand over time with increased liquidity, which necessarily has to come in a credit-based system, Bitcoin should do well. 

Stephan Livera 01:02:15  

Yeah, I think that’s a great argument for. Just, you know, just accumulating, you know, as long term savings and I think that’s a great way to put it. And so look, I think it’s probably a good spot to wrap up here. So before we let you go, Joe, where’s the? Best place for people to find you online. 

Joe Carlasare 01:02:31  

Yeah, So I’m on Twitter @JoeCarlasare, sorry if you have a litigated matter. You know, I represent a ton of minors. Contract disputes, breach of fiduciary duty, claims, issues with exchanges. Feel free to reach out if you Google my name, my law firm Amundsen Davis will pop up and you can always chat with me about any issue. I’ve worked it to where about half my practice now is Bitcoin centric related in the. Industry. So I’d love to go 100% Bitcoin at some point. If folks keep wanting to have legal representation and also if you don’t have litigated dispute. I have very sophisticated partners that can help with most transactional issues as well, and I work alongside them where there’s a Bitcoin related issue just so I can bring my knowledge base to it. So thank you so much for having me on and. I really enjoyed it. 

Stephan Livera 01:03:15  

Thank you, Jeff show notes are available at Thanks for listening and I’ll see you in the Citadels. 

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