The Merge Is Here: What To Expect - Transcripts

September 15, 2022

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The historic, highly complex, years-in-the-making switch to proof-of-stake from proof-of-work is now complete.

Transcript

This episode is brought to you by Car. Vonna Carbonneau is in the business of driving you happy and with the widest selection of used cars under $20,000, you're bound to find a car that will put a smile on your face. They even offer customizable financing so you can plan your down and monthly payments to shop thousands of affordable vehicles, 100% online, download the app or visit carbonneau.com. Availability may vary by market. Hello and welcome back to a post merge world. Here's why you should watch today's real vision crypto daily briefing the merges here, one of the biggest events in crypto history has just been completed. We're going to bring you a flash analysis of how it went, what's changed and what's next? Plus we're gonna do a deep dive into the other big story in crypto right now, regulation stay tuned for a panel experts led by Ash and perry and boring. The head of the world's largest trade association representing the Blockchain industry. As always, we're gonna break that down to key takeaways. My name is Mark Oliveira with me. We have, as always, Ash Bennington, how are you doing Ash, exciting day,

right. I'm

Doing great man, I'm a little bit tired, got to be honest, I was up last night watching the viewing party until about 3:30 AM when it went off the air. But it was an exciting time and excited to talk about it here.

Marco

Yeah, definitely an exciting time. I mean, I was up myself, I couldn't stay up till 3 30 I'm not a champ like you uh you know, I got to get some, some sleep for the show, right? But anyways to the viewers, don't forget to subscribe, smash the like button, hit the notification bell. So you know, we go live on youtube, join us on our real vision platform since today is not the usual day in crypto, we're gonna mix things up a little bit. Starting with our top story, there's no prize for guessing what news is absolutely dominating the crypto landscape today. The long anticipated years in the making merge is finally here. This has been confirmed in a tweet by ethereum, co founder of metallic veteran, he said quote and we finalized happy merge All this is a big moment for the ethereum ecosystem. Everyone who helped make the merge happen should feel very proud today unquote by very early preliminary accounts. The merge has been successful so far. We have not heard of any major bugs downtimes or people losing money, which is good, but it's important to know that the merge is just hours old and we won't have a full picture for days or even weeks Ash, let's start with the big picture, can you recap for me what the merge is all

about? Yeah,

Absolute. This is something we've talked about here on the show now, it's about the transition from proof of work to proof of stake, proof of work uses miners and mining, mining is very energy intensive, proof of stake uses validators. The pos structure reduces energy consumption by about 99.9%. That number is probably not exact, but it gives you a first order approximation of the magnitude of this change. And also as people in the Ethereum Foundation will tell you this is also very much in their view about improving the security of the ethereum chain. Look, it's important to point out that this is also part of a much broader road map. We've got to merge the splurge and all of these other rhyming names that are going to come up in the future. This is about the ethereum ecosystem continuing to develop mature and change this morning though. And I think this is the single most important thing is what we're not talking about and what we're not talking about is a catastrophic failure. We did not see any massive problems in the, we haven't seen reports that are learning significant challenges associated with what happened last night. And I think it's, it's fair to point out and to say at this moment, it's an extraordinary accomplishment. We've talked about the scale of this change for some time here on the show, how it's been analogized to changing the engines on a jet plane at 50,000 ft cruising altitude.

So hats off to the ethereum Foundation this morning in the theorem community for pulling this off, but also I think it's an extraordinary moment for crypto in general for open soft or some software, the crypto community can do big things. I think that's ultimately the message here. And we're going to talk about some of the trade offs and some of the potential downsides to this later on in this show. But I do think it's a big moment that the community came together and was able to coordinate a change at this scale in terms of the complexity, in terms of the really core functionality of the ethereum network of the ethereum chain got transitioned last night and there haven't been any major problems. That's something that's a notable accomplishment for ethereum and I think more generally marco for the crypto space. Yeah. An extraordinary moment. Indeed. Ash, I should say that, you know, I feel like it's you that popularized the statement changing the engines on a jet plane at 50,000 ft. So I gotta give you credit for that. I don't, I don't think that's mine. I think I stole that.

But it's a great, it's a great line and you hear it in the ethereum community, but please go on. Yeah, yeah, of course. But uh, anyways, uh, speaking about this, obviously extraordinary moment, what are the benefits of this massive change?

Yeah,

I talked about this earlier energy consumption being cut by around 99 or more percent. And this is because energy hungry mining is just no longer happening Timba ko said on the show yesterday that security will be improved. Indeed, at the live watch party last night with metallic, metallic said that security on the chain with something that he believed was going to be improved by this. So the security of the chain continues to evolve. This is obviously something that is, that is noteworthy because as the theory begins to scale as the theory and begins to go enter into more mission critical applications, security of course, is a top priority. Indeed, it's kind of a cynic wanna and it's the, the characteristic where if it doesn't exist, the chain can't exist. So I think it's really important. Uh and look, you know, this is something that, that we've all been looking at here and it's a big moment and I think the ethereum foundation probably deserves a victory lap today. Of course, we'll be talking about some of the downsides and some of the potential risks. But look, this is just a very positive story for crypto across the board.

Well,

speaking of the downsides, what do you think about them? What are the potential ones that we have? Well, a couple of potential downsides here. First of all, proof of stake is believed to concentrate power in the hands of the biggest ethereum stickers that also includes public corporations and there are those who feel that this makes ethereum more susceptible to pressure from regulators around the world. Another sort of limitation. A potential downside is the things that won't change at least for right now. Those are transaction fees, that's gas on the ethereum network and broadly the overall speed and transaction volume of the network itself is not changing.

I think the

other thing that we should probably point out is, you know, last night I tweeted something at like 3 30 in the morning when I was sleep deprived and in the moment I tweeted something like this is cool and exciting and I got teased a little bit by bit coin hours for saying that the Bitcoin community especially, I would say that it's not impressed with the they believe, I think broadly speaking, if we want to characterize it in sort of general terms, this makes the ethereum network more susceptible to centralization, more susceptible to pressure. That's the feeling in the Bitcoin community. That's one perspective and it's something that we, we shouldn't discount. It's important to bring all sides of the table here in this conversation. Marco. Yeah. Well something else that I think was notable too is that ethereum price actually hasn't moved much. Our producer archer this morning, He checked mark coin market cap and it was virtually flat on the day up by mere like 0.1%. So I mean it seems like investors are shrugging their shoulders at this good news. If we look at the chart, it's actually down slightly at the moment. Ash, you would think with all the hype around the merge. It would have moved more, why

hasn't it?

Well, you know, this is sometimes often typical of financial markets, you hear the phrase that you buy the rumor and sell the news. Success is probably priced in. We should also point out, we're in a negative overall macro environment. It is a bear market after all. But again, I think the single most important thing to say about price again, it's sort of this proving the negative, We're talking about the negative, but it's really important, I think for people to understand what did not happen. If we had a catastrophic failure of the technology, we would have likely seen a catastrophic plunge in the price of ethereum and that did not happen. And that really is the important point. So to say it's trading down, you know, whatever it is, 4/10 of 1%. Look, it's basically flat. It tells you that this successful outcome was largely priced in. But again, we did not see a catastrophic failure that would have resulted in massive downside moves. I think it's fair to say beyond that, we're gonna have to wait and see what the impact is on the longer term to ethereum price marco.

Yeah, absolutely. I mean, and speaking about the price, you know, we actually asked real vision fans on linkedin if they thought the merge would be a catalyst for a new bull run, the results are in 829 people voted 65% of people said no, only 32% thought it would be a catalyst. You know that said another crypt that we're keeping a close eye on is a theory. Um classic, right? It's a much smaller Cryptocurrency with a market cap of around five billion compared to the 195 billion for eve. But it seems that ethereum classic could be emerging as a possible possible alternative for miners who want to continue mining after the merge. It is the original ethereum after all right. It was the legacy Blockchain following the 2016 hard fork. It's doing better than Eve price wise at the moment. Decrypt is reporting that the data from two miners dot com shows mining activity known as the hash rate has surged to an all time high ash. Is there potential for further upheaval in the crypto market, what other coins could be affected by this

merge? Yeah,

there's a lot to unpack their. First of all we should say that poll is not scientific, it's something that we put out on twitter. So it's not a scientific poll. Look et ce classic. Also we have the E. T H. W. This is the the Iou being traded right now for ethereum proof of work. There are always these splinter coins. That reminds me a little bit of the block chain size wars. The Bitcoin size wars back in 2017. You see things like B.

SV Bitcoin cash develop and and you know historically those have not been significant players at least relative to the type of market capitalization you see in the main chain. Look, there are still some open questions to your point about the impact on layer two Blockchain. This is about interoperability. It's important to note that we haven't heard any signs this morning that there have been significant challenges with interoperability. That's obviously a good sign. You know, just the unscientific scrolling through twitter this morning. We haven't heard about any L two failures. So again, I think this is really a day in many ways. We're talking about the things that did not occur. We didn't see anything with those interoperability issues but important to know we're gonna have to keep watching them. We're only, gosh, whatever it is, 6.5 hours in. I didn't sleep a whole lot last

night.

Right, knock on wood. Right? Yeah. So we gotta, you know, speaking of good sides and good vibes, let's get a sense of how the community is feeling through some tweets. We've shown you metallics already. Here's one from Tim baker, a member of the ethereum Foundation. He was just on the the daily briefing yesterday. He tweeted, we're good, it's done. We merged amazing work everyone, we ran our interview with TIM about the merge yesterday. As I just said, go check it out if you haven't already. Another tweet is from yoga labs, the company behind the board, a yacht club and other pop massively popular and FT collections. They said, quote, congratulations to the entire ethereum team on a successful merge.

This is a historic moment for us all in a big step in scaling ethereum to its first billion users. We hope you're celebrating this morning. We sure are. And finally the legendary former boxer, Mike Tyson is all business. He tweeted this question Salon a or two point oh question mark, sorry mike, we can't give you financial advice on the show. But Ash, this is a momentous day for crypto. There are virtual parties apparently in an actual one in Prague this weekend. What are your final thoughts on this story?

You know, final

thoughts are, it's a big day for theory and we'll be watching to see if any bugs develop of course, either in the ethereum chain itself or in some of the L two networks. And you know, again, we should point out that centralization is a risk that's been discussed. Many people have raised that point, but look at the end of the day here, it's a big day for Ethan. I think it's a big day for the crypto world in general. Whatever you think of the politics of staking whether you believe that it increases centralization or you think it has manifold benefits in terms of energy reduction. It shows that the crew community can do big things. You know, I tweeted last night that watching that live launch party with metallic and folks from the ethereum foundation, it felt a little bit like watching a space shuttle launch and, and maybe that's not really the correct metaphor. Maybe it's more like, like those, those photos, those old photos you see from the 19 sixties with the guys in their suits and the ladies with their beehive hairdos watching the landing on the moon. It was a really exciting moment and I think, and I think justifiably and deservedly so because this really was a significant transition and again, I've said it before earlier in the show, marco, it shows the Crypto community. It shows that open soft software in concert with the Cryptocurrency community can really do huge things. So this was a big moment and, and I think it's sort of like tees it up for the future for the things that we're going to see to come. I think people will be emboldened by this, They'll be excited by this and we're going to probably see a lot more energy and enthusiasm around some of the future transitions in the space because it did in fact go so well, marco.

Yeah,

it's very meaningful. It's like the culmination of years of hard work. So I definitely think everyone involved, everyone that's in the community should be celebrating today. Like you said, it's good that there's no bad news, right? So definitely something that it's just, it's just, it's great news. I'm really happy about it. Hey there and thanks for tuning in to another real vision podcast. Today's episode is brought to you by zen go in the last 10 years over $100 billion worth of crypto has been lost or stolen specifically because of poor key management scams and hackers. Forget not your keys, not your crypto software and hardware wallets both have the same vulnerability, a single private key that can be lost. Hacked or simply misplaced. Our sponsor zen go crypto wallet is a total game changer bringing wallet security to a whole new level. Zen go is an on chain crypto wallet with no private key vulnerability leveraging, advanced cryptography called MPC which until now has only been available to multi billion dollar institutions.

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It's also fully recoverable using their biometric recovery kit. Get started at zen go dot com slash R. V. Crypto and use our V crypto to get $20 back on your first purchase of $200 or more that Z E N G O dot com slash R. V. Crypto code RV crypto for $20 back on your first purchase of $200 or more terms and conditions apply. See site for details. Another hot topic in crypto right now is regulation Gary Gensler, the chair of the sec, the U. S. Securities and Exchange Commission is set to testify in the Senate today in prepared remarks that have been published. He states that most crypto tokens are securities. He says he will say the centralized and decentralized platforms will need to register with the sec Gensler below leaves.

An aggressive regulator is necessary to maintain the U. S. As the quote unquote gold standard. One example of a years long crypto battle in Washington, D. C. Is this lack of approval for spot Big GTs and the Chamber of Digital Commerce and advocacy group for crypto has been at the forefront of this fight. Perry and boring the Chambers founder and a panel of regulation experts joined. You asked to discuss this battle and their recent report, the crypto conundrum alongside Perry and we have mike Castiglione Director of regulatory affairs and digital assets at Aventis. I hope I said that correctly. And Greg king founder and Ceo of Osprey funds. Let's start off with mary ann's breakdown of why there is still no spot Bitcoin. TTF

the SEc? S official justification for denying applications. It's remained the same over the past. It's been about nine years since the first company applied for his thought, Bitcoin A. T. F. And despite there being significant maturation as well as institutional ization of the market, uh, um and the industry addressing the SEc? S concerns, um it we haven't really moved the needle on on getting this done, but their initial um issues have been around market manipulation. And so it was the winkle vice who applied for the first spot Bitcoin E. T. F. In 2013.

Um and after that, the SEC opposed on the industry, this unprecedented requirement that has come to be named the winkle Voss standard and it says that an applicant has to um one they said you need to have the surveillance sharing agreements in place which once we got Bitcoin futures, um the CMI group had these surveillance sharing arrangements and infrastructure set up. So they met that and then the SEc said, oh well you have to prove that price discovery is happening on the CMI and not the crypto exchanges and there's been a number of studies that have been provided that that that show to a significantly significant basis that price discovery is happening on the CMI. Um, So at this point, a lot of our members feel like there is no data that could ever be provided to the S E. D. At this point that would change their position. They've been given all the data they need. Um secondly, nobody else is required. Other industries have not been required to provide this type of information or go through these types of hoops and maybe Greg can speak to that and details. Of course his E. T. F. Experience predates Bitcoin.

Um but it does come down to that market manipulation piece which again we detail and um in the report a number of different ways how the industry has addressed those concerns.

You know, Ash, it's really interesting to learn that the sec has been using the same justification to reject Bitcoin E. T. S for the past nine years. It really does seem the regulators hold digital assets to a higher standard. As Peri mentioned, the Winklevoss standard as it's dubbed in another part of the interview. She put it down to politics Ash. What do you think about the comments here on the Winklevoss standard? The SCC's justifications?

Well, you

know, Marko, it's not really my role to take a position one way or the other on sec guidelines or rulings, but I want to add some color here because the important point I think is Perry ans view from her chair running the Chamber of Digital Commerce, she spends a great deal of time talking to market participants. So it's a window into that perspective market manipulation as Perry and points out is one of the most often side reasons for why a Btc spot doesn't yet exist. I'll say this, I talk to people both on and off the record here on the show and across the city and on the phone and on zoom calls. And I hear market manipulation cited as well as the reason why SEc is concerned about this. And in the view of the people I speak to, it does appear that that is in fact a sincere concern. You know, look as Perry and points out the standard is different for digital assets, but the asset class is different as well. So, I haven't gone through the price discovery data myself that Perry and mentions, and even if I did, I'm not a digital market micro structure expert, but look, Perry and makes a compelling argument here, as she always does when she joins us on real vision. But there are clearly those at sec who believe that there's a risk to investors, marco Yeah, risk to investors for sure. But also a risk of falling behind as we discuss in this next clip, our panelists, they falling behind other jurisdictions. Let's hear what they have to say about that.

Yeah, I think we can all share the sec s wants and concerns and at the top of that is investor protections. Um, so I don't think their concerns are unjustifiable, but it's just how we've gotten to where we are today, it is definitely a head scratcher. But you would think if that if that is their goal um that they would want to have a spot Bitcoin E. T. F. Come come to market because the absence of one means that retail investors are forced to invest in Bitcoin alone. They are not able to get um direct access to Bitcoin um investments through their financial advisory relationships or under the S. E. C. S. Um the protections of their registration and disclosure frameworks. So having this product come to market would bring with it all sorts of protections for the retail investor, which at the end of the day, you know, should be what we're prioritizing.

But you know, it seems as though that's not what we've prioritized in this instance.

It really is something of a paradox, isn't it?

Yeah, that's why we're calling it the crypto conundrum.

one more thing to add is if you look

at other

jurisdictions

other markets, you

know, um Canada Germany

Sweden

uh Switzerland. They they

all have

the option

uh to purchase

crypto through

uh Spot B. T. F.

Um So we certainly can learn about how these

products are operating

overseas. Uh

See if there are any

problems um and and learn from these other other

markets. So

this is is, you know, this is this would this would not be an

unprecedented

move on the U. S.

As part. Yeah, we I mean we we looked at that in detail in the report, we've been interviewed some of the issue Aires um in other jurisdictions Australia as well has bought crypto E T. F. S in some of these countries have even brought um uh ether E t F. So um we have, you know, I think as a country we've really fallen behind other jurisdictions, you know, traditionally the United States is at the forefront of financial and technological innovation, but not here. Um And uh from a U. S. Competitiveness perspective, um you know, it's certainly um I think makes us less competitive. Um and there have been no reported instances of half kings or thefts or indications of market market manipulation related to um other Bitcoin E T F um that are listed on other international exchanges. So we looked at that in detail um throughout this, So, another kind of piece of the conundrum as to why we don't have one here in the United States.

So, Ash, I know you speak to many people involved regulation, you're following this closely. What do you make of this clip? Is the US falling behind other jurisdictions? Why is this important?

You

know, marco, I think you said it exactly right in your remarks prior to the clip that you have on the one hand, investor protection on the other the competitiveness of the United States. So I think it is absolutely a balancing act and I think it's perfectly reasonable for people, I think they can and should be concerned about this question. You know, the reality is I think it's perfectly appropriate and permissible for the United States to pursue global competitiveness as one of its goals. Indeed, as it would be for any nation around the world to do the same. You know, Mike makes the point about other jurisdictions where people can buy products through E. T. F. Specifically crypto products through E. T. S. And he talks about Canada Germany, Sweden, Switzerland and Australia. Perry and add so this isn't a theoretical risk.

You know, there are people who are buying financial products that basically are the equity stakes in companies traded in the US who are then those companies are then buying foreign products. So you can actually see some of this challenge unfolding here in real time. Again, not a theoretical risk. You know, I think it's important to point out that the United States led the world in the web one and Web two revolution. And I I think in my view at least crypto is that important? Indeed, I think crypto is the internet, it's just the culmination, the solving of problems that hadn't been solved by Internet, Web by web one and Web two. I could be wrong of course. But you know, the point is that I really hope this gets resolved soon because it is important for the United States to maintain its leadership. I think in tech, in finance and in Fintech and all the things that we talked about here on this show, marco

Yeah,

I think it's important for them to maintain their leadership and investor protections as well. You know perry and mentioned this. She builds, she kind of builds on her previous statement, illustrates why Bitcoin E. T. S would benefit investors. Let's hear what she has to say about it.

Well, we talked about the retail investors having additional investor protections by being able to invest alongside with the advice of their financial advisors and under the full protections that the sec. S disclosure frameworks provide. So there's that Um, the other is there's incredible demand for cryptocurrencies, the White House and their executive order that was issued earlier this year found that there's tens of millions of American households who are already owning cryptocurrencies. Um, so there is a lot of interest, but it is reported um based on a different different studies that up to 23% of all the Bitcoin and circulation is actually locked in wallets that people lost their keys to. So, Bitcoin is unique, right? It's, you have to know how to address public and private key. Um, I best practices, you have to, you know, you understand, you know what it means to lose your keys. I admittedly have lost keys before. It's a very painful process. Um, and, and it and it's easy to do and it's unique to other asset classes. So, um, I think having um, traditional financial services companies providing regulated products, could, could fix a lot of these investor protection issues that again, I think we all care about. Um, but despite this, Bitcoin's moving on, the Cryptocurrency space is going to continue to move forward whether the United States wants to support the adoption of this technology and this asset class or not.

And what's at risk is that the U. S. May not be the leading jurisdiction in this space. And I think that's a huge thing to see to other jurisdictions. It would be one of the biggest mistakes of our generation if we let that happen. So

Ash here we have Perry and making a strong case for how big spot big GTs can help protect investors. She mentioned investors being able to invest alongside their financial advisers. She talked about private keys. What are your thoughts on her argument? What's the significance here?

You

know, marco, I think big picture of the point that Perry and is making here is that Cryptocurrency is unique as an asset class and specifically it has those challenges around custody. I think many of us remember the story from last year about the german programmer who got locked out of his iron key flash drive with his private keys that control Bitcoin that at the time was worth about a quarter of a billion dollars. You know, her point is that self custody isn't for everyone and if people want to get exposure to digital assets without having custody of them, it would be favorable for them to get that exposure via an E. T. F. What else can you say? It's a strong point marco

absolutely

a strong point. You know, speaking of all the points that have been in the previous clips, these clips have done a great job of illustrating the problem, but that begs the question, what happens next? How are things going to move forward? And in this final clip, we hear from our panelists about two possible scenarios we might see play out. Let's take a listen.

We're encouraging our policymakers to provide oversight into what's happened at the sec. So um Congress has jurisdiction over the Securities and Exchange Commission and they will have the ability to question and subpoena and bring the commission to testify under oath about what's happened here. So there's really kind of 22 opportunities um or 22 directions. This could go, one is congress could pass a the law um could legislate and bring their oversight authority to help move this forward to get a Bitcoin E. T. F. To market. The other path is litigation. And of course that process has already started um as well, there's at least one company Grayscale who's um asserted that it will be challenging the sec. S desai to deny their Bitcoin E. T. F.

Application. Um and they're bringing a case um on the grounds of arbitrary and capricious activity, violations of the administrative procedures, act as well as unfair discrimination, um, between the issuers. So, um, Congress may get involved? That's very possible. Um, and the courts may have to settle this, but they don't have to, the sec has the authority to do the right thing. Um, and to allow a spot Bitcoin E. T. F. To come to market and, and you know, maybe they will. Um, but I think this is a win not, and if it's just been a long and difficult road for the companies who are looking to offer products in this market

well, and for the investors who are looking to invest in this market, you know, they've had a lot of suboptimal choices for a while. I mean, you have at this point to comment on the state of play and where things might go, You have publicly traded E. T. F. S that, um, that hold crypto related stocks as a way that folks are trying to get crypto exposure. And those E. T. F. Those US based DTs themselves often try to gain a little bit of Bitcoin exposure. And you know how they do this. They buy Canadian E. T.

F. S. They buy products from, from europe. And so, I mean, this is, this is kind of craziness to me, it goes to the mindset of the regulator. You know, the, the image that kind of keeps coming for me is, you know, we've all been on hikes where there's like guardrails and kind of a cliff dropping off. And what if you're in charge of the guardrails? And you notice that there's a path being cut like a shortcut and it's well trod and you can see that people are going outside of where you've designed for them to go. The question is, are you going to try and force them back onto that path when clearly they don't want to do that? They keep going around it in bigger and bigger numbers for years and years and years. Or you're gonna just put some guardrails up there because your job is to protect them. So to me, it's a mindset issue. Um, and to be fair, we also have a fragmentation of regulators issue in the US we've got the Cftc as well.

We have banking regulators. I mean, things that have happened in crypto lately with, you know, online, you know, high yield based accounts blowing up. I mean, that was outside the purview. So we don't really have a situation where there's one central authority and so I personally believe that Congress will need to act. But I also think we could benefit from a different mindset at the sec.

So

here we have Perry and talking about litigation. She said the courts may have to settle this unless the sec makes a change or Congress steps in Greg King also made a great analogy about investor protections, Ash, what are your thoughts

here? Yeah,

litigation. It's probably important to point out that Grayscale has already filed a petition for review in federal court in Washington, D. C. But I also want to pick up on Greg's point, Greg points out the irony of publicly traded companies. I talked about this a little bit in clip to publicly traded companies are essentially buying Canadian E T. S to get exposure to Bitcoin or buying european products to get exposure to Bitcoin. These are public companies that are traded in the United State. That's a little bit weird, right? That's a sort of a counterintuitive thing. And one of the challenges about regulation, he also talks about he being Greg of course, talks about regulatory fragmentation. I think this is a really interesting point. It's one that we've covered here on real vision in the past.

How SEc Cftc I. R. S look at Bitcoin and other digital assets. You know, part of this fragmentation I suspect is because regulators were never set up to deal with things that resemble financial products in many ways, but in other ways function like software. So laws regulations, the court's precedents, these things don't move at the speed of software. They obviously move much slower and that really is a key challenge in the space more broadly marco and one that will be watching here as it creates these sort of unusual circumstances.

A

key challenge. Indeed. You know, these are great clips for viewers who are interested. The full version of the interview is available on our Youtube channel. Real vision Youtube. Real vision crypto Youtube. Check it out. So let's jump into this next segment where we talk about the takeaways. Here's what I think viewers can take away from this expert panel on regulation A US Bitcoin E T F. Doesn't exist yet. The sec has rejected every application since 2013, citing market manipulation as one of the top reasons. According to the panel's view, it seems that the issue is not really about subs substance but about politics.

Why does this matter? Well, not having a Bitcoin E T F could lead the U. S. To fall behind other jurisdictions and that's not good. We want the us to remain a leader in the crypto space. A leader in investor protections and as perry in and the panel have illustrated a Bitcoin. E T F can definitely do that. What happens next? Who knows? But like you mentioned, ash laws and regulations don't move at the speed of software so we may have to keep an eye on this for a while. Hey there, we're just gonna interrupt your listening for 30 seconds or so to announce that neck. So is now an official partner of Real vision crypto are free digital assets channel with more than 290,000 members.

Next So is the security first platform where you can buy, earn on exchange and borrow against your crypto, the company safeguard your crypto by relying on five key fundamentals, including real time auditing and insurance on custodial assets and here's a quick run through of what next. So users can do, they can buy crypto in seven seconds, earn up to 16% daily compound interest swap 300 plus pairs easily and instantly get up to 0.5% in crypto rewards each time, borrow cash or stable coins against their crypto at 0% a P R spend and earn rewards with an XO card, store their digital assets on a platform trusted by five million plus users and more to find out more about neck. So please visit any exo dot iO. Thanks for listening. Well, moving on to the final segment of our show viewer questions. Our first one comes from JJ um, oh, it's takers are incentivized to judge the trustworthiness of validators. Doesn't that create a centralization pressure? Ash? What do you think in here? JJ Great, great question, theoretically what you're saying makes sense. You know, the reality is this is, you know, some six hours old, we're gonna have to wait out to see how it plays out actually in practice, but theoretically I think that is a fair question to pose. JJ.

Well, in our next

question here from Shawshank Rye, is the merge likely to increase enterprise adoption of the

Blockchain.

That's certainly the hope of the ethereum community. I would probably just say that obviously we pointed this out earlier. This is part of a much broader road map of which the merge is only the first part. I think the scaling issue that's going to come in the next component of the, of this transition is an important one in terms of being able to increase the, increase the transaction volume on the layer one chain and also hopefully to reduce costs. Potentially this is a shard ng something we're gonna be talking about but certainly Shawshank, I think that's right. That's the goal.

We

should, we should say that Shashank also made some lovely comments about you as she says, I love Ashes. Caveats, hard to come across people like him with such a balanced view in crypto, I thought defining a bench mark for decentralization was going to be key in identifying whether a coin is the security of commodity. Oh, so there's a question in there too, is that still the case? Is that is that still the case? What do

you think? Ash, well,

first, thank you frank. This is something that we're obviously very passionate about here at real vision, but also it's important to maintain this balance because there are a lot of different perspectives. There are a lot of different risks and potential opportunities here in terms of the benchmark for decentralization. I'm just reading through the question now and whether it is in fact a security or a commodity. This is something that Chair Gensler was out talking about this morning or I should say his prepared remarks were released ahead of his speech. And that's certainly one of the questions, Chair Gensler effectively says that he believes that most of the things that are trading right now are in fact securities. So we're going to have to see, I think that, you know, the idea of decentralization is an important component of that, but this is something that we're going to see play out not just in the technological sphere, but also in the legal and regulatory sphere as well. And I think this is really a key issue that we're all going to be looking at. But I think that's right. Shashank, I think that is one of the major inputs that people are going to make in regulatory circles and in the courts in making that determination at least it seems to be the case based on what's been said in the past. Well, Ash, as you mentioned, there was actually a question on twitter from all the kegs he was saying with Gensler coming out and saying that Bitcoin is a commodity. Wouldn't that take the spotty TF approval or denial decision off of the sec.

S desk? What are your

thoughts? They're

great question kegs? I'm not a lawyer, but my guess is probably not because of its shades on us. Equity exchanges. Probably regulated by sec. That's just my guess, again, not a lawyer, but I don't think it would. Perfect. Perfect. And so the next question here from Ralph Humphrey on our real vision website. What is the benefit of a spot? Bitcoin? E T. F.

As opposed to the futures based ones available. Now there's some further comments there where he says the future seems pretty correlated to the Bitcoin price. Is there a is there less of a risk of the discount premium to the nav issues present with OtC funds like G B T C or E.

Oh

boy. These are really technical questions in terms of evaluation and the legal mechanics of how these things are structured in terms of open ended funds are closed ended funds. I believe the general consensus opinion is that E T P s tend to track those with less loss and less slippage and I believe that's one of the key issues involved with why there's desire for Bitcoin spot your basically are getting kind of a derivative of a derivative when you're getting an exchange traded product that trades a future. I think the idea here is capital efficiency and the ability for the products basically to stay in sync from a price point which is also, which is also one of the challenge and some of the OtC funds that you mentioned earlier in your question ralph But great question. Yeah, great question actually, great question to everyone. Thank you so much for submitting your questions. Remember to always submit them when we're on, we want to hear from you so we can be answering these questions, engage with you as much as we can and Ash as always. Thank you for your insights today. Thank you for answering those questions you've been, you know, amazing guests. So thank you again for for all of the information you're providing

us.

It's, it's especially fun on a day like today. Obviously when we saw this huge story just a couple of hours ago and it's, it's fun to come on and and sort of weight into the news stream and do this analysis and do this on site and unpack this for people because I think it's obvious very clear from the questions that people have a lot of questions. Uh, it's very early, but it's, it's great to come in and try and make heads or tails of this. Try and make sense of these very complicated questions. Uh, and it's a pleasure to do it here with you. Marco.

Awesome

man. Well that's it for today's show. Everyone thank you for watching. As always, don't forget to subscribe to our Youtube channel, smash that like button, hit the notification bell. So you know when we upload and when we go live, remember this is your show, we want to hear from you on what's working. What's not drop a comment down below, Give us your feedback. Let us know what guests you want to see what things we should cover. We appreciate you sharing your time with us today. Tomorrow we've got a great episode of rows adventures in crypto with johN Wu, president of AVA Labs. It's a really, really, really good one. Subscribe to real vision crypto on the website for free to watch it, just go to real vision dot com forward slash crypto. See you next week live on real vision crypto daily briefing.

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