1 00:00:00,240 --> 00:00:03,360 Speaker 1: Hello everyone, and welcome to the latest episode from the 2 00:00:03,360 --> 00:00:06,640 Speaker 1: midweek edition of the coin Bureau podcast. Every week, I 3 00:00:06,680 --> 00:00:09,200 Speaker 1: pick out two of my favorite videos from coin Bureau's 4 00:00:09,240 --> 00:00:12,799 Speaker 1: YouTube channel to present to you in podcast form. The 5 00:00:12,840 --> 00:00:15,280 Speaker 1: audio you're about to hear is from those videos I've 6 00:00:15,360 --> 00:00:17,799 Speaker 1: chosen this week. Many of you have been in touch 7 00:00:17,840 --> 00:00:20,079 Speaker 1: to ask whether it's possible to listen to our videos 8 00:00:20,079 --> 00:00:23,239 Speaker 1: in podcast format, and so your wish is my command. 9 00:00:23,600 --> 00:00:26,640 Speaker 1: This week, I've selected our videos about the sudden crisis 10 00:00:26,680 --> 00:00:30,120 Speaker 1: that recently gripped the British bond market and the company 11 00:00:30,200 --> 00:00:34,080 Speaker 1: that could soon come to dominate the entire crypto industry. 12 00:00:34,400 --> 00:00:37,319 Speaker 1: It's not been easy being a bridge recently, when our 13 00:00:37,360 --> 00:00:40,159 Speaker 1: new chancellor announced a raft of tax cuts just a 14 00:00:40,159 --> 00:00:43,479 Speaker 1: couple of weeks ago, financial markets did not take the 15 00:00:43,520 --> 00:00:47,000 Speaker 1: news well. The pound dipped to its lowest ever level 16 00:00:47,040 --> 00:00:50,320 Speaker 1: against the US dollar, while the market for Guilt's British 17 00:00:50,320 --> 00:00:54,480 Speaker 1: government bonds also went haywire. The situation got so bad 18 00:00:54,520 --> 00:00:56,400 Speaker 1: that the Bank of England had to step in to 19 00:00:56,520 --> 00:00:59,520 Speaker 1: calm the situation with you guessed it, a bit of 20 00:00:59,520 --> 00:01:03,880 Speaker 1: good old quantitative easing. The situation has since stabilized somewhat, 21 00:01:03,920 --> 00:01:07,080 Speaker 1: but the lesson is clear. Markets don't like to see 22 00:01:07,080 --> 00:01:10,200 Speaker 1: a government borrowing even more money at a time when 23 00:01:10,240 --> 00:01:13,000 Speaker 1: fiscal prudence should be the order of the day. In 24 00:01:13,040 --> 00:01:15,880 Speaker 1: the first part of today's episode, i'd break down exactly 25 00:01:15,880 --> 00:01:19,759 Speaker 1: what happened and what could come next. Then in part two, 26 00:01:19,959 --> 00:01:22,920 Speaker 1: you'll hear all about a company that's quickly becoming one 27 00:01:22,959 --> 00:01:26,120 Speaker 1: of the most powerful forces in the crypto industry. It's 28 00:01:26,160 --> 00:01:28,840 Speaker 1: backed by the likes of Goldman, Sachs and Black Rock 29 00:01:29,040 --> 00:01:32,360 Speaker 1: and is due to become only the second crypto company 30 00:01:32,560 --> 00:01:36,240 Speaker 1: to go public later this year. The company in question 31 00:01:36,520 --> 00:01:39,720 Speaker 1: is Circle, issuer of the U S d C stable coin, 32 00:01:40,160 --> 00:01:43,160 Speaker 1: and if you haven't heard much about it yet, well 33 00:01:43,640 --> 00:01:46,320 Speaker 1: you will. In the second part of today's episode, I 34 00:01:46,400 --> 00:01:48,200 Speaker 1: lift the lid on this can of worms and tell 35 00:01:48,240 --> 00:01:50,880 Speaker 1: you everything you need to know about what could feasibly 36 00:01:50,880 --> 00:01:54,680 Speaker 1: become one of the biggest companies in the world. I 37 00:01:54,720 --> 00:01:57,040 Speaker 1: hope you enjoy listening to these two pieces, and I'll 38 00:01:57,040 --> 00:01:59,480 Speaker 1: be back talking crypto with Mike very soon, so be 39 00:01:59,560 --> 00:02:02,360 Speaker 1: sure to stay tuned. And if you want even more 40 00:02:02,440 --> 00:02:05,240 Speaker 1: content from coin Bureau, be sure to subscribe to our 41 00:02:05,280 --> 00:02:28,480 Speaker 1: YouTube channel and visit us on social media too. Last 42 00:02:28,520 --> 00:02:31,480 Speaker 1: week saw one of the most dramatic meltdowns in the 43 00:02:31,520 --> 00:02:35,560 Speaker 1: financial markets for years, and meltdown which could have led 44 00:02:35,800 --> 00:02:39,639 Speaker 1: to a complete collapse in the UK sovereign debt market. 45 00:02:40,480 --> 00:02:42,920 Speaker 1: It was so severe that it forced the Bank of 46 00:02:42,960 --> 00:02:46,320 Speaker 1: England to try and calm the situation by turning the 47 00:02:46,400 --> 00:02:50,680 Speaker 1: money printer back on. However, every action has an equal 48 00:02:50,800 --> 00:02:55,840 Speaker 1: and opposite reaction, unintended consequences will rear their ugly heads. 49 00:02:56,280 --> 00:02:59,240 Speaker 1: In this video, I'm going to explain exactly what happened 50 00:02:59,360 --> 00:03:02,840 Speaker 1: and what could mean for the markets going forward. So 51 00:03:03,360 --> 00:03:07,640 Speaker 1: don't go anywhere now. I assume that not all of 52 00:03:07,680 --> 00:03:10,840 Speaker 1: you have been keeping up to date with UK politics recently, 53 00:03:10,880 --> 00:03:14,040 Speaker 1: and to be honest, I don't blame you. So three 54 00:03:14,040 --> 00:03:17,600 Speaker 1: months ago, then Prime Minister Boris Johnson was forced to resign, 55 00:03:17,680 --> 00:03:21,040 Speaker 1: having lost the faith of the Conservative Party. Why this 56 00:03:21,120 --> 00:03:24,000 Speaker 1: happened is beyond the scope of this video, suffice to 57 00:03:24,000 --> 00:03:26,880 Speaker 1: say that it had been a long time coming. The 58 00:03:26,919 --> 00:03:31,400 Speaker 1: Conservatives then held a lengthy internal election process to determine 59 00:03:31,440 --> 00:03:33,640 Speaker 1: who would be the new leader of the party and 60 00:03:33,680 --> 00:03:37,360 Speaker 1: hence Prime Minister. Conservative MPs narrowed the field down to 61 00:03:37,440 --> 00:03:40,440 Speaker 1: two candidates, who then had to secure votes from the 62 00:03:40,480 --> 00:03:44,880 Speaker 1: wider party membership. After a long, bitter and frankly often 63 00:03:45,000 --> 00:03:49,200 Speaker 1: tedious battle with former Chancellor Rishie Sunac, Liz Trust won 64 00:03:49,240 --> 00:03:52,480 Speaker 1: the election with a total of eighty one thousand votes. 65 00:03:52,960 --> 00:03:58,000 Speaker 1: That's right, party members decided the future leader of an 66 00:03:58,160 --> 00:04:03,360 Speaker 1: entire country. That folks is democracy, apparently any who. Liz 67 00:04:03,520 --> 00:04:07,200 Speaker 1: Julie appointed her cabinet and named a loyalist and close friend, 68 00:04:07,280 --> 00:04:10,680 Speaker 1: Quasi Quatanan, as the Chancellor of the Exchequer. This is 69 00:04:10,720 --> 00:04:13,680 Speaker 1: effectively the Minister of Finance is akin to the Treasury 70 00:04:13,720 --> 00:04:17,880 Speaker 1: Secretary in the US. We Brits are just better at titles. Now, 71 00:04:17,920 --> 00:04:21,000 Speaker 1: after a hiatus caused by the death of Queen Elizabeth 72 00:04:21,120 --> 00:04:25,080 Speaker 1: and a subsequent period of morning business was resumed, Quasi 73 00:04:25,200 --> 00:04:28,600 Speaker 1: unveiled his new mini budget in the House of Commons 74 00:04:28,680 --> 00:04:31,960 Speaker 1: and it did not go down well. Now. One of 75 00:04:32,000 --> 00:04:35,040 Speaker 1: the most contentious parts of this mini budget was a 76 00:04:35,120 --> 00:04:39,400 Speaker 1: tax cut which was overwhelmingly favorable to the rich. Quasi 77 00:04:39,640 --> 00:04:44,320 Speaker 1: effectively scrapped the top fort tax rate. Now, this of 78 00:04:44,320 --> 00:04:47,000 Speaker 1: course meant that the government would be short of change 79 00:04:47,080 --> 00:04:51,360 Speaker 1: forty five billion pounds to be exact. More on that later. Now, 80 00:04:51,400 --> 00:04:54,800 Speaker 1: if that didn't sufficiently dent the market's confidence. Then the 81 00:04:55,040 --> 00:04:59,720 Speaker 1: energy subsidy certainly did sixty billion pounds worth over the 82 00:05:00,000 --> 00:05:03,480 Speaker 1: next six months. However, it's not only the cost that 83 00:05:03,520 --> 00:05:06,520 Speaker 1: we would witness over the next six months that's the issue. 84 00:05:06,839 --> 00:05:09,599 Speaker 1: It's the cost of this fiscal package over the next 85 00:05:09,839 --> 00:05:13,720 Speaker 1: five years. By some estimates, this could be as much 86 00:05:13,760 --> 00:05:18,279 Speaker 1: as one hundred and sixty one billion pounds. So the 87 00:05:18,320 --> 00:05:22,159 Speaker 1: inevitable question naturally arose, how on earth is all this 88 00:05:22,320 --> 00:05:25,360 Speaker 1: going to be paid for? Well, what does anyone do 89 00:05:25,440 --> 00:05:28,480 Speaker 1: when they want to spend without earning income. That's right, 90 00:05:28,760 --> 00:05:32,240 Speaker 1: they borrow. The thing is that markets are not all 91 00:05:32,279 --> 00:05:34,440 Speaker 1: that happy to invest in the sovereign debt of a 92 00:05:34,520 --> 00:05:38,400 Speaker 1: country that's becoming less credit worthy. They're also not too 93 00:05:38,440 --> 00:05:41,520 Speaker 1: happy to hold the currency of a country that is 94 00:05:41,560 --> 00:05:45,400 Speaker 1: likely going to feed further inflation with reckless fiscal spending. 95 00:05:46,440 --> 00:05:50,000 Speaker 1: The result was an unprecedented shock to the markets. The 96 00:05:50,080 --> 00:05:53,279 Speaker 1: pound hit a near all time low of one dollar 97 00:05:53,360 --> 00:05:56,159 Speaker 1: and four cents in the early hours of Monday morning. 98 00:05:56,600 --> 00:06:00,960 Speaker 1: It had many people, including myself, wondering whether parity was 99 00:06:01,000 --> 00:06:04,200 Speaker 1: on the cards. But the collapse in the pound was 100 00:06:04,279 --> 00:06:07,839 Speaker 1: not even the worst of our concerns. That's because the 101 00:06:08,000 --> 00:06:12,560 Speaker 1: moves in the guilt market were even more alarming. Now, 102 00:06:12,560 --> 00:06:16,960 Speaker 1: for those unfamiliar with archaic British fiscal terminology, guilts is 103 00:06:17,000 --> 00:06:20,520 Speaker 1: the term used to refer to British government bonds. It's 104 00:06:20,560 --> 00:06:25,240 Speaker 1: a shortening of the term guilt edged securities fact fans. Now, 105 00:06:25,279 --> 00:06:28,320 Speaker 1: in the wake of the mini budgets announcement, foreign investors 106 00:06:28,360 --> 00:06:32,000 Speaker 1: began dumping their guilts as they digested the news. The 107 00:06:32,120 --> 00:06:34,560 Speaker 1: scale of the selling was so bad that it was 108 00:06:34,600 --> 00:06:39,359 Speaker 1: the worst day in the UK guilt market since According 109 00:06:39,520 --> 00:06:42,800 Speaker 1: to the head of UK rate strategy at HSBC Quote, 110 00:06:43,400 --> 00:06:47,080 Speaker 1: the moves in long end yields were nothing short of incredible. 111 00:06:47,120 --> 00:06:50,640 Speaker 1: The guilt market was in free fall. As a result 112 00:06:50,640 --> 00:06:53,359 Speaker 1: of this sell off, there was an unprecedented rise in 113 00:06:53,400 --> 00:06:56,560 Speaker 1: the yield on guilts. Now over here you can see 114 00:06:56,600 --> 00:06:59,440 Speaker 1: the charts on the yield of the longest dated guilt 115 00:06:59,480 --> 00:07:03,880 Speaker 1: thirty years is it's quite hard to appreciate how crazy 116 00:07:04,080 --> 00:07:07,080 Speaker 1: moves like this are in a thirty year instrument. That 117 00:07:07,160 --> 00:07:10,000 Speaker 1: this was one for the record books. They went from 118 00:07:10,000 --> 00:07:13,040 Speaker 1: about three point six on the twenty second September to 119 00:07:13,240 --> 00:07:17,800 Speaker 1: over five the following Wednesday, the highest level in twenty years, 120 00:07:18,560 --> 00:07:20,520 Speaker 1: and it's not only the fact that the yield was 121 00:07:20,600 --> 00:07:23,680 Speaker 1: reaching such crazy levels, but it's also the speed at 122 00:07:23,680 --> 00:07:27,160 Speaker 1: which they were moving. Here you can see the volatility 123 00:07:27,200 --> 00:07:31,320 Speaker 1: around these yields. It's pretty crazy. So why is this 124 00:07:31,400 --> 00:07:34,040 Speaker 1: a problem. Well, if you were an investor who got 125 00:07:34,080 --> 00:07:38,120 Speaker 1: exposure to guilt's synthetically i e. Through derivatives, you would 126 00:07:38,200 --> 00:07:41,720 Speaker 1: need to post collateral to fund these traits. But it 127 00:07:41,800 --> 00:07:45,640 Speaker 1: was even worse for those investors and institutions that had 128 00:07:45,760 --> 00:07:49,880 Speaker 1: entered derivative agreements that were exposed to moves in guilt yields. 129 00:07:50,360 --> 00:07:53,600 Speaker 1: The largest investors of this type were those who employed 130 00:07:53,680 --> 00:07:58,000 Speaker 1: an l d I or liability driven investment strategy. For 131 00:07:58,040 --> 00:08:01,240 Speaker 1: those unfamiliar, this is an investor style that attempts to 132 00:08:01,280 --> 00:08:06,320 Speaker 1: hedge out liability exposure. And those with the most exposure 133 00:08:06,360 --> 00:08:10,920 Speaker 1: to longer dated guilt yields were pension funds. That's because 134 00:08:11,120 --> 00:08:15,640 Speaker 1: their liabilities present value of pension payments are discounted using 135 00:08:15,680 --> 00:08:19,720 Speaker 1: applicable interest rates. Now I've linked to some resources that 136 00:08:19,800 --> 00:08:22,440 Speaker 1: explain l d I in a bit more detailed down below. 137 00:08:23,440 --> 00:08:27,559 Speaker 1: But whereas older ld I strategies just involved holding longer 138 00:08:27,680 --> 00:08:32,360 Speaker 1: dated government debt, new strategies involved complicated interest rate derivative 139 00:08:32,360 --> 00:08:35,760 Speaker 1: structures in what are called l d I funds. These 140 00:08:35,800 --> 00:08:41,280 Speaker 1: included the likes of interest rate swaps, guilt total return swaps, swaptions, 141 00:08:41,280 --> 00:08:44,800 Speaker 1: and other complex instruments. Not only that, but these were 142 00:08:44,920 --> 00:08:49,440 Speaker 1: leveraged up to four times. This meant that those pension funds, 143 00:08:49,559 --> 00:08:52,520 Speaker 1: or indeed anyone who invested in l d I funds, 144 00:08:52,800 --> 00:08:56,560 Speaker 1: were exposed to outsize moves in interest rates, they would 145 00:08:56,600 --> 00:08:59,880 Speaker 1: need to post collateral as their derivative hedges unwound quit 146 00:09:00,320 --> 00:09:03,200 Speaker 1: than they could raise the cash. Now, I know what 147 00:09:03,240 --> 00:09:07,079 Speaker 1: you're thinking, Who on Earth structured and developed these ld 148 00:09:07,200 --> 00:09:10,920 Speaker 1: I funds. Well, that would be the likes of black Rock, 149 00:09:11,200 --> 00:09:15,640 Speaker 1: Insight Legal in General and their ILK. It's pretty crazy 150 00:09:15,720 --> 00:09:18,360 Speaker 1: to think that your mum's pension is being hedged by 151 00:09:18,360 --> 00:09:20,800 Speaker 1: the likes of these chaps. But hey, this is the 152 00:09:20,840 --> 00:09:24,280 Speaker 1: world of fiat finance, folks. It's like an iceberg with 153 00:09:24,320 --> 00:09:28,319 Speaker 1: a whole lot of risk lurking beneath the surface. Now, 154 00:09:28,320 --> 00:09:30,959 Speaker 1: the point is that pension funds were in a deeply 155 00:09:31,040 --> 00:09:34,480 Speaker 1: unfortunate situation as they were forced to post collateral on 156 00:09:34,559 --> 00:09:38,640 Speaker 1: derivative trades that no one had anticipated. This meant that 157 00:09:38,720 --> 00:09:41,320 Speaker 1: these pension funds had to conduct a fire sale of 158 00:09:41,320 --> 00:09:44,480 Speaker 1: their assets in order to free up liquidity to post 159 00:09:44,600 --> 00:09:48,760 Speaker 1: this collateral. Apparently, some funds even made calls for cash 160 00:09:48,920 --> 00:09:53,800 Speaker 1: to employers backing their plans. According to the Financial Times, 161 00:09:53,880 --> 00:09:58,320 Speaker 1: outsourcing groups CIRCO provided sixty million pounds after a request 162 00:09:58,400 --> 00:10:02,760 Speaker 1: from pension trustees, something incredibly unusual for such a well 163 00:10:02,840 --> 00:10:06,719 Speaker 1: funded scheme. But the rush to sell assets had an 164 00:10:06,720 --> 00:10:10,520 Speaker 1: even more perverse effect, a self inducing chain reaction that 165 00:10:10,679 --> 00:10:16,319 Speaker 1: could actually have brought the financial markets to a standstill. Basically, 166 00:10:16,480 --> 00:10:20,040 Speaker 1: in order to realize that liquidity, these pension funds needed 167 00:10:20,080 --> 00:10:23,960 Speaker 1: to sell other assets to free up cash. Well, it 168 00:10:24,000 --> 00:10:27,240 Speaker 1: turns out that pension funds hold a lot of guilts 169 00:10:27,440 --> 00:10:32,400 Speaker 1: as well. Not only that, but these are among the 170 00:10:32,440 --> 00:10:35,240 Speaker 1: most liquid assets they hold and thus some of the 171 00:10:35,320 --> 00:10:39,600 Speaker 1: easiest to realize for cash. Hence, pension funds started dumping 172 00:10:39,720 --> 00:10:42,800 Speaker 1: their guilts too. This of course meant that there were 173 00:10:42,840 --> 00:10:46,320 Speaker 1: further falls in the prices of these guilts and rises 174 00:10:46,360 --> 00:10:49,800 Speaker 1: in the interest rates on them. Higher rates, more collateral 175 00:10:49,840 --> 00:10:53,720 Speaker 1: calls on leveraged LDI trades, more guilt selling. It's a 176 00:10:53,760 --> 00:10:57,720 Speaker 1: spiral of guilt, fire sales and collateral calls. Things were 177 00:10:57,720 --> 00:11:02,600 Speaker 1: getting seriously out of hand. There was a legitimate concern 178 00:11:02,760 --> 00:11:06,400 Speaker 1: that this could devolve into a full blown financial crisis, 179 00:11:06,679 --> 00:11:09,960 Speaker 1: and unlike in two thousand and eight when it involved banks, 180 00:11:09,960 --> 00:11:13,440 Speaker 1: this would have involved the one point five trillion pound 181 00:11:13,559 --> 00:11:17,680 Speaker 1: pension sector. According to a senior London banker quoted in 182 00:11:17,720 --> 00:11:20,920 Speaker 1: the same FT article, quote at some point this morning 183 00:11:20,960 --> 00:11:23,679 Speaker 1: I was worried this was the beginning of the end. 184 00:11:24,400 --> 00:11:27,320 Speaker 1: He also added that at that time there were no 185 00:11:27,760 --> 00:11:32,840 Speaker 1: buyers of long dated UK guilts. According to Karen Rosenberg, 186 00:11:32,920 --> 00:11:37,400 Speaker 1: Cardano Investment chief executive quote, if there was no intervention today, 187 00:11:37,520 --> 00:11:40,080 Speaker 1: guilt yields could have gone up to seven to eight 188 00:11:40,080 --> 00:11:43,560 Speaker 1: percent from four point five percent this morning, and in 189 00:11:43,600 --> 00:11:47,680 Speaker 1: that situation around ninety percent of UK pension funds would 190 00:11:47,679 --> 00:11:52,240 Speaker 1: have run out of collateral. For reference, Cardano Investments manages 191 00:11:52,400 --> 00:11:56,440 Speaker 1: LDI strategies for about thirty UK pension schemes worth roughly 192 00:11:56,600 --> 00:12:00,240 Speaker 1: fifty billion pounds in assets, and no nothing to do 193 00:12:00,320 --> 00:12:04,240 Speaker 1: with the Layer one blockchain project. Now, this statement was 194 00:12:04,360 --> 00:12:07,120 Speaker 1: made as part of a plea to the Bank of England, 195 00:12:07,200 --> 00:12:11,319 Speaker 1: the Central Bank of the UK, to intervene in the market. However, 196 00:12:11,480 --> 00:12:14,520 Speaker 1: could the bank really step in and do something. I mean, 197 00:12:14,840 --> 00:12:17,080 Speaker 1: it was in the middle of a rate tightening cycle 198 00:12:17,200 --> 00:12:20,559 Speaker 1: and had stopped its guilt buying program only a few 199 00:12:20,600 --> 00:12:24,440 Speaker 1: weeks ago. Well, the fear in the markets was just 200 00:12:24,679 --> 00:12:27,240 Speaker 1: too great and caused the Bank of England to warn 201 00:12:27,360 --> 00:12:32,080 Speaker 1: of a quote material risk to UK financial stability. It 202 00:12:32,240 --> 00:12:36,360 Speaker 1: duly unleashed a sixty five billion pound bond buying program 203 00:12:36,480 --> 00:12:40,679 Speaker 1: on Wednesday. In other words, quantitative easing, or in the 204 00:12:40,720 --> 00:12:46,240 Speaker 1: parlance of our times money printer go. It was an 205 00:12:46,320 --> 00:12:49,200 Speaker 1: unprecedented action for a central bank which had only a 206 00:12:49,200 --> 00:12:53,840 Speaker 1: week previously raised interest rates by fifty basis points, A 207 00:12:53,920 --> 00:12:57,680 Speaker 1: bank that stated it was committed to fighting inflation, A 208 00:12:57,760 --> 00:13:01,319 Speaker 1: bank which now finds itself turning on the printing presses again, 209 00:13:01,800 --> 00:13:04,840 Speaker 1: or to clean up the mess that kama Quasi, Kwarteng 210 00:13:04,960 --> 00:13:08,360 Speaker 1: and ld I Funds had got us into. Speaking of which, 211 00:13:08,520 --> 00:13:11,280 Speaker 1: did you guys know that black Rock threatened to halt 212 00:13:11,360 --> 00:13:15,240 Speaker 1: trading for numerous pension fund clients. Yep, It's sent a 213 00:13:15,280 --> 00:13:18,480 Speaker 1: memo to clients that it would quote freeze funds more 214 00:13:18,520 --> 00:13:22,840 Speaker 1: at risk of assets being exhausted. Trustees at pension funds 215 00:13:22,880 --> 00:13:26,600 Speaker 1: mentioned that the actions left pension schemes unable to take 216 00:13:26,640 --> 00:13:30,800 Speaker 1: steps to protect their members. Literally, these funds could not 217 00:13:31,120 --> 00:13:35,360 Speaker 1: buy or sell assets at that time. Anyway, the Bank 218 00:13:35,400 --> 00:13:39,040 Speaker 1: of England's emergency QUEUI was able to bring calm back 219 00:13:39,040 --> 00:13:42,960 Speaker 1: to the markets in a pretty dramatic fashion. Guilt prices 220 00:13:43,160 --> 00:13:47,560 Speaker 1: rocketed and yields on the instruments fell dramatically. For example, 221 00:13:47,840 --> 00:13:50,640 Speaker 1: the third year guilt fell as much as one hundred 222 00:13:50,679 --> 00:13:54,079 Speaker 1: basis points on the day. It was the biggest rally 223 00:13:54,120 --> 00:13:58,120 Speaker 1: in a single day since in the days that followed 224 00:13:58,160 --> 00:14:01,640 Speaker 1: the yields kept on falling and sterling marked a pretty 225 00:14:01,640 --> 00:14:05,520 Speaker 1: decent rally. It seemed as if the markets were breathing 226 00:14:05,559 --> 00:14:10,560 Speaker 1: a sigh of relief. But at what cost. Well, there's 227 00:14:10,559 --> 00:14:13,760 Speaker 1: the immediate question of what impact the mini budget could 228 00:14:13,760 --> 00:14:16,880 Speaker 1: have on the UK's economy. It was a pretty ill 229 00:14:16,960 --> 00:14:20,880 Speaker 1: thought out plan and has resulted in near universal condemnation. 230 00:14:21,280 --> 00:14:23,120 Speaker 1: I mean, even the folks at the i m F 231 00:14:23,560 --> 00:14:27,200 Speaker 1: issued a statement rebuking the British government. It said, quote, 232 00:14:27,680 --> 00:14:31,200 Speaker 1: given elevated inflation pressures in many countries, including the UK, 233 00:14:31,680 --> 00:14:35,720 Speaker 1: we do not recommend large and untargeted fiscal packages at 234 00:14:35,800 --> 00:14:40,480 Speaker 1: this juncture. Moreover, quote, it is important that fiscal policy 235 00:14:40,560 --> 00:14:44,200 Speaker 1: does not work at cross purposes to monetary policy. I 236 00:14:44,200 --> 00:14:49,640 Speaker 1: mean the but perhaps most damning of all is that 237 00:14:49,680 --> 00:14:52,520 Speaker 1: the i m F said that these measures are likely 238 00:14:52,600 --> 00:14:57,040 Speaker 1: to increase inequality, which is indeed true. That's because not 239 00:14:57,160 --> 00:15:00,640 Speaker 1: only are the richest people in the country getting tax break, 240 00:15:00,760 --> 00:15:04,280 Speaker 1: but the poor are getting a tax hike, not directly, 241 00:15:04,320 --> 00:15:09,440 Speaker 1: of course, but through increased inflation. It's already at record highs, 242 00:15:09,720 --> 00:15:12,640 Speaker 1: and now you also have to add the impact of 243 00:15:12,680 --> 00:15:16,520 Speaker 1: the unfunded fiscal spending. Then you have the pound, which, 244 00:15:16,600 --> 00:15:20,960 Speaker 1: given its devaluation, makes imports that much more expensive, pushing 245 00:15:21,040 --> 00:15:25,640 Speaker 1: inflation still higher. Now I've spoken to many, many friends 246 00:15:25,680 --> 00:15:28,440 Speaker 1: and family members in the UK and they are already 247 00:15:28,600 --> 00:15:32,400 Speaker 1: feeling the impact of the falling pound. Moreover, the weakening 248 00:15:32,440 --> 00:15:36,120 Speaker 1: pound means higher energy costs, which could even dampen much 249 00:15:36,200 --> 00:15:40,240 Speaker 1: of the short term relief derived from those energy subsidies. Then, 250 00:15:40,280 --> 00:15:42,960 Speaker 1: of course there is the impact that the actions by 251 00:15:43,040 --> 00:15:45,760 Speaker 1: the Bank of England are likely to have. It was 252 00:15:45,840 --> 00:15:50,880 Speaker 1: supposed to be fighting inflation and selling guilts in the market. However, 253 00:15:51,200 --> 00:15:54,880 Speaker 1: its actions last week ran counter to that policy. Not 254 00:15:55,000 --> 00:15:58,520 Speaker 1: only do we now have more money in the system inflationary, 255 00:15:58,560 --> 00:16:01,240 Speaker 1: but it also dealt amount sift blow to the Bank 256 00:16:01,280 --> 00:16:06,720 Speaker 1: of England's credibility. For central banks, credibility is essential people 257 00:16:06,960 --> 00:16:11,080 Speaker 1: build their inflation expectations on the word of central banks. 258 00:16:11,800 --> 00:16:15,320 Speaker 1: In August, inflation was already at nine point nine percent, 259 00:16:15,440 --> 00:16:17,840 Speaker 1: and there are many analysts who think it could go 260 00:16:18,000 --> 00:16:21,840 Speaker 1: into the high double digits next year. For example, City 261 00:16:21,880 --> 00:16:24,880 Speaker 1: Bank thinks that if the energy crisis deepens, we could 262 00:16:24,920 --> 00:16:29,080 Speaker 1: see inflation at eighteen percent early next year. Just think 263 00:16:29,080 --> 00:16:32,240 Speaker 1: about that. What this means is that the Bank of 264 00:16:32,240 --> 00:16:35,000 Speaker 1: England is going to have to be even more aggressive 265 00:16:35,040 --> 00:16:37,960 Speaker 1: when it comes to hiking interest rates in the coming months, 266 00:16:38,000 --> 00:16:42,080 Speaker 1: and that itself has some really adverse implications for the 267 00:16:42,240 --> 00:16:45,960 Speaker 1: UK mortgage market. You see, not only did the mini 268 00:16:46,000 --> 00:16:48,720 Speaker 1: budget lead to panic in the UK pension funds, but 269 00:16:48,800 --> 00:16:52,520 Speaker 1: it also led to mayhem in the mortgage market. Numerous 270 00:16:52,720 --> 00:16:56,440 Speaker 1: mortgage providers in the UK started with drawing their products 271 00:16:56,520 --> 00:16:59,960 Speaker 1: in the days after the budget. That's because they were 272 00:17:00,160 --> 00:17:04,359 Speaker 1: unable to price them amid all the market uncertainty. According 273 00:17:04,400 --> 00:17:08,880 Speaker 1: to The Guardian, about of mortgage deals have been withdrawn 274 00:17:09,680 --> 00:17:12,840 Speaker 1: during those days when guilt yields were rallying. These fixed 275 00:17:12,920 --> 00:17:16,359 Speaker 1: rate mortgages were becoming instantly unaffordable for many of the 276 00:17:16,440 --> 00:17:20,520 Speaker 1: smaller banks operating on tighter profit margins. There was also 277 00:17:20,680 --> 00:17:24,159 Speaker 1: a flood of applications for these fixed rate mortgages in 278 00:17:24,200 --> 00:17:27,960 Speaker 1: the immediate aftermath of the budget. People were scrambling to 279 00:17:28,040 --> 00:17:31,199 Speaker 1: secure deals before they were priced up on the market. 280 00:17:31,800 --> 00:17:35,160 Speaker 1: According to a mortgage executive quote, I was literally watching 281 00:17:35,160 --> 00:17:38,840 Speaker 1: the application numbers by the minute. We saw a threefold 282 00:17:38,920 --> 00:17:43,399 Speaker 1: increase in existing customers contacting us. According to Andy Golding, 283 00:17:43,520 --> 00:17:47,240 Speaker 1: the chief executive of One Savings quote, there were queues 284 00:17:47,320 --> 00:17:50,280 Speaker 1: around Southampton, Row and up High Hope and people wanting 285 00:17:50,280 --> 00:17:53,800 Speaker 1: to buy a ten point five percent fixed rate mortgage. 286 00:17:54,080 --> 00:17:57,240 Speaker 1: Panic appeared to be gripping the market as people rushed 287 00:17:57,240 --> 00:18:00,320 Speaker 1: to try and grab what might be their last aunts 288 00:18:00,480 --> 00:18:03,639 Speaker 1: at an affordable mortgage. And bear in mind that not 289 00:18:03,800 --> 00:18:06,680 Speaker 1: so long ago ten point five percent would have been 290 00:18:06,720 --> 00:18:12,879 Speaker 1: deemed laughably expensive. How things change. However, what really concerns 291 00:18:12,920 --> 00:18:17,840 Speaker 1: me is what happens when these mortgage rates reset. You see, 292 00:18:17,960 --> 00:18:21,080 Speaker 1: unlike in the US, for instance, where fixed rate mortgages 293 00:18:21,119 --> 00:18:23,720 Speaker 1: can be signed for a term of ten to twenty years, 294 00:18:24,320 --> 00:18:28,119 Speaker 1: fixed rates in the UK are usually much shorter in duration. 295 00:18:28,440 --> 00:18:32,720 Speaker 1: We're generally talking two to five years max. Longer terms 296 00:18:32,720 --> 00:18:36,520 Speaker 1: of ten years are available, but less common. What that 297 00:18:36,600 --> 00:18:40,120 Speaker 1: means is that once these fixed rate mortgages expire, they 298 00:18:40,119 --> 00:18:43,359 Speaker 1: will have to be refinanced at a much higher rate. 299 00:18:43,880 --> 00:18:47,480 Speaker 1: And as we know, interest rates are shooting up thanks 300 00:18:47,520 --> 00:18:51,000 Speaker 1: to the Bank of England's rate policy. After this latest 301 00:18:51,080 --> 00:18:55,320 Speaker 1: mini budget announcement, Bank of America analysts revised their estimates 302 00:18:55,359 --> 00:18:58,479 Speaker 1: for base interest rates in the UK to four percent 303 00:18:58,720 --> 00:19:01,520 Speaker 1: by August of next year. May I remind you that 304 00:19:01,600 --> 00:19:04,760 Speaker 1: the rate is currently at two point to five, which 305 00:19:04,840 --> 00:19:08,000 Speaker 1: means that anyone who secured a fixed rate mortgage over 306 00:19:08,040 --> 00:19:11,040 Speaker 1: the past two years is going to have to refinance 307 00:19:11,119 --> 00:19:15,680 Speaker 1: with much higher mortgage payments. Next year alone, the fixed 308 00:19:15,720 --> 00:19:19,760 Speaker 1: rate mortgages of one point eight million households are due 309 00:19:19,760 --> 00:19:23,560 Speaker 1: to end now. According to data from Bloomberg Economics, the 310 00:19:23,640 --> 00:19:26,920 Speaker 1: cost of a two year mortgage will rise by seventy 311 00:19:27,520 --> 00:19:30,760 Speaker 1: by March of next year compared with January of this year. 312 00:19:31,280 --> 00:19:34,560 Speaker 1: How many UK homeowners will be able to afford to 313 00:19:34,640 --> 00:19:38,000 Speaker 1: refinance at this higher rate with everything else going on? 314 00:19:38,480 --> 00:19:41,639 Speaker 1: Could it exacerbate the cost of living crisis and further 315 00:19:41,760 --> 00:19:45,920 Speaker 1: squeeze ordinary Brits, all while the rich squirrel away those 316 00:19:45,960 --> 00:19:49,680 Speaker 1: supposed tax breaks savings they've been handed. Well, at least 317 00:19:49,720 --> 00:19:54,000 Speaker 1: we have our super secure pensions to fall back on. Right. Okay, 318 00:19:54,280 --> 00:19:57,040 Speaker 1: time for a few of my closing thoughts now, As 319 00:19:57,080 --> 00:20:00,359 Speaker 1: a proud brit watching the fallout from this catast trophic 320 00:20:00,400 --> 00:20:04,720 Speaker 1: budget was painful. That's because not only was the aim 321 00:20:04,800 --> 00:20:08,320 Speaker 1: to reduce taxes for the rich, but given how haphazardly 322 00:20:08,359 --> 00:20:11,200 Speaker 1: it was planned and rolled out, it's the poor who 323 00:20:11,200 --> 00:20:14,120 Speaker 1: will ultimately foot the bill, all at a time when 324 00:20:14,119 --> 00:20:18,040 Speaker 1: things are already tough enough for many, many people. Now, 325 00:20:18,119 --> 00:20:21,040 Speaker 1: as we were preparing to shoot this video, kama Quasi 326 00:20:21,119 --> 00:20:24,760 Speaker 1: Quartan finally realized he had spectacularly failed to read the 327 00:20:24,840 --> 00:20:29,240 Speaker 1: room and announced that the tax cut would be scrapped. 328 00:20:29,480 --> 00:20:33,800 Speaker 1: A wise move, but the damage has been done. The 329 00:20:33,840 --> 00:20:36,040 Speaker 1: collapse of the pound and the fall in the guilt 330 00:20:36,080 --> 00:20:39,720 Speaker 1: markets led to some severe market stresses that almost brought 331 00:20:39,720 --> 00:20:43,760 Speaker 1: pension funds to the brink. Pension funds where the ultimate 332 00:20:43,800 --> 00:20:47,520 Speaker 1: beneficiaries are likely to be middle income earners with limited 333 00:20:47,640 --> 00:20:51,320 Speaker 1: nest eggs. Pension funds where the trustees were duped into 334 00:20:51,400 --> 00:20:54,560 Speaker 1: leverage by high flying ld I funds from the likes 335 00:20:54,640 --> 00:20:57,960 Speaker 1: of black Rock at OWL. A budget that ultimately lead 336 00:20:58,000 --> 00:21:01,240 Speaker 1: to cascading collateral calls that threatened to drive the UK 337 00:21:01,400 --> 00:21:04,760 Speaker 1: guilt market into the ground. It was only when the 338 00:21:04,800 --> 00:21:08,080 Speaker 1: Bank of England took the drastic and embarrassing step of 339 00:21:08,280 --> 00:21:11,879 Speaker 1: emergency quee that the markets breathed a sigh of relief. 340 00:21:12,240 --> 00:21:15,760 Speaker 1: But that didn't come without consequences, not only for the 341 00:21:15,760 --> 00:21:19,800 Speaker 1: bank's reputation, but also the inflation and interest rate outlook 342 00:21:20,040 --> 00:21:22,720 Speaker 1: for the coming year. As we're now seeing with the 343 00:21:22,760 --> 00:21:26,000 Speaker 1: mortgage product moves in the UK, higher interest rates are 344 00:21:26,040 --> 00:21:29,880 Speaker 1: already starting to break things. People are being squeezed from 345 00:21:30,000 --> 00:21:32,760 Speaker 1: both ends and now it's not even a question of 346 00:21:32,760 --> 00:21:35,720 Speaker 1: whether they can afford to heat their home, but whether 347 00:21:35,760 --> 00:21:38,919 Speaker 1: they will be able to keep it now. I know, 348 00:21:39,240 --> 00:21:41,760 Speaker 1: I know. It all sounds gloomier than a rainy day 349 00:21:41,760 --> 00:21:45,240 Speaker 1: in Stoke on Trent, but there are some silver linings 350 00:21:45,240 --> 00:21:48,880 Speaker 1: to this cloud. Guilty yields appear to have stabilized and 351 00:21:49,040 --> 00:21:53,080 Speaker 1: the panic appears to have subsided. Pension funds may also 352 00:21:53,359 --> 00:21:58,120 Speaker 1: use the opportunity to reassess the ld I strategies they employ. Moreover, 353 00:21:58,440 --> 00:22:01,800 Speaker 1: a higher rates environment does mean that the present value 354 00:22:01,840 --> 00:22:05,840 Speaker 1: of these liabilities is much less pronounced. I e. Better funded, 355 00:22:06,440 --> 00:22:10,080 Speaker 1: and while the energy subsidy may lead to additional inflation, 356 00:22:10,119 --> 00:22:12,520 Speaker 1: in the long term, it should help some of those 357 00:22:12,560 --> 00:22:15,119 Speaker 1: who are struggling at least make it through the winter. 358 00:22:15,720 --> 00:22:23,880 Speaker 1: Every little helps these days. Right, there is a crypto 359 00:22:23,960 --> 00:22:27,280 Speaker 1: company that's backed by Wall Street titans like Black Rock 360 00:22:27,440 --> 00:22:31,080 Speaker 1: and Goldman Sachs. It's a crypto company that has received 361 00:22:31,160 --> 00:22:35,760 Speaker 1: more funding than almost every crypto project in existence. Not 362 00:22:35,880 --> 00:22:39,480 Speaker 1: only that, but this company has been subsidizing the US 363 00:22:39,560 --> 00:22:44,000 Speaker 1: government spending and has close connections to the Federal Reserve. 364 00:22:44,560 --> 00:22:48,960 Speaker 1: It's stock is even scheduled to list on exchanges later 365 00:22:49,000 --> 00:22:52,320 Speaker 1: this year. Today, I'm going to tell you all about 366 00:22:52,359 --> 00:22:56,040 Speaker 1: a company that's slowly taking over the crypto industry and 367 00:22:56,160 --> 00:22:59,639 Speaker 1: explain why you need to pay close attention if you 368 00:22:59,720 --> 00:23:04,480 Speaker 1: care about financial freedom. If you've been paying attention in crypto, 369 00:23:04,640 --> 00:23:07,359 Speaker 1: you'll know that the crypto company I'm talking about today 370 00:23:07,560 --> 00:23:10,280 Speaker 1: is the one and only Circle, the issuer of the 371 00:23:10,400 --> 00:23:13,400 Speaker 1: U S d C stable coin. What many of you 372 00:23:13,480 --> 00:23:16,480 Speaker 1: may not know, however, is that Circle did not start 373 00:23:16,520 --> 00:23:19,760 Speaker 1: out as a stable coin company, and its roots in 374 00:23:19,800 --> 00:23:24,879 Speaker 1: the crypto industry go very deep. Circle Internet Financial, Inc. 375 00:23:25,000 --> 00:23:29,040 Speaker 1: Or Circle, was founded way back in by Jeremy Alair 376 00:23:29,160 --> 00:23:33,280 Speaker 1: and Sean Neville. Jeremy and Sean have been working together 377 00:23:33,400 --> 00:23:36,040 Speaker 1: for decades to build and then sell or I p 378 00:23:36,160 --> 00:23:40,360 Speaker 1: O cutting edge technology companies, notably the A Layer Corporation 379 00:23:40,480 --> 00:23:44,840 Speaker 1: and bright Cove. One of Jeremy's oldest videos on YouTube 380 00:23:44,960 --> 00:23:47,880 Speaker 1: is a presentation he did shortly before leaving bright Cove 381 00:23:48,000 --> 00:23:52,040 Speaker 1: to create Circle. In this video, Jeremy explains how the 382 00:23:52,160 --> 00:23:55,720 Speaker 1: final step of building a successful technology company is to 383 00:23:55,840 --> 00:23:59,960 Speaker 1: exit i e. Sell to a bigger company or list 384 00:24:00,160 --> 00:24:04,280 Speaker 1: on a stock exchange. More about that later on that note. 385 00:24:04,400 --> 00:24:07,639 Speaker 1: Another of Jeremy's oldest videos on YouTube can be found 386 00:24:07,720 --> 00:24:12,440 Speaker 1: on the World Economic Forum's official YouTube channel. It appears 387 00:24:12,600 --> 00:24:14,720 Speaker 1: that Jeremy has been a part of the WEST for 388 00:24:14,880 --> 00:24:17,439 Speaker 1: many years, and if you watched our video about the 389 00:24:17,480 --> 00:24:21,560 Speaker 1: West's Davos conference, you'll know that he was there this year. 390 00:24:22,680 --> 00:24:26,560 Speaker 1: Jeremy has served as the chairman and CEO of Circle 391 00:24:26,640 --> 00:24:30,639 Speaker 1: ever since it was founded in Sean served as the 392 00:24:30,720 --> 00:24:34,560 Speaker 1: president of Circle until late nine, when he stepped down 393 00:24:34,640 --> 00:24:39,239 Speaker 1: to join Circle's board of directors. Jeremy explained in one 394 00:24:39,320 --> 00:24:42,399 Speaker 1: interview that Sean is still involved with the company and 395 00:24:42,440 --> 00:24:47,760 Speaker 1: working on secret stuff. When Circle first began, its focus 396 00:24:48,040 --> 00:24:52,680 Speaker 1: was Bitcoin payments. Like other payments companies such as MasterCard 397 00:24:52,720 --> 00:24:56,159 Speaker 1: and Visa, Circle wanted Bitcoin to become the base layer 398 00:24:56,359 --> 00:25:00,680 Speaker 1: for the new financial system. Now, the financials system these 399 00:25:00,760 --> 00:25:06,720 Speaker 1: entities envisioned was not open and decentralized, but closed and centralized. 400 00:25:07,520 --> 00:25:11,440 Speaker 1: To that end, these entities effectively tried to force Bitcoin 401 00:25:11,600 --> 00:25:14,800 Speaker 1: to fit their vision. They pushed for all the old 402 00:25:14,840 --> 00:25:18,359 Speaker 1: coin innovations, such as token ization and smart contracts to 403 00:25:18,480 --> 00:25:22,880 Speaker 1: be brought to Bitcoin. They also pushed for Bitcoin's block 404 00:25:22,960 --> 00:25:25,760 Speaker 1: size to be increased so that it could scale I e. 405 00:25:26,119 --> 00:25:31,359 Speaker 1: B faster. This is where things get interesting. According to 406 00:25:31,560 --> 00:25:36,320 Speaker 1: various coin Telegraph articles, from Circle was the first gold 407 00:25:36,400 --> 00:25:40,360 Speaker 1: member of the Bitcoin Foundation. For those unfamiliar, the Bitcoin 408 00:25:40,400 --> 00:25:45,480 Speaker 1: Foundation was founded in twelve by early bitcoin developer Gavin Andresen, 409 00:25:45,680 --> 00:25:49,119 Speaker 1: who pushed for Bitcoin's block size to be increased until 410 00:25:49,200 --> 00:25:54,359 Speaker 1: he left the foundation in Those familiar with Bitcoin's history 411 00:25:54,400 --> 00:25:57,240 Speaker 1: will know that the efforts of these entities to increase 412 00:25:57,280 --> 00:26:01,040 Speaker 1: bitcoins block size hit their apex in twenty seventeen with 413 00:26:01,119 --> 00:26:05,080 Speaker 1: the so called New York Agreement the TLDR. There is 414 00:26:05,119 --> 00:26:09,480 Speaker 1: that sixty corporations tried and failed to convince the Bitcoin 415 00:26:09,520 --> 00:26:13,080 Speaker 1: community to increase bitcoins block size. As a fun fact, 416 00:26:13,359 --> 00:26:17,680 Speaker 1: the New York agreement was reportedly overseen by Digital Currency 417 00:26:17,720 --> 00:26:23,320 Speaker 1: Group or DCG. Now DCG owns gray Scale and coin Desk, 418 00:26:23,480 --> 00:26:27,000 Speaker 1: and hold stakes in top crypto projects including coin base 419 00:26:27,119 --> 00:26:32,320 Speaker 1: and you guessed it, Circle, naturally, coin based CEO Brian 420 00:26:32,400 --> 00:26:37,440 Speaker 1: Armstrong also wanted to increase bitcoins block size. Now, as 421 00:26:37,600 --> 00:26:42,160 Speaker 1: almost all of you will know, Sen saw crypto's previous 422 00:26:42,200 --> 00:26:45,800 Speaker 1: bull run. By that time, Circle had raised around one 423 00:26:45,880 --> 00:26:49,920 Speaker 1: hundred and twenty seven million dollars from Goldman, Sacks and others. 424 00:26:50,680 --> 00:26:53,639 Speaker 1: Circle had used this capital to create a suite of 425 00:26:53,680 --> 00:26:57,680 Speaker 1: crypto services, including an O t C trading desk. Circle 426 00:26:57,760 --> 00:27:02,880 Speaker 1: also purchased the pollen x exchange. Around this time, Jeremy 427 00:27:02,920 --> 00:27:05,800 Speaker 1: became a part of the International Monetary Fund or i 428 00:27:06,000 --> 00:27:10,199 Speaker 1: mf's High Level Advisory Group on Fintech. For context, the 429 00:27:10,240 --> 00:27:12,720 Speaker 1: purpose of the i m F is to ensure that 430 00:27:12,800 --> 00:27:17,159 Speaker 1: the current US centric financial system continues without interference from 431 00:27:17,200 --> 00:27:22,400 Speaker 1: cryptocurrencies and other such technologies. Now, I wouldn't be mentioning 432 00:27:22,440 --> 00:27:25,200 Speaker 1: this were it not for the fact that Circle and 433 00:27:25,359 --> 00:27:29,320 Speaker 1: other Wall Street funded crypto companies held a closed door 434 00:27:29,440 --> 00:27:33,080 Speaker 1: meeting with the i m F that same year. Obviously, 435 00:27:33,480 --> 00:27:36,840 Speaker 1: this meeting was met with lots of scrutiny from the 436 00:27:36,880 --> 00:27:40,480 Speaker 1: crypto community, and it looks like there have been many 437 00:27:40,680 --> 00:27:45,600 Speaker 1: meetings since now. Jeremy explained in multiple interviews that by 438 00:27:45,640 --> 00:27:49,280 Speaker 1: this point Circle could see that Bitcoin wasn't the future 439 00:27:49,359 --> 00:27:53,399 Speaker 1: of payments. That said, Jeremy still believes that BTC is 440 00:27:53,440 --> 00:27:57,200 Speaker 1: digital gold and could someday serve as the world's next 441 00:27:57,359 --> 00:28:03,240 Speaker 1: reserve currency. In interview, Jeremy said he holds mostly BTC 442 00:28:03,480 --> 00:28:07,720 Speaker 1: and cash. This sounds crazy until you realize that the 443 00:28:07,840 --> 00:28:10,480 Speaker 1: US dollar is on the decline and that central banks 444 00:28:10,520 --> 00:28:14,480 Speaker 1: are increasingly holding alternative currencies as part of their balance sheets. 445 00:28:15,160 --> 00:28:18,680 Speaker 1: Jeremy believes BTC will be a part of that alternative 446 00:28:18,680 --> 00:28:21,480 Speaker 1: currency basket in the next ten to twenty years, which 447 00:28:21,520 --> 00:28:24,879 Speaker 1: is consistent with our predictions. More about that using the 448 00:28:24,920 --> 00:28:29,359 Speaker 1: link in the description. Anyways, thinking that Bitcoin could not 449 00:28:29,400 --> 00:28:32,400 Speaker 1: be the future of payments, Circle and others turned their 450 00:28:32,400 --> 00:28:36,159 Speaker 1: eyes to the next best cryptocurrency on the market. This was, 451 00:28:36,200 --> 00:28:40,360 Speaker 1: of course, Ethereum, which grew significantly during the previous bullmarket 452 00:28:40,400 --> 00:28:44,240 Speaker 1: cycle and established eth as the second largest crypto by 453 00:28:44,280 --> 00:28:48,960 Speaker 1: market cap. Jeremy mentioned in many interviews that Circle started 454 00:28:49,000 --> 00:28:53,000 Speaker 1: considering Ethereum as early as twenty sixteen and settled on 455 00:28:53,080 --> 00:28:55,480 Speaker 1: the decision to build a U S dollar stable coin 456 00:28:55,560 --> 00:29:01,600 Speaker 1: on ethereum. In Circle based a hundred and ten million 457 00:29:01,600 --> 00:29:05,320 Speaker 1: dollars from Chinese crypto mining company bitmain and others to 458 00:29:05,400 --> 00:29:09,280 Speaker 1: build its stable coin. That same year, coin Base and 459 00:29:09,480 --> 00:29:13,640 Speaker 1: Circle founded the Center Consortium to set standards for stable 460 00:29:13,680 --> 00:29:17,160 Speaker 1: coins issued on public block chains and to govern the 461 00:29:17,240 --> 00:29:22,240 Speaker 1: issuance and redemption of the USDC stable coin. Now it's 462 00:29:22,280 --> 00:29:25,800 Speaker 1: important to note that any entity that's part of the 463 00:29:25,840 --> 00:29:31,200 Speaker 1: Center Consortium can mint and redeem stable coins. The USDC 464 00:29:31,400 --> 00:29:35,480 Speaker 1: stable coin officially launched in September twenty eighteen and got 465 00:29:35,520 --> 00:29:39,200 Speaker 1: off to a rough start. This was because September twenty 466 00:29:39,280 --> 00:29:41,959 Speaker 1: eighteen was the middle of the crypto bear market and 467 00:29:42,120 --> 00:29:45,920 Speaker 1: there wasn't much demand for stable coins. As a result, 468 00:29:46,200 --> 00:29:51,200 Speaker 1: usdcs market cap remained mostly flat during this period. In 469 00:29:52,400 --> 00:29:56,160 Speaker 1: Circle subsequently sold its suite of products and services to 470 00:29:56,280 --> 00:30:00,720 Speaker 1: focus on its stable coin. Bias included Kraken, which purchased 471 00:30:00,720 --> 00:30:04,840 Speaker 1: circles OTC trading Desk, and Tron founder Justin Son, who 472 00:30:04,880 --> 00:30:10,240 Speaker 1: reportedly purchased Polognacs from Circle, that's a whole other rabbit hole. 473 00:30:10,800 --> 00:30:14,719 Speaker 1: And speaking of rabbit holes, Circle's head of trading also 474 00:30:14,840 --> 00:30:18,960 Speaker 1: left the company in mid twenty nineteen to establish CMS Holdings. 475 00:30:19,480 --> 00:30:23,000 Speaker 1: CMS Holdings is a well known crypto investing company and 476 00:30:23,240 --> 00:30:27,000 Speaker 1: recently confirmed to our research team via email that there 477 00:30:27,000 --> 00:30:32,480 Speaker 1: are also Defy whales now. This is significant because DEFY 478 00:30:32,720 --> 00:30:36,080 Speaker 1: seems to have been the primary demand driver of usdc's 479 00:30:36,160 --> 00:30:40,120 Speaker 1: market cap growth. This growth appears to have begun around 480 00:30:40,120 --> 00:30:43,760 Speaker 1: the time the coin base began investing USDC in Defy 481 00:30:43,840 --> 00:30:49,120 Speaker 1: protocols in late namely Compound Finance and d y d X. 482 00:30:49,440 --> 00:30:53,600 Speaker 1: Really gets the noggin jogging now. In early twenty Jeremy 483 00:30:53,640 --> 00:30:57,000 Speaker 1: attended the weft's annual conference in Davos, where he preached 484 00:30:57,040 --> 00:31:01,040 Speaker 1: about the power of programmable money. He also talked about 485 00:31:01,080 --> 00:31:04,320 Speaker 1: the importance of a partnership between the public and private 486 00:31:04,320 --> 00:31:08,600 Speaker 1: sector to quote support the development of global stable coins 487 00:31:08,680 --> 00:31:12,959 Speaker 1: backed by its central bank money. Circle even published a 488 00:31:12,960 --> 00:31:15,760 Speaker 1: stable coin white paper for the West, which I honestly 489 00:31:15,840 --> 00:31:17,800 Speaker 1: didn't have the time to read because there are just 490 00:31:18,120 --> 00:31:21,600 Speaker 1: so many rabbit holes there. What I did have time 491 00:31:21,640 --> 00:31:24,240 Speaker 1: to do, however, is listened to an interview with Jeremy, 492 00:31:24,320 --> 00:31:28,720 Speaker 1: where he explained the assets backing USDC will inevitably be 493 00:31:28,800 --> 00:31:32,200 Speaker 1: held at the FED. If you watched our video about 494 00:31:32,240 --> 00:31:35,479 Speaker 1: the assets backing stable coins, you'll know that most stable 495 00:31:35,520 --> 00:31:39,480 Speaker 1: coins are backed by US government debt. This means that 496 00:31:39,520 --> 00:31:43,200 Speaker 1: when you buy a stable coin, you are essentially subsidizing 497 00:31:43,280 --> 00:31:47,400 Speaker 1: the US government spending, a scary thing considering that many 498 00:31:47,680 --> 00:31:52,360 Speaker 1: use stable coins for safety. This also makes it possible 499 00:31:52,440 --> 00:31:55,719 Speaker 1: for Circle to make billions of dollars impassive income. But 500 00:31:55,840 --> 00:31:58,880 Speaker 1: let's not go there just yet. All you need to 501 00:31:58,880 --> 00:32:03,000 Speaker 1: know for now is that Jeremy's repeated prediction that usdc's 502 00:32:03,080 --> 00:32:06,360 Speaker 1: reserves will be held at the FED relates to something 503 00:32:06,440 --> 00:32:11,360 Speaker 1: called a synthetic central bank digital currency, or synthetic CBDC. 504 00:32:12,800 --> 00:32:17,720 Speaker 1: As the name suggests, Synthetic CBDCs involve a partnership between 505 00:32:17,760 --> 00:32:21,360 Speaker 1: a private company, in this case, Circle, and the central 506 00:32:21,400 --> 00:32:24,160 Speaker 1: bank of a country, in this case, the Federal Reserve 507 00:32:24,560 --> 00:32:28,560 Speaker 1: to issue a day facto CBDC, in this case, a 508 00:32:28,640 --> 00:32:32,760 Speaker 1: de facto digital dollar. As you might have guessed, the 509 00:32:32,840 --> 00:32:36,200 Speaker 1: I m F and the WEF are particularly interested in 510 00:32:36,200 --> 00:32:40,760 Speaker 1: this synthetic CBDC set up. It seems the only disagreement 511 00:32:40,840 --> 00:32:45,280 Speaker 1: is about which blockchain will power a synthetic CBDC. Will 512 00:32:45,280 --> 00:32:48,520 Speaker 1: it be a private and permission blockchain created by a 513 00:32:48,560 --> 00:32:52,440 Speaker 1: big bank or a cryptocurrency. More on that in a bit. 514 00:32:53,320 --> 00:32:57,000 Speaker 1: You know this reminds me. Another thing that Jeremy has 515 00:32:57,040 --> 00:33:00,640 Speaker 1: mentioned in many interviews is the prospect of a global 516 00:33:00,680 --> 00:33:03,200 Speaker 1: stable coin that will be modeled on the I m 517 00:33:03,280 --> 00:33:08,600 Speaker 1: F S Special Drawing Rights or SDR. The SDR consists 518 00:33:08,680 --> 00:33:12,800 Speaker 1: of multiple national currencies, and Jeremy believes it will eventually 519 00:33:12,840 --> 00:33:20,200 Speaker 1: include BTC. Spooky, Now where were we are? Yes? As 520 00:33:20,240 --> 00:33:23,840 Speaker 1: you can see, us dcs market cap went parabolic during 521 00:33:23,920 --> 00:33:26,959 Speaker 1: the DeFi summer of twenty and continued to grow as 522 00:33:27,080 --> 00:33:31,360 Speaker 1: u SEC expanded to new exchanges and smart contract cryptocurrencies. 523 00:33:31,880 --> 00:33:35,000 Speaker 1: Any algo holders in the audience will know that Algorand 524 00:33:35,200 --> 00:33:39,080 Speaker 1: was the second blockchain that USDC expanded to. If you 525 00:33:39,120 --> 00:33:41,959 Speaker 1: watched my recent old coin update on coin Bureau clips, 526 00:33:42,040 --> 00:33:45,240 Speaker 1: you'll know that Algorand seems to have a very close 527 00:33:45,280 --> 00:33:50,200 Speaker 1: relationship with both Circle and the Federal Reserve. Circle is 528 00:33:50,240 --> 00:33:53,960 Speaker 1: based in Boston, Massachusetts, a stone throw from m I 529 00:33:54,040 --> 00:33:59,080 Speaker 1: T where Algorand founder Sylvio McCauley is based. CBDC reports 530 00:33:59,120 --> 00:34:02,160 Speaker 1: by the FED that the Central Bank partnered with m 531 00:34:02,160 --> 00:34:06,520 Speaker 1: I T to develop its digital dollar. Meanwhile, a one 532 00:34:06,560 --> 00:34:10,000 Speaker 1: report by accounting firm Price Waterhouse Coopers noted that the 533 00:34:10,040 --> 00:34:13,279 Speaker 1: FED would begin testing quantum resistance on its would be 534 00:34:13,360 --> 00:34:18,480 Speaker 1: blockchain this year. As it so happens, Algorand recently achieved 535 00:34:18,640 --> 00:34:23,200 Speaker 1: quantum resistance through the introduction of state proofs. The total 536 00:34:23,280 --> 00:34:28,160 Speaker 1: supply of USDC on Algorand is also a whopping eighteen trillion, 537 00:34:28,239 --> 00:34:31,399 Speaker 1: which happens to be eerily close to the M two 538 00:34:31,440 --> 00:34:36,520 Speaker 1: money supply of the US dollar probably nothing any who. 539 00:34:36,640 --> 00:34:40,600 Speaker 1: Shortly after Circle announced its multi chain push, former CLS 540 00:34:40,640 --> 00:34:45,760 Speaker 1: Bank CEO David Pooth became the CEO of the Center Consortium. 541 00:34:45,760 --> 00:34:48,440 Speaker 1: Now don't worry if you don't know these names. Jeremy 542 00:34:48,440 --> 00:34:52,160 Speaker 1: mentioned in one interview that CLS Bank is the quote 543 00:34:52,320 --> 00:34:57,160 Speaker 1: biggest bank that nobody knows. CLS Bank apparently settles more 544 00:34:57,160 --> 00:35:01,200 Speaker 1: than two trillion dollars of transactions per day between the 545 00:35:01,320 --> 00:35:06,080 Speaker 1: seventy largest banks on the planet. As per Circle's blog post, 546 00:35:06,280 --> 00:35:10,360 Speaker 1: David's job is to ensure quote the most significant transformation 547 00:35:10,480 --> 00:35:14,000 Speaker 1: of the international monetary system since the formation of the 548 00:35:14,040 --> 00:35:18,959 Speaker 1: Breton Woods system. Oddly enough, David recently stepped away from 549 00:35:18,960 --> 00:35:22,600 Speaker 1: the Center Consortium to become a senior adviser to Circle. 550 00:35:23,719 --> 00:35:26,280 Speaker 1: This might have something to do with the exponential growth 551 00:35:26,360 --> 00:35:30,680 Speaker 1: of Circle, which really began in twenty one. That's because 552 00:35:30,880 --> 00:35:35,560 Speaker 1: Circle raised a staggering four hundred and forty million dollars 553 00:35:35,640 --> 00:35:40,239 Speaker 1: from various crypto vcs, including DCG and f t X, 554 00:35:41,160 --> 00:35:45,480 Speaker 1: all the while Circle was offering high yield USDC accounts 555 00:35:45,520 --> 00:35:49,680 Speaker 1: to institutional investors that were returning between eight and eleven 556 00:35:49,680 --> 00:35:53,120 Speaker 1: percent per year, according to an interview with Jeremy from 557 00:35:53,239 --> 00:35:59,000 Speaker 1: February one. This eventually led to allegations by skeptical journalists 558 00:35:59,040 --> 00:36:02,120 Speaker 1: that Circle was in aging in extremely high risk defy 559 00:36:02,200 --> 00:36:06,240 Speaker 1: activities behind the scenes to earn this high yield. Note 560 00:36:06,520 --> 00:36:09,320 Speaker 1: that this is the same kind of stuff that crypto 561 00:36:09,360 --> 00:36:13,480 Speaker 1: platforms like Celsius and Voyager Digital were doing before they 562 00:36:13,480 --> 00:36:17,719 Speaker 1: went bankrupt. Following the collapse of the crypto market and 563 00:36:17,760 --> 00:36:21,760 Speaker 1: the appointment of SEC chairman Gary Gensler, stable coins began 564 00:36:21,800 --> 00:36:27,000 Speaker 1: to experience lots of scrutiny, including USDC. It didn't take 565 00:36:27,080 --> 00:36:30,319 Speaker 1: long for stable coin issuers to publish details about the 566 00:36:30,360 --> 00:36:34,520 Speaker 1: assets backing all their billions of tokens in circulation. If 567 00:36:34,520 --> 00:36:37,960 Speaker 1: you watched our aforementioned video about the assets backing stable coins, 568 00:36:38,200 --> 00:36:42,440 Speaker 1: you'll know that Pasos took the top spot for collateral quality. 569 00:36:42,840 --> 00:36:46,440 Speaker 1: Circle has since changed the composition of the assets back 570 00:36:46,480 --> 00:36:50,359 Speaker 1: in USDC to match those of Packsos's b U s D. 571 00:36:50,800 --> 00:36:54,600 Speaker 1: Let's just say Tether's reserves are still well, not quite 572 00:36:54,600 --> 00:36:59,000 Speaker 1: at the same level. In case you're wondering around, of 573 00:36:59,040 --> 00:37:03,080 Speaker 1: the USDC circulation is currently backed by short term US 574 00:37:03,160 --> 00:37:08,320 Speaker 1: government debt and is backed by cash. Now, assuming short 575 00:37:08,440 --> 00:37:12,320 Speaker 1: term US government debt means two year treasuries, this means 576 00:37:12,440 --> 00:37:16,000 Speaker 1: that Circle is earning a yield of around four on 577 00:37:16,080 --> 00:37:20,880 Speaker 1: almost forty billion dollars of reserves. If you crunch those numbers, 578 00:37:21,000 --> 00:37:24,279 Speaker 1: that works out too well over one million dollars in 579 00:37:24,440 --> 00:37:29,839 Speaker 1: pure passive income every single month. As I mentioned in 580 00:37:29,840 --> 00:37:32,520 Speaker 1: one of our recent weekly crypto reviews, there is a 581 00:37:32,560 --> 00:37:34,760 Speaker 1: lot that you can do with that kind of money, 582 00:37:34,840 --> 00:37:39,600 Speaker 1: particularly during a bear market, and especially in the crypto industry. 583 00:37:40,160 --> 00:37:43,960 Speaker 1: This incredible potential for passive profit is probably why Circle 584 00:37:44,000 --> 00:37:47,720 Speaker 1: managed to secure a special purpose acquisition company or spack 585 00:37:47,840 --> 00:37:52,320 Speaker 1: deal for its stock to list on US exchanges. Circle 586 00:37:52,400 --> 00:37:55,200 Speaker 1: stock is expected to list by the end of this year, 587 00:37:55,280 --> 00:37:58,400 Speaker 1: but given the current state of the market, this seems 588 00:37:58,520 --> 00:38:02,360 Speaker 1: unlikely in my view at a rate now. Towards the 589 00:38:02,480 --> 00:38:06,520 Speaker 1: end of one, Circles started to call for reasonable crypto 590 00:38:06,560 --> 00:38:10,239 Speaker 1: regulations and seems to have lobbied to that end. The 591 00:38:10,320 --> 00:38:14,960 Speaker 1: company also continued to expand USDC to other blockchains and 592 00:38:15,040 --> 00:38:19,080 Speaker 1: started looking into stable coins for other theat currencies, notably 593 00:38:19,160 --> 00:38:22,920 Speaker 1: the Japanese yen and the New Zealand dollar. Some of 594 00:38:22,960 --> 00:38:27,120 Speaker 1: you will recall that late one is when Terror's algorithmic 595 00:38:27,280 --> 00:38:31,080 Speaker 1: ust stable coin began to gain serious ground, especially in 596 00:38:31,200 --> 00:38:37,440 Speaker 1: defied protocols, where USDC had reigned supreme for almost two years. Interestingly, 597 00:38:37,719 --> 00:38:42,320 Speaker 1: Jeremy had predicted in a interview that decentralized stable coins 598 00:38:42,400 --> 00:38:46,839 Speaker 1: would surface. This is simply because decentralized stable coins are 599 00:38:47,360 --> 00:38:52,200 Speaker 1: well decentralized. This means that their creation and destruction is 600 00:38:52,200 --> 00:38:56,239 Speaker 1: done via voluntary, free market arbitrage, and that nobody can 601 00:38:56,360 --> 00:39:00,959 Speaker 1: freeze or confiscate these tokens. Note that all centralized stable 602 00:39:01,000 --> 00:39:05,560 Speaker 1: coin issuers have frozen tokens in the past. This occasional 603 00:39:05,560 --> 00:39:08,279 Speaker 1: freezing of tokens is just the tip of the iceberg, too, 604 00:39:08,320 --> 00:39:12,400 Speaker 1: because in a interview Jeremy confirmed that Circle has the 605 00:39:12,400 --> 00:39:17,000 Speaker 1: power to freeze all its sable coins in circulation. This 606 00:39:17,200 --> 00:39:20,759 Speaker 1: is a terrifying prospect when you remember that Circle has 607 00:39:20,880 --> 00:39:24,120 Speaker 1: uncomfortably close ties to Wall Street, the I, M F, 608 00:39:24,640 --> 00:39:28,799 Speaker 1: and the West. It's also terrifying to consider that supposedly 609 00:39:28,920 --> 00:39:33,360 Speaker 1: decentralized table coins like maker Dow's Die are backed mostly 610 00:39:33,520 --> 00:39:37,360 Speaker 1: by U s DC. Maker Dow's founder actually called for 611 00:39:37,440 --> 00:39:40,560 Speaker 1: Die to drop its PEG to get off of USDC 612 00:39:41,000 --> 00:39:44,480 Speaker 1: after Circle froze a bunch of tokens related to Tornado Cash. 613 00:39:44,800 --> 00:39:49,000 Speaker 1: More about what happened there in the description. Anyhow, this 614 00:39:49,080 --> 00:39:52,799 Speaker 1: brings us to two now. In my opinion, the most 615 00:39:52,840 --> 00:39:56,160 Speaker 1: important announcement from Circle this year was the release of 616 00:39:56,200 --> 00:40:00,279 Speaker 1: the Verity platform in February. This is because it's to 617 00:40:00,360 --> 00:40:04,279 Speaker 1: roll out digital identities in cryptocurrency, and it looks like 618 00:40:04,400 --> 00:40:08,160 Speaker 1: Polygon was the first to sign on watch out. Two 619 00:40:08,160 --> 00:40:11,160 Speaker 1: months later, Circle announced that it had received another four 620 00:40:11,239 --> 00:40:14,919 Speaker 1: hundred million dollars of funding in around, led by black Rock, 621 00:40:15,040 --> 00:40:19,760 Speaker 1: the world's largest asset manager. Black Rock and Circle also 622 00:40:19,960 --> 00:40:23,359 Speaker 1: entered a quote strategic partnership which would see black Rock 623 00:40:23,440 --> 00:40:27,960 Speaker 1: managed circles cash reserves. Black Rocks buy in bought circles 624 00:40:28,000 --> 00:40:31,560 Speaker 1: total funding to well over one billion dollars, and crunch 625 00:40:31,600 --> 00:40:34,440 Speaker 1: base suggests that this figure is much higher, though the 626 00:40:34,560 --> 00:40:39,600 Speaker 1: details of all these investments were apparently not disclosed. Then again, 627 00:40:39,880 --> 00:40:43,240 Speaker 1: it looks like coin Desk made up for the reporting shortfall, 628 00:40:43,440 --> 00:40:47,960 Speaker 1: not surprising given the circumstances. In any case, the market 629 00:40:47,960 --> 00:40:51,040 Speaker 1: cap of Circles USDC hit an all time high of 630 00:40:51,120 --> 00:40:54,200 Speaker 1: over fifty five billion dollars in the aftermath of the 631 00:40:54,239 --> 00:40:58,600 Speaker 1: collapse of Terror's UST and the concerns around Tether's USDT 632 00:40:59,040 --> 00:41:02,720 Speaker 1: that arose during the chaos. I'll quickly note that Jeremy 633 00:41:02,760 --> 00:41:05,920 Speaker 1: had admitted in previous interviews that both stable coins were 634 00:41:05,960 --> 00:41:10,960 Speaker 1: competitors to USDC. As expected, terrorist collapse and the temporary 635 00:41:11,000 --> 00:41:14,399 Speaker 1: depegging of USDT led to renewed calls for stable coin 636 00:41:14,480 --> 00:41:17,919 Speaker 1: regulation around the world. If you watch our recent video 637 00:41:17,960 --> 00:41:20,840 Speaker 1: about the leak of Europe's MICA bill, you'll know that 638 00:41:20,920 --> 00:41:25,799 Speaker 1: it appears Circle has been very involved in influencing these regulations. 639 00:41:26,440 --> 00:41:29,200 Speaker 1: Say did I mention that x r P is a 640 00:41:29,280 --> 00:41:32,080 Speaker 1: top competitor to the global system that Circle and the 641 00:41:32,120 --> 00:41:41,480 Speaker 1: Center Consortium are trying to create? Noah, probably nothing. Now 642 00:41:41,719 --> 00:41:45,279 Speaker 1: If Circle is leveraging regulations. It would be nothing new. 643 00:41:45,640 --> 00:41:50,680 Speaker 1: Incumbents have long used regulation to prevent competition. Goldman Saxes 644 00:41:50,760 --> 00:41:54,279 Speaker 1: CEO actually admitted this shortly after the bank invested in 645 00:41:54,320 --> 00:41:59,640 Speaker 1: Circle Back. It's not just regulations where stable coin issuers 646 00:41:59,640 --> 00:42:04,360 Speaker 1: seemed to be competing either. Cryptocurrency exchange Binance recently announced 647 00:42:04,400 --> 00:42:07,600 Speaker 1: it would be converting all stable coin trading pairs except 648 00:42:07,640 --> 00:42:10,719 Speaker 1: those involving us d T into b U s D 649 00:42:10,880 --> 00:42:15,120 Speaker 1: which I'll remind you is issued by Paxos. Jeremy said 650 00:42:15,239 --> 00:42:18,560 Speaker 1: that this somehow benefits U s d C, but I 651 00:42:18,680 --> 00:42:21,320 Speaker 1: highly doubt that, and the proof is in the pudding. 652 00:42:21,840 --> 00:42:24,200 Speaker 1: U s dcs market cap has been slipping over the 653 00:42:24,280 --> 00:42:27,240 Speaker 1: last few weeks, and it took a plunge when Binance 654 00:42:27,280 --> 00:42:30,480 Speaker 1: effectively gave USDC the boot at the end of September. 655 00:42:31,280 --> 00:42:34,440 Speaker 1: This means that Circle has to sell assets behind the 656 00:42:34,440 --> 00:42:37,680 Speaker 1: scenes to ensure that the supply of USDC is in 657 00:42:37,719 --> 00:42:41,000 Speaker 1: line with the lower level of demand for USDC following 658 00:42:41,080 --> 00:42:44,439 Speaker 1: its day Facto d listing. To be clear, it's well 659 00:42:44,440 --> 00:42:47,839 Speaker 1: within Binances right to make this move. It just goes 660 00:42:47,880 --> 00:42:51,680 Speaker 1: to show that crypto is hyper competitive and every crypto 661 00:42:51,680 --> 00:42:54,799 Speaker 1: project and company has its way of cementing itself in 662 00:42:54,880 --> 00:42:59,360 Speaker 1: the industry. In Circle's case, this involves working with questionable 663 00:42:59,400 --> 00:43:05,040 Speaker 1: global organizations and expanding on chain. This includes issuing stable 664 00:43:05,040 --> 00:43:08,960 Speaker 1: coins denominated in other currencies besides the USD to appease 665 00:43:09,040 --> 00:43:13,239 Speaker 1: foreign governments and regulators. Make no mistake. At this rate, 666 00:43:13,360 --> 00:43:16,360 Speaker 1: it's more than likely that every national currency will have 667 00:43:16,440 --> 00:43:20,040 Speaker 1: its own stable coin issued by the Center Consortium, a 668 00:43:20,200 --> 00:43:26,040 Speaker 1: perfect synthetic CBDC, and as with USDC, all these synthetic 669 00:43:26,080 --> 00:43:29,279 Speaker 1: CBDCs will be backed by the government debt of their 670 00:43:29,320 --> 00:43:33,200 Speaker 1: respective regions. This means you'll have no choice but to 671 00:43:33,239 --> 00:43:37,880 Speaker 1: subsidize your government spending and lower interest rates for institutions 672 00:43:38,160 --> 00:43:42,359 Speaker 1: when the powers that be inevitably phase out cash. But wait, 673 00:43:43,120 --> 00:43:47,040 Speaker 1: there's more. Just the other day, Circle announced that it 674 00:43:47,080 --> 00:43:51,719 Speaker 1: will be expanding to five additional smart contract cryptocurrencies and 675 00:43:51,920 --> 00:43:55,960 Speaker 1: introducing a cross chain interoperability protocol for its stable coins. 676 00:43:56,239 --> 00:43:59,239 Speaker 1: It even announced that it had partnered with block to 677 00:43:59,320 --> 00:44:03,200 Speaker 1: bring u SDC to Bitcoin. Heck, Jack Dawsey is a 678 00:44:03,200 --> 00:44:07,360 Speaker 1: Bitcoin MAXI. If that didn't make it clear enough, Circle 679 00:44:07,520 --> 00:44:11,840 Speaker 1: is also quickly taking over every single smart contract cryptocurrency 680 00:44:12,160 --> 00:44:15,560 Speaker 1: I reckon it won't belong. Before we see Circle start 681 00:44:15,600 --> 00:44:18,399 Speaker 1: to buy stakes in the proof of stake blockchains, It's 682 00:44:18,440 --> 00:44:22,000 Speaker 1: stable coins are circulating on and it's possible this is 683 00:44:22,040 --> 00:44:26,000 Speaker 1: happening already. With its stable coin reserves being held by 684 00:44:26,000 --> 00:44:30,440 Speaker 1: the FED, Circle could potentially have access to unlimited liquidity 685 00:44:30,560 --> 00:44:34,319 Speaker 1: a k a. The money printer. With the money printer 686 00:44:34,480 --> 00:44:37,200 Speaker 1: in its grip, Circle will in fact have the power 687 00:44:37,239 --> 00:44:40,480 Speaker 1: to take total control of every proof of stake smart 688 00:44:40,520 --> 00:44:45,960 Speaker 1: contract cryptocurrency in existence. Case and point. Ethereum creator Vitality 689 00:44:46,080 --> 00:44:49,680 Speaker 1: Terrant recently admitted that Circle will have the power to 690 00:44:49,760 --> 00:44:53,000 Speaker 1: decide the future of forks on Ethereum due to its 691 00:44:53,040 --> 00:44:56,480 Speaker 1: stable coin liquidity. At the rate that Circle is growing, 692 00:44:56,680 --> 00:44:59,640 Speaker 1: this will soon be the case for every other proof 693 00:44:59,680 --> 00:45:03,360 Speaker 1: of state smart contract crypto on the market. For what 694 00:45:03,480 --> 00:45:07,600 Speaker 1: it's worth, it looks like Bitcoin's BTC and physical cash 695 00:45:07,880 --> 00:45:11,000 Speaker 1: will offer protection from the upcoming dystopia that Circle and 696 00:45:11,080 --> 00:45:14,359 Speaker 1: its affiliates are not so subtly rushing to roll out. 697 00:45:14,920 --> 00:45:17,279 Speaker 1: I mean, why else would Jeremy hold most of his 698 00:45:17,360 --> 00:45:21,680 Speaker 1: wealth in cash and BTC? Maybe, just maybe he knows 699 00:45:21,719 --> 00:45:26,040 Speaker 1: what's coming now. To Jeremy's credit, he wants stable coins 700 00:45:26,080 --> 00:45:29,680 Speaker 1: to be as cash like as possible, meaning transaction privacy 701 00:45:29,760 --> 00:45:33,000 Speaker 1: and no k y C. The problem is that the 702 00:45:33,080 --> 00:45:37,680 Speaker 1: regulators will probably never allow this, and the institution's Circle 703 00:45:37,840 --> 00:45:41,560 Speaker 1: has aligned itself with explicitly want to take control of 704 00:45:41,719 --> 00:45:46,040 Speaker 1: every transaction you and I make forever. This brings me 705 00:45:46,080 --> 00:45:49,120 Speaker 1: back to something I mentioned earlier, and that's Circle's co 706 00:45:49,320 --> 00:45:52,840 Speaker 1: founders have a history of building up and then exiting 707 00:45:53,080 --> 00:45:56,920 Speaker 1: cutting edge tech companies. This makes me wonder whether Jeremy 708 00:45:56,960 --> 00:45:59,840 Speaker 1: and Sean will do the same with Circle once it's stock. 709 00:46:00,000 --> 00:46:03,880 Speaker 1: As I p oed via this back. This is because 710 00:46:04,040 --> 00:46:07,759 Speaker 1: Circle could an ironically become the most valuable company on 711 00:46:07,800 --> 00:46:10,720 Speaker 1: the planet if it succeeds in its mission of literally 712 00:46:10,840 --> 00:46:15,719 Speaker 1: recalibrating the whole global financial system around stable coins. The 713 00:46:15,760 --> 00:46:19,439 Speaker 1: only issue with this analysis is that fiat currencies are 714 00:46:19,560 --> 00:46:24,080 Speaker 1: failing and stable coins probably won't help much. This is 715 00:46:24,120 --> 00:46:27,200 Speaker 1: something Jeremy seems to be hyper aware of, and I 716 00:46:27,239 --> 00:46:31,360 Speaker 1: reckon it's why he's so bullish on BTC, despite Circles 717 00:46:31,400 --> 00:46:35,279 Speaker 1: having ditched Bitcoin half a decade ago. As such, it's 718 00:46:35,320 --> 00:46:38,879 Speaker 1: probably wise to watch whether he leaves Circle after its 719 00:46:38,880 --> 00:46:42,080 Speaker 1: I p O. If he does, then it probably means 720 00:46:42,080 --> 00:46:46,520 Speaker 1: he knows that Circle will inevitably fail. By now, you're 721 00:46:46,560 --> 00:46:50,640 Speaker 1: probably wondering which blockchain Jeremy believes will support all of 722 00:46:50,680 --> 00:46:55,360 Speaker 1: circles stable coins. Well, the short answer is all of them. 723 00:46:55,400 --> 00:46:59,279 Speaker 1: The Circle team seems to be genuinely blockchain agnostic, and 724 00:46:59,440 --> 00:47:03,680 Speaker 1: Jeremy believes that each smart contract cryptocurrency will have a 725 00:47:03,719 --> 00:47:08,080 Speaker 1: piece of the financial puzzle. Even so, it's clear that 726 00:47:08,160 --> 00:47:11,600 Speaker 1: Ethereum is currently the favorite, and that's simply because it's 727 00:47:11,680 --> 00:47:17,880 Speaker 1: security is unparalleled among smart contract cryptocurrencies. Oddly enough, Solana 728 00:47:18,000 --> 00:47:21,640 Speaker 1: appears to be the official chain for USDC according to 729 00:47:21,680 --> 00:47:26,080 Speaker 1: the Center Consortium, but this has probably changed after all 730 00:47:26,080 --> 00:47:30,799 Speaker 1: the outages in some then Circle will probably become the 731 00:47:30,840 --> 00:47:35,280 Speaker 1: most powerful company in cryptocurrency, maybe even the entire world, 732 00:47:35,440 --> 00:47:38,440 Speaker 1: but will arguably fail due to the fact that it's 733 00:47:38,480 --> 00:47:43,440 Speaker 1: fundamentally leveraging failing FIAT currencies. The silver lining is that 734 00:47:43,480 --> 00:47:48,000 Speaker 1: Circle's domination will make the average person comfortable with cryptocurrency. 735 00:47:48,120 --> 00:47:50,799 Speaker 1: And if I had my tinfoil hat on, I'd tell 736 00:47:50,840 --> 00:47:54,719 Speaker 1: you that was the end game. All along, partner with 737 00:47:54,760 --> 00:47:59,000 Speaker 1: all the international organizations and the financial system, convince them 738 00:47:59,040 --> 00:48:02,319 Speaker 1: to adopt stable coins, sneak BTC in through the back 739 00:48:02,320 --> 00:48:05,080 Speaker 1: door with an I m F SDR stable coin and 740 00:48:05,239 --> 00:48:10,160 Speaker 1: turn BTC into the world's next reserve currency. That is 741 00:48:10,200 --> 00:48:13,640 Speaker 1: an outcome I would love to see because the alternative 742 00:48:14,080 --> 00:48:18,120 Speaker 1: is eternal slavery. You can find out exactly what the 743 00:48:18,160 --> 00:48:20,839 Speaker 1: people in power are planning by watching our recent video 744 00:48:20,920 --> 00:48:24,200 Speaker 1: about a new kind of social credit score. The link 745 00:48:24,239 --> 00:48:27,959 Speaker 1: to that flick will be down in the description. Thank 746 00:48:28,000 --> 00:48:30,920 Speaker 1: you so much for listening to the coin Bureau podcast. 747 00:48:31,000 --> 00:48:33,839 Speaker 1: If you'd like to learn more about cryptocurrency, you can 748 00:48:33,960 --> 00:48:37,240 Speaker 1: visit our YouTube channel at YouTube dot com forward slash 749 00:48:37,239 --> 00:48:40,040 Speaker 1: coin Bureau. You can also go to coin bureau dot 750 00:48:40,080 --> 00:48:42,960 Speaker 1: com for loads more information about all things crypto. You 751 00:48:43,000 --> 00:48:45,560 Speaker 1: can follow me on Twitter at at coin bureau or 752 00:48:45,600 --> 00:48:49,600 Speaker 1: one word, and I'm also active on TikTok and Instagram too,