00:00I want to start with the news that we just covered and hearing from Jack Maulers, who's been on our
00:04program a few times before. What does all of this say about the digital asset treasury business model?
00:12Sure, Tim. It basically says what I think a lot of observers of the model have known for a long
00:18time, that there's an exit valve in most markets. In the digital asset treasury model, the exit
00:23valve, it doesn't exist. And we're seeing the problems with that with strategy. This is an
00:28indication of that. What the three firms were trying to do basically was to vertically integrate
00:33and diversify away from pure exposure to Bitcoin. That model has fallen apart today. And I think
00:40it's exactly because there is no exit valve in the digital asset treasury model. So I don't think
00:44this is a tether governance issue. It's basically these firms deciding that the model is not going
00:49to work. And the structural problem with digital asset treasury is that this is just not the
00:54indication of that. So is this the more to come, D, after this, in your view? Is that your
00:59prediction? Well, as long as Bitcoin prices remain under pressure, the digital asset treasury model is
01:05going to be under pressure. I mean, look, 21 Capital still holds the second largest amount of Bitcoin
01:10after strategies. The firm's not going away. But clearly, as long as Bitcoin prices remain soft,
01:16the entire digital asset treasury model remains under pressure. All right. So that's one of the big
01:20stories of the week. The other big story is the Senate is now targeting a vote, a floor vote on
01:25the Clarity Act sometime this week. President Trump, we know, publicly pushed for passage back on July
01:3113th. Prediction markets, however, are still pricing in 2026 enactment of the Clarity vote at around 35 to
01:3840 percent. D, what's the industry missing or what is what are prediction markets missing?
01:43Yeah, sure, Scarlett. So, you know, if you look at the stock prices of public companies in this space,
01:47they've shot up this week as well, whether it's Coinbase or Circle. I'm not a stock analyst,
01:51so I cannot opine on where the stock price and the valuations are. But the market seems to be
01:56pricing in momentum when it comes to the Clarity Act. But I think Kalshi and Polymarket,
02:02the prediction markets guys, are basically, you know, pricing in the math. And the math is not as
02:08optimistic as the momentum seems to be. So clearly, the prediction markets, you know, 40 percent,
02:12I looked at the numbers actually for Kalshi, their odds of this thing getting passed before November,
02:17I think is at about 4 percent. It's about 40 percent overall until the end of the year. So I
02:21don't think that if you look purely at the price momentum in the stock market moves is much to go
02:28by. We still have a long ways to go before Clarity gets passed. Obviously, you're going to have
02:32Nathan, you know, Nathan, another Bloomberg reporter who's much more attuned on this stuff. But I think
02:37more important to step back is what if Clarity gets passed, three major things get fixed in this
02:44market. One, the problems between CFTC and SEC jurisdiction over crypto get clarified.
02:49Two, tokenization goes on the fast track. It's absolute approval. Third issue is that all the
02:55institutional capital waiting on the sidelines gets released. If Clarity does not get passed,
03:00all those three things are off the table. All right. And we also got to get your take on
03:04perpetual futures, perps. Kalshi just filed to expand its perpetual futures beyond crypto into
03:09metals, into effects, into energy. Bitcoin perps have already done $16 billion in six weeks. I know
03:16you've been writing about the perpetualization of everything, all assets. Is this it? And what does
03:22it mean for a company like the CME, whose lawsuit was ostensibly about crypto, but whose actual business
03:27is about commodities that Kalshi is now laser focused on targeting?
03:33Scarlett, great question. And look, I mean, perpetuals are here, whether we like them or not,
03:37whether we think that they are massive leverage opportunities for investors. But if you look at
03:43the success that Kalshi has had over the last six weeks, $16 billion of activity in six weeks' time on
03:49BTC perp. Look, for Kalshi and prediction markets, guys, actually for the entire sector, even for CME,
03:54this was never about just perpetual futures on crypto. That's just the start of it. It's really about
04:00perpetual futures on all commodities, which Kalshi has already asked for approval from CFTC on now.
04:07Equities might be next. So the fight was always about perpetuals for all instruments as the next
04:13version of next leg of derivatives, you know, moving forward. That's why CME is concerned. CME is not
04:18concerned because Kalshi is offering BTC perps. They are very concerned about prediction markets,
04:22guys, encroaching them on the turf. And it comes to the mainstream commodity derivatives,
04:26which is obviously the blue chip business for CME.
04:29Okay, so this is a really good segue to our final topic of the week, D. And that's with what
04:34happened
04:34with the DTCC pilot. So we're talking a little bit about plumbing here and tokenization, but you're
04:39going to explain exactly what this means and the implications of it. The $114 trillion backbone of
04:44every U.S. stock trade went live with limited production trades of tokenized Russell 1000 stocks.
04:49You've got ETFs, Treasuries, BlackRock, JP Morgan, Chase, and more. 40 firms are participating.
04:54Where does DTCC's pilot fit into the broader tokenization landscape? You've written about
05:00this and what could actually change for institutional investors between now and when it launches in
05:06October? So what could change is this is the DTCC. This is the backbone of U.S. clearing its
05:13settlement for the last 50 years. If they are under an SEC exemption talking about tokenizing equities,
05:19you've got to take that seriously. So this is not, you know, crypto native companies testing out
05:24tokenization in a sandbox. This is the first attempt. This is firms, you know, select number
05:30of firms between now, which is July and October, doing test trades, but live trades using the
05:35tokenization platform of DTCC. If that goes well, in October, this experiment turns into a live option,
05:43which means option being it's available for people to actually, you know, do stuff on tokenized
05:48equities starting in October as it becomes mainstream. After that point, it's about economics.
05:53The debate whether tokenized securities are more economical, more convenient compared to traditional
05:59equities, that debate will only be evident if institutions decide, asset managers decide,
06:04to pick tokenized stocks versus regular stocks. That decision will be made after October,
06:09but right now we're paving the path towards making that happen. So this is absolutely an interim step,
06:14but a very important step for U.S. capital markets, U.S. equities to move on chain.
Comments