Ryan Selkis on Crypto : Vivek, Crypto Trends, PAC, ETF Wars, DAOs, Theses

Ram Ahluwalia & Ryan Selkis

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Episode Description

We discuss everything that matters for cypto investors in 2024: Policy & Politics, ETFs, Bitcoin, Ethereum, Solana, AI & Crypto, Crypto Theses top takes

Episode Transcript

[00:00:00] All right, we're live. Pleased to host Ryan Selkis, founder and CEO of Masari. Masari and Ryan, in particular, is a real tour de force. Ryan is building a business. I've seen him interview leaders in policy, in crypto, back to back at the Messari conference with no notes he also have a, has a small groin family like myself, so I can appreciate how you balance all that, it's a lot of energy, and Ryan, why don't we start off talking about Vivek, you interviewed Vivek and we'll cover other topics too, Grayscale, the ETF wars, highlights from your crypto feces, The fair shake pack, which I think everyone should be a participant of if you're going to speak at a crypto conference.

There's a lot of ground we need to cover. We got 55 minutes. Let's start with Vivek. I know, you had interviewed him. What are your impressions of him? Where we are now. I think he's great. I think he had the most articulate, thorough [00:01:00] pro crypto platform of any major politician that we've seen on the national stage.

I think he is 38. He's brilliant. He's technically savvy. He's eloquent. And I think he's going to have a tremendous future in politics. Now, Obviously, disappointed that that he dropped out of the race yesterday. We're filming this the day after the Iowa caucuses. And I think, it is going to be a crazy year as presidential election years, arguably always are, but I struggling to think of a year that's was potentially crazier, more, incendiary than a Trump Biden rematch after everything that's happened the last few years.

I'm not necessarily looking forward to that, but. At the same time, I think Vivek, as a as a pro crypto proxy that will be, campaigning for Trump that is a net positive, and I think people have a misunderstanding of how it works. The White House works.

Joe Biden is not sitting [00:02:00] in on every single meeting when it comes to economic policy and certainly not when it comes to crypto, right? That's getting done by folks like Bharat Ramamurthy, who was a former staffer with Elizabeth Warren. He was really the driver at the National Economic Council that was putting forward some of these hostile crypto policies.

And then, members of the administrative financial, regulatory apparatus. These are former. Allies and close friends of Senator Warren. Presidents have allies and those allies are usually very influential depending on their area of expertise and in terms of who is in these positions of power and then ultimately how those policies get enacted.

There's a saying in DC, personnel is policy. So I think even for folks in crypto that strongly dislike to be charitable Donald Trump, the game at this point is not about whether you like Joe Biden or whether you like Donald Trump, it is how many pro crypto proxies can we surround these gentlemen with on both sides so that we can ultimately have [00:03:00] A fighting shot at good policy in the next administration, particularly good regulation without necessarily there being laws that are passed on a bipartisan basis that become law of the land.

People are policy. And you had a great post the other day showing the policy positions under the current administration and the Trump administration. And Brian Brooks was an incredible win for crypto in many ways not least of which was awarding Anchorage. A national bank charter to engage in crypto activity, but it's been mixed, right?

So Mnuchin went the other way and Trump himself has said he's not a big fan of Bitcoin. And I claim that it was really Peter Thiel who had much to do with the influence of some of those positions. Now I'd say, I would say that's more Steve Mnuchin, right? That, that tweet was almost drafted by the former treasury secretary who is no fan of Bitcoin, but that's exactly the point, right?

I think the game now is to make sure that there is enough influential people in that orbit that ultimately [00:04:00] are going to have the potential president's ear and, give him good advice about the, the competitiveness of us tech and where crypto falls in that.

Thank you. Really the battle is focused on who would be Treasury Secretary under a Trump administration, because that role and person would set policy and play a key role in selecting all the other key personnel as well. And as there was a bargain with Biden and Warren in exchange for the endorsement.

Warren set essentially a slate of regulators, including Chair Gensler and my read of what you're saying is that you don't expect that bargain to come undone, therefore focus on the other side of the aisle and focus on the right leadership that would be around advanced crypto policy. Is that fair?

Yeah. I think that's fair. I would also say there's plenty of Democrats in, and kind of career staffers that have been on that side of the fence within crypto that are working in house or [00:05:00] at lobbying firms at some of the different entities. I hope that they have success if, Biden is reelected and there is, that will be a new administration.

Some people will carry over, maybe some alliances will carry over, but that will. be a new administration and an opportunity to get new personnel in. I'm just not that optimistic about that side. So for folks that don't want to get bogged down in Trump versus Biden, version two I'd say the bigger battle is actually at the Senate.

And that's where we can make more progress because it does look likely or at least the most probable events that the Republicans could take the Senate given how unfavorable the map is for Democrats and ultimately that would neuter some of Senator Warren's influence because her leadership.

Influence over Senate banking, which oversees all the financial regulators would now be in the minority instead of, in the catbird seat that's actually in control of these nominations from the Senate side. So the Senate is the key area to focus on. What would you [00:06:00] say the recent set of losses for the SEC and now the launch of the Bitcoin ETF means for rule of law?

That's above my pay grade. I think that the, look, anyone that's been paying attention to me for the last two years two and a half years, basically since the infrastructure bill knows that I am disgusted at the way this financial administration really, In general things have been going the last couple of years, but specifically to crypto the way that financial policy and the regulators have been acting is can only be described as going rogue and trampling on the rule of law and basically turning, many of these regulators into merit regulators and doing, through the side door what they couldn't do through through the front door.

So I, I do think. That's, there's plenty of evidence for that, and the courts have agreed, and we see incremental evidence, each passing day, I don't think that this SEC will approve an ETHER ETF this year I think that is [00:07:00] that's, a long shot to put it mildly. I just generally think that the SEC will force Grayscale and others to take them to court again and any delay tactic that they can use will be deployed employed and the SEC's argument, I think, for blocking a, an Ethereum ETF could be, with the implementation of staking and the change to Ethereum's consensus mechanism, it is now a Bonafide security.

We're gonna and actually this chart that you're pulling up right now, I think almost acts like a prediction market of sorts for whether this will be approved. So if you start to see this this gap widening a bit, that's the market telling you that the the confidence level is low, that the SEC is going to reverse course here.

One dampener to that impact is that people, could in the same look at this as a. Nine month shot clock now until the election, where maybe this won't be approved this year. And someone like Chair Gensler and [00:08:00] that SEC will continue to be hostile towards additional products. But there's going to be a new administration right now.

Trump is the marginal favorite. But that seems to be growing versus declining. And and then the thought process would be, we'll that, Republican led administration and set of financial regulators actually let some of these products through. A lot of variables here, but but I think it's a a great thing for the industry that we got this through the courts.

I just don't think it should have taken 10 years. Yeah, no, I agree. And I'm pulling up on this slide here, the Ethereum ETHE versus the other trusts. So on the one hand, that discount has widened. I fully agree. It is like a prediction market in real time. And the discount is now 15 percent and that's increased from 7%, which is where it was.

Last week. However, it still remains a bid. Part of that's the plane into the discount and begging that will pull to par or close at the time of an eventual ETF. Which does seem inevitable either, we get it this year or we get it next year through litigation. So on Ethereum. [00:09:00] There's been a lot of discussion around, the narrative of Ethereum.

Is it straddled? You mentioned this in your report. I think you might have used a different language than straddle, per se, a little bit more polite. From my lens, what I see is, one, there's a rotation that's taking place across markets, taking place in every market. That in big technology.

You see that. Now, in crypto, you have this worst to first dynamic and this first to worst dynamic and then within crypto, you now have this narrative of eigenlayer, of restaking, which is another idea to really galvanize people around and there's a big airdrop that's around that people are excited and motivated there as well.

It seems to me like Ethereum is, on, on the rise. That in the price action, we saw, again, I just showed ETHE, Ethereum, I'm going to check today was at 2, 600, not too long ago, so long as down 20%. What's your view on Ethereum now, given what you've learned since you published the report?

Is it the same view and you you took both sides of that as well. You say, here's my view on Ethereum, but by the way, [00:10:00] there's a meaner version that could happen. And I'm more in the mean reversion camp. I think we've seen that, right? I think when I drafted the report, I finished up the draft late November, early December a lot of this divergence, it was Ethereum was starting to underperform pretty significantly.

ETHBTC was coming near, all time or multi year lows. Solana was, was rallying, particularly again, off the back of the break point conference. So that was already in process and it accelerated, through the end of the year. And then at publication I did in some of the other, interviews and commentary say, yeah, I'd expect some mean reversion.

We've seen that this year ETH's up about 10%, Solana's down, Bitcoin's flat. But it's not by much, right? I'm not surprised by that in the short term. I do think in the medium term though, Ethereum has a 60 percent market cap market share for network tokens and This does not seem like a market where you're going to have a power law distribution in those economics versus an oligopoly.

So you'll, it [00:11:00] will look more like mobile phone operating systems or browsers or, computer operating systems, use your, tech equivalent, then it will search engines, right? So I think that's really the the bet on the field. In a declining market or a market where things are cold with the exception of the macro narrative around bitcoin, yeah, bitcoin is going to outperform Ethereum.

In a market where Everything is on fire. Bitcoin might underperform Ethereum, but there can be faster horses in these long tail network tokens. And I think that's probably a pretty safe bet, but I wouldn't, I wouldn't do a pair trade where you're going long short cause you can, you can get blown out on that sort of thing.

Like in an instant, the other thing to keep in mind is some of these other alternative L1s do have supply overhang. Maybe that's not directly. included maybe it's technically included in the market cap, but there's some supply dynamic that whether it's, [00:12:00] liquid tokens that are held by a foundation or, some type of vesting contract or anything in between.