S1: With Bitcoin ETFs now active, you might be feeling slightly
S1: sheepish to ask what exactly is a Bitcoin ETF? No
S1: need for you to feel sheepish. We're going to ask
S1: the question for you as we welcome Patrick Doherty to
S1: the show. A teacher of digital assets at Cornell Law School, Mr.
S1: Doherty has contributed several books on securities regulation and new
S1: financial products. He was with the SEC during the Reagan
S1: Bush years and helped craft regulations, which are used today
S1: to sell tokens and compliance with US securities law. Asking
S1: questions sheepishly doesn't make you a sheep, just an inquisitive person.
S1: So join the herd at the Republic of Bad Cryptopia
S1: as we discover everything you wanted to know about Bitcoin ETFs,
S1: but we're afraid to ask on episode number 710. Of
S1: the Bad Crypto Podcast 54310.
UU: It's insane. Who's bad? And.
S1: I am feeling she is telling me how to vote.
S2: Man. Are you. Are you too scared to ask?
S1: Man, I'm too afraid to question authority. Hey.
S2: Very good. Well, welcome to episode number 710 of the
S2: Bad Crypto Podcast. We got a good one today, folks.
S2: We're talking about Bitcoin ETFs and all the things around
S2: that thing that you might not know about.
S1: And we're going to make it really sexy because Bitcoin
S1: ETFs can be you know this whenever you talk about
S1: financial instruments it can be really boring. But Patrick is
S1: not boring. And we are super sexy. So all the
S1: questions will be asked with more male music going in
S1: the background.
S2: Patrick Doherty.
S1: Oh, yeah. Oh, and stay tuned on the other side
S1: because all of the crypto bull dragons you guys bought them,
S1: they're gone. You own them. 24 of them are now
S1: in the firm hands of those who own a crypto
S1: bull dragon. And we're going to announce when you're going
S1: to be able to join us. Only those 24 are
S1: going to be able to join us for a special
S1: two hour meeting with myself. Sir. Lord Travis are going
S1: to be there. So we're going to share that with
S1: you on the other end of this interview that happens
S1: to be coming up well right now ETFs ETFs ETFs
S1: Bitcoin spot. It's all the rage right now. Of course
S1: we've covered this in the form of the latest news
S1: on our show. But what does it all mean. And
S1: here with us today to help break it down we've
S1: got an Irishman. His name is Patrick Doherty. Yes. And
S1: he is. He conceived and directs the digital assets practice
S1: of Foley and Lardner LLP, based in Chicago. He also
S1: teaches digital assets at Cornell Law School. He's got a
S1: whole litany of things that he's done, including working for
S1: the SEC during the Reagan Bush years, all those years ago.
S1: And he's got a lot to say about what these
S1: ETFs might possibly mean for the future of crypto, Bitcoin,
S1: our economy and blockchain in general. Patrick, welcome to the
S1: Bad Crypto podcast.
S3: Thanks for having me Joel. Yeah, Travis as.
S1: Well. And other guy Travis to you guy over here.
S2: This is me. Yeah, yeah.
S1: Don't forget the other guy. Um, just so we have
S1: a firm foundation to go on so people understand the
S1: the credibility of the thoughts you're going to share, the
S1: words you're going to say, and perhaps the jokes that
S1: you'll make with us along the way. Uh, go ahead
S1: and fill in. Put a little bit more meat on
S1: the bones of your bio for me.
S3: Yeah. Well, um. As you can tell if you're looking
S3: at this, I've got some age. I'm well into my
S3: 60s now, and for 40 years I was a trad
S3: fi lawyer doing IPOs, takeovers, that sort of thing. I
S3: still do that work, but about seven years ago, I
S3: went down the rabbit hole of crypto and have been
S3: since then been advising prop traders, exchanges, token issuers, funds,
S3: really everyone across the entire, uh, ecosystem. Uh, and I
S3: do some. Volunteer work on the legislation that's coursing through
S3: Congress right now. I teach at Cornell, as you mentioned,
S3: and I live in Chicago. I also lecture at Northwestern
S3: Law School in Chicago and several others when I'm not
S3: at Cornell.
S1: Is the law school in Evanston as well, or is, uh,
S1: is it actually located?
S3: No, it's it's it's it's downtown in Cedarville. Mhm. Uh,
S3: and uh, uh, you know, along with the medical school,
S3: it's near the hospital.
S1: Got it. All right. Well, let's let's, uh, let's start
S1: at a really high level and then we can drill
S1: down on this, these ETFs of course. Long anticipated. Uh,
S1: turns out the price of Bitcoin had the anticipation built
S1: into the rumor. The news hit Bitcoin's currently down. Um, explain.
S1: For those of us that think on a 12 year
S1: old level what these mean.
S3: Oh, well, you can think of it as, uh. Uh,
S3: a pot of Bitcoin that's held, you know, by a fund,
S3: by a sponsor. Uh, the fund issues shares in, in it,
S3: in it, uh, and those shares trade on a stock
S3: exchange in this case NYSE Arca. So you buy and
S3: sell the shares which represent interests in in Bitcoin instead
S3: of owning Bitcoin directly or in addition to that if
S3: you so desire.
S2: So we just assuming that they're holding it then. Right.
S2: So we. So it seems like the regulation it seems
S2: like they have to be holding it. And so as
S2: the price of Bitcoin goes, the more that they hold
S2: like the like for example, to me it seems like wow,
S2: what if MicroStrategy did a Bitcoin ETF right. They have
S2: so many bitcoin like that could be.
S3: Well that's that that's that's a really good point I
S3: mean these are audited. So yeah the Bitcoin's really there
S3: because auditors confirm it. And you're right MicroStrategy owns an
S3: awful lot of Bitcoin. It is kind of sort of
S3: like an ETF. It does have other business. It doesn't
S3: only hold Bitcoin. So it's not a pure play the
S3: way these funds are. These funds are pure plays. If
S3: you own shares of a Bitcoin ETP exchange traded product
S3: you own an indirect indirect interest in bitcoin and and
S3: nothing else. Mhm. Uh. So it is as if you
S3: held the, uh, you held the, the cash product itself.
S1: So how do, um, how are we assured via these audits?
S1: We know that audits are only as reliable as the
S1: people who are auditing them, that the same thing that's
S1: happened with the precious metals market, uh, silver and gold
S1: being traded heavily on paper and thereby manipulating the price
S1: of metals to be as low as they are. How
S1: do we know that same thing won't or perhaps can't
S1: happen with the Bitcoin ETFs? Well.
S3: Smart question because you know that's been a concern of
S3: the SEC all along. Uh you know these these have
S3: been proposed now for more than ten years. That's how
S3: long it took to get one through the SEC. We
S3: can talk about that too. But, uh, how do we
S3: know it's not manipulated? We don't know for sure, but
S3: there are surveillance agreements between the sponsors. Well, between the
S3: listing exchange on the one hand and, uh, the CME
S3: on the other, which is where the where the futures
S3: contracts trade and those surveillance agreements, uh, you know, help
S3: detect possible manipulation. Uh, is it perfect? No. Is it
S3: pretty good? Yeah. Probably is. Um. Uh, all I won't say. Oh, commodities.
S3: But many commodities are susceptible to manipulation because the cash
S3: markets are very thinly regulated. Um, so it is an issue.
S3: It is a concern. And but that's something that investors
S3: take into account in making up their minds whether they
S3: want to buy this or not. I mean, if these
S3: are spelled out as risk factors in the prospectus, you know,
S3: this could be this product could be manipulated or the
S3: underlying the underlying market could be manipulated. And if it is,
S3: you could suffer for that. So you take your chances
S3: if you buy. Mm.
S2: It does sound like the, the potential for, you know,
S2: some corruptions seems to be because it's so weird to me, Patrick,
S2: about how, you know, uh, Larry Fink of Blackrock was
S2: like no big con. And then all of a sudden
S2: he's like, oh my God, I'm a big believer in Bitcoin.
S2: Yeah well Bitcoin like what what is going what has
S2: changed his mind. It's weird to me.
S3: There are a lot of new converts uh in the
S3: trad fi institutions right. The big asset managers, the investment banks. Uh.
S3: You know what changed their mind? I don't know, but
S3: I know it's a big market. Possibly the ability to
S3: sell a lot of product here has got to be
S3: a motivation for some. Um. Uh, the, uh, you know,
S3: the the the chairman of, uh, Morgan Stanley, I should
S3: say the recently retired CEO of Morgan Stanley, still on
S3: the board, um, said, uh, I think just last week
S3: that he thinks that, um, you know, Bitcoin has a place,
S3: albeit a very small place. Those are the words he used.
S3: Very small place in the portfolio of wealthy people. Um,
S3: but that is highly speculative. Um, uh, instrument and, uh,
S3: needs to be understood that way. Uh, so. I'm not
S3: a finance guy. I don't give financial advice, but I
S3: think a lot of asset managers are saying something like 1%
S3: of a portfolio might be in crypto assets and particularly Bitcoin.
S3: Some say 1 to 5%. Again, that's not advice from me.
S3: I'm just saying that's what they're saying on the street now. Um,
S3: and then others say 0%. Vanguard apparently has decided that
S3: they're not going to allow their customers to buy any
S3: of these Bitcoin. Uh, exchange traded products. And so if
S3: you're a Vanguard customer and you don't like it, you
S3: got to open an account somewhere else.
S1: I think they are too. I mean, at least I
S1: noticed on X that people are very verbal. They're like, okay, fine.
S1: I just tell you, yeah, that's fine. I want us
S1: to be your customer.
S3: You know, you don't want to sell it. I'll go
S3: to fidelity or I'll go somewhere else. So, um, there
S3: is an awful lot of demand for this product when
S3: when grayscale proposed to list and got denied and then sued.
S3: And then one. That's a great story in itself. But
S3: when they did that, there were thousands of comment letters
S3: to the SEC saying, please approve this. That came from
S3: people who really wanted to buy the product. And the
S3: SEC wasn't let them letting them buy it. Uh, because
S3: the SEC is you basically was in so many words,
S3: we understand this better than you. We know what's good
S3: for you better than you do. And we don't think
S3: this is something you should invest in. That's called merit regulation.
S3: And they're not supposed to do that.
S1: It's so nice that they're there to protect us. Uh,
S1: you know, I mean, meanwhile, they issue a, uh, a
S1: fake tweet saying that the ETFs are approved, Bitcoin goes
S1: up a thousand, and then they retracted 20 minutes later
S1: saying that that wasn't an official tweet. And 90 million
S1: in Bitcoin were liquidated. Yeah. We're supposed to trust that
S1: these people really not only are interested in protecting us,
S1: but are capable.
S3: Well that that that was uh, there's a federal investigation
S3: into that, as you can imagine. And, um. Congressional leadership, uh,
S3: sent sent letters to the FCC the same day saying,
S3: what's going on here? And, oh, by the way, you demand, uh,
S3: a great cybersecurity from the list of companies who whose stocks, uh, uh,
S3: you oversee, whose stock trading you oversee. But you can't
S3: do it yourself. So, um. It. I mean, I don't
S3: know what happened there yet. I don't think any of
S3: us know yet. It's under investigation. But you're right, it did, cause.
S3: Damage in the market because people transacted based on bad
S3: information that, it turns out, didn't really come from the SEC,
S3: but it sure looked like it had.
S2: Mm. So let me ask this. So how do you
S2: think that these um the Bitcoin ETF. How do you
S2: think that that it's going to be overall considering that
S2: you know Satoshi Nakamoto. He doesn't he doesn't really want
S2: more intermediary involvement from big you know big thing. So
S2: it's like a I don't know it's a paradox.
S3: It is. Uh, you're spot on, correct. Travis. I mean, uh.
S3: It's ironic that, uh, the, uh, this product which is
S3: going to lead, is leading, I believe, into deeper retail, uh,
S3: investment in the asset. Is, uh, involves all these centralized institutions.
S3: I mean, Satoshi's idea was peer to peer. You know,
S3: it was, you know, I sell Bitcoin to you. You
S3: sell it to Joel using our, you know, our handheld
S3: devices and, you know, without any custodian other than ourselves
S3: and certainly without any, uh, exchange or investment bank or
S3: brokerage fee firm charging a commission, by the way. Uh, so, yeah,
S3: I guess I need to own a ledger or a
S3: trazer or something like that. And I can buy one
S3: for 50 bucks, a hundred bucks to do it. But
S3: I shouldn't have to pay, you know, an an AUM
S3: fee to do that. So. So that was his idea, right.
S3: And that but that's not where we are now. And
S3: the reason we are now is because it's so incredibly
S3: convenient to use a stock broker. And for the stock
S3: broker to be, uh, a member of a stock exchange
S3: where the shares trade. And oh, by the way, notice
S3: this carefully. The SEC is very involved in all of that.
S3: So part of the Satoshi's vision was decentralised, not just
S3: away from the banking industry, but also away from the government. Mm. And,
S3: and so some people look at this and they say,
S3: you know, this is a Trojan horse. Uh, Chair Gensler
S3: has brought us this slew of ETFs, and I'm not
S3: sure he really wanted to, but the D.C. Circuit Court
S3: of Appeals basically said you kind of sort of need
S3: to do this.
S2: Maybe part of the Trojan horse, though, to make it
S2: seem like you don't really want to do this. We
S2: don't really we don't want to do this. Right?
S3: Right. But but notice the SEC is going to regulate
S3: these products. That's certainly the case. So I mean he
S3: wanted the power to regulate crypto assets. Uh, from Congress.
S3: They never gave it to him. I mean, I think
S3: he claims it was given to him in 1934. But,
S3: you know, the reason Congress, uh, kind of sort of
S3: disagrees with that. So, um, he didn't hasn't gotten it
S3: that way. They've been fighting it out in the courts.
S3: And then meanwhile they introduced these products. And there he is,
S3: I should say. There they are. The agency is. Regulating? Um, probably. Well,
S3: I don't know how big this is going to get,
S3: but this is a big financial product that a lot
S3: of retail and investors are coming into, and that's all
S3: SEC regulated. And that may well be for the, you know,
S3: the good that may be the best result I don't know.
S2: So not necessarily regulating crypto per se. They're right. No
S2: they're not they're not. Yes. Right. So it's like they're.
S3: Regulating.
S2: Some separation of state right.
S3: That's right. They regulate the share trading and they regulate the,
S3: the sponsors who who bring these products. Um, I mean,
S3: the exchanges do that too, by the way. I mean,
S3: it's not only the SEC, there's some self regulation by
S3: the exchanges and there's self regulation by the brokerage community,
S3: because the brokers and the investment banks who buy and
S3: sell this, they all have supervision. They all have, uh,
S3: regulatory responsibilities. So, uh, I'm not saying it's a bad thing,
S3: but it is not what Satoshi had in mind. How's that?
S1: An ultimately not.
S3: Decentralized. It's not decentralized.
S1: We we always encourage people to use exchanges as exchanges
S1: and then take your take it off, put it in
S1: a ledger or Trezor. This is like one step beyond that.
S1: You know, on an exchange, at least you have access
S1: to the wallet. But they're custodial here. You're not actually
S1: owning Bitcoin. You can't send somebody bitcoin if you're the ETF.
S3: That's exactly right. You own shares in a trust that
S3: holds bitcoin. You do not own bitcoin directly. You have.
S3: The economics of Bitcoin ownership for the most part. I mean,
S3: Bitcoin doesn't, um. Bitcoin. You know there are no staking
S3: fees for Bitcoin. It doesn't pay interest. But if there
S3: were any distributions you would not get that. Um, but
S3: it doesn't matter because they don't have it anyway. Uh
S3: Bitcoin doesn't have it anyway. Um, but uh, but you're right,
S3: you have claim against the trust. You do not own bitcoin.
S3: And oh by the way you can do it both ways.
S3: I mean there's there's no law that says having bought
S3: shares in one of these ETFs you cannot buy Bitcoin
S3: in the cash market. You certainly can. You can certainly
S3: go to the crypto exchanges and become customers there. Yes
S3: they're being sued. I'm not going to get into that.
S3: But um, they're certainly still very much in business. Um,
S3: and uh, you know, one of them is, uh, a
S3: custodian for about, you know, 8 or 10 of these products.
S3: So they're making money that way, too, and nothing wrong
S3: with that. But that, that, that, um, uh, you can
S3: own you can own Bitcoin in several different ways. This
S3: is an additional option. And by the way, you can
S3: also say it's not for me. I don't want it.
S3: You know, I uh, I, you know, I, I, I,
S3: I think like Warren Buffett I think it's worthless. It
S3: has no value, you know, or the chairman of Chase,
S3: Jamie Diamond, is worthless. It says no value. Um, and, um, uh,
S3: you know, there's there's no mandatory investments in America. You know,
S3: you it can be an all cash all day long,
S3: if that's what you want.
S2: So this mine, it seems to me it might make
S2: more people aware of crypto realizing. Oh, yes, an entry
S2: point into it. It's it's finally been validated in the
S2: eye of the SEC. So now we're going to be
S2: more well, I want to ask this because I was
S2: trying to you might've heard me.
S3: I think you're right about that, Travis. I think it will.
S3: It's it's I don't mean to give it a bad connotation,
S3: but it's kind of like a gateway drug. You know,
S3: if you buy some shares of this, that may lead
S3: to other involvement in the crypto in.
S2: This coin right here, man, I got some. Yeah.
S1: He's mainlining it.
S2: Mainline. Yes I want to ask about this. So you
S2: know I don't know if you know what the numbers are.
S2: I was over here frantically typing to try to figure
S2: it out. So I know that the global real estate
S2: market is maybe somewhere 3 to $400 trillion, right? Stock markets.
S2: The numbers that I'm finding is somewhere last year around
S2: 100 to $200 trillion. So let's just say for the
S2: sake of it all, it's $500 trillion are in those assets.
S2: So are they saying 1% of that, which would be
S2: 5 trillion should go into Bitcoin. And if that's the case,
S2: then Bitcoin is is worth freaking $250,000.
S3: There's, there's saying, uh, that 1% of your portfolio. Right.
S2: So if everybody's got 1% of their portfolio.
S3: Right, right, right. But but not for all retail investors,
S3: for those for whom it's suitable. Okay. Uh, and and that's,
S3: you know, and that's not everyone. Um, uh, it's well
S3: beyond the accredited investor category, but, you know, it's probably
S3: not suitable for everyone. And, uh, you know, 1 to 5%
S3: is a is a is a rule of thumb that
S3: you're starting to hear. I think 5% is pretty high,
S3: but that's but that's just that's just me. Oh, unless,
S3: by the way, you're a professional trader or you consider
S3: yourself very sophisticated regarding crypto assets, and there are many
S3: such people and I have, um. Yeah. So, uh, I
S3: think for a novice 1 to 5% and probably on
S3: the low end of that makes more sense. But but, uh,
S3: but if you're a fan and you follow this carefully. Um,
S3: and if you do, by the way, you're probably not
S3: just interested in Bitcoin exchange traded funds. You're probably all
S3: over the crypto sphere, right? Um, and those are not
S3: exchange traded funds yet. You can't even get an Eath
S3: ETF yet. Um, but I suspect that'll come soon.
S1: Well, whatever we think of Gary Gensler, fortunately, there are
S1: some voices in the SEC that are voices of reason.
S1: One of them is a crypto mom, Hester Pierce, former
S1: guest on this show. And she has been spot on about, uh, crypto, uh,
S1: for the long haul here. And, uh, you've suggested, I think,
S1: in some of the writings that she should be the, uh,
S1: chair of the SEC, uh, in any administration, but especially
S1: in a Republican administration.
S3: Well, yeah, I think so. I don't think, um. You
S3: know I'm I'm not in Washington insider but I don't
S3: think the Biden administration is likely to pick or they
S3: like Gary Gensler and and the direction he is going.
S2: Well, they also like SBF and FDX donate.
S3: I didn't say they don't make errors. Jeffrey Epstein and
S3: I didn't say they don't make errors. Uh, yeah. You know,
S3: I love Commissioner Peirce. I think if she didn't exist,
S3: we'd have to invent her. I think no one in
S3: government understands the digital assets industry better than she does.
S3: No one cares more about the limitations on federal power
S3: than she does. And, you know, she's been in that
S3: job for six years. She's been right about it from
S3: the start. You see this very clearly in her frequent
S3: dissents from SEC attempts to expand its jurisdiction by making
S3: unsupportable claims that are ultimately fought about in court and
S3: rebuffed by the courts. The courts have been. Pushing back
S3: against the SEC's claims. Um, you see it most obviously
S3: in her dissents to the SEC's decisions to reject Bitcoin
S3: ETF applications. Um, including one in which I was involved
S3: as counsel to the applicant. Um, but you need to
S3: be living under a rock not to see and hear
S3: her presence felt across the broad expanse of the SEC's
S3: war on crypto that Congress never declared. The SEC declared it.
S3: And and not just on crypto. That's what this show
S3: is about. But she, uh, you know, the SEC is
S3: also undertaking to regulate commerce through climate change disclosure rulemaking,
S3: which is what, uh, progressive politicians want to see. But
S3: as far beyond the SEC statutory mandate to protect investors,
S3: she has been critical of that initiative, too. Like I said,
S3: she is very focused on the limitations on federal power. Uh,
S3: that the agencies have in the law is a national treasure.
S3: And in a in a Republican administration, she ought to
S3: be chairman. And, uh, by the way, that's not an
S3: endorsement of any particular candidate.
S2: No, no, that's an endorsement that we're taking.
S3: No, I mean, I it's an endorsement of her. Okay,
S3: but I'm not endorsing anyone for president. Okay. Uh, and, uh, and, uh, and, uh, uh,
S3: you know, uh, I'm not going there, but it would
S3: be one benefit of a change of administration in a
S3: libertarian direction. I am a libertarian. I'll say that much.
S3: And she is too, so I, uh. Uh, you know,
S3: can't say enough good things about her. And we would
S3: this industry would be. Hurt if she were not in
S3: the job she's doing now. It's got to be tough
S3: to be always in the minority on these things. Almost always,
S3: almost always. The chairman voted with her this time. But, um.
S3: I'm awfully glad that she is continued in that role.
S2: I want to ask. I want to ask you something
S2: about this, because I did some research on some stuff
S2: earlier today, and it was talking about the tokenization of
S2: other assets. Right. You start seeing more tokenization of assets.
S2: And it was one of the articles that Joel deleted.
S2: But I thought it was interesting because there's some cool
S2: stuff that's going on with these things. And it's like
S2: I've always thought like security traded tokens, right? Like instead
S2: of stocks, like more of these things. Seems like they're
S2: going to be tokenized over time. And it seems like
S2: that this is one of those first steps. The ETF
S2: is maybe one of the more official first steps into
S2: moving more towards tokenization of more assets.
S3: I think that's right. And I think that's what, uh,
S3: institutional investors and what the investment banks think as well. Um,
S3: they're talking about securities tokens. They're talking about, you know,
S3: for example, uh, it's just the digitization of the financial instrument. So,
S3: I mean, the classic example, the classic example is, is
S3: real estate, you know, putting, you know, buying and selling
S3: real estate in digital format, uh, or ownership interest in
S3: real estate in digital format, much more liquid than the
S3: classic way of doing it all on paper, um, much
S3: more economical, much quicker to trade and settle, for example.
S3: But you can do this with common stocks too. You
S3: can do it with bonds. There have been tokenized bond
S3: offerings in Europe. Um, and I expect those to come
S3: to America soon. Uh, uh, as well. It's part of.
S3: I mean, this is internet money, right? So part of
S3: internet money includes tokenized stock and tokenized bonds, um, which
S3: the SEC would regulate because those are securities. No one
S3: doubts that stocks and bonds are securities. No one fights
S3: over that. We fight over crypto assets because many of
S3: them look more like commodities and securities to to us. Mhm.
S3: But to some of us.
S1: So how far behind.
S2: It's actually magical internet mining.
S1: So how far behind are we then on uh Ethereum ETFs.
S1: Because certainly uh Ethereum is price is held perhaps on
S1: the same rumor that it's next.
S3: Uh, yes. There's at least one application pending that I
S3: think comes due in May. If I'm not wrong. It's
S3: not mine. It's not my client. I'd love to do
S3: one of these, but I haven't started on one yet, and. And, um.
S3: I think it's although the chair Gensler said, look, don't
S3: think that approving the Bitcoin fund means we're going to
S3: approve anything else. He he did say that, but I
S3: think they're going to be driven to do it because
S3: the same reasoning that applies to the Bitcoin fund probably
S3: applies to to the ETH funds as well. There are
S3: futures markets that are regulated by the CFTC and the
S3: CME and other exchanges.
S1: Well, it's necessarily because, you know, crypto according to Gary, uh,
S1: you know, there's all kinds of, uh, criminal enterprises that
S1: are funded by. Yeah. And that never happens with, with
S1: cash or, you know, other that just that doesn't happen
S1: at all. Yeah.
S3: Yeah. Right. You know, I mean, I, you know, $100 bills,
S3: you know, I don't know how many of them have
S3: traces of cocaine, but it's a very high point.
S2: Oh my God. I saw a statistic on that the
S2: other day. And I was like.
S3: And I, and I take I take that personally because
S3: I'm a descendant of Ben Franklin, but uh, but uh, but, uh, uh, look,
S3: I don't mean to make light of the criminal use
S3: of crypto assets.
S1: We'll do that for you. We'll we'll.
S3: Hear. But but notice this. It's almost always bitcoin. No
S3: one uses ether that way. And uh, so if you're
S3: concerned about that and and you're right to be somewhat
S3: concerned about it. Um it's really. Probably not a big
S3: deal for ether. Um, and it is something that Gensler
S3: mentioned in his separate statement. He said, you know, these
S3: it's these are not this is not like oil. It's
S3: not like precious metals or real uses for that. The
S3: real use is for Bitcoin. He says, you know, our,
S3: our criminal uses, which is an overstatement of, of the
S3: I mean, I own Bitcoin and I'm not a criminal
S3: so I'm just a hodler, right. So there are plenty
S3: of hodlers out there. Uh, who don't do, uh, anything
S3: inappropriate with their Bitcoin holdings. Holdings?
S2: That's good. I just want to say this. So I
S2: asked grok. Joel, I asked grok, I said, what percentage
S2: of paper money has traces of cocaine on it, and
S2: it says it's been found. Studies have shown that up
S2: to 90% of banknotes in circulation in the US have
S2: found traces of cocaine. That's a pretty high number. Imagine
S2: all these bills passing around tiny amounts of the white stuff.
S2: It's like a never ending party for your wallet.
S3: Right? So I guess we're supposed to shut down all
S3: the banks because they traffic in dollar bills, right?
S1: You stick those in a counter, and those little traces
S1: of powder gets all over everything, right?
S3: I mean, again, that's making light of a serious subject.
S3: There are things you can do with crypto assets you
S3: cannot do with money. For example, you can send it
S3: very far, very fast to an account that is, if
S3: not anonymous, is at least pseudonymous. And now you can
S3: be found, though. Um. Uh, I mean, there are several
S3: companies that are very, very good at tracking down, uh, uh,
S3: the proceeds of, uh, of ransomware. Uh, very, very good
S3: at it. The government itself is quite good at it. Uh, so, uh, yeah,
S3: the crime is committed, but you may not get away
S3: with it. And, uh.
S2: Around this. So you were talking about, you know, potentially
S2: an Ethereum ETF. Does that mean that it's quite possible
S2: down the road we could be having a Binance ETF.
S2: There could be a Solana ETF polka dot ETF.
S3: I absolutely like yes I think it's quite possible that
S3: they if you take the top 20 tokens or so, uh,
S3: and you and you omit the stablecoins because, you know,
S3: why would you make an ETF out of that then? Um. Then, uh,
S3: several of those could be could come. Um, the it helps.
S3: It might even be necessary under current law, but it
S3: would certainly help if they already traded in a regulated
S3: futures market. And I think the only two for that
S3: are Bitcoin and ether moment. But there are futures markets
S3: that are, uh, you know, away from the regulated agencies,
S3: away from the regulators as well. And there are foreign
S3: exchanges that that count. Um, so I wouldn't say that's impossible. Uh,
S3: there could also be, uh, a fund that holds multiple coins,
S3: you know, some kind of diversified portfolio, if you will, of, uh,
S3: crypto assets.
S2: Tokens. That's. Yeah.
S3: Travel tokens.
S1: Why not an NFT f right?
S3: So, uh, and I know of at least one out
S3: there now, actually. Um, and so I don't think it
S3: trades on a major exchange yet, but it certainly trades over-the-counter. Um,
S3: so that could come to, um. Uh, the other thing
S3: we'll see is just more fund development, private funds, you know, um, uh,
S3: I think we'll see more private funds and different kinds
S3: of private funds because of, because of this thawing, uh,
S3: by the SEC and the fund area. And the SEC
S3: actually doesn't regulate private funds very much. Uh, it doesn't
S3: have the authority to very much, uh, so that you
S3: can be more creative there. Um.
S1: Well, I think we have a better understanding of what's
S1: going on now, Patrick, thanks to you, I want to, uh. Uh,
S1: as we wrap up here, ask you to prognosticate just
S1: a little bit. I know this is not financial advice.
S1: We have the, uh, you know, these ETFs are out there. Now,
S1: the Bitcoin halving is upon us in April, right? Uh,
S1: so I'm going to ask you a question. We ask
S1: many guests and of course not holding you to it,
S1: but what do you think are all time high? If
S1: you are going to be a guessing man is going
S1: to be on this, uh, bull run.
S3: On this bull run. Yeah.
S1: 24 to 25, 2024 to 2025. What do you think?
S3: I don't have a view on that. I will not
S3: be surprised if it tests the all time high and.
S3: I don't think about it much because. But I view
S3: Bitcoin mainly as insurance rather than an investment. I view
S3: it as if prices get very, very high in Bitcoin.
S3: That means something terrible has happened. Probably that means that
S3: what's very.
S1: Very high, I mean.
S3: Well, you know, it's. $200,000 or more. You know, $1 million,
S3: if that. If that happens. That means we have fiscal
S3: and monetary chaos in the United States. In my view,
S3: that's what it means. And I don't want that to happen. Right.
S3: Because I have a lot of dollars denominated investments.
S2: Yeah, I was I was watching a guy. He was
S2: talking about the the overall price of Bitcoin. He was like, dude,
S2: you know, if you're talking about the total value of gold,
S2: you know, it's trillions five, seven, ten. I don't know
S2: what the number was because Bitcoin's like at the time
S2: Bitcoin was worth half half a trillion. He was like
S2: this could go easily to 3 to 5 trillion. I
S2: mean if you start getting the right mechanisms in it,
S2: that's true.
S3: I think that's right. I think that's like around 200,000.
S3: That's what happened with exchange traded funds generally I, I,
S3: I was on teams that invented some of the earlier
S3: exchange traded funds. And at the time everyone said these
S3: are ridiculous. They're never going to get any traction against
S3: mutual funds. Why would anyone buy an exchange rate? But
S3: now everyone owns exchange traded funds. And that was only
S3: 1520 years ago. So yes, 3 trillion wouldn't surprise me
S3: in the least. We were at 3 trillion, uh, before
S3: Sam happened. Okay. Uh, we were at 3 trillion, so
S3: that wouldn't surprise me. Um, but if it goes up
S3: by several magnitudes, that's because of fiscal irresponsibility and because
S3: the United States has become a banana republic. And I
S3: don't want that to happen.
S1: Well, we've certainly seen signs of it. Uh, yes. And
S1: I think that's, uh, cause for concern for everybody. I
S1: do want to ask you this. You were with the
S1: SEC during the Reagan Bush. Did you have any interactions
S1: with President Reagan?
S3: One time as he was leaving office. Uh huh. Uh,
S3: I remember it vividly. I was just in an audience,
S3: and we waved back and forth, and I saw him,
S3: and I was never in the white House. And, you know,
S3: I wish I'd had that opportunity, but I viewed myself as.
S3: You know, I was a young lawyer in an important
S3: regulatory agency, but I worked directly for a man who
S3: was appointed by President Reagan. But I wasn't appointed by
S3: him myself.
S1: One degree of separation.
S3: One degree of several. But I had just in. Immense
S3: respect for him, and, uh. And, uh, I miss him.
S1: Where, uh uh, where should people stalk you? What website
S1: or social?
S3: Oh. Oh, well, on Twitter, uh, or X, I'm at
S3: Doherty lawyer. That's a at d a u g h
S3: e r t y lawyer. Uh, but I'm also on LinkedIn.
S3: I'm the Patrick Doherty in Chicago. If you go to
S3: Patrick Doherty in Chicago and maybe you type in Cornell,
S3: something like that, because I teach at Cornell Law School. Uh,
S3: I post a lot of material there, actually.
S1: Excellent. Well, we will, uh, we'll definitely link to that.
S1: We appreciate you coming on and sharing with us today.
S1: It's been a very enlightening.
S3: Thanks for having me, guys. This is an important development. And, uh, so, um,
S3: you know, I'm happy to spend the time with you.
S2: Thank you so much to Patrick Doherty. And you can
S2: follow him on the Twitter x at Doherty Lawyer. Make
S2: sure to connect with him. Really smart dude, doing some
S2: interesting things and teaching the youngins over there at Cornell
S2: Law School all about the digital assets. And we saw,
S2: you know, Bitcoin and the whole crypto market has gone down.
S2: It's like $1.6 trillion right now, up from down from
S2: 1.8 something. So, you know, it looks like that ETF
S2: was actually something where oh sell the news. And um,
S2: but uh that's the way it goes. The having is
S2: coming up folks. We're going to be seeing that in
S2: early May. So a lot of great stuff happening. And
S2: it's just calm before the storm. Kind of seems to me.
S1: You have to be in the know as the having approaches.
S1: And uh, for those of you watching the video version
S1: of the show, you'll be able to follow along with
S1: the visuals here. The crypto bull dragons are gone here
S1: they all are. Uh, and each one is a one
S1: of one that has an owner. Might be bulls Aldrin.
S1: It might be the bull market baron. It could be
S1: opulent onyx. They are all in the diamond hands of
S1: 24 people. And, uh, each one of you is going
S1: to receive an airdrop of this NFT.
S4: Prospero Draconis, this is.
S1: What is this guy? Look at him. He's just golden
S1: bitcoins everywhere.
S2: So the whole thought of this is, you know, let's
S2: create some fun amulet stuff of power for this next
S2: bull run. Right. This is the year of the Dragon.
S2: It's the crypto bull run is up here for the
S2: next 18 months or so in theory. And so hopefully,
S2: if you possess this, then, uh, the the crypto gods
S2: will shine down upon thee.
S1: So along with this NFT that we're going to drop
S1: to the 24 holders, uh, when you click on your NFT,
S1: if you are a holder, you'll see a place in there, uh,
S1: which I can't from this account because this is the
S1: master account. If you hold it, then you will be
S1: able to see a link that says Bonus content. And
S1: that bonus content is only viewable through Bad Crypto Dot
S1: uncut network. That's going to give you a link to
S1: the zoom. When are we doing the zoom? It's going
S1: to happen at Travis came up with this and it
S1: makes perfect sense. Since it's 2024, it's going to happen
S1: on two for 2024. February 4th, 2024. That is a Sunday.
S1: What time? 2 to 4 p.m. Eastern Standard Time makes
S1: perfect sense, except that I'm Atlantic Standard Time and it's
S1: 3 to 5 for me. Uh, and Travis.
S2: Is it's 1 to.
S1: 3 for 1 to 3, but it makes for a
S1: great copy. So on February 4th, two for 2024, from
S1: 2 to 4 eastern, a link to the private zoom
S1: where you'll be able to join us. And we're going
S1: to talk about all kinds of stuff. It's going to
S1: be very spontaneous. We'll answer your questions, we'll drop some
S1: knowledge and, uh, we'll maybe give some advice, not financial. Um,
S1: it's going to be a good time. So I want
S1: to be there. It's going to be great.
S2: We're going to talk about Bitcoin ETFs and the implications
S2: for decentralization. You guys.
S1: Know. And so this should be encouragement for all of you.
S1: All that don't yet have the bad crypto Nifty Club
S1: NFT that gets you entry into this whole world of
S1: free airdrops. And a bonus stuff that we're releasing. You
S1: go to bad crypto dot uncut dot network, and the
S1: last NFT on there is the first one we created.
S1: It is the spinny bad Crypto Nifty Club card. Um,
S1: you can pay for it with a credit card if
S1: you don't want to, you know, pay Ethereum or use gas.
S1: And right now it is $4.43. It's pegged to, I think,
S1: 0.002 ETH. And once you have this in your wallet,
S1: it's yours. You'll start getting airdrops as we create cool
S1: stuff and your world will open to new bad opportunities.
S2: There you go, there you go. And we're grateful for
S2: you guys for tuning in to the show. Uh, we're
S2: extra grateful for the 24 that want to be a
S2: part of the little mastermind group. All the rest of
S2: you guys do. Not nearly as cool, but that's okay.
S2: You can become cooler. Uh, because all you really need
S2: to do is to. What is it? What do they
S2: need to do.
S1: Buy the NFT? Oh, no, not that one. That will
S1: make them cooler, though, if they own the bad Crypto
S1: Club NFT.
S2: You don't have the NFT. What you can do instead
S2: is just stay back.
S1: Yeah. That's all you got to do. Who's bad. The
S1: Bad Crypto Podcast is a production of Bad Crypto LLC.
S1: The content of the show, the videos and the website
S1: is provided for educational, informational and entertainment purposes only. It's
S1: not intended to be and does not constitute financial investment
S1: or trading advice of any kind. You shouldn't make any
S1: decisions as to finances, investing, trading or anything else based
S1: on this information without undertaking independent due diligence and consultation
S1: with a professional financial advisor. Please understand that the trading
S1: of bitcoins and alternative cryptocurrencies have potential risks involved. Anyone
S1: wishing to invest in any of the currencies or tokens
S1: mentioned on this podcast should first seek their own independent,
S1: professional financial advisor. All you gotta do is to stay
S1: bad and buy a NFT. You won't be sad then.
S5: Wow.
S1: Who did that? All I want to do is have
S1: some fun. That. What was that.
S6: Song? Crow?
S1: Sheryl Crow, eat some, eat crow. Sheryl just busted you
S1: out there.
S2: That was by Joel.
S1: No, that song would have been a huge hit for us.
S1: Why are you stealing our melodies, Sheryl Crow?
S6: That's not.
S1: Nice. Don't do that.
S2: For future melodies that we're going to come up with
S2: in our heads years down the road.
S6: That's right.
S7: Come, lend me your ears. Girls and boys. Bout those
S7: magic little kernels of joy. Versatile in the kitchen. Every
S7: day I'm wishing for that plant that we love so
S7: much more than soy. Yes, it's corn syrup or. Boil. Grinder.
S7: Pop it. Grilled or boiled? Yes. It's. Need it today.
S7: It'll remind you.
UU: On down the way.