This Is The Only Way Banks Survive | Caitlin Long

this is the only way that banks will survive now  unless you've been living under rock you know   that the banks have been under amazing stress as a  matter of fact we have seen more Banks collapsing   at a higher level at a higher dollar value than  we saw in 2008 and while many people think it's   getting over it is not it's only just beginning  and so I'm sitting down with a banking expert I'm   talking about Caitlyn long someone who's been in  the inner workings of the Banking and Financial   industry and is in the is in the process of  setting up her own bank right now we're going   to talk about the problem that's been created but  from a whole different level than you've heard   before talking about the way money is Flowing how  the FED is causing this the only way the banks   are going to be able to protect themselves from  this damage and destruction that's coming their   way we're going to talk about the damage that  will happen in the economy from centralizing   the entire banking process we're going to talk  about her revolutionary bank and why the Federal   Reserve does not want to allow it to happen we're  going to talk about the FED now system and the new   cbdc that everybody's afraid of the UCC Universal  Commercial Code filings that are making it so you   don't own any more money and so much more we cover  a lot around it was an amazing conversation with   Caitlyn long let's go ahead and just jump right  into it Caitlin uh thanks so much for taking the   time to join me today I know you are super busy so  I appreciate it dealing with all kinds of banking   stuff so yes I want to dig into the banking stuff  uh past current and potential future where this   is going and so you're certainly one of the  people that are kind of on the Forefront that   can help with this but I first wanted to start  in talking about um you know I know you're the   founder CE you know CEO of custodia Bank and  so I want to get into that but before we kind   of get into that I just want to talk about like  this current banking Shuffle that we're in right   now this consolidation of banking and so we're  seeing smaller Banks going down consolidating   to bigger banks at this point we have like eight  banks that are probably you know too big to fail   right and we're starting to see kind of this  flow to these too big to fail and it seems like   it's almost like the only banks that can survive  uh this type of situation the FED has put them   in is these too big to fail Banks um unless  maybe one the FED decides to cut rates down   below the two to three percent range where  the F where the banks could be profitable   um you know or uh they greatly loosen the  financial conditions uh so one or the other and if   it's not that then it seems almost like we would  need a fully reserved Bank ha ha wow okay yes well   so I actually tweeted out today we're recording  this on the 23rd of May I tweeted out today   um in response to Jamie dimon saying there's going  to be more consolidation in banking and of course   I suspect he's licking his chops at JPMorgan  because they're a beneficiary they're one of   the eight or so banks that you describe as likely  too big to fail and because they've been subject   to Basel III they've had to pay attention to  their liquidity in a way that all the other   banks that are not subject the vast majority of  the quantity of banks in the United States are   not subject to any real liquidity requirements  they'll run some stress tests but they'll assume   you know that 35 of their deposits get withdrawn  within the span of a week as a stress test well we   saw in Silicon Valley Bank 25 be withdrawn within  the span of hours and the the small banks in this   country have about seven cents now of cash on  their balance sheet seven only seven cents for   every dollar on their balance sheet is cash so  if 25 cents gets withdrawn in this short period   of time you start to see the problem they need to  start to liquidate assets and they're liquidating   assets at a loss which is what took Silicon  Valley Bank down okay so that's the background   um I tweeted up today that in 1994 there was  a huge consolidation wave and it was something   I worked on at the early stage of my career in  the bank World there were more than ten thousand   Banks back then and what caused that consolidation  wave was that they were very cost inefficient in   spite of the fact that Greenspan at the time had  engineered a steep yield curve so I would go back   to the way you asked the question it's not so much  rates coming down to two or three percent it's   the steepness of the yield curve because those  businesses those Banks traditional Banks make   money based upon borrowing short-term and lending  long term and they don't really really care in the   grand scheme of things with the exception of Mark  to markets which we'll come back to in a minute   whether interest rates are you know five percent  short term and eight percent long term and they   capture the three percent spread or you know one  percent short term versus four percent long-term   and capture the three percent spread it's a three  percent spread either way because that presumes   yeah except if I could ask except for the big draw  away from the banks is because the FED is paying   five percent so the banks are forced to compete  with that so if the FED were to bring it down then   it wouldn't be as competitive or that's absolutely  right in the so that's why you can't look at this   in a vacuum first of all I was going to add that  the banks may have Mark to Market losses on their   balance sheet which is what's killing the Regional  Community Banks right now because they during all   the covid era the way the plumbing works is all  that money that came from all the fiscal stimulus   had to go through the banking system so the bank  suddenly found themselves flush with cash and   there was no loan demand and so what did they do  they bought treasuries but because treasuries had   no Capital charge they rolled the dice and played  the yield curve and this is where the Management's   made the mistake they didn't have to do what they  did they they invested in long-term treasuries   now those long-term treasuries have a big Mark  to Market loss and your point is also very well   taken which is there's something different now  that didn't exist back in 1994 the last time we   came off a big rate Rising environment but the  FED had engineered a steep yield curve and that   is Money Market funds ding ding ding ding ding  you can earn right now north of five percent in   a U.S government money market fund we're taking  U.S government credit risk whereas banks are   paying little to no interest and you're taking  Bank credit risk a lot of money is walking with   its feet in fact actually at one point there was  an estimate that 850 billion of with of deposits   had been had exited the traditional banks for the  crypto industry back at the peak of the crypto   craze and now we're almost at that amount of money  that's been withdrawn from the banking industry   to go to the money market funds it's uh it's  really stunning how much money has moved from   the banking industry and traditional  Banks were just not ready for this   yeah so so that's one of the things  so obviously one the the risk that   you said Bank risk versus uh government risk  so there's the risk that they're dealing with   um and so that has people on edge and then there's  the the carrot dangling where like hey I can go   make five percent instead of the two percent or  I'm sorry the 0.25 or whatever it is yeah yeah   whatever and I've got counter pretty credit risk  right so if you adjust that for the counterparty   credit risk it's negative yield yeah which way  I was thinking so if inflation stays where it's   at interest rates and banking regulations remain  where they're at it just seems like there's just   no way these small too big to fail or non-too  big to fail Banks can stay in business it just   seems like they're almost guaranteed to fail like  I said unless something were to happen and that's   what I was saying If the Fed were to bring  the rates down it eases the banks also takes   away that big demand for people to move like  that that'd be one thing that I was thinking   but if they're going to recapitalize the banks  they need to do a green span did in the early 90s   and engineer a steep yield curve which is what he  did and it recapitalized the banks back then and   uh that's the that's the last time we really had  Rising rates and you had a big Bank consolidation   wave big banking consolidation wave we didn't  have the giant Banks back then that we do today   um but right now there's a balance sheet problem  in the banking industry and so long story short   it's um it's it's a it this is the type of  consolidation wave where pro profits are   going to be privatized and losses are going to  be socialized unlike the bank consolidation wave   I worked on in their in beginning in 1994 where  it was a win-win because you had a lot of banks   that in spite of the fact that they were earning  High spreads just couldn't keep up because they   were cost inefficient so it was a win-win to  consolidate back then now this consolidation   wave is more about balance sheet weakness  and you have seen a couple of really strongly   performing Bank stocks and guess who they've been  they've been the winners of the auction processes   buying these these defunct Banks out of the bank  auction process and immediately booking a gain   and their stocks go up okay that's that's the  privatization of profits and socialization of   losses that everybody should be upset about yeah  certainly now you know one of the big things with   a consolidation of bank is uh is uh well through  the consolidation getting getting rid of sort   of this like local Regional relationship of the  banker and then potentially pushing more and more   like credit decisions up to the larger you know  National type corporations and things like that   I know about half of U.S employment is with firms  that have less than 500 employees so about half   of that business environment could potentially be  affected I mean there's these some of the risks   that you see with consolidation absolutely but but  it's happening anyway Matt Levine at Bloomberg has   been correctly pointing out money market funds  are basically just narrow Banks okay so the   banks all the the almost 600 billion of deposits  that have been withdrawn from from the banking   system and deposited into money market funds is  is maybe permanently leaving the banking industry   and so all the concern about that's implied in  your question which is that that's where credit   comes from you got to have Regional banks that  can provide that can make loans because that's   where credit to small and medium-sized businesses  comes from it doesn't come from the large Banks   they're not set up to do that and so but yet I  look at it and say it's already happening folks   because people are voting with their feet to go to  money market funds this is not rocket science and   unfortunately if we had to start all over again  we wouldn't structure the banking system the way   it's structured today where you have this enormous  maturity transformation maturity mismatch in in   Banks borrowing short-term lending long-term  and trying to capture a three percent spread   why because it's fundamentally unstable as Matt  pointed out I think it was in yesterday's column   that the the assumption that was made for decades  is that banking deposits were sticky and uh they   might be withdrawn from One bank to go to another  but that would that was a zero-sum game because   it all stayed within the banking system well  now they're not sticky the banking deposits are   leaving they left to go to crypto and now they're  leaving to go to the money market fund industry   um and that is outside of the banking industry  and here's the irony this is where those of us   who like to talk Plumbing of the money markets  look at what the FED did with the RRP facility   the reverse repo facility that's exactly what's  allowing the money market fund industry to invest   in all of these high yielding U.S government  instruments and they can invest in repo and   pick up even extra yield and the impact of that  is if anybody could get direct balance sheet   exposure to the FED then there's an incentive  to there's less credit risk than going through   a bank so you're picking up higher yields  and you're getting US Government slash fed   counterparty credit risk it's it's you know this  is why money is voting with its feet and so the   concern about credit availability in the small  and medium-sized businesses boy the bank regulator   should have had that concern in mind a long time  ago it's so interesting because this is bread   and butter stuff for the banking industry and yet  it's amazing how many really smart people missed   it yeah I think I think banking is sticky um it's  just getting less and less sticky right technology   has made it easier to move I've been with my same  bank since ever my first been kind of over opened   and it's like still there because it's a pain in  the butt to go close bank accounts it's really   difficult and so it is pretty sticky but to your  point it's getting much easier and money moves a   lot faster now than I never did before um I was  reading a report from Christopher Whalen he was   talking about the FDIC report I'm saying that most  of the banking system is insolvent already Yes   um they're just not realizing the losses correct  right and so so a lot of these assets that they   have on their books potentially like commercial  real estate and regular mortgage-backed Securities   Etc underwater you know mortgage loans things like  that we can see delinquencies are going through   the roof cars credit cards et cetera things like  that and so we have this but every time it seems   like they you know fed or the banking system is  kind of like backs against the wall it's like   another three or four letter letter uh special  yeah it pops up right so I mean I mean there's   really nothing stopping them I mean the FED can  just continue to take these assets off the books   at par put them off the balance sheet in some  tucked away corner and correct just kind of keep   this going right well sure right but here's the  thing and this is where I think those who thought   that the expansion of the fed's balance sheet is  by definition inflationary the credit creation is   what's inflationary and you know up prior to the  financial crisis the fed's balance sheet was 800   billion it was you know it was nothing in compared  to what it's been in the trillions today uh and   and non-financial sector debt is 95 trillion ish  last I looked okay so there's been 95 trillion ish   of US dollar credit issued in the United States of  which nine trillion ish has been monetized by the   FED those are approximate numbers but you see the  point where I'm going about 10 percent the FED has   monetized about 10 percent of the credit that got  issued okay by the time this is all said and done   a lot of it's going to end up on the fed's balance  sheet through the mechanisms you just talked about   right but what a lot of folks Miss is that that's  not the inflation the inflation occurred when the   credit got created in the first place how did it  get created it got created in the banking system   and it got created in the shadow banking system  which is through Securities markets Etc but the   credit creation was what was inflationary it  wasn't the expansion of the fed's balance sheet   per se that's a piece of it but but it's not  the the vast majority of it even with the FED   basically backstopping so what they're doing is  basically filling a hole right when you get into   deflationary environments where debt is defaulting  the credit outstanding is shrinking that is small   D deflation the FED has expanded its balance sheet  in order to keep credit inflated okay so they're   not trying to issue 95 trillion more of debt what  they're trying to do is keep that 95 trillion on   its normal trajectory and here's the interesting  thing if you go look at the data I haven't updated   this in a little while but if you look at the  non-financial sector debt in the United States   it's pretty much a straight line up and you can't  tell when Republicans were in charge versus when   Democrats were in charge okay so we've had two and  a half to three trillion dollars of non-financial   sector debt growth in each of the last 10 years  uh and and it's you know it's it's essentially   um keeping me total economy inflated only a  small percentage of that historically has been   the FED itself the real inflation came from the  credit that was created in both the traditional   banking system and in the non traditional  I.E the shadow banking system but it all got   created in the financial system and then got got  intermediated out into the real economy and so   um you know basically the there's a big debate  over the stability of the US dollar banking   system I look at it and you know as you said the  FDIC is saying hey the banking system's insolvent   okay well it really always has been um this is  not new fractional Reserve banking is not new   bank runs are not new none of this is new what's  new is that people are much more aware of what   the issue has been all along but it was always  there bubbling under the surface building up   uh and fundamentally this is not a stable system  it seems stable because they've been able as you   point out to pull the rabbit out of the Hat with  the latest you know alphabet soup program but   all that is doing is taking defaulted credit off  the traditional banking systems balance sheet and   putting it onto the fed's balance sheet to try  to keep the aggregate of total credit inflated   and while that doesn't cause the deflation  because the aggregate credit is still there   and even though it may be tucked away somewhere  it's still a drag on the overall economy I mean   it's still a drag on growth in production because  whoever owes that debt is still being held down by   that right so even though it's kind of like tucked  away uh hidden you know out of sight out of mind   it's still there it's still dragging the overall  situation down so it never allows us to kind of   heal and start growing again absolutely well and  we don't know what real Market interest rates are   we have no idea the one thing I'm pretty confident  of although I can't no one knows for sure is that   they would be hired than they are today right if  if free markets really rained but uh this is why   the most important price that needs to be left  alone and not controlled by the government is   the price of borrowing money because it is the  the traffic light that allocates Capital across   Industries and across time and when that is  controlled which it is in every major economy   in the world right now because there's something  called a central bank and the central banks have   desks that literally buy and sell government  obligations to control those interest rates   and so when they're controlling those interest  rates to their target levels you know they're   not free market interest rates and so to your  point you're we're not we're not allowing all   of the Dead weight of the economy to burn  and and it's uh I like uh Nasim taleb's   uh analogy of forest fires if you don't allow the  underbelly the undergrowth to to burn every now   and then when the when the real one comes you get  a conflagration and it might burn hot enough that   it burns all the bacteria in the soil and nothing  grows for decades until you know an elk or a moose   comes along and takes a you know what and then the  bacteria re regenerates in the soil but it takes   decades for that to happen I'm literally watching  that uh happen there were terrible forest fires   not far from where I live here in Wyoming a couple  of years ago and nothing is growing back because   they they didn't let it burn in in the the more  mild years and when it finally came everything   including the bacteria in the soil burned it's  really sad I recently went out to Wyoming I was   out there earlier this year for the Bitcoin ski  week and boy was it beautiful absolutely oh yes   it sure is just yeah it is wild Big Country out  there for sure man wow God bless Wyoming and keep   it wild that's yeah that's for sure it made me it  made me think I mean this is off track but uh it   we went I went we were there in Jackson Hole right  and then we went about four 45 minutes out and did   a little heli skiing but I got to kind of drive  out and see that that rugged country and just get   to meet some of the people that are out there and  I left thinking these people are never going to   live in 15-minute cities in metaverse like correct  these are the Cowboys out here right correct and   it made me feel a little bit better so I'm just  gonna say that hey I lived on the East Coast for   30 years in in big cities so I'm I I can move  easily from one environment to the other but I   grew up here and I I totally get it I'm much you  know much more much more comfortable here and you   know boy there are a lot of people who are moving  here who are like that escaping the city is and   uh and and appreciating the Big Wide Open Spaces  and generally being left alone although I can't   say I'm here in Southern California and uh in  in Orange County along the beach Newport Beach   Corona del Mar Laguna Beach I mean some of the  most expensive real estate anywhere and I was   completely shocked how expensive it was outside  yeah I mean I'm like 30 40 minutes from the   airport in the in the middle of seemingly nowhere  in these homes are like 15 million dollars yep   what is going on oh I've watched that for years  and you know they're very land constrained around   around Jackson the rest of Wyoming is not like  that when I moved from the New York City area   my cost of living went down by two-thirds it's  uh the rest of Wyoming isn't like that but you   know what's interesting is people Jackson's like  a gateway drug to Wyoming a lot of people fall in   love with Wyoming when they see that and then  they realize wow the once you go not far from   Jackson any direction it's it's equally beautiful  but the real estate prices are a lot lower and   you don't have the craziness of the resort town  and uh so now the joke is the billionaires are   driving out the Millionaires and the millionaires  in Jacksonville who used to be in Jackson are now   really scattered all over Wyoming and uh as you  can imagine is causing a little bit of friction   um you know with with uh with the locals yeah  yeah yeah so I'm jumping back onto this uh you   know what you're saying about um kind of setting  the price of money a lot of people don't realize   that you actually buy money you use money to buy  things but you also buy money when you borrow   the money and while most people understand  the dangers of price fixing which of course   we're already starting to hear talks of price  fixing because inflation is so bad yield curve   control so you most people kind of understand  intuitively that price fixing isn't isn't a   good thing it's actually a very dangerous thing  but they don't think to the point that you made   that setting the price of money actually sets  the price of everything and also they don't   realize how much information is in that price so  if I'm a business owner if the interest rate is   very low that means there's lots of excess  money in the system and people are Healthy   and Wealthy and I should probably launch a new  product or business and if the rates are high   I might I might know the opposite and so when  that's all distorted all types of misallocation   unfortunately people's lives get ruined you  know in small business sector specifically   um going back to this so in this you know banking  situation uh as I kind of said it almost seems   like no bank's really going to survive unless  either of these conditions change or there   was like some sort of like a full Reserve Bank  which of course custodia Bank was trying to do   um and I know that you and I got to talk about  this a little bit in Miami and I know you can't   lay out a whole lot of details um but uh you had a  full full Reserve Bank idea seemingly they didn't   want that at least that's what it appears like  uh what kind of information can you give us on   that what's so interesting because we have full  Reserve Banks they're called money market funds   they're not banks in the sense that they don't  take deposits but they're really the same thing   right they have liabilities in the form of fund  shares and they have Assets in the form of T bills   and repo that that back 100 of the obligations  that's really 100 Reserve Bank and again people   are voting to money market funds taking money  out of the banking system to put them into   money market funds voting with their feet because  that's what they that's what they want there's   something else out there that is essentially a  full Reserve Bank it's called a money transmitter   the 50 states have money transmitter licensing  regimes that's how most of fintechs are licensed   they just can't take a US dollar deposit a bank  is some is a unique animal it is a corporation   bestowed by law with the right to accept US  dollar deposits uh but the fintechs are not   Banks yet they're effectively 100 Reserve Banks  why because they are not allowed to lend their   customer funds they have to hold 100 of their  customer funds in something called permissible   Investments and the permissible Investments are  generally short-term high quality liquid assets   okay so if we want to step back and look at it  objectively we already have 100 Reserve Banks   they're just not legally Banks because they can't  accept deposits but they're effectively the same   thing they're called fintechs and they're called  money market funds um and so what's funny is how   do the money market funds not collect deposits  well because deposits are are are a US dollar   that is deposited into a bank so legally  a money market fund is a security you're   buying a security now you and I look at that  and say it's effectively the same thing right   but the plumbing is very different and the legal  structure is very different a money market fund   cannot be used to make a payment that has to be  done through a bank now if we segregate out what   are the functions of our bank we really use our  bank for basically two things for storing our   deposits storing our US Dollars and for making  payments so the storage of the U.S deposits that   can be handled through a money market fund  with arguably higher yields and lower risk   which is why again so many people are voting with  their feet so a lot of people have commented that   this isn't a bank run it's a bank walk it's this  slow bleed of deposits out of the banking system   um into money market funds just simply because of  the economics the risk-adjusted returns okay and   that's a situation that has been created by the  FED itself um but but we also use the bank for   payments and the money market fund cannot offer  access to fedwire and ACH in order to get access   to Federal Nach as a financial institution you  must be a bank where do uh where do like Charles   Schwab and uh um those types fit in because they  are spanking they have Bank subsidiaries they   Charles Schwab and Morgan Stanley for example have  or they use a clearing Bank um like a JP Morgan uh   you know what would be called a correspondent bank  and basically it's it's really passing through   their balance sheet and that's how they get access  to the Fed so this whole question of who gets   access to Fed accounts is a very interesting  one because in other countries non-banks get   access to central bank accounts so the fintechs  like the paypals and stripes and squares of the   world in the UK for example would be eligible to  get a clearing account at the FED however in the   U.S that's not the case um well in the UK it  would be the bank of England but but in the US   that's not the case the law says you have to be a  depository institution now an eligible depository   institution what is that defined as number one  it's insured depository institutions so FDIC   insured Banks or ncua insured Credit Unions that's  group number one insured depository institutions   and number two is depository institutions eligible  to apply for insurance custodia falls into that   second bucket we are uninsured the FDIC was  refusing to ensure any companies applying for   insurance that were involved in the digital  asset industry incidentally I agree with them   um we can come back and talk about that later if  you want to but the point is that second bucket   is in federal statute and federal law says  the Federal Reserve shall provide services   to eligible depository institutions if xiaomin  shall then that means a Federal Reserve should   or will have to provide those uh those Services  both the fed and the FDIC started to reinterpret   the laws that apply to them shall we say uh and  um and and start to pick and choose who they got   to serve and who they didn't want to serve and  that has resulted in in the politicization of   the banking system and that is something I have  spoken out about broadly banking should not be   politicized if there are fights over whether  marijuana is legal or whether abortion clinics   should have access to the financial services to to  you know to Banks or whether oil and gas companies   should have access to Banks those should be  fought out the in the regulatory realm not   behind closed doors in a bank  supervisors exam 100 percent it's a big deal now what about you said the two  functions of the bank but there's a third function   of the bank two which is extending credit that's  to the point that you're making earlier that's   where the money is actually created and issued  is through the bank correct not everybody borrows   right so now we can actually do we can divide  Banks into lending Banks and banks that that   are really just payment Banks or there's a third  category which is custody Banks um so custody   Banks like Bank of New York Mellon um State  Street Northern Trust most of their business   is providing custody for Securities they don't  they're they they do have small lending books but   the if you go if you look at the balance sheets  of those Banks they are teeny tiny compared to   the assets under custody it's I don't know like a  hundred billion of of on balance sheet assets and   20 trillion of off-balance sheet assets under  custody at those Banks directionally those ratios   are right they really are not in the business  of making loans they're mostly in the business   of providing services and that's um that's that's  that's a a well-trodden pass for banks so it's not   the case that every Bank makes loans okay so um  custodia is not dead in the water you're up and   running just not full services at this point  is that correct we're not taking third-party   customer funds right now we've actually been  operating since October we kept it quiet but   we've been operating since October and uh we  got our certificate of authority to operate from   the Wyoming division of banking last October but  stay tuned we will have announcements coming out   relatively soon about about a pivot yeah we'll  certainly be hanging on that I'm curious then   um you know part of I think what custodia and  maybe potentially you can tell about the name   but kind of like custodian I'm guessing rightful  Reserve but also involved Bitcoin and I think   maybe other crypto assets as well and taking  custody of those and I'm just curious you know   like we're obviously in this transition and  uh most of us alive today are used to Banks   holding our money for us now of course we have  Bitcoin that allows us to take custody of our   own assets you know we have this we're kind of  stuck between Generations some people are still   going to want that custody Etc but and especially  maybe with institutions and things like that I'm   just curious your take on that given uh what's  happened over the weekend with Ledger uh well   look I mean what Ledger revealed is something  that a lot of folks did not understand about the   nature of the hardware provider having software  control over the extraction of private keys in a   hardware device okay so what that's underscoring  is that if you are not self-custed in literally   by you generating a random seed phrase and you  storing it yourselves in a secure way then you're   relying on someone else and it's just a different  layer of trust so you know I think a lot of the   engineers who said this is no big deal understood  it all along a lot of people who were really   shocked just didn't understand that's what that's  what the hardware devices were all along so there   was a really interesting panel that I was honored  to be part of the Jameson loft of Casa hosted with   Obi of fediment and it's basically three different  models of custody with Casa being uh self being a   um a three of five multi-sig with custodia being a  structure that is very different than traditional   full-service third-party custody because the legal  structure of the Wyoming law allows you to retain   title legal title to your assets even when you  turn over your private keys and then there's   the community custody model where essentially  you're segregating out parts of the keys into   the com your trusted community and and then of  course would you put that third model sort of   like with a coinbase kind of model well no it's  not because in that case you're keeping parts of   your key as I understand it with trusted people  in your community full service counterparty risk   uh it's an i what you have is an IOU you don't  have legal title to the asset and as the SEC   um properly required coinbase to disclose last  spring and this applies to all third party custody   that exists in the US market right now the the  way the legal structure works is when you turn   over your Bitcoin to a custodian they give you an  IOU back and if they go out of business because of   their legal structure they're subject to the US  bankruptcy code and you're stuck in a bankruptcy   line getting your money back it looks like though  with Celsius and block five they're letting people   who are in custody Solutions get their money  back but not in their earn or yield products   well again some of that is is a function of just  how much money the custodian has so they were they   were able and willing to be able to pay those out  and they were deemed to be senior claims so now   we get into some very esoteric legal structures  as to whether the account was an Omnibus account   or not if it's an ominous account or not you  are definitely in a debt of credit creditor   relationship um but if if you have a trust account  there's a better argument for segregation what   coinbase was required by the SEC to disclose and  it was about a year ago there was a big brouhaha   over always coinbase going bankrupt well no I I  didn't think they were going bankrupt what they   asked what the SEC made them disclose is that  if they ever did that there is a risk that they   that the people who were holding money in their  trust company might not find that their assets   are segregated right at the moment when they need  the assets to be segregated why because the U.S   bankruptcy code is U.S bankruptcy court judges are  empowered under the U.S bankruptcy code to be able   to break contracts and and in a trust company or  a money transmitter legally in the United States   the asset segregation is by contract okay big  difference with a bank like custodia or a broker   dealer Banks and broker dealers have special  statutory segregation of assets and special   receivership regimes a bankruptcy judge cannot  break the statutory segregation of assets that   judge must respect it okay so what that means  and that is is that the greater likelihood is   that if anything happened to a custodian that was  a bank or a broker dealer you were more likely to   get your money back in ultimately in the case of  Lehman pretty much everybody got their money back   it took some time but that's because they had  statutory segregation of assets and they paid   out the money fairly quickly so it does depend on  how deep the loss is and and whether they recover   sufficient assets to start to pay out creditors  fast bankruptcy judges want to pay out creditors   fast for sure um but uh but the the gist is the  This is complicated stuff there's one other piece   I'll add which is that Wyoming offers something  called bailman bailman is the law of valet parking   for your car or a coat check you are not handing  legal title to your car when you perk it at the   garage to the garage the garage can do one and  one only one thing only which is park your car   they can't take it on a joy ride they can't you  know rent it out to an Uber driver and pocket the   earnings right and securities custody that's  exactly how it works you custody you you you   deposit your securities with a custody bank they  take your securities for a joyride sticky with a   risk and they pocket the losses that's the way  it works okay so the Wyoming bailment law not   only keeps title with statutory segregation with  the customer if the customer elects the balance   however also it prohibits the custodian from the  proverbial Joyride with your assets the only thing   that you can do as a custodian under Wyoming law  is what your customer specifically directs you to   do whereas in the Securities custody world the  Bank of New York's the you know the the um the   Northern Trust the state streets uh go read the  fine prints they can they can lend out your assets   without your Express consent and um it's called  Securities lending these are big big businesses   for these Banks uh and they're pocketing profits  uh and you're arguably getting a lot of risk   that's part of the whole rehypothetication yes and  it goes down absolutely right yes without getting   uh going down that whole rabbit hole but I'm  just curious um you know um to the point of the   Securities I mean like so I don't own the Apple  stock um E-Trade owns it and they owe it to me   but then E-Trade doesn't own it either it's owed  to them which is owed to them and there's I don't   know five five six people in this process this  dtcc kind of clearing services that does all this   um it seems like now we have um technology that  could fix that problem so um you know whether that   be on some blockchain or on on top of the Bitcoin  blockchain we have like you know potentially like   a taro uh layer that we could now or have  Securities yeah yeah and it wasn't that long   ago that stocks used to be Bearer instruments  it was a stock certificate it was actually a   certificate you know we've we've we've yeah paper  and we've grown up seen the movies I don't know   if they still do it but they had like you know the  criminals were like give me the bearer bonds right   like bare bonds are like bear instruments and so  like it wasn't that long ago that these Securities   were Bearer instruments and now we have technology  to do that again however there's this whole   establishment that seems to rent seek in the  middle of every opportunity and not just rent   seek taking a piece of the transaction but  actually leveraging them out use them to your   point joy ride in your car while you're gone uh  do you think I mean is that going to be a big   if not almost uh insurmountable obstacle in the  way of letting technology fix that solution well   so this is interesting this is a broader question  do the bank Regulators want Technology Innovation   in the banking system and here's what I think  happened I think the answer is no I would say   no and here's why they let the back end systems  of the banking industry atrophy and now here   come all these fintechs with these Ferrari front  ends that have to plug into the horse and buggy   back end and then Here Comes crypto on top of  that which is in some ways even faster and more   efficient than the fintechs because they've  got their own separate settlement systems wow   um that's scarce the banking regulators and here's  the problem they've they're in a catch 22. we   talked at the beginning of this conversation about  the Catch-22 they're in with which is if they keep   raising interest rates and have an inverted  yield curve they cause more Banks to go bust   now they're in a catch-22 on technology  too that very few people are talking about   people are voting with their feet to use the  better technology especially the Millennials and   gen Z's they've never set foot in a bank branch  yet liquidity and capital in the banking world are   calibrated to an analog world yeah so people are  voting with their feet to go digital they're they   want regulated digital asset service providers  they'd rather do business with in the regulated   world but the traditional Regulators are trying  to shove them backwards in technology I talked   to one of the Gen Z Folks at Miami he's never  written a check and has only set foot in a bank   branch once in his life so there you go now try  to make somebody like that live in an analog world   yeah not going backwards they're not going back  it makes me think of uh a quote from Christine   Lagarde and she said that Innovation is a threat  to our financial stability which it is I mean it   it's Innovation it disrupts the old way of doing  things that's the entire point and it's actually   a conversation I had with Robert Breedlove while  we were in Miami and I was explaining kind of how   I was thinking through this and like uh from many  ways we had that we had a long rip on his podcast   we talked about it but how like our current form  of government was built for the Industrial Age and   now we've moved we've moved to the information age  and we still have an industrial age government but   we have an Information Age world and one of those  things I didn't talk about necessarily with him   but one of those things that I was thinking about  is that you know we've gone from a slow settlement   to instant or not I'm sorry slow transactions to  instant transactions and so kind of to the point   earlier about moving money from bank to bank I can  literally do it with a push of a button instead   of driving to the bank and filling out the forms  Etc and or whether I buy things you know I used to   have to go to the store and I push a button so now  we have instant transactions but the settlement   still is in the Dark Ages here right and so that's  kind of the point that you're making the banks   have this uh carton buggy back into now we have  this Ferrari uh or even spaceship uh transactions   and so there's just this big gap that's there well  and that's what custodia set out to solve we we   really truly were a friendly and we're actively  working with both sides to figure out how to make   sure that neither side cause problems for the  other and in fact unfortunately what happened   is both sides cause problems for the other yeah  right we saw that traditional banking system   you know through the through the debanking and  just like the the small number of banks that   were willing to serve this industry caused a lot  of problems for the digital asset industry and by   the way the digital asset industry arguably  blew up some of those Banks because going   back to FTX there were 11 Banks including three  g-sibs that provided Financial Services to FTX   which which appears to have been uh just a giant  fraud and allegedly and yet 11 Banks didn't catch   that including Three G sibs including by by the  way three USG sibs I think there were two non-usgs   as well these are supposed to be the best of the  best at catching money laundering and catching   um you know know your customer violations and  they were apparently allowing wires allegedly   to be sent to FTX that ended up instead being  sent to Alameda yeah I saw that with silvergate   and I was just I couldn't believe it I mean how  do you not pick something like that up well I got   to tell you this is one of the things that that  makes me sad about the attempt to just shove this   entire industry offshore and out of the banking  industry is that there were some of us as I think   you know who actively knew uh about about some  of the frauds right let's go back to the to my   public statements against the the lenders it was  clear to me the lenders were going to blow up you   cannot take an asset that is finite in quantity  and start rehypothecating it the moment you do   that somebody's insolvent and it's just a matter  of time before they blow up and there is no lender   of Last Resort unlike there is in the traditional  Finance industry yeah and then I have publicly   disclosed in the morning you've been warning  about that since you came into the space years   now you've been pounding the table on that right  and so those of us who spotted all that and who   and who also were working with law enforcement to  the criticism of people in the in the you know the   purists I look at that and say even the purest  Libertarians should recognize that fraud is an   attack on property rights and we should want to  rid this industry of Fraud and uh you know behind   the scenes I've been helping I just heard of a  horrific situation yesterday where somebody was   defrauded a substantial amount of money out of  their IRA and you know the sad thing is it was   done through an offshore crypto exchange into a  D5 protocol he thought this was a regulated entity   and had there been a regulated entity he would  have been handling his business through the   regulated entity but because of the way the U.S  has shoved this all offshore what have they done   they've just empowered the criminals and the  illicit Finance part of the industry uh and the   crazy leverage I'm seeing now 200 to one leverage  yeah Futures come back I mean this is just awful I   wish we could there's certainly that and there's  a complete breakdown in our regulatory agency as   well which I always have to preface this with a  disclaimer I'm not for this I think we should be   free to do what we want with our property and  we'll take the responsibility and I think the   SEC should shut down in disgrace that being said  they're here so I guess we got to deal with that   but you know back to the FTX scenario okay I  mean it was part it was in the US part was the   Bahamas uh it was American investors and we can  sit here and argue about that but they bought   what uh the only U.S licensed crypto derivatives  exchange Ledger and that went through the cftc   they don't even have any bank accounts  everything was co-mingled like nobody even   looked at that supposedly they kept everything  on a spreadsheet like what kind of compliance   are they doing yeah I don't know about that with  Ledger X ledgerx was not part of the bankruptcy   but that because that was bought by uh FTX us  or whatever uh yes but it was a separate legal   entity so here's the interesting thing um this  is this is a really important Point Ledger X   just got sold it had positive Equity value it was  solvent and I don't believe Ledger X was included   in the bankruptcy filing and it just got sold of  course the equity interest was owned by FTX but   this is the cftc approved the sell uh for FTX to  buy that yes they did right and they didn't they   didn't look into FTX that that's my that's my  point I agree uh and again like I I don't there   there were so many due diligence failures but I  again I got to tell you like you know what was   going on behind the scenes of this industry yeah  those of us who had been around for a while were   quietly all talking to each other saying how  the hell did FTX make as much money as it did   as fast as it did we knew what the economics  were in this industry and we were we we knew   something was wrong there and it wasn't until uh  until later that evidence started piling up that   something was very wrong there and how is it that  the banks didn't catch that you know unfortunately   For Better or For Worse the structure of the  U.S system relies on the banks as the as the   as the government's cop right they're supposed  to do the anti-money laundering and know your   customer and ofac checks uh and and based on what  I saw from the fdic's Inspector General report   11 U.S banks plus several other non-us banks  failed on that front what happened yeah yeah   so that was a little bit of arable I didn't  really intend to go down to but it is super   interesting and it's important to understand as  we go through this transition but going back to   your kind of uh the horse and buggy Bank back  end and strapped into a Ferrari front end we   now have the launch of the fednow system that's  coming up in about 40 days about just a little   over a month that's supposed to launch now I've  tried to do my research I don't see a whole lot   of information on this you know it allows the  banks to move money back and forth faster it's   a new rail it's not a currency so if we have like  the big we have the Bitcoin Network which is the   network and we have Bitcoin is the asset that sits  on it so this is just the network the rail not the   asset but when I look at that you know one of the  things they're doing is they're allowing okay you   know now 24 7 settlement um but like if there's  no asset moving back and forth what settlement is   there if all there is is a ledger that the fed's  going okay from bank number one to bank number two   um I mean I would imagine this can happen in  a database a blockchain a database or whatever   it's not like you need somebody there with like  a pencil like tracking it so like he went home   or took a break to go to lunch or something  and so I was like okay so like what are they   settling I mean yeah I mean what's your what's  your underscoring is that all money is really   just a ledger system used to be done you know  in calorie shells then it was done in you know   pencil and paper and now it's done in bits in a  computer database but it's just a ledger that's   all it is and the way the whole reason why there  is such a thing called settlement is that the   adults screwed up what the kids understood the  kids used to trade baseball cards with both kids   holding both baseball cards and on the count  of three you let go of the one you're trading   right that's simultaneous settlement give me the  drugs no give me the money no give me the drugs   give me the money but that but the but but but  obviously it doesn't work that way because of   the layers of intermediate technology has worked  and still works at most banks by quantity is that   they're batch processing their transactions so  they're not real time settling they're delayed   settling and then trying to settle as many  of them net they'll net all the debits and   credits together it used to be when processing  power is expensive and when computer storage   was expensive that it made sense to do it that  way well now those two things are not expensive   anymore we can move data at the speed of light  we can go back to what the kids were so smart   about which is real-time gross settlement both  legs of a transaction happen at the same time   nobody therefore carries an unsettled transaction  which is really a counterparty credit risk and we   can reduce the risk in the system as a whole  so fed now is designed to do that now here's   the problem remember when I said that the bank's  balance sheets and liquidity were calibrated for   an analog world they were calibrated for the world  where you had to go line up and you know fill out   a form to get money out of a bank now with online  banking we've now learned everything moves a lot   faster in terms of transaction instructions the  settlement is still happening behind the scenes   on the back end in the horse and buggy but fed  now is going to replace that horse and buggy   settlement system so now we're going to 24 7  365 what do you think is going to happen to   bank runs if we can start to settle US Dollars  24 7 365. well it'll certainly speed it up you   bet big increase in Bank runs big increase in  problems in the banks Ergo here's the punch   line they're gonna have to gate it they're it's  not really going to be a widely used real-time   gross settlement payment system because right  now they're proposing to have a 250 000 payment   cap well heck if you've got 15 employees in your  business your payroll is more than 250 000 okay   how useful is this really uh it's not going to be  that useful and but but the alternative is to go   to 100 Reserve Banks and then have an unlimited  cap on on on the payments because everything   has to be pre-funded and it's real-time gross  settlement that that would be a real innovation I read this very very interesting article from  deep throat deep throat IPO I think it is I   sent it to a few people I sent to Joseph Wang  you know the FED guy I sent to a couple people   um get their opinions on it and it basically  highlights how um well I won't go into the   whole background of the story but basically how  you have these um the four largest banks in the   world being Chinese Banks having having money  offshore Tong Longo says yeah but don't forget   about the Euro banks at euro dollar Banks as  well but let's just say uh in the point we   have we have four four of the largest banks in  the world are Chinese banks that are in the you   know Cayman Islands or whatever they're in and  um there are trillions and trillions of dollars   um they he has all the math it's an  amazing article so so dense he had to   highlight just the key points uh but in the  U.S banking system we have like 800 billion   so he's like they have trillions all they have  to do is just move from Bank a to bank B with   a bank with a push of a button and up that bank's  done up now I'll transfer from this statement and   they say even JP Morgan is powerless to this  and and he goes on to say like the only way   that the U.S could defend itself from this is  by putting in the gates exactly what you just   said right they have to gain all this right right  but remember also what I just as the banks fail   it's a swap from the bank's balance  sheets when they fail to the Fed   through these alphabet soup right so I have  always expected the fed's balance sheet to   expand massively it's not a shock to me that it  went from 800 billion to almost 10 trillion at   its peak it's gonna go a lot higher over time but  that's not necessarily inflationary this is where   the Austrian School folks got it wrong because all  they're doing is is filling up the hole from the   defunct balance sheet who's whose credit creation  went away when the bank failed yeah but but   but that's where I have a little bit of a  disagreement with the likes of the Jeff schneiders   of the world that maybe take that Viewpoint  because to your point from an Austrian lens   you're not increasing the money supply you're just  moving it but um by making that by making that   policy decision by putting that fed put into play  it puts people into this easing mindset that makes   them spend more money privatize profits socialized  losses right again this should make every   fair-minded human angry right so even though  that's factually correct it's not it didn't   increase the money supply it's not inflationary  it's actually not correct because by seeing that   it makes me feel better about going getting a  loan which then did increase the money supply   uh absolutely the money supply already increased  that's the point it's already there right there's   95 trillion of non-financial sector debt  outstanding that all got intermediated through   the financial system and it's been it's been  growing two and a half to three trillion a year   and as long as the FED can keep it growing two  and a half to three trillion a year through   turning the dials behind the curtain they keep  the economy inflated the moment they can't keep   that number continuing to go up two and a half to  three trillion a year that's when things start to   become really dicey but your point is that that  that caused Distortion I agree yeah absolutely   it did so I don't think we're disagreeing I just  think we're we're we're talking past each other a   little bit on this on the semantics yeah so back  to the FED now then uh very interesting I hadn't   really thought about that part specifically so  it's not really real-time settlement because   they have to put these gates in play to your point  it's actually a pretty low number so yeah I mean   is this then just kind of like the first step that  you think this kind of um is this gateway drug   kind of like uh Jackson Jacksonville it's like  this gateway drug where it kind of opens up to   the FED in the banking system to these new rails  and over time they'll probably grow it and maybe   it moves towards sort of like a cbdc or is it just  like hey they updated their software on the back   end we don't care what software they use today why  do I care what software they use tomorrow kind of   a thing well no we really do care what software  they use but but there's not a limit on fed wire   fed now is supposed to replace fed wire but until  the banking system's liquidity gets massively   increased then it's not really a replacement  they're going to keep both systems going for a   long time anyway but they're never really going to  be able to take the gate off fed now until you get   to essentially 100 Reserve System why because  the money is going to be sloshing around like   that old Hoover quote you know uh it's like a  cannonball loose on a on a ship during a tempest   toss era yeah right the monies can you imagine if  Silicon Valley Bank weekend if we'd had 24 7 365   withdrawals the the the amount of money sloshing  around the banking system from bank to bank that   weekend would have been staggering yeah right  but this is exactly why they have to gate it   um and so it really isn't going to replace  fed wire fed wire is the slow analog system   that's basically digitizing analog data it's not  literally paper it's so there is a digitization   but it's not natively Digital Data uh and  so it but it's a slow system you're still   filling out the form in an analog way even if  it's a form fill on your bank's online banking   website it's still analog and as a result um you  can't program it to have a wire go through at 11   59 pm on a Saturday night you can't do that it  it settles only during business hours and only   when the FED gets around to settling it so um you  know it's that's the only scenario in which the   fed's willing to have an unlimited transfer value  but not with not with fed now where I thought you   were going is the cbdc debate right which is is  this a gateway drug to cbdc's and you know this   is a this is a an interesting question because  the states the red States it started with South   Dakota then Florida got involved and now Texas  and North Carolina Alabama I mean a number of   states are saying they're not going to adopt the  proposed UCC article 12 which is the update to   allow electronic controllable records electronic  financial instruments right including crypto of   all forms it's an important update and it got  politicized unfortunately because of the way they   handled the concept of a prospective sentiment  by digital currency and so now it there is zero   possibility of all 50 states having a uniform  commercial code on controllable electronic records   um but that said I have said that a cbdc is a hill  I'm willing to die on because it is true that once   you get to to a digitized government money you  get to government control one one thing most folks   don't realize now is how surveilled all Financial  transactions are the government can and will get   every financial transaction on you if it wants to  without even without having to show probable cause   and get a warrant there is no Fourth Amendment  anymore on on data that you provide to a third   party it's called the third party Doctrine it's  been upheld at the Supreme Court as valid you   have no privacy interests and data that you give  up to a third party and this was a Supreme Court   case the Miller case in 1977 that upheld the  bank secrecy act uh and then it was started   to it's been starting to chip away because cell  phone location data is something anyone not just   a government but anyone can buy so they can  track you using your cell phone pings on cell   phone towers and a lot of of fourth amendments  um violations in my mind have have taken place   by the government just going out and buying that  data from a third party under the guise that you   have no privacy interest anymore because you gave  up your data to a third party well luckily in the   carpenter case two years ago three years ago now  the Supreme Court has started to walk that back   and say you can't live in the modern world without  giving up your you know some data to a third party   and you might not have even realized you did  it and so they started to carve back a third   party Doctrine but what I wanted the listeners  to realize is there is no Financial privacy you   should assume there already is none and so the  cbdc proponents look at that and say it's no   different than where it is now most people though  perceive that their bank is only going to give up   their give up data to the government if there's a  valid search warrant or a subpoena yeah yeah and   to your point I mean they already have all that  data even with the whole to your point your cell   phone's tracking you and this whole uh you know  this whole noise being made about the whole Tick   Tock situation and the Chinese are still in your  data it's like that they're they already sell all   that data like they're probably already buying the  data like um it's all out there um but in regards   to this back to yes I did want to take from the  FED now cbdc into this UCC filing and part of what   I was thinking I want to ask you about on the UCC  filing is it's about who owns the property right   that's what the UCC filing is about right who owns  the property and so we kind of already understand   that like okay well you know most people don't but  they're waking up to the fact that the money in   my bank isn't my isn't my money anymore it's the  bank's money and I have a claim and I owe you to   that and in regards to the cbdc versus a Bitcoin  or another crypto asset if I have that Bitcoin   or crypto asset then that's my property but if I  have a cbdc I think per the UCC filing it's not my   cbdc it's not my money is that part of what that  you see UCC was about to basically say that all   all of the cbdc money that exists in society  will actually be owned by the banks not by us   the people well again it was set up to recognize  that that government issued money is an IOU   so really is it that different than the dollar  bill in your wallet if you still carry one   um because if you pull out that dollar bill it  says pay to the order of that dollar bill is an   IOU yeah it used to be an IOU for gold right but  when they severed the gold standard IOU four it's   not an IOU anymore it's Turtles all the way down  it's an IOU to an IOU to an IOU to an I owe you to   an IOU right yeah what what is the Full Faith and  Credit of the US government people would say well   it's the taxing Authority or it's the you know  warships or you know national parks right there   are there are some assets there but the government  itself isn't solid it's I say it's only as good   it's only as good as the next person will take  it from me well but that's the point right this   this gets to once you make that leap you just  made the most important leap to understanding   why Bitcoin has value and a lot of folks who  were trained in a traditional World think that   money has to be backed by something no what you  just said is brilliant everything is subjective   yeah everything okay it once you realize that that  piece of paper in your wallet with a picture of a   dead president in green ink the intrinsic value of  that is a fraction of a penny it's just a piece of   linen with some green ink on it but yet why is  it that that I can trade one of those pieces of   paper that says a dollar one dollar on it for  a can of Coca-Cola because it's a recognized   medium of exchange what makes it recognized even  though its intrinsic value is virtually zero it's   because somebody else accepts it as that it's all  subjective it is always all subjective and and   once you realize that it's always all subjective  that's why Bitcoin has value so many people say   so many smart people so many well-trained  including economics phds will say Bitcoin has no   value because it's not backed by anything what you  got to realize is neither is the US dollar it's   not backed by anything the full faith and credit  of the US government is as ephemeral as anything   in fact I would much rather trust math than trust  trust the laws of math and Trust the laws of man   the backed by something is when gold actually  I mean gold was money and the the paper was the   IOU for that so the dollar that I had was backed  by the gold that was in the bank and so if I gave   it to you you can go redeem it so it was backed  by that but what gave the gold value nothing it   was subjective yes no I know and so the point I  was going to make is only debt needs to be backed   by something oil is not backed by anything Gold's  not right I think bitcoin's not backed by anything   only the debt is backed and so anyone that says  but what is it backed by in my opinion shows that   they don't really understand how this system works  they're referring to a debt-based system when   dollars actually used to be backed by something  they're not anymore either so well that's a great   point because I and the way I like to phrase it  is is slightly different than the but it's exactly   the same point you just made which is that you  don't want money to be issued by anyone Satoshi   gifted gifted Humanity with money that is not  issued by anyone and gold was not issued by anyone   silver was not issued by anyone calorie shells  Wampum beads were not issued by anyone they   were they were things that occurred in nature and  satoshi's invention it their Commodities exactly   and they were they were Goods that exchange were  commonly accepted in exchange and then evolved   because they were so commonly accepted in exchange  to be what we know as money here's the crazy   thing the vast majority of people working in the  financial services industry don't understand money   took me a long time to figure that out took me a  long time to understand money most people don't   realize what money is it's the most confusing  Concept in in society and yet every day we all   interact with it but but you know to your point  about social media and the bank runs more and   more people are waking up to realize that the  money in their bank is not theirs legally it's   a loan you've lent your money to the bank and  the Bank owes it back to you even fewer people   realize the same is true of Securities you've lent  your securities to your broker dealer and they owe   it back to you and what we realize is that when  companies like FTX took money in exchange for   Bitcoin they sold Bitcoin to their customers they  didn't go out and actually buy the Bitcoin they   just pocketed the money yeah but that Bitcoin  IOU was always there now that ended up with a   lot more people thinking they owned Bitcoin  than really did and anytime an institution   goes naked short that's called naked short  they sold more Bitcoin than they actually had   any time they do that it's just a matter of time  before that institution blows up and this is one   of the reasons why I'm a big proponent of not your  keys not your coins you only own the assets that   you directly control and back to the UCC Point  that's what's sad about the way this whole thing   evolved the Wyoming original version Wyoming  was the first state to to create an appendix   for digital assets and interpretive appendix to  the UCC Uniform Commercial Code why did Wyoming do   that wanted to make a road map for judges so that  judges had a means by which to adjudicate disputes   and not clog up the court system we we want clear  obligations rights and obligations of parties to   a transaction involving digital assets so that the  legal system couldn't be used as an attack Vector   on bitcoin that was the concept so Wyoming started  this whole thing and guess what Wyoming did   Wyoming created an appendix that defines Bitcoin  in the category of money so digital assets with no   issue are in the category of money for commercial  law purposes in Wyoming and I think ultimately   many of the red states are going to end up going  in that same direction but it's sad because it   kind of got co-opted this whole multi-state  effort through the uniform law Commission   of which I supported and was a was invited to be  an observer the whole thing got co-opted by this   Central Bank digital currency issue and it's sad  because uh the uniform law commission did a lot of   good work there but because of that one sentence  in the draft uniform law um it got vetoed and uh   it's it's the the governors who are vetoing it are  not wrong in their sentiment they were looking in   the wrong place but they were not wrong in their  sentiment that they want to avoid having a central   bank digital currency recognized in their states  as a means by which to protect their citizens they   are absolutely right in that philosophy yeah man  that's a lot we've covered a lot uh and I kind of   got involved in that UCC in a couple conversations  around that and it was a little bit confusing   um but to your point that's the hill you'll die  on so we have to stay vigilant on that and so   um you know sometimes these laws seem a little  bit vague and um maybe they should clean that up   and try it again but I think we'll stop with that  we've we've gone super long I really appreciate   your time you've been uh more than generous  custodiabank.com uh follow that what's going   on Caitlyn long underscore on Twitter we'll  link to all that down below anything else you   want to call attention to or close it out with no  thank you it's fun we missed missed each other in   Miami and we got to actually go a little bit  deeper as a result so thanks for making the   time to reschedule really appreciate it yeah it  works out all right Caitlin thank you so much   thank you all right that's a wrap hopefully  you enjoyed this conversation with Caitlyn as   much as I did now I've done another conversation  with Caitlin just uh in the past not too Fargo   we'll link to that down below if you want to get  caught up so you can stay at the same Pace with   us otherwise let me know what you think leave me  a comment give me a thumbs up if you like it if   you don't give me thumbs down that's okay but  at least tell me why hit that subscribe button   so you know when I could put new videos out  and that's what I got to your success I'm out foreign

Channel: Mark Moss

Views: 38,995

Keywords: bitcoin news today, mark moss, market disruptors, crypto news today, sovereignty, stock market, dividend stocks, stock market news, passive income 2023, stock market update, bank loans, interest rates, investing for beginners crypto, commodity trading for beginners, how to make money online, recession 2023, stock market crash coming, how to trade options, Caitlin Long, crypto news alerts, banking collapse 2023, custodia bank, caitlin long sam bankman fried, cbdc explained

Id: -ZqfjfJlJog

Length: 71min 12sec (4272 seconds)

Published: Thu Jun 08 2023