00:00Today, we're going to get into what I think is going to happen with the digital asset space over the next six months, and why.
00:08We've got legal clarity on the asset itself, XRP, and the SEC's appeal against that legal clarity has been removed.
00:18So, it doesn't look like XRP itself will be a security in the eyes of the U.S. government, now that there is regulation on that asset.
00:28But that's really the only thing in the U.S. that has legal clarity at this point.
00:33The only two other assets that have been mentioned to potentially have legal clarity were by Bill Hinman in a speech he gave in 2018,
00:43where he basically said that the SEC viewed Bitcoin and Ethereum as commodities, and that the rest of the space could be considered securities.
00:53And he threw a new prong into the Howey test, which, you know, he looked at decentralization of a project, which is not a prong to the Howey test.
01:02So, I think they'll end up being a new test for digital assets in particular, a framework put around that.
01:08MICA, the bill that's been drafted in the U.K., does a good job of putting a sandbox in place and allowing for some other things there.
01:16And the U.S. seems behind in that area.
01:19But I think maybe that's on purpose.
01:22Potentially to expose some corruption and collusion that went on.
01:26We'll see what ends up happening.
01:28I'm just going to give my thoughts on the situation, and I'll let you come to your own conclusions.
01:33In this case, Bill Hinman's emails have come out,
01:37And there were people that told him not to make the remarks that he made in that speech in 2018.
01:45But he did it anyway.
01:47And there's some other things that have been brought to the forefront.
01:52There's also a supposed whistleblower that has receipts for collusion between the Ethereum Foundation,
02:02Russia, China, the SEC, and J.P. Morgan.
02:07Until we see the receipts, I don't know what those are, or if they're true or not.
02:13We'll have to wait and see if those actually come out.
02:15But the potential headwinds here are that Bitcoin and Ethereum actually don't have legal clarity in the eyes of the U.S. government.
02:24There is no congressional legislation that was put forth.
02:28And really the only thing at this point for digital assets are court rulings.
02:32And Ripple and the SEC are still in the lawsuit.
02:34The asset itself is no longer on the table as the security with contracts that Ripple created for the investment with their company
02:44and the sales of XRP to institutions still is under litigation, along with Chris Larson and Brad Garlinghouse.
02:51So we'll see what ends up shaking out there.
02:55They do meet for an hour, I believe, in December.
02:58And if they don't come to a settlement at that point, the case and trial will be in April next year.
03:05But during that time, let's say they do push it all the way to trial.
03:08That would probably mean that XRP is the only thing that has legal clarity that's not, not a security.
03:15It doesn't have full legal clarity in the eyes of the U.S. government because it's not been given a designation.
03:19FinCEN did state that XRP is a currency in 2014 when they settled with Ripple
03:26or some of the other regulatory things that were an issue early on.
03:32With that, let's say some of these allegations, maybe not all of them, are true that come out around this whistleblower from Ethereum.
03:44There's been a lot of things developed on that network, like a lot of things.
03:49DeFi protocols, staking, NFTs.
03:53You know, there's a lot of stuff that has flourished on that network over the past five years
03:58as those people thought it had legal clarity in the eyes of the U.S. government, you know, because Bill Hinman gave that speech.
04:05And so a lot has been developed.
04:06There's been a lot of time, resources, and money invested into that network.
04:10And it would be a tragedy if that network, the underlying protocol, were to come under scrutiny by the SEC
04:17and potentially be sued or come after for the ICO.
04:21So the, you know, potential collusion and other problems that have gone on.
04:26We'll see if, again, I don't know if any of that's true until we see the receipts.
04:31This is all speculation here.
04:33But let's say that does happen.
04:35The implications for Ethereum's network would be dramatic.
04:42I think you would see a similar price drop in Ethereum that you saw in XRP when the lawsuit was filed against it.
04:49So that's a dramatic drop.
04:50I mean, we're looking at, you know, 60, 70% price reduction in Ethereum.
04:55And what does that do to liquidity on that network?
04:57It's already got high gas fees and long latency.
05:02If people don't want to run validator nodes because they're concerned that they're holding securities and they pull out,
05:07you've got large funds at this point that run validator nodes on that network.
05:11Again, speculation.
05:13We'll see what happens with time.
05:14But all the things that have been built on that network would need a new home.
05:18They would need somewhere to transition.
05:20They would need a bridge.
05:21They would need somebody else that would put together something that was compatible with the EVM or the Ethereum virtual machine.
05:26And there's other networks that are compatible with the EVM that are coded in Python and Solidity for the smart contract protocols and DeFi.
05:35You'd still have to change some things in order to migrate them.
05:38Again, so XRP being the only thing that technically has legal clarity in the U.S. as not a security.
05:45It's interesting to me that they've developed a sidechain with that network that is EVM compatible.
05:52And would allow a smooth transition of all those projects that have been scaled and built on Ethereum over to that network,
06:00which would have much lower latency and lower fees.
06:02We'll see if that transpires.
06:03You've also got things like XDC that have real-world financial products being built on top of it, TradeFi.
06:09I think that there's a real chance, if these allegations by the whistleblower are true,
06:15that we would see a dramatic shift in the landscape of crypto over the next six months,
06:20where people migrate from their projects being on, you know, Matic and Polygon and Solana and Ethereum over to that sidechain on the XRPL.
06:32And I think that would bring a lot of liquidity to that network.
06:36It would bring use case.
06:39And it's just interesting to me that, you know, within the last year that that's been created there.
06:45Almost like, you know, they knew maybe some of this was coming.
06:49Again, we'll see if it happens or not.
06:51I'm not stating it does either way.
06:53I'm just giving you some information and a little bit of speculation for fun.
