January 25, 2023

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In crypto news today the EU committee approves BIS policy to let banks hold 2% of capital in Bitcoin and crypto. Michael Burry says markets rally maybe a dead cat bounce. 🌟Sponsor - Signup with Uphold. https://uphold.sjv.io/gbED4X 🚀 Get the Ledger...


Welcome back to the Thinking Crypto Podcast, your home for cryptocurrency news and interviews. If you are new here, please hit that subscribe button as well as the thumbs up button and leave a comment below. If you're listening on a podcast platform such as Apple, Spotify, or Google, please leave a five-star rating and review. It supports the podcast and it doesn't cost you anything. This content is brought to you by Uphold, which makes crypto investing easy. I've been using Uphold since 2017, so I can vouch for this platform. They have 10 plus million users, 250 plus crypto currencies, and they're available in 150 countries. You can also trade precious metals and equities at Uphold. If you'd like to learn more, please visit the link in the description. All right, my friends, I want to start off with Michael Burry. Yes, Mr. Big Short himself. He tweeted out yesterday a chart of the 2001 charts here showing the collapse of the dot-com bubble and things on the way down.

And what he highlights is a rally that took place on the way down. And the text that he put with this chart, he said maybe. So he's not saying this is definitely happening, but this is a maybe. That this rally we're seeing, both in the stock market and in crypto, is just a bear market rally and can roll over to lower lows. Now, once again, he said maybe, so we don't know if he's right. And I did a poll today where I asked the question, what will Bitcoin do over the next two months? The three options for the answers are retrace the 40K to 50K, number two, crash to lows again, and number three, no clue. So here's the results so far. We got 527 votes. It's pretty much tied for Bitcoin doing a retracement to 40K and crashing to lows. So 30% for the first and 30% for the second. And what's in the lead right now is no clue.

Folks are not sure at 38%. So everyone is still waiting to see what's gonna happen because we got the FOMC meeting coming up at the end of the month. Bitcoin still needs to cross over certain price points. I think it needs to cross over $25,000 before I say, hey, this is a move to the retracement. But we'll see what happens, guys. But Burry, who's of course a perma bear, he's always shorting. He has a bit of a bias here, but he may not be wrong. And that's why he kind of put out maybe he's not making a definitive statement here, but we'll see what happens, guys. We gotta give this some time. Now, here's the big news I wanna share with you all. EU committee approves BIS policy to let banks hold 2% of capital in Bitcoin. This is huge news.

And it's been an ongoing news item because it started in a last year where the BIS, which is the Bank of International Settlements, was exploring whether banks can hold Bitcoin and other crypto. And then it progressed into December where the Basel committee or the BIS Basel committee, they introduced a finalized proposal for limits to the amount of tier one capital banks can hold in Bitcoin. So the dialogue and the discussions around what type of framework and what these banks can and can't do has been going on for a while. So we got the update today that the EU lawmakers imposed prohibitive requirements on banks' crypto holdings. The vote in the European Parliament's Economic and Monetary Affairs Committee is intended to anticipate international bank capital norms. So let me give you some details here, guys. In the meantime, actually, let me back up. The measures, a leaked version of which reported by CoinDesk Monday, are a bid to anticipate international norms that would limit the amount of unbacked assets such as Bitcoin and Ether lenders can hold before the European Commission proposes more extensive rules. In the meantime, banks will be required to hold a euro of own capital for every euro they hold in crypto. Marcus Ferber, the economic spokesperson for the parliament's largest political grouping, said in a statement, such prohibitive capital requirements will help prevent instability in the crypto world from spilling over to the financial system. Over the past couple of years, we've seen that the crypto assets are high-risk investments, he said. The Association of Financial Markets in Europe, a lobbying group that represents traditional finance firms, raise concerns that the scope of the amendment may be too wide.

Here's another quote, there is no definition of crypto assets in the legislation, and therefore the requirement may apply to tokenized securities as well as non-traditional crypto assets. The interim treatment is targeted at. The organization said in an email statement calling for the issues to be dealt with later in the legislative process. The move from the parliament's committee mimics rules set out by the Basel Committee on Banking Supervision, the international standard setter for the industry, which has proposed that holdings of unbanked crypto should be given the highest possible risk waiting, and also limited as a proportion of the bank's total issuance of core financial instruments. Now, you read this and it may come off as maybe negative, right, that okay, they're putting the guardrails here, you can only hold just around 2%, but I want you to step back from a second and look at this from a macro perspective. At one point, they couldn't even touch this stuff. Bitcoin and crypto is considered a fad, a scam, and so forth, and look, there's still naysayers, there's still critics out there who say crypto's decentralized Ponzi and so forth. But look at what these advocacy groups or these folks who help set the standards and the rules for banks are doing. They're saying, hey, we're not banning crypto, we're not preventing you from holding crypto, but we're gonna cap it, we're gonna put it at 2%, and you gotta make sure you have the reserves. Now, all of this is standard, right? If you're gonna hold assets and so forth, you wanna have the backing, you wanna make sure everything's in order, so I don't see any red flags here. What I see is a move in the direction of, hey, banks, go ahead and hold crypto, we don't have a problem with that, but we want you to make sure you follow these rules and regulations.

Guys, that's bullish, because it's always gonna be crawl, walk, run. They're not gonna go zero to 100 immediately and say, oh, you can hold 50% crypto. That's not gonna happen, right? And there were some people who were saying, oh, this is bad news, I don't think so, because the alternative is you can't hold anything and we're gonna ban it, but we know this is the future, guys. This technology, this asset class is here to stay. It's gonna be a big driver of the economy and GDP growth and so forth. So banks will hold crypto, and we saw even in the United States, the OCC, they had green-lighted banks to be able to offer a crypto custody. This was done via Brian Brooks, right? And there's still some critics and folks who are trying to fight this, but you see the direction we're headed to, and once again, it's gonna take time to get everybody on board, but we're making strides, we're making progress here, and this is why I think this is bullish news that once again, the alternative, you can't hold it and we're banning it, right? Versus you can hold it, just follow these rules. I think that's fair, and I think that 2% number will grow to 10%, then 20% as the years come, but it's not gonna happen overnight and we have to be patient, but this is a big move. And obviously last year, we saw that BNY Mellon here in the United States, they launched crypto custody.

So the other big banks like JP Morgan and Bank of America are also dabbling in crypto, expect more of them to offer a crypto custody as well, in addition to trading. Now, I've often talked about NIDIG, this company that had raised a billion dollars and they're trying to help federal credit unions and small banks around the United States to offer Bitcoin to their customers. So you have this happening in the United States as well. I had interviewed one of the folks from there and it's amazing what's happening. There's some big Wall Street backers behind NIDIG. So the infrastructure for banks to be able to offer crypto is being set up and we'll start with Bitcoin, then we'll move to Ethereum and then I think once we get regulatory clarity around what's a security and what's not, the other altcoins will be able to be added accordingly. So all good news, I think this sets another standard. I think, don't be surprised if you see something here where in the United States where the US limits how much crypto banks can hold as well. But once again, it's not what the critics and all the other folks there are beating the drum on. Don't let them hold banks, this and that, right? You can look at Elizabeth Warren and some of these other people who are big time crypto critics, they don't even like the fact that crypto exists and let alone they would want a bank to be able to hold some of it. So I think the lawmakers and these folks recognize what's happening and they have to allow these banks to hold crypto but initially it's gonna be capped and I think that cap is gonna be raised over time.

So good news in my opinion here. Now, I've often talked about the token economy and where we're headed to guys. We got some big news today that Saudi Arabia, or the Saudi central bank is carrying out experiments with a central bank digital currency in cooperation with other financial institutions. This is something to follow closely considering Saudi Arabia is open to settling trade in currencies other than the dollar. So we're seeing the narrative and the piloting and the testing happening where these different central banks are building CBDCs and this is gonna be flowing through the economy. Now you may say, well, what does it have to do with crypto? Well, many of these CBDCs will be built on the blockchains that many of you hold the native tokens for. For example, the XRP ledger, right? I recently interviewed James Wallace of Ripple and how they're dealing with central banks and helping them to build stable coins and CBDCs. Algorand is one that's out there where central banks are piloting CBDCs there. I've heard about Ethereum as well and there's others. And don't get me wrong there are some homegrown proprietary blockchains that some of these central banks are using but there's gonna be these public blockchains out there that they are gonna build on.

So that's gonna be key in when we learn about the CBDCs and which blockchains they're running on. And certainly some are gonna be on the XRP ledger for sure. So you see these folks opting out of the dollar and moving to CBDCs whether it's their own or another country's CBDC. And once again, the token economy, right? You have central banks tokenizing fiat on the blockchain. You have cryptocurrencies and digital assets. You have NFTs, you have the tokenization of money via stable coins, right? So CBDCs are like stable coins but obviously CBDCs are more controlled by central banks. And then you have tokenization of securities, bonds, stocks, real estates and other commodities, guys. All of these things and you're gonna have 24 seven trading. There's not gonna be an opening or closing bell. You're gonna have 24 seven trading, fractionalization.

All of these things will happen and you can verify it and trust it and it's gonna move at a very fast pace because it's on the blockchain. That's what's coming, that's the token economy. And when I see moves like this it makes me very, very bullish. And I just keep dollar cost averaging, accumulating and getting ready for the future bull markets which I'm expecting new all time highs. Now we got news here that investment bankers are working with Coindesk which is owned by Digital Currency Group which owns Genesis, Grayscale and so forth. Genesis of course file for bankruptcy on a potential sale are set to be looking to accept the highest bid despite some interested buyers saying a 200 million dollar plus price tag is significantly overvalued. Remember that Digital Currency Group bought Coindesk for around $500,000 in 2016. And I remember Charles Hoskinson recently the founder of Cardano talking about he would buy Coindesk but $200 million for Coindesk, get the hell out of here. If Coindesk gets sold for $200 million plus I'm gonna put up my YouTube channel and podcast for sale for $10 million. You know, come on man, Coindesk is just a blog. They're not like, look, could they be bought for like maybe $25 million, $30 million? Sure, I think that's fair.

Maybe even 40, 50, right? But 200 million plus, get out of here, man. But another sign that Digital Currency Group is not in a good spot guys. And there's a lot of vultures circling here looking to grab grayscale. And this could be, Digital Currency Group could collapse. I'm not saying I want that to happen. I'm not putting out FUD. I just see smoke and where there's smoke there's fire. And I see continue to see red flags. And you just look at your gut or your BS meter and it's like, yeah, something doesn't seem right here. So I am cautiously optimistic with what's happening with the market now because I still think there's issues here. And remember, Genesis had to file for bankruptcy because no one wanted to even give them a loan.

No one wanted to come in and scoop up what was happening. Now that could be Barry Silbert and these guys not wanting to give up their business for a certain price amount. I think Cameron Winklevoss did tweet something like that, but still not looking good and we'll see what happens. Finally guys, here we got reports that between 2013 and 2023, the SEC penalties for crypto firms totaled over $2.6 billion. More than $2 billion came from the ICO penalties alone. It's a lot of money they collected there guys. And I tweeted out and of course none of that money went towards research to help provide clear regulations for crypto. Most of it went to Gary Gensler's pockets, the cop on the take. And this is his MO. He doesn't want to provide the market with clear regulations because he wants to be able to just go and shake down companies where he, when he feels like it, maybe tomorrow he wakes up and he tries to shake down another company, grab his millions, then runs back and go on TV. See, I did my job. And when he actually hasn't done his job from a industry perspective, from a macro perspective, right?

And even members of Congress are calling him out on this. So anyway, guys, that's the news. What do you think about this EU folks passing, the committee passing the BIS policy to let banks hold crypto? You know, I think it's good news, even though it's capped, it's a move in the right direction. It's crawl, in the crawl phase, then it'll go to walk and then run. Let me know what you think and I'll talk to you all later.