ROLLUP: Crypto in Free Fall | Vitalik’s L2 Pivot | Warsh Fed Pick | Clarity Act Showdown
TRANSCRIPT
Ryan Sean Adams:
[0:04] Bankless nation it is the first week of dreary february my god this is uh started out pretty sad hasn't it first week
David Hoffman:
[0:10] In the bear market let's go.
Ryan Sean Adams:
[0:11] Oh my god um i feel like we've known it's a bear market for a while but this was this confirmation uh some
David Hoffman:
[0:18] People have known it's a bear market of which you were one and i was not and now you're just finding this out well and i I was like, you know, prices go up, prices go down. This does remind me of that one day in 2018, halfway through 2018, where like Bitcoin had fallen from $20,000 down to like $8,000 or $9,000. And then people were still optimistic. And then one day it went from $8,000 down to like $4,000. And that's when the whole industry was like, yep, this is the bear market. And I feel like the last people holding out on like whether this is a bear market or not.
Ryan Sean Adams:
[0:57] It turns from bear market to like just pure pain market and desponse. It's more like, and crypto is never coming back and it's dead. That's what it's starting to feel like out there.
David Hoffman:
[1:06] Crypto sentiment right now is perhaps the lowest I have ever seen it.
Ryan Sean Adams:
[1:10] We'll get into that. It's not just that, though. It's a very confusing time
Ryan Sean Adams:
[1:13] in the market. This was a tweet that you sent me right before this episode. I honestly have no idea if we are close to a crash, a melt-up, or World War II, an AI industrial revolution, a mother of all short squeezes, a depression, a recession, or aliens, but it sure feels like all these things at once.
David Hoffman:
[1:30] Yeah, crypto is not the only sector that is just materially impacted in the market right now. There's like tech stocks to talk about. There's like a rotation. Not all stocks are down. There are some people's portfolios who are just super happy right now. No, and we know. Yeah, it ain't us. But if you were invested in value stocks and yield-bearing stocks with revenues and dividends, you feel pretty good right now.
Ryan Sean Adams:
[1:54] Yeah, all right. Well, we'll talk about crypto and freefall. The market carnage will evaluate it. The question is, is it over? And also, Vitalik had this tweet heard around the world. Let's give him a quote. He said this, the original vision of L2s and their role in Ethereum no longer makes sense. And we need a new path.
Ryan Sean Adams:
[2:12] We'll talk about all the controversy behind this tweet.
David Hoffman:
[2:15] Also, the White House is just demanding that the banks and crypto get in a room and hug it out. They want Clarity Act passed as the demand from Donald Trump. So we're going to talk about all that news. And also out of the Trump world, the new incoming Fed chair has been named.
David Hoffman:
[2:29] Who is he? What's his stance on crypto? And is he good or bad for the markets? We're going to talk about all of that and more. But first, a moment to talk about some of our friends over at...
Ryan Sean Adams:
[2:37] So let's talk about the market and some of the carnage we're seeing. Bitcoin has dropped below the April 2025 bottom. That was the tariff scare. Where are we at the time of recording? Realize, guys, this is falling like a rock as we're even recording this episode.
David Hoffman:
[2:52] Yeah, I thought maybe it paused, but no, it continues to drop. So these prices might be outdated. Who knows? Maybe we bounce by tomorrow. Maybe we're out of the bear market tomorrow. So we, Ryan, are back to prices pre-Donald Trump's inauguration. Yeah. We are pre-Donald Trump prices back into like the November. Remember when Bitcoin just absolutely rocketed on the news that Donald Trump won the election? That's where we are. We're all the way back there. We haven't erased the entire Donald Trump presidency. So 46% of the total crypto market cap has been erased since this October 6th. So, you know, 1010 happened and 1010 was like, you know, crypto had already started to roll over. We've lost almost half of the total crypto market cap since that moment. That is not the only story going on in markets right now.
David Hoffman:
[3:43] QQQ, the tech sector, down 6% in the last week or so. And then there's this IGV, which is the tech software sector. which is down 17% week over week and 30% in 2026. So not only is crypto crumbling, but other parts of the market are taking a massive beating. This is a unique week in the markets for a variety of markets. Gold, precious metals are also falling. Gold fell below $4,500 and silver fell below $72, which represents something like down 12 and then also 30% respectively. Those have kind of come back. But overall, there is just turmoil left and right, no matter where you look.
Ryan Sean Adams:
[4:26] All right. People are selling a lot of things. What are they buying?
Ryan Sean Adams:
[4:29] They got to exchange it for something. Is there anything that's going up?
David Hoffman:
[4:32] Yeah. So energy, consumer staples, and then US dollar yields. These are all up. So consumer staples up 6%. Energy is up 4.5%. So boring cash flow, high revenue sectors have been the place that- What's.
Ryan Sean Adams:
[4:48] A consumer staple? Is that like Procter & Gamble? Something like that? Yeah. Johnson & Johnson?
David Hoffman:
[4:52] Recession resistant products.
Ryan Sean Adams:
[4:55] The Warren Buffett stuff.
David Hoffman:
[4:56] Like depend, no matter what like the crypto market does, people are still buying like shampoo and soap, you know, stuff like that.
Ryan Sean Adams:
[5:03] Yeah.
David Hoffman:
[5:04] So the theme that I've come to, like what's a common denominator here is in addition to crypto having its own reasons to be bearish, we can talk about the Clarity Act, we can talk about the incoming Fed share that's potentially hawkish. But overall, there's a handful of just like crowded trades across multiple asset
David Hoffman:
[5:23] classes that like leverage is getting kind of cleaned up and wiped out all at the same time. So you have like the AI CapEx trade, you have crypto and precious metals. They're all kind of seeing the same move that you usually get when like, there's a bunch of people on the same side of the trade. perhaps with a little bit too much leverage. And then liquidity is also kind of thin. And so there's kind of just a resetting of some of the risk end of the market, the growth end of the market. And especially with Google's earnings, Ryan, Google announced earnings this week. And they forecasted something like a 50 or 60% increase in their capital expenditure for next week, going from $110 billion of spending to $170 billion of spending. And so the market digested that and was like, oh, this is a lot of money. I'm kind of scared about the whole AI side of this growth market. Let me perhaps diversify into value. That's what's happening in trad markets.
Ryan Sean Adams:
[6:19] So if you want to explain these things, why is QQQ down? It's because there's AI capex fatigue, and it's also because SaaS companies are just getting blown
Ryan Sean Adams:
[6:29] away right now because AI is poised to disrupt them. If AI can write its own software, why do you need a Salesforce CRM? So that's happening. And then an explanatory reason for why silver and gold are going down is maybe the Warsh factor, which we're going to talk about. This is the new incoming chair of the Fed. And he might be hawkish, actually. We'll talk about that in more detail, but that could be a reason. If you want an explanatory reason for why those markets are selling off, Why is there so much more pain in crypto, David? So we talked about the price of Bitcoin now, 66K and continuing to drop. But what is that? That is down 21% since last week. ETH is down 30% since last week. Just getting absolutely walloped here. Why is crypto suffering for all of the mistakes from AI and SaaS products? And why are we taking the brunt of this?
David Hoffman:
[7:24] Yeah, it's interesting. It's a million dollar question. There's a chart that's been going around, which is that crypto has had this very high correlation with the software index. Software is the SaaS index. There's this word that's been coined in the last week, the SaaSpocalypse in the traditional equities market. So as you kind of alluded to, Cloud Code came out, Cloud Cowork, these new tools that people think can just totally replace entire businesses like Figma, LegalZoom, Adobe, Salesforce. And so the SaaSpocalypse was this week. That's what's going on in trade markets.
Ryan Sean Adams:
[7:55] Is that what this chart is? Yes. This is an ETF that tracks SaaS products.
David Hoffman:
[8:00] If you overlay the SaaS index over Bitcoin, it is the same shape. I know sometimes doing stuff like this is a little horoscopy, But like, you can't tell me that that doesn't look a little bit.
Ryan Sean Adams:
[8:11] It's the same shape over the last, what is this, 18 months, two years?
David Hoffman:
[8:16] 18 months is right. Yeah. September of 2023.
Ryan Sean Adams:
[8:19] It wasn't always the same shape. It was a normal. Scroll out a little bit. It's different. This is selected data, but I see the point.
David Hoffman:
[8:25] Yeah. I mean, why is crypto down so bad? I mean, I think we can talk about a handful of things, the hawkishness of the new Fed share that we talked about. We can also just say the four-year cycle, Brian. Oh, yeah.
Ryan Sean Adams:
[8:35] That's what I want to say.
David Hoffman:
[8:36] You can totally just say, and I have been a fan of saying the four-year cycle's dead, but if you look at the price chart, it's not what the price chart says. The four-year cycle is just continuing to play out exactly to a T.
Ryan Sean Adams:
[8:51] That's right. That's right. So I am not one to really play these cycles. I don't really trade them. But the person I follow most closely, as you know, I'm sort of Mike Nato-pilled and have been...
David Hoffman:
[9:01] He's just getting more and more correct. I hope he's doing some public tweeting about taking some victory laps.
Ryan Sean Adams:
[9:06] I've been trying to build them up. And for Bankless listeners, there's a weekly report that Mike puts out on a podcast called The DeFi Report. And I joined him in those episodes. That's how I've been following this. But he's been calling for 65K Bitcoin, fair market value of Bitcoin since like October before even 1010, when it was like not popular, when it was not cool. And this is what's playing out. Like, So there's a lot of fear in the market by some level, David, if the four-year cycle is playing out, this is exactly what you would expect to a T from a price perspective, also from a timeline perspective. It's just like not that scary if you believe in the four-year cycle. Like that's the thing. I would be more concerned if people like Mike hadn't been predicting that this is exactly where the market is going and this provides a buying opportunity. Now, that doesn't mean as soon as it hits 65k like it's over like you buy the you know this was it and then we this
David Hoffman:
[10:03] Is the bottom tick.
Ryan Sean Adams:
[10:04] No there's there it's gonna take you have some time here it's gonna play out over a long period of time and this is
David Hoffman:
[10:11] When you start being more aggressive in your dcas but you don't dump your load.
Ryan Sean Adams:
[10:15] Right right yes and but like and then we have apathy to uh to look forward to i suppose yes but somebody go check in on michael saylor and tom lee okay see if they're okay because it seems like they're down bad. What's the story here?
David Hoffman:
[10:30] The DATs are epically underwater. So we are well below, not well below, but we are under the strategy cost basis. Current strategy, micro strategy cost basis is $76,000 Bitcoin. We are $65,000 Bitcoin. So Michael's strategy is currently sitting at a $6.5 billion loss. So they're underwater by $6.5 billion. Which kind of sounds bad. It sounds bad. $6.5 billion is a lot of money to lose. Total strategy holdings is $50 billion. So like, Yeah, they have a lot of money, though.
Ryan Sean Adams:
[11:06] But so he's been at this for five years and he's still under his cost basis.
Ryan Sean Adams:
[11:11] Like Michael Saylor has been dollar cost averaging for five years. Yeah. And now he is underwater on that dollar cost average strategy. Right. It's notable. It's not.
David Hoffman:
[11:20] It's notable.
Ryan Sean Adams:
[11:21] Yeah, it's notable. How about Tom Lee? I mean, he's only been at this for less than a year. Right. How's he doing?
David Hoffman:
[11:26] He in less than a year, Tom Lee managed to rack up a six billion dollar unrealized loss.
Ryan Sean Adams:
[11:32] It's greater than that, David. But actually, it's closer to $8 to $9 billion now at
David Hoffman:
[11:38] These ETH prices. Oh, no. Yeah. I'm actually having a hard time actually getting updated figures on that. So Tom Lee accumulated $4 million as an average cost basis between $3,800 and $4,000 ETH.
Ryan Sean Adams:
[11:51] Yeah.
David Hoffman:
[11:52] Yeah. Yeah, yeah, yeah. So, I mean, impressive that he is beating Michael Strategy. Why do I keep doing the Michael Strategy in unrealized losses despite only being in the game one quarter of the time?
Ryan Sean Adams:
[12:06] No, that makes sense, right? Because he bought some at the top. I mean, who among us hasn't top blasted in crypto from time to time, right? Now, here's the thing, though, with both Strategy and Tom Lee is people think that these stats are going to completely evaporate and die and go bankrupt or something like that, MicroStrategy does have some debt that we've talked about. But so long as this bear market doesn't last for many years.
David Hoffman:
[12:34] Like 10 plus years.
Ryan Sean Adams:
[12:36] Yeah, I mean, his debt is well-structured. It's just not that bad. And so you should be able to weather this out, right? Now, you're not going to get an MNAV premium that's attractive, of course, on strategy. It might even go below MNAP of one, basically. And then BitMine is in a similar position, except from a debt perspective, like even better. Even though it has those unrealized losses, of course, they're just unrealized losses at this point. There's really no debt on the BitMine balance sheet. In fact, they have a healthy cash position, right? Right.
David Hoffman:
[13:09] It was just a bad trade, but they still own all of the Ether and they have no obligations.
Ryan Sean Adams:
[13:13] It's a bad trade so far.
David Hoffman:
[13:16] So far. So far. In this moment.
Ryan Sean Adams:
[13:18] Yeah, of course. But everyone is dunking on Tom Lee and be like, oh, you idiot. Look, you've lost so much money. I think as long as the market returns, I think it will.
Ryan Sean Adams:
[13:29] Tom Lee will be pretty well positioned. It just might take a long time for that to play out. He's going to have to eat crow for a long time. Did you see there was a video clip of him actually calling a bottom at 2,400 ETH earlier this week.
David Hoffman:
[13:43] A little early, but yeah, it was just last week in which he caught and we made that clip. The clip's already outdated.
Ryan Sean Adams:
[13:50] That was not the bottom. But, you know, Tom, there's another article I read from Coindesk saying, you know, Tom Lee saying that BitMines loss, paper loss, yeah, we could take paper losses by design, basically. It's all according to the plan. I mean, maybe not that, but the structure is meant to weather this type of storm. And of course, they're staking their ETH. So they have cash flow,
David Hoffman:
[14:11] Positive cash flow. He's unliquidatable.
Ryan Sean Adams:
[14:14] Pretty hard to liquidate, Tom Lee. So anyway.
David Hoffman:
[14:16] It's impossible. It can't be done because he has no leverage.
Ryan Sean Adams:
[14:18] He has no leverage. That's right. It can't be done.
David Hoffman:
[14:20] I mean, like, I think the most valid critique of Tom Lee you can say is that he just did not optimize for price execution and just blindly bid ETH at whatever price. Yeah. But that's, I think.
Ryan Sean Adams:
[14:34] That's bad. It could have broken in a different direction. It just didn't. Mike Novogratz, Galaxy post $482 million loss in this crypto cash crash too in Q4. So imagine what it is in Q1 once that gets reported.
David Hoffman:
[14:47] Yeah. That's a good point. There's also, there was a conversation about during earnings, Galaxy earnings, Mike Novogratz implied that Galaxy had a client that sold $9 billion worth of Bitcoin and at least mentioned Quantum during that conversation about why they were selling. And so Nick Carter and them went back and forth on this, but Nick Carter emphasizing the point that quantum is a, dampener on what Bitcoin price can do in the short term.
Ryan Sean Adams:
[15:16] Yeah, I think that's true. I'm believing I'm on Nick Carter's side of that narrative. Now, if you want to trade on Bitcoin or quantum or where price is going, Polymarket has some great opportunities for you to go do that. In fact, this is useful to just see the probability. What price will Bitcoin hit in 2026? Wow, this has changed a lot. What are we looking at?
David Hoffman:
[15:36] Yeah, so you see Bitcoin price in $5,000 increments. and, of course, Polymarket is giving, it's telling us the market probability of what the market thinks that Bitcoin price will hit. So the most likely thing, because we are basically there, we're just a few couple hundred dollars away, $700 away, is $65,000. But you can go in either direction. $60,000, there's an 80% chance, according to Polymarket, that Bitcoin will hit $60,000, as opposed to only a 47% chance that Bitcoin will hit $100,000 in the year of 2020.
Ryan Sean Adams:
[16:10] And all it has to do is hit it. So it could just touch it, right? Just wick it and these conditions will be fulfilled.
David Hoffman:
[16:15] Yes. Yeah. And so you can kind of see, this is an interesting financial tool.
Ryan Sean Adams:
[16:20] It's really interesting.
David Hoffman:
[16:21] I would like to see how accurate or capitally efficient this tool is, but I don't think we've ever seen anything like this. I guess other than like implied price or implied volatility from options and stuff like this. Yeah.
Ryan Sean Adams:
[16:35] Options are so opaque to me. They're hard to kind of reason about.
David Hoffman:
[16:38] This is very easy to reason about. like 55% chance, according to Polymarket Traders, that Bitcoin hits $50,000, $5,000.
Ryan Sean Adams:
[16:49] Okay, but David, there's a 5% chance that we hit 250K this year, all right? So don't give up.
David Hoffman:
[16:55] That's more than just a chance.
Ryan Sean Adams:
[16:57] There's always a chance. One of the interesting things about this crypto crash, as Eric Balchunas has observed, is that this is primarily coming from OG selling. And I guess, David, you made the point earlier to me. It's always that.
David Hoffman:
[17:11] It's always that. That's always how cycles end.
Ryan Sean Adams:
[17:14] I echo that. And I agree with you, but this is Eric Balchunas. He says, facts. Only about 6% of the assets in the Bitcoin ETF have left. 94% hang tough, those ETF holders. They're hanging in there, despite a nasty 40% downturn and many being underwater. OGs, on the other hand, the OGs are selling. So they are selling to the new holders who are, I guess, institutional, tradify ETF buyers. This is the turning of the wheel.
David Hoffman:
[17:40] This is the cycle. This is what happens. Welcome a new generation of bag holders.
Ryan Sean Adams:
[17:45] Welcome to the Bankless Podcast.
David Hoffman:
[17:47] You got dumped on. You got to pay it for it next time. Come join the community. Eventually, you wait enough cycles. You will be dumping on people. They will come join the community, and the cycle repeats, and every cycle, Bankless gets new listeners. This is great.
Ryan Sean Adams:
[17:59] There's always a next cycle, right, David? There's going to be a next cycle, right, David?
David Hoffman:
[18:03] Until proven otherwise.
Ryan Sean Adams:
[18:05] All right, until proven otherwise. This is a hopeful take if you want to inject some hopium. I don't know. You may not be in the mood for this. Matt Hogan said, Actually, I know it's Crypto Winter, but the good news is Crypto Winter started last January 2025.
David Hoffman:
[18:22] Oh, so we're 13 months into this?
Ryan Sean Adams:
[18:25] Yeah, he goes through some justification and he basically says, he shows that, well, crypto winter started last January. We just didn't feel it until now because ETFs were doing so well, essentially, because of DATS and the institutional bid and ETFs.
Ryan Sean Adams:
[18:40] And so if it started 12 months ago, maybe we're closer to spring than you think. What do you think about this take?
David Hoffman:
[18:46] I think that's right. I think that's right. One, well, despite the fact that I'm poor now, I feel refreshed and optimistic about the opportunity that is presented to me. And this is something that Zeneca said in a tweet, just kind of like, you know, markets take psychological discipline. And I think that's maybe like something I would just kind of like to call out of just...
Ryan Sean Adams:
[19:09] Investing is pain.
David Hoffman:
[19:10] Investing is pain. This is a psychological experience. This is an emotional experience. Despite how everyone's supposed to be an unemotional investor, investing in markets is fundamentally about your relationship with your own emotions. One thing that he says, he puts out just like a list of advice, and I want to kind of read out a few of these things. Number three is one of my favorites. Recognize that as the price goes lower, more people give up. Your competition literally leaves. There are outsized returns for people that stick around. So like investing just gets easier as people fundamentally give up. Uh, six, go on walks, de-stress yourself. Uh, it's worth noting that if you are in this market and you've lost a lot of money, you are probably stressed out even if you don't think that you are or don't want to admit it. Uh, and so take a moment, close your eyes, have a deep breath. It's okay to be stressed. Ignoring your stress is worse than not ignoring your stress.
Ryan Sean Adams:
[20:07] Stop checking price all the time.
David Hoffman:
[20:09] Stop checking prices. Do what you need to do to maintain good psychological health because bad psychological health will lead to what he says in number seven, obvious traps that people fall into when trying to feel better. Alcohol, drugs, leverage, revenge trading. Don't do that. You need to be smart. This is when the opportunities are here, so be smart. Overall, there's a link in the show notes to kind of list all of Zeneca's tweets, but overall, I ask listeners if you want to maximize the opportunity that we have ahead of us in the next year,
David Hoffman:
[20:39] be honest with yourself, be psychologically sound with yourself. And that's how you prepare yourself to be a good investor.
Ryan Sean Adams:
[20:47] You know, it's a bear market when bankless goes full therapy mode on a weekly roll up. That's good advice though.
David Hoffman:
[20:52] I got to put my undergrad degree in you somehow.
Ryan Sean Adams:
[20:54] That's good advice though. My take on Matt Hogan's take is I think he's being a little too optimistic. So I'm still in the camp of Michael Nato where the actual bear market started in October, we've got a full year to put in. So not until October of next year will things start to look a little more springtimey
Ryan Sean Adams:
[21:13] and will we get some buds. Until then.
David Hoffman:
[21:15] Does that mean that you are DCAing? What are you doing about that fact?
Ryan Sean Adams:
[21:19] Oh, you got to, well, either DCA, if you have, you know, sables or something like that, you can always DCA. You can DCA through all markets. That's kind of the default strategy. Yeah, but I like timing my DCAs. All right. Well, if you time it honestly if you time it i would clue into the defy report and you know mike thinks fair market value is 65k and under and then he's start gonna start going risk on so i would tune into that and um I mean, not quite yet, but it's getting really attractive out there, I think, for long-term holders, probably.
Ryan Sean Adams:
[21:50] David, we got more to discuss, including Kevin Warsh, the next Fed chairman. What's he about? And is he positive for crypto? He says some things about crypto and Bitcoin. Also, Vitalik, his comments, is the roll-up-centric roadmap over, David? Was this the pivot? What is happening here? We'll talk about all that more, but before we do, we want to thank the sponsors that made this episode possible.
David Hoffman:
[22:14] Last Friday, Trump named Kevin Warsh as the new upcoming Fed chairman. Kevin Warsh is a former Fed governor and also Bush economic advisor. He's nominated to replace Jerome Powell as Fed chair starting in May 2026. So not now, but kind of soon.
Ryan Sean Adams:
[22:32] Did you know, David, so he wasn't the FOMC, but he actually rage quit the FOMC. He was one of the governors. He rage quit somewhere around 2010, 2011, because he was fine with the initial bailout stuff. But then when the Fed doubled and tripled down on quantitative easing, he was like, that's not what we should be doing. This is bad Fed policy. He prefers like quantitative tightening and he thinks that the Fed has been grossly irresponsible in terms of intervening in monetary policy in the way that it has and expanding its balance sheet in the way that it has.
David Hoffman:
[23:05] Do you mean post-08 crisis, a couple years after that, after the initial reaction, he was criticizing the Fed for being too zerpy?
Ryan Sean Adams:
[23:14] Yeah. Well, less Zerpey. So less Zerpey. So Zerpey, you mean zero yield, right?
David Hoffman:
[23:20] Yeah, zero interest rate policy.
Ryan Sean Adams:
[23:22] It's unclear what he will do with interest rates. I think he will lower them. In fact, Trump is kind of indicating that that's kind of why I picked him, but there's some Trump comments here. But less Zerpey, but more a critique of how the Fed has done quantitative easing. So buying assets, basically, and placing it on his balance sheet.
David Hoffman:
[23:40] Oh, being more hands-on and opinionated than what they could have otherwise been. Yeah.
Ryan Sean Adams:
[23:45] He basically says it was a bailout for Wall Street. Asset price inflation- It was a bailout for Wall Street. Yeah. Asset price inflation is a bad thing and shouldn't be done. And it caused massive wealth inequality in the U.S. And like- He's saying many of our talking points, essentially, which is why he's an interesting choice from Trump.
David Hoffman:
[24:06] Okay, okay. What about crypto? What does he think about crypto?
Ryan Sean Adams:
[24:10] So he had some interviews. He said that Bitcoin is the new gold for people under the age of 40. He's also a holder of crypto. Here's his on-chain metrics.
David Hoffman:
[24:22] We have his wallet.
Ryan Sean Adams:
[24:23] We know his wallets. We think we know his wallets. Anyway, he's got about nine Bitcoins. He's got about 745K of crypto assets between Bitcoin and ETH. That's probably worth a lot less now.
David Hoffman:
[24:33] It's mostly Bitcoin. It's mostly Bitcoin. It's nine Bitcoins and six Ether. So, you know.
Ryan Sean Adams:
[24:39] Yeah.
David Hoffman:
[24:39] A little favor to Bitcoin.
Ryan Sean Adams:
[24:41] People from crypto like Evitul from Electric Capital know him, think he's an excellent pick for FedShare. Actually, let's get this direct quote because he went back and forth with an interviewer about Bitcoin. This is what Kevin Warsh had to say. You made reference to Bitcoin, and I thought I heard a little bit of condescension that people are buying Bitcoin and these things.
David Hoffman:
[25:06] But doesn't it, Charlie Munger, this is two or three years before he died, Charlie Munger attacked Bitcoin. He called it evil in part because it would begin to undermine the Fed's ability to manage the economy.
Ryan Sean Adams:
[25:17] Or it could provide market discipline, or it could tell the world that things need to be fixed.
David Hoffman:
[25:23] Bitcoin does not make you nervous.
Ryan Sean Adams:
[25:25] Bitcoin does not make me nervous. I can harken back to a dinner I had here in 2011 with someone who is another guest on your show. I won't say his name. Okay, I just did Marc Andreessen, who showed me the white paper. That was the original white paper. I wish I had understood as clearly as he did how transformative Bitcoin and this new technology would be. Bitcoin doesn't trouble me. I think of it as an important asset that can help inform policymakers when they're doing things right and wrong. It is not a substitute to the dollar. I think it can often be a very good policeman for policy. So his comment on Bitcoin is basically that it was a check on bad Fed policy. I think pretty healthy from that perspective.
David Hoffman:
[26:17] Accurate and healthy.
Ryan Sean Adams:
[26:18] Yeah. And he mentioned Marc Andreessen actually introducing him to it. So he's not afraid of it. He's familiar with that world. He's a crypto investor, at least at some level. This is why Donald Trump, according to him, according to Donald Trump, actually picked Kevin Warsh. Trump called Warsh highly qualified, predicted that he would be remembered as one of the great Fed chairmen who would not let you down. Did Trump pick him because he would cut rates? Trump was asked that very question. He replied, we talked about it. I've been following him. I don't want to ask him that question. I think it's inappropriate.
David Hoffman:
[26:54] That is hilarious. What?
Ryan Sean Adams:
[26:58] And then he went on, it probably would be allowed, but I want to keep it nice and pure. But he certainly wants to cut rates. What? He just wants to out of the goodness of his own heart. Of course, Trump would not.
David Hoffman:
[27:09] It would be inappropriate for me to tell the Federal Reserve governor to cut rates. So I'm not going to do that because I want it here. Wow. What kind of double talk is that?
Ryan Sean Adams:
[27:20] So Kevin Warsh is also, I think, highly respected among investors. So he worked for Stanley Druckenmiller. Ray Dalio also likes him. So Ray Dalio said he's respected for his capabilities and judgment. He understands the risk of having a Fed policy that is too easy as well as too tight and how to judge what's what. That's a good take. Luke Grauman actually thinks that he will be less, because people are talking about him as being actually hawkish,
David Hoffman:
[27:47] Maybe more hawkish than Trump. That's the word that everyone is describing this guy. He's a hawk.
Ryan Sean Adams:
[27:51] I think he could be by default, but there's a difference between what you say when you're outside of the chair and when you're in it. Yeah. Okay, so he might be constrained by all sorts of things.
David Hoffman:
[27:59] We know this from Gary Gensler.
Ryan Sean Adams:
[28:01] Yeah, and so Luke Grauman quotes, he says, Warsh is the hawkish choice for Fed chair. But in 2018, he co-wrote this Wall Street Journal op-ed begging the Fed for more liquidity. That was despite strong economic growth in 2018. So it's a mixed picture. We don't know what he's going to do until he's actually in the seat. It's hard for me. I know Michael Nadeau was throwing out there like, hey, he could be super hawkish. But then there's always the question of like, then why did Trump pick him?
David Hoffman:
[28:32] Why is Trump so comfortable with him putting him in there?
Ryan Sean Adams:
[28:36] Because Trump is not one to take short-term pain for long-term gain, right? And if there's any Fed policy that prescribes that, he's going to not want that to happen.
David Hoffman:
[28:47] Yes, yes, yes. Granted, Trump also doesn't know what Kevin will do once he is in office, because once Kevin is in office, he gets to act somewhat independently. He can piss Trump off if he wants. One does have to like, you know, begs the question, why is Trump so happy with him coming into office if he doesn't think he's going to get exactly what he wants, which is a easy money paradigm for the markets?
Ryan Sean Adams:
[29:12] I mean, the minute stocks drop, OK, he's going to want those, you know, that money to flow. Anyway, we'll see what happens. It's a mixed picture. Very interesting choice, though, for sure. David, let's get to the tweet heard around the crypto sphere. This is from Vitalik.
Ryan Sean Adams:
[29:28] It's a long tweet, really. What's the thing to focus on?
David Hoffman:
[29:31] The thing to focus on is that he is retracting, I'll call, I'll say he's retracting the roll-up centric roadmap to Ethereum. He's taking the centric out of the whole roadmap North Star for Ethereum and saying that many layer twos or focusing on layer twos as the enshrined scaling solution for Ethereum's plan no longer makes sense. That's what he said, no longer makes sense. He does not say that layer twos make sense, but he is saying that like layer twos as a North Star for the Ethereum technical roadmap no longer makes sense and we need to pivot. He didn't say the word pivot, but I'm happy to. Pivot what Ethereum scaling strategy is to something new. And so he kind of reframes as layer twos that is needing to be strongly customizable or strongly specialized in some specific direction. Whereas generalized EVM equivalent layer twos that don't do anything other than just like add scale to Ethereum is now kind of redundant because he is talking about how incredibly scaled the layer one is about to be in the short term. That's kind of like the broad strokes of it.
Ryan Sean Adams:
[30:46] I've seen so many different interpretations of what Vitalik is saying. Maybe we should just read a few things that he said, actually, just to put it in his own words. He said, there have recently been discussions on the ongoing role of layer twos in the Ethereum ecosystem, especially in the face of two facts. These are the two facts. L2's progress to stage two and secondarily on interop have been far slower and more difficult than originally expected. Okay, that's the first. The second is L1 itself is scaling. Fees are very low and gas limits are projected to increase greatly in 2026.
Ryan Sean Adams:
[31:21] Both of these facts, for their own separate reasons, mean that the original vision of L2s and their role in Ethereum no longer makes sense. And we need a new path. Talk about that new path in a minute. But this, to me, is saying that the roll-up centric roadmap that was instantiated sometime in, say, 2020 didn't work out quite the way Vitalik had hoped or that the rest of Ethereum Yeah, well, I guess maybe, yeah, there's two reasons here. One is the progress has been slower, particularly in the stage two. Interop hasn't quite worked. And then also, now this is the good part of it, L2 has found a ZK-centric scaling path where scaling Ethereum via route of L2s no longer become necessary. Now, let's go back to October 2020, okay, in the roll-up-centric roadmap.
Ryan Sean Adams:
[32:17] The rule-up centric roadmap to me, and I think for people in the Ethereum community that were there, basically was the way Ethereum planned to scale, right? It was a message of Ethereum will be always kind of slow. Therefore, we will extend Ethereum block space via these layer twos. And so if you are an app, if you are a user and you want to extend Ethereum block space, you must do it on an L2. and that is the the scaling roadmap, essentially, for Ethereum. There's other things on the back burner, like maybe we figure out how to scale L1 at some point in time, but roll-ups were really the path forward for scaling Ethereum at that time. I mean, is that your recollection of things?
David Hoffman:
[33:03] That's right, yeah, that's right. And everyone got in line around the strategy pretty quickly and investment into the Layer 2 space grew rapidly because what Vitalik did was he put scaling the Ethereum, scaling Ethereum into the free market and allow the free market to really like solve that problem. And a bunch of things happened that I don't think you could have really have hypothesized back then, but no one individual roll-up team had any sort of incentive to build an interoperability standard. In fact, five different interoperability standards came out of that and not anyone was really picked by the market. And this is one of the failings that Vitalik is saying that never really happened.
Ryan Sean Adams:
[33:44] He does say that L2s have a place, right? And he talks about L2s. They can't just be a clone of the Ethereum L1. Basically, they should differentiate in some way. So you can imagine something that is extreme levels of scaling, something maybe like a mega ETH or app-centric layer 2, something like a lighter doing perps. But the days of just cloning Ethereum L1 and all of its apps and spinning up an EVM and setting up an optimistic bridge and slapping stage one on it, He's like, that hasn't worked out very well for Ethereum. That's a summary. I mean, there's a lot here, right? And there's multiple interpretations of this. But to me, this reflected something that needed to be said probably, right? Like a pivot that we had hoped to see that you and I had talked about before and had hoped to see from the Ethereum ecosystem of like, hey, let's get back to scaling the L1 and L2s are great. That path is already moving forward. but that can't be the focal point for Ethereum block space moving forward. And I think he said the quiet part out loud with respect to that. Some people, though, feel like he also, in this tweet, threw L2s under the bus a little bit.
David Hoffman:
[35:05] I don't know. That's not how I feel.
Ryan Sean Adams:
[35:08] How do you feel?
David Hoffman:
[35:10] I feel like some people are frustrated that... you know, Vitalik pushed for layer twos and then has like pivoted Ethereum away from them in a moment of time where like the market had already realized that. And many people in Ethereum had already realized that. And I think people are frustrated. One of the things I feel is that like, why does Vitalik seemingly have to be the last person to admit this?
Ryan Sean Adams:
[35:36] You frustrated that it took so long.
David Hoffman:
[35:38] That it took so long and the person with the most amount of influence and control took the longest amount of time to really come to this conclusion, where other people in the industry, in the crypto industry, have been saying this for anywhere between zero and four years now, depending on like where you are in the market. And I think a lot of people are frustrated about that. One thing that I'm seeing that I also resonate with is like, I'm glad that we are finally able to speak plainly about this. There's been just a lot of, bike shedding about layer twos that I think we don't have to do anymore. And so there's something just like intellectual honesty comes to mind. Some people were praising Vitalik for that. Overall, you and I are going to do something like a 40, 45 minute long episode on this. So we won't cover all of the details here comprehensively, but like it's a big moment in Ethereum's trajectory and it deserves a lot of attention.
Ryan Sean Adams:
[36:31] I think so too. I think it's the end of an era. I do think this is a pivot from the volubcentric roadmap perspective. It's worth some reflection. what went right, what went wrong.
Ryan Sean Adams:
[36:40] I do think L2s were overall and are overall very net beneficial. And so there's this weird kind of swing on the pendulum where I feel like we're going a little, some people are going a little too far and saying L2s were useless, it was a waste of time. I don't feel like that. Anyway, you and I will be recording an episode and talking about all these things shortly. Let's maybe get a reaction from the rest of the community here. So this is Tamash. What was his take? He is the executive director of the EF.
David Hoffman:
[37:06] Yeah, he gave out a handful of takes. His first one is that many, many Ethereum Layer 2s have already specialized, despite Vitalik taking, you know, until 2026 to say that specialized Layer 2s are the way to go. So he's kind of alluding to the fact that, like, the Layer 2 landscape has already been moving in this direction for years. And he also emphasizes, really, I think, what Vitalik understated. which is that the idea of a ZKVM is an incredibly powerful scaling strategy that is now the core focus of that. And then a handful of other things, but I think those are the two main things.
Ryan Sean Adams:
[37:42] This is Ryan Watkins. He's an investor. He's been historically, I think, fairly bearish on Ethereum.
David Hoffman:
[37:50] Highly skeptical of Ethereum ever since this whole roll-ups versus monolithic chain debate became a thing in 2023.
Ryan Sean Adams:
[37:56] Yeah, but he says this, a lot to be excited about in Ethereum lately, explicit plans to greatly scale the L1 formal team for quantum resistance, re-theorizing the role of L2 so they expand the app design space, native roll-up pre-compiles. He's basically saying this pivot is exactly what I want to see as an investor and he's swinging more bullish on it. So that's an outsider's take. Joseph DeLong is an insider and he had maybe more the pessimistic insider Ethereum community type take that I saw.
David Hoffman:
[38:28] Yeah, he tweeted out, I joined Ethereum to displace banks. Ethereum now feels like Vitalik's little Erbit-esque side project building a temple to nothing. Erbit is a, how would you describe Erbit? A distributed systems nerd snipe around, it's very hard to describe it. Maybe that kind of illustrates the point.
Ryan Sean Adams:
[38:49] It's been the next big thing among nerds for like 10 years, right? It's like a decentralized operating system.
David Hoffman:
[38:53] Yeah, even more niche than like the Linux believers. And so he's basically saying that just like this is just a niche upon a niche of like an interesting computer science project. And he joined Ethereum to displace banks. And so I think Joseph is emblematic of many people who feel like they have dedicated five plus years to building out this Ethereum vision that, The market realized that it was invalid a while ago, and finally Vitalik's catching up to the point, and people have wasted a lot of time and resources.
Ryan Sean Adams:
[39:25] Yeah, venting some frustration.
David Hoffman:
[39:26] Venting frustration, which I think is totally fair. And I would like to also do that.
Ryan Sean Adams:
[39:32] Well, I can't wait for our episode then. There's also a bear take here. This is from Tom O'Shaughnessy. He basically says, I think it's going to be very hard for allocators to rationalize being long ETH in 2026. and he gives a reason why. On the technical side, Vitalik is calling for scaling L1 and using LTs for specific use cases, but both of these are achieved on faster L1s like Solana who have been accelerating on progress like this for years. Ethereum got me in crypto in 2017. I think Vitalik should be massively respected for calling this out, changing course, but he thinks it's going to be an uphill battle for Ethereum.
David Hoffman:
[40:11] I will say, maybe to tie the section off, the day after Vitalik put out this tweet, a pay, P-A-Y-Y, which is a roll-up that uses Celestia for DA, transitioned to becoming an Ethereum layer two. And so to some degree, whatever Vitalik's saying doesn't matter. Like Ethereum's network effects are Ethereum's network effects and people will deploy layer twos on Ethereum no matter what for their own reasons and purposes.
David Hoffman:
[40:34] Despite whatever Vitalik is saying and how the market has moved away from emphasizing layer twos, layer twos are still the best business model for blockchains and crypto full stop. and that is still a fundamental truth.
Ryan Sean Adams:
[40:45] There you go. All right, more to cover. The Clarity Act, does it still have a chance of passing? There's talks in the White House this week, but it might require Trump to give
Ryan Sean Adams:
[40:54] something up, which is all of his green toeholdings. Also, Polymarket, opening a grocery store, David, in your hometown. Yep, that's real news.
David Hoffman:
[41:02] The Polymarket is what it's called.
Ryan Sean Adams:
[41:04] All right, guys, we'll get to all that and more, but before we do, we want to thank the sponsors that made this episode possible.
David Hoffman:
[41:09] How's the Clarity Act going? Good.
Ryan Sean Adams:
[41:12] They're in talks.
David Hoffman:
[41:15] That's where it has been. That's where it has been.
Ryan Sean Adams:
[41:17] They're not not talking.
David Hoffman:
[41:18] So Tether has come out on the side of supporting the ban on stablecoin yield, which is the opposite side of where Coinbase is.
Ryan Sean Adams:
[41:26] That's the crux of this thing. They're all fighting over the stablecoin yield. Who gets it?
David Hoffman:
[41:31] That's the crux. And also Donald Trump's being able to profit from crypto, but we'll shelve that for a hot second.
Ryan Sean Adams:
[41:36] We'll talk about that.
David Hoffman:
[41:37] So Tether has joined basically the side of the banks. Why is Tether on the opposite side of Coinbase?
Ryan Sean Adams:
[41:44] Yeah, it's surprising. It's a crypto-native company. And Coinbase is saying, hey, the yields should go to users.
David Hoffman:
[41:50] Yields should go to the people.
Ryan Sean Adams:
[41:51] We should have anybody do that rather than the banks. But Tether's saying, no, it's okay. I mean, the provisions of the Stable Act were fine. Keep in mind, David, Tether makes a lot of money on not passing that yield.
David Hoffman:
[42:03] They keep all the yields. Tether keeps all of the yield. Coinbase wants to give the yield away to the users and to the stablecoin holders and to the stablecoin holders, Tether has no interest in doing that.
Ryan Sean Adams:
[42:13] And I don't think it's because like Coinbase is like, you know, are the good guys or whatever. I mean, that's an okay view of the world. But like, I also think it's like a one-dimensional view of the world. Let's just go where the incentives are. I mean, Coinbase has more to gain by passing on yield to its customers and making money from user acquisition in other ways. Tether has a lot to gain from stablecoin yield right now. So, you know, you show me the incentives.
David Hoffman:
[42:37] Everyone's playing their incentives.
Ryan Sean Adams:
[42:38] Exactly. Everyone's playing their incentives and this is why. But it is interesting to see how a crypto native company can quickly become an incumbent and do something maybe like anti-crypto user. So it's interesting that Tether is coming on the side of the banks. But there's some back and forth with Brian Armstrong and the banker of all bankers, Jamie Dimon. What the heck was this?
David Hoffman:
[42:59] Yeah, so Brian Armstrong has been dubbed enemy number one on Wall Street. This is in the Wall Street Journal. Just because Brian is not backing down on this stablecoin yield thing. So it's basically Coinbase versus the banks. And you can't really deny why the banks are doing this. This is the entire business model of the banks. And so you have Brian Armstrong telling the banks, hey, we are going to die on the hill of you guys lose your business model. So you can kind of guess why this tension is so big. And there was this face-off in, where was this, Davos? Yes, Davos is still news. Brian was having coffee with Tony Blair, apparently, when Jamie Dimon walked up and cut in on this conversation, pointed his finger at Armstrong and said, you are full of shit. Accused him of lying about banks on TV. So why did Jamie Dimon do this? Armstrong apparently went on TV and accused big banks of trying to tank the Clarity Act. Yeah. When I think Jamie Dimon is like, no, dude, you're trying to tank the Clarity Act because you won't die on this hill of trying to invalidate our entire business model.
Ryan Sean Adams:
[44:06] Sorry, dude. We had the genius. Sorry, Jamie Dimon. We had the genius bill that already passed. The terms were agreed. Now you're stapling this yield bearing interest thing into a clarity act. A clarity act's not about that. I'm definitely on the side of Brian Armstrong here. Although part of me wonders whether like, whether a compromise on something is worth getting it passed or whether we should just settle for no bill here. There's a trade-off there, and I'm not sure what the right side of that trade-off actually is.
David Hoffman:
[44:36] I would need to talk to somebody like Jake Stravinsky about that. I do think the world where you can give yield to stablecoin holders is very interesting. And is it so interesting that the rest of the bill is worth it? I'm not totally sure about that.
Ryan Sean Adams:
[44:54] Yeah, I'm not sure either. I'm not sure how I feel, to be honest. Some other parts of the bill are incredibly useful for crypto. But the White House, of course, has a weigh-in on this because Trump is the pro-crypto president, as he's reminded us so often in the past. There was a two-hour meeting at the White House this week, included all the reps from the major crypto companies and the big banks. And basically, the take from Trump was, and I think Congress, is this has to get done in February.
David Hoffman:
[45:23] Lock yourselves in a room, figure it out, but get it done, is what they said.
Ryan Sean Adams:
[45:28] The White House set a deadline at the end of February for compromise on this yield language and warned that a failure to resolve the issue would risk the entire bill. Basically, they're not going to support it. You guys have to figure this out in February or it's not going to work. And so there is some reaction that there's some common ground. People are talking and they're trying to navigate their way through it. But if there's not progress by the end of February, Clarity Act is not looking good. polymarket there's a 62% chance which actually I feel like that's up on the week from last time we looked at this right?
David Hoffman:
[46:02] It is so there's the stablecoin hurdle, that we have to get over. And, you know, at least that's, the people are talking, at least that's being productive. You know, February is a short month where it's only 28 days, so we don't have that much time. There's another roadblock, however, Ryan. And the White House is, this is the White House themselves. So while the White House is yelling at the banks and Coinbase to figure it out, they themselves are being a blocker because they will not give up the fact that Donald Trump gets to continue to do crypto things in the bill. And so Trump's advisor, Patrick Witt, said for Coinbase that the White House will only back the crypto market structure bill if Democrats drop the most aggressive anti-Trump ethics language and refocus the text on industries rather than the president's personal holdings.
Ryan Sean Adams:
[46:50] Oh, wow, dude. I feel like that's a hard position to take, huh?
David Hoffman:
[46:53] This is something that apparently Donald Trump is, that's the hill that he is willing to die on is he gets to continue to do crypto business.
David Hoffman:
[47:02] and so the Democrats are currently strategizing with the industry to balance ethics on stuff like this so they're kind of teaming up with other industry leaders to like make sure that this part of the bill does get enforced I bet.
Ryan Sean Adams:
[47:14] The Democrats would sign off on some other concessions if they got this anti-corruption like you know Trump stuff in there because Trump family has made billions maybe on crypto so far
David Hoffman:
[47:26] Well this was also news this week So Abu Dhabi bought a 49% stake in World Liberty Financial. This was news that the Wall Street Journal broke. Bought the stake for about $500 million days before Donald Trump was inaugurated for president. This deal was not public. We are now finding out about this. And the Wall Street Journal also alleged, in addition to the 49% stake for $500 million, at least $187 million of that was upfront payment that went directly into the pockets of Trump family-controlled entities. So using WLFIL, World Liberty Financial, as like kind of the, conduit here uh 187 million dollars got pocketed by trump families just four days before.
Ryan Sean Adams:
[48:09] Just distribution just owners kind of draw distribution not investment that's staying in world liberty finance and of course um world liberty finance it's a stable coin and it's lending and borrowing protocol it's like not super complicated here it's sort of it's you know fork of ave or something like ave we call
David Hoffman:
[48:27] It sometimes we call like decentralization to centralization theater I'll call this utility theater. Utility theater, like it's a fork of Aave in the front, but it's Donald Trump's pocket in the back.
Ryan Sean Adams:
[48:38] Sure. And so this is like $200 million of direct cash flow to the Trump family. And the thing here that the Wall Street Journal is reporting is that this was a quid pro quo. It was basically after that, later in May, the UAE, which didn't have access to NVIDIA, the latest AI chips, then got access to it. So the Trump administration basically said, okay, you guys can have access to it.
David Hoffman:
[49:03] Because this is the Biden-Chip Act. The Biden-Chip Act, when Biden was in office, put in this rule that prevented certain countries of getting access to chips. And then Donald Trump just leveraged that. It's like, hey, Saudi Arabia, Arab countries, would you like access to chips? Please put $187 million in my pocket.
Ryan Sean Adams:
[49:19] That's the allegation. It's not just Trump and family. It's also Trump's special envoy to the Middle East, Steve Whitcoff. His son actually runs, is the CEO of World Liberty Finance. His family entities received $31 million, according to the Wall Street Journal. Okay. So, and this is all alleged corruption of, you know, crypto and state secrets and using your position as president and political influence in order to enrich your pockets by route of crypto, right? So it's not great. So Trump has actually asked about this, and here's what he said.
David Hoffman:
[49:58] President, the Wall Street Journal reported that the royal family of Abu Dhabi invested hundreds of millions of dollars in your World Liberty financial. Can you explain why you decided to take that investment? Was that a transaction? President Trump Well, I don't know about it. I know that crypto is a big thing and they like it. A lot of people like it. The people behind me like it. My sons are handling that. My family is handling it. And I guess they get investments from different people, but I'm not. I have all I can handle right now with Iran and with Russia and Ukraine and with all the things we're doing. So I don't know.
Ryan Sean Adams:
[50:32] There you go. Trump doesn't know anything about it. It's his sons handling it. He's got more stuff to handle. So there's that, David. I mean, it's definitely been a double-edged sword with
Ryan Sean Adams:
[50:42] the Trump administration.
David Hoffman:
[50:44] I definitely think this is part of the story about why crypto is crumbling in price right now, like downstream of news like this.
Ryan Sean Adams:
[50:52] What do you mean? Like just its image outside of- Yeah,
David Hoffman:
[50:55] The image brand is like, we are now just becoming so incredibly branded alongside of Trump corruption. Like Trump is doing great things for the industry in the sense that like, we're finally getting regulation passed and the regulation that we've always wanted.
Ryan Sean Adams:
[51:08] And he's also getting paid for it.
David Hoffman:
[51:09] He's also taking his pound of flesh as a result and the future blowback to the industry might be significant.
Ryan Sean Adams:
[51:20] Well, one benefit, though, is with clarity in front of Congress, we get interactions like this. You remember Brad Sherman, famous crypto hater? This is Brad Sherman versus Secretary of Treasury Scott Besson. Do you have the authority to order banks to buy Bitcoin or to invest U.S. tax dollars in Bitcoin or Trump coin?
David Hoffman:
[51:38] I am Secretary of the Treasury. I do not have the authority to do that. And as chair of FSOC, I do not have that authority.
Ryan Sean Adams:
[51:46] So, we're not going to see our tax dollars invested in crypto assets?
David Hoffman:
[51:51] Well, why would a private bank be your tax dollars, Congressman?
Ryan Sean Adams:
[51:54] Excuse me, I'm now asking about the money of our taxpayers, which you manage as Secretary of the Treasury. Is it going to be deployed into crypto assets?
David Hoffman:
[52:03] We are retaining seized Bitcoin.
Ryan Sean Adams:
[52:07] That's not exactly taxpayer money. You collect a lot of taxes this month.
David Hoffman:
[52:12] No, that is an asset of the U.S.
Ryan Sean Adams:
[52:13] It's an asset of the U.S. It was a government. Are you going to invest in it?
David Hoffman:
[52:18] And I will point out.
Ryan Sean Adams:
[52:19] Mr. Secretary, reclaiming my time. Are you going to
David Hoffman:
[52:22] Invest in the asset seizure that $1 billion of Bitcoin was seized, $500 million was retained, and that $500 million has become over $15 billion. Gentleman's time has expired.
Ryan Sean Adams:
[52:33] Boom, mic drop. I do love to see Brad Sherman put his place on topics like that.
David Hoffman:
[52:38] Dude, nothing just kills my faith in democracy faster than watching these congressional hearings.
Ryan Sean Adams:
[52:43] The congressional hearings.
David Hoffman:
[52:43] And they are just asking the stupidest questions.
Ryan Sean Adams:
[52:47] Everyone showboating and jockeying and just looking for clips. Well, we played the clips, so I guess it's working.
David Hoffman:
[52:51] Good job, Brad Sherman. Well, I don't think that was the clip that he wanted us to play. It wasn't what the clip he was looking for.
Ryan Sean Adams:
[52:57] Moving on, David. Lando Finance, now on Metamask as well. This is kind of cool. So tokenized stocks in your MetaMask wallet. Yep.
David Hoffman:
[53:05] This is how we win. Tokenized stocks on-chain, accessible with neobanks on Ethereum. Don't forget the world's greatest super app. It's Ethereum. Also in this world, Bitwise has acquired Chorus One. Chorus One is a staking operator. And they are just buying Chorus One to increase their, what do you want to call it? Their on-trail yield opportunities.
Ryan Sean Adams:
[53:26] Yeah. Yeah. I mean, this is their second actually staking acquisition. Yeah.
David Hoffman:
[53:29] Why did they buy two? Yeah.
Ryan Sean Adams:
[53:31] More the merrier. I mean, staking is consolidating. Staking operators are consolidating, right? It's like Bitwise asset managers acquiring staking providers, not just one too in this case. Of course, one was doing more than I think is a company called Attestant that they acquired, which is primarily ETH staking. Of course, one does all of the other networks. So it's just an expansion in that dimension.
David Hoffman:
[53:52] Ethereum is also getting its standard for AI agents. 8004 got introduced last week. We already did an entire podcast on this with WD Krapas and Austin Griffith. so we're going to have more of that, but like ERC 8.04, it's like an identity construct, an identity primitive for agents to give agents reputation and give them like a soul, a spirit of sorts so that people can know what they are and what they do and how people think about them.
Ryan Sean Adams:
[54:20] I think it's cool. I really hope this standard catches on. David, this is in your neck of the woods, I think. Okay, so I didn't think this was real when Polymarket announced it. They said, after months of training, planning, we're excited to announce the Polymarket is coming to New York City. By the Polymarket, they're talking about New York's first free grocery store. Is this real? This is AI generated.
David Hoffman:
[54:44] It is. Well, this looks like AI generated. That's definitely true. But it is a real thing. It's only for five days. It's a five-day free grocery store. So it's a pop-up market. It could not be permanent. I don't know where it is. I bet you it's out of my way.
Ryan Sean Adams:
[54:57] Are you going to go? You should go.
David Hoffman:
[54:58] I have to figure out where it is. Like depending on the neighborhood, dude, like it could be really far away from me.
Ryan Sean Adams:
[55:03] So I feel like Polymarket is genius when it comes to attention and engagement. And they got some engagement with your mayor,
David Hoffman:
[55:11] Mom Donnie. My mayor, who I just love. I love my mayor. This is Mom Donnie tweeting out a tweet. It's the classic tweet of, the worst person you know just made a very great point. And so Mom Donnie ran on a platform of like free government run grocery stores.
Ryan Sean Adams:
[55:28] Yeah.
David Hoffman:
[55:29] Very commie. And then he's retweeting Polymarket, which is like the worst person you know, just made a very good point.
David Hoffman:
[55:35] Because like it's Polly Market doing the Mom Donnie campaign thing. But he's like negging Polly Market.
Ryan Sean Adams:
[55:41] Yeah, why is Polly Market the worst thing?
David Hoffman:
[55:42] Which is inside the New, it was in New York. That's where Polly Market was born. That's where Shane Copeland created Polly Market. So this is his, it's his constituent. And you know, like Mom Donnie.
Ryan Sean Adams:
[55:55] Why is Polly Market the worst thing that Mom Donnie,
David Hoffman:
[55:57] Like the worst person that Mom Donnie is? Because Mom Donnie is like super lib. And libs hate all the hyper-financialization of prediction markets. and also capitalism.
Ryan Sean Adams:
[56:06] Yeah, that's part of it. But also, I don't think that Trump and family and corruption schemes are giving crypto a good reputation. And so it's been very much a right-coded issue now.
David Hoffman:
[56:20] I guess so.
Ryan Sean Adams:
[56:21] Crypto is partisan, unfortunately.
David Hoffman:
[56:23] Yeah. Either way, yeah. I hate both sides of those things.
Ryan Sean Adams:
[56:29] Yeah. Welcome to the 2026, I guess, David. Well, speaking of two sides, you've got two sides on the Super Bowl. We've got the Seahawks versus who? Is it the Patriots again?
David Hoffman:
[56:40] Who? The New England Patriots.
Ryan Sean Adams:
[56:41] Oh, my God.
David Hoffman:
[56:42] Do you remember the last time the Seahawks played the New England Patriots in the Super Bowl?
Ryan Sean Adams:
[56:46] No. When was that?
David Hoffman:
[56:48] This was when I was in college. So it was going to be like 2014 or 2015 or something like that. Yeah. And we had Marshawn Lynch. He was like the greatest. I don't even know what position he played because I don't know football. But he ran a lot and he ran very, very hard. and that's what he was known for doing. He was the greatest runner of all time. And we were at like the one yard line with like a few seconds left to go. And our general manager, our coach, Pete Carroll, decides to throw it. And like everyone at the time was like, Marshawn's going to run it. And they decide to throw it at the one-yard line. I think just because, like, everyone knows that we have the best runner of all time. They're obviously going to give it to Marshawn Flinch to get over the one-yard line and score the touchdown. And then Pete Carroll's like, no, we're going to fake him out. We're going to throw it. And they throw it, and it was intercepted at the one-yard line, and they lost. And that's what happened the last time the Seahawks played the New England Patriots.
Ryan Sean Adams:
[57:39] Well, you'll be happy to know they got 69% odds on Polymarket right now. So this game could go... Imagine you're a Seahawks fan, right?
David Hoffman:
[57:47] Yeah, I mean, like I have watched zero football games this season.
Ryan Sean Adams:
[57:52] Okay, actually, so I'm excited about this football game just also because of a particular commercial that I want to play in the moment of Zen. So this is like Anthropic versus OpenAI,
David Hoffman:
[58:03] And I am loving- Throwing strays at each other.
Ryan Sean Adams:
[58:06] Okay, I'm loving this rivalry because so OpenAI has recently announced that they are introducing ads in ChatGPT, and Anthropic is throwing down and saying, we will never have ads. And so this ad is going to play during the Super Bowl and talk about that exactly. And I love and I hope, David, for no ads in AI moving forward. I think AI plus ads brings a very toxic brew that is going to prey on us in a way that is far beyond order of magnitude more in social media and could lead to some pretty dark, bad things. And I am hopeful that models exist that are just, you just pay for them. I just want to pay for
David Hoffman:
[58:49] Products without ads. Crazy.
Ryan Sean Adams:
[58:50] That's right. Because I don't want to be the product in AI. It feels like a very bad place to be. Anyway, we're going to play that in a minute, in the moment of Zen. Before I do, got to let you know, none of this has been financial advice.
Ryan Sean Adams:
[59:02] God knows, not this week. Crypto is risky. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless Journey. Thanks a lot.
David Hoffman:
[59:16] How do I communicate better with my mom?
Ryan Sean Adams:
[59:21] Great question. Improved communication with your mom can bring you closer. Here are some techniques you can try. Start by listening. Really hear what she's trying to say underneath her words. Build conversation from points of agreement. Find a connection through shared activity. Perhaps a nature walk. Or if the relationship can't be fixed, Find emotional connection with other older women on Golden Encounters, the mature dating site that connects sensitive cubs with roaring cougars.
David Hoffman:
[59:55] What?
Ryan Sean Adams:
[59:57] Would you like me to create your profile?