Trump’s impact on crypto future and your portfolio, with Unchained’s Laura Shin

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1:17The Biden administration was so anti-crypto. I was like, oh my God, it's just like watching Blockbuster and Netflix is coming and Blockbuster is not changing and doesn't know what to do and in fact thinks that they're invincible. This is like literally watching the U.S. deal with crypto. And it's very nerve-wracking as an American.

1:44That's Laura Shin, crypto expert, journalist, and host of the podcast Unchained. With the crypto industry booming under the Trump administration and Trump and his family engaged in their own personal crypto ventures, I wanted to talk with Laura about the emerging economic, political, and geopolitical implications. Laura takes us through the twists and turns in layman's language, along the way providing a primer on how crypto really works, why stablecoin use is growing so fast, and what Coinbase joining the S &P 500 means for your portfolio. Plus, her advice on how each of us should be experimenting with crypto right now.

2:24I'm Bob Safian, and this is Rapid Response.

2:33I'm Bob Safian. I'm here with Laura Shin, journalist and host of the podcast Unchained, covering all things cryptocurrency. Laura, thanks for being here. Thanks for having me. I am so eager to have this conversation because crypto fascinates me about how you embed a new currency with trust and what's hype and what isn't and how the landscape may be shifting here in Trump's second term. You call yourself a no-hype crypto journalist. So can you give us a short no-hype overview of where we are right now in crypto's evolution? Yeah, I would say we're probably on the cusp of more widespread adoption.

3:16The number one biggest reason is simply that the Trump administration is really embracing crypto. And that has not been true of previous administrations. And in fact, the Biden administration was probably, you know, I want to say actively hostile. I don't know if people will love that term, but that's probably a pretty accurate description. For a long time, there were a lot of entrepreneurs who were cautious about doing things in the U.S. And you would see constantly, you know, there would be these popular projects, but they would always say, like, you know, you can't participate if you're from these countries.

3:55And it's like, you know, North Korea, Iran, the United States. So that's definitely shifting. The administration is kind of more not only open-minded, but even in some regards, like almost a little bit too embracing of crypto, you could say. The day that we're recording is the day that the Circle IPO is happening. And that in and of itself is another sign of how this is shifting. I think there's going to be probably a decent number of crypto IPOs this year. But then on top of it, you know, stable coins are probably the first major application that has really found what the industry likes to call product market fit.

4:33We're seeing that stable coins have a huge amount of uptake, especially in so many other jurisdictions where they don't trust their local currency. You know, it could be like Argentina, which has seen hyperinflation multiple times or Venezuela or Turkey or Nigeria. You know, there's just a lot of places where people don't actually have a great way to save their money. and they maybe don't also have like really great ways to send money across borders. And so stable coins are really fulfilling that role. And Congress is probably on the cusp of finally passing legislation here in the U.S. around stable coins.

5:08So, you know, these are all things that kind of show how all of this has changed. For a lay person, someone not engaged in the crypto world, Can you just explain what is a stablecoin relative to a meme coin, relative to whatever the portfolio might look like? Yeah, so a stablecoin is any blockchain-based asset that is pegged to the value of some other asset. 99 % of all stablecoins, they're pegged to the value of the U.S. dollar. The way that stablecoins really took off initially was that on a number of crypto exchanges, people wanted to be able to buy and trade using dollars. I wrote this book called The Cryptopians, and it covers kind of like 2013 to till 2018.

5:58And even at that time, people, they would recite back to me the price of Bitcoin or the price of Ether in dollars, no matter whether they were European or Asian or, you know, just wherever they were in the world. They always knew the price in dollars, these other places in the world that they don't have a good way to save their money. Here's a really simple example. I feature this entrepreneur on my podcast. So she's a serial entrepreneur in Afghanistan. Her name is Roya Mahbub, and she had this micro blogging platform. And I think a lot of the people writing for it were women, and they had a hard time paying them because a lot of women in Afghanistan, they don't have bank accounts.

6:36Or if they do, then their male relatives might actually take the money that they earned from them. And so they set them up with Bitcoin wallets and then taught them how to use them. One of the women was in an abusive marriage and saved at the Bitcoin and then used that to eventually divorce her husband. So, you know, that gives you some kind of agency. Like I have some close Turkish friends and I think it was in 2018, like the value of the lira was just going down and down, you know. So it's like people in those places, I think, grasp these kinds of things a lot more quickly, like the value of crypto, like having a form of money that isn't influenced by a central bank, that's stablecoins.

7:15Because the stablecoins are generally linked to the U.S. dollar, it's like a way to sort of have dollars without having dollars, right? I mean, you're getting the stability of that U.S. market, which is, there's some irony in that because, of course, one of the philosophical ideas around crypto is that it's not linked to a government, that it's separate. Now we're going to get really deep into this. So you're correct that this is people wanting U.S. dollars, which is a, you know, form of currency linked to a specific government. But of course, the people that want those dollars are people who don't otherwise have the privilege of easily accessing them.

7:58Bitcoin, of course, existed before stable coins ever existed. There have been times when, you know, the Bitcoin price would go up and then it would kind of crash for a little while and then it would go up again and then it would crash. So that's kind of when you started to see stablecoins also take off. A lot of people view Bitcoin as a good kind of like long-term investment, but on any like short-term timescale, you don't really know where the price is going to be. So if you need the money like on a shorter term timescale, then you would probably rather have something more stable. And so that's where the interest in stablecoins came about.

8:31There's a reason why 99 % of the stablecoins are denominated or pegged to the belt of the U.S. dollar. And it's, of course, because we're the global reserve currency. So there's a lot of safety there, you know? I mean, there's so many different reasons people access crypto, as you're talking about, right? Sometimes it's an investment. Sometimes it is a currency, basically. It's what they want it to be more stable. One way to think about it is, you know, putting something on a blockchain is just giving it a certain wrapper. I there was actually a an NYU professor who a business school professor who's very kind of pro crypto and he will make these funny statements because the Biden administration was just anti all of crypto no matter what it was and he was just saying that's like saying that you're against something because it's not in a sequel database anymore and now you're using Microsoft Excel He was like, the technology that you use for the ledger doesn't matter.

9:32But somehow the Biden administration just said anything using Excel was bad. And he was like, that's just fundamentally doesn't make any sense. It's the type of asset should, you know, kind of provoke a different response based on what it is. And Trump seems like he's done like a full 180 on crypto. I mean, he said it was a scam during his first term and then it supported very strongly in his campaign. He's now launched his own Trump coin three days before the inauguration. Do we know how much of Trump's crypto position is about political opportunity or financial opportunity or some larger philosophy about markets?

10:12I don't think there's a larger philosophy. I think most people probably know what Trump's M.O. is. But let's just say, you know, like he's president and he took like a luxury jetliner from the Qataris. So whatever it is that you think that says about him, it applies to his activities in the crypto world. What I will say, though, like aside from his personal dealings, which by and large, in my opinion, they're business dealings, things that would like help his family or him. And he launches this meme coin, which, by the way, like to make one of these things costs almost no much, no money. So I just want to make that clear.

10:52And you're basically like kind of printing money out of thin air. Right. But then on top of that, the people who got in very early, they just had some agreement where they had to hold their coins until, you know, whatever it was, you know, 90 days or I forget what the what the number of days was. Now, fortuitously, when that deadline came, he announced that he was going to have a dinner. And in order to participate in the dinner, you had to be one of the top holders of this coin. So, of course, the price shot up right at that time when this unlock was happening for those insiders. You know, just note the timing there and put those two facts together and you can make your own conclusions.

11:31But, you know, let me put it this way. Trump saw that the Biden administration alienated the crypto community. he realized these people have money and they hate the democrats i'm going to pick up those votes i like i think it's so obvious you know to me he said you know i'm i'm the crypto candidate and he you know he even went to the bitcoin conference last year he made all these promises to the crypto community and bitcoin communities and on top of that people in his personal orbit his family realized this industry is going to get bigger this industry is all about money and so they have been taking advantage and so you will see and this is very interesting there were a number of people that were very passionately pro-Trump during the campaign and then once the meme coin thing happened because not only Trump but also Melania she also launched a meme coin yeah and they were not happy about what he was doing they still are happy they voted for him just in the sense that they think that this administration is better for the industry but I don't think they love what his family is doing.

12:33And in fact, it was reported that their company, World Liberty Financial, was doing deals with different token teams where basically they were just exchanging money. Like, I'll give you this amount of money if you buy the World Liberty Financial token and we'll buy this amount of your token. I'll scratch your back and you scratch mine. But people in the industry also kind of look down on that because it's not organic. So there are people in the industry who, while they may be happy to have the sort of regulatory environment and support that the administration can offer to them, the personal activity that Trump and his family has under sort of undercut some of their enthusiasm about what that what that says about crypto more largely.

13:23Yeah. Yeah. I think some of them feel like it almost hurts the industry a little bit. You mentioned the Bitcoin conference last year that Trump spoke at. This year's one recently closed was in Las Vegas. J.D. Vance spoke. Was there any news or important signals that came out of that event? The main thing that I would note is that this was the first time there were literally no Democratic politicians who went. um even though bitcoin had originally started as kind of a more libertarian thing um i would say that up until 2021 it was kind of like there there were both sides and um yeah it wasn't super partisan at that point like you could say that maybe certain republicans seemed more enthusiastic but it was not as clear as now where it seems like kind of like the whole republican party is definitely pro.

14:17And then the Democrats are mixed sort of in a generational way. J.P. Morgan, the largest bank in the U.S. by assets, just changed a policy around crypto. Now we'll let some clients use crypto backed assets as loan collateral. It sounds it sounds a little arcane, but is this a big deal? Does it mean that like J.P. Morgan is counting crypto as real money in a new way? It is a big deal. And it's a big deal for actually a few different reasons. So you're right that in a way you could say that they're finally looking at it as real money. And the reason why this is notable is because Jamie Dimon himself has been on the record many times being anti-Bitcoin.

14:59But clearly he knows that no matter what his personal views are, that there's an opportunity to make money here. So, you know, they're definitely going down that road. But the other reason why it's significant is because you may remember in 2022, there were a series of collapses in the crypto industry. And one of the kind of contagion factors is this asset called GBTC. It was sort of like a Bitcoin ETF before Bitcoin ETFs existed. But because of the rules around how it could trade, the price was super distorted from the actual price of the Bitcoin it held. So there were times when it was trading at like 30 % less than the value of the Bitcoins in it.

15:41And when that happened, that is partially why we saw all these collapses, because people were using that as collateral to take loans. And not everyday people, but like institutions. Mostly crypto-related outfits, right? Yeah. They were saying, hey, I have this GPTC. I'd like to put it up as collateral and take a loan. But then when the value of it kept dropping and dropping and dropping, then suddenly they would have to kind of top up the collateral in order to retain the amount of money that they had borrowed, or they'd have to pay some of it back. But they didn't have the money to pay it back.

16:15Basically, once you collapse, then whoever you owe money to also maybe can't pay their bills. And then whoever they owe money to can't pay their bills. And it keeps going on. So anyway, the reason I'm just mentioning this is that the industry is a little nervous about these types of loans, right? And so the fact that JP Morgan is kind of doing a similar, and obviously the Bitcoin ETFs, they literally trade pretty much in line with the value of the underlying. So you don't get those weird distortions in the market. But the point is just that the fact that they allow you to borrow money based on your Bitcoin ETFs, that is very notable.

16:53There is something that feels inevitable about the growth of crypto, maybe because it serves a real need in certain parts of the world, maybe just because it's a way to make money, whether you're JP Morgan Chase or the president of the United States. So why are cryptocurrencies so volatile and are they destined to stay that way? Or should everyone be investing in crypto? We'll talk about that after the break. Stay with us.

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19:01So if you're scaling, make it simple with Deal. Go to deel.com slash MOS and get up to three months free. Before the break, Laura Shin of Podcast Unchained talked about how the crypto world is changing with Trump in the White House. Now she gives us a primer on crypto volatility and explains the impact of crypto exchange Coinbase joining the S &P 500. Plus, the best ways to test out crypto if you're a newbie. Let's jump back in.

19:38You mentioned this sort of cycles of boom and bust in crypto prices and Bitcoin and other coins. Is volatility like a permanent feature of the industry? You know, are there specific signals that would indicate crypto stabilizing more? Or do you think this is just part of this kind of asset? That's a difficult question. probably one of the reasons it is so volatile is just because it's a new market. So if you look back at like the early days of like stock trading and things like that, it was very similar. You know, I've been covering this for 10 years. I remember 10 years ago writing articles where I was asking the same exact questions.

20:21All of these assets are very different. They all have their kind of little particularities. So, you know, Bitcoin is very different from Ether and Ether is different from Solana. And there, you know, there's more out there. And so each of each one of them kind of deserves its own analysis. Every blockchain has what's called its tokenomics or crypto economics. You can design a token in a way where there's incentives around it that, you know, kind of try to get people to do different things on on the blockchain itself on a network. I'm sure this is very confusing. But for listeners who don't know, like a blockchain is a ledger.

20:55And you can imagine like you live in Brooklyn. So imagine that everybody on your block in Brooklyn all lived in one village. And the village's financial system was that you would gather in the town square every day at noon, and every person would just call out verbally, like, these were all the transactions I had yesterday. I paid so-and-so $10 for this cab ride. And then, you know, that person might say, I paid, you know, this other person for babysitting or whatever. So there's no bank, right? Because right now we rely on the bank to do it, right? You agree that the one quote-unquote authoritative ledger is in the cloud, and all it is is just whatever the majority of the ledgers say, that's the correct ledger.

21:34So my point is, this is the same as a blockchain, except that instead of people in your village, it's just all these anonymous computers all around the globe that are collecting these transactions. And every 24 hours in the example of the village, or every 10 minutes in the example of Bitcoin, this new block of transactions gets added to the chain of the transactions that forms the ledger that's why they call it a blockchain so anyway um point is that like of course in the village you're all doing it just because you want to keep the village financial system running but in bitcoin the reason people do is because they can make money doing that so every blockchain has its own version of this where they have like different incentives where they're trying to get you know the different people to do different things on their network so there's many different functions that they could try to incentivize.

22:22But that's sort of how it works. And that's why, like, when you ask this question about the volatility, yeah, like, all these new things are being started. So figuring out how to value all of them that I mean, that's a whole project in and of itself that could take a really long time. There have been people who theorize that as crypto grows, it will become less volatile because, you know, all of these systems will be more mature and sophisticated and there will be better traders that are working on keeping the price at the correct levels in all these different places. But then also just the fact that all of these things work so much faster because it's on the internet than our traditional banking rails, that could also mean that perhaps they might end up being more volatile.

23:11The reason why I'm mentioning this is just, do you remember when Silicon Valley Bank collapsed? Yes. Yeah. And And they were saying that gone are the days where you would go into the bank to withdraw your savings. Everybody was just doing it on their mobile phones. And so banks had never seen a bank run happen that quickly. So we're in a new era, right? And it's the same thing with crypto. How do you sort of differentiate between what the hype is and, you know, what's solid? I think probably so for people who are interested and who don't want to fall for hype, you probably would want to educate yourself before you start investing in some way that puts real money at risk.

23:55So you could take$100 or$200 and just try to do different things using the technology, right? So you could get a little bit of Bitcoin and try to send it to yourself or someone else. You could mint an NFT. You could buy an NFT. You could buy a meme coin. But the point is just that, you know, I feel like all of those things would help you kind of understand, like, you know, why are people talking about this? Like, what is the innovation here? Like, how does this work? And then even just each of those actions that you're doing, you would kind of understand, like, what are the risks? And by the way, the other reason people should try this out first is because it is so easy to literally lose and like you no longer have access to these funds because, you know, maybe you like lose a password or maybe you get phished, meaning like a scammer sends you a link and you click on it thinking it's an OK link.

24:51but instead it just gave them the keys to snatch all of your crypto. I mean, there's so many kind of security risks here because it's, you know, a new space and people are newbies and they don't know what they're doing. And so we see these scams happening all the time. Like, you know, Coinbase was just some people on their customer service team were bribed to give away, you know, customer information. So point is just like through that exercise, I feel like you would learn a lot and then it would help you kind of understand like what's out there. But, you know, like I said earlier, sometimes when I hear people who are very critical, I'm like, your privilege is showing because they just think the U.S.

25:29dollar will be here forever. And, you know, I'm sure people who were under like Napoleon's empire thought it would be the dominant currency forever. And, you know, for a long time, people transacted with seashells, like cowry shells. Like I literally keep one at my desk. I have this little cowry shell here. You know, this is this is this used to be a currency for a long time. So, you know, it's just what people believe. And, yeah, the younger generation probably is going to be more into this than maybe somebody who can't think to how the world might change. And are we all impacted by crypto today, even if we don't have a crypto wallet?

26:07Or is it still too early for it to be that case? No, we are all impacted by it, I would say, because the world's changing. and, you know, the government is in competition with other governments, whether or not it likes to think that or realizes it, Bitcoin and stablecoins, they're getting into this very geopolitical space. Like you see China doing all these different blockchain initiatives and they already have their digital yuan. And, you know, they probably don't like it that the U.S. dollar is the global reserve currency. And so they would love it if like more of the yuan was the global reserve currency, right?

26:49And so the fact that they, because they did their digital yuan a long time ago, they could use this, for instance, in their Belt and Road Initiative, where they are going in to develop these less developed countries. And maybe they'll say, like, if you want to do business with us, then you have to pay us in digital yuan. So then those businesses start holding digital yuan. Honestly, as a journalist, just watching this all go down, especially with the way the Biden administration was so anti-crypto, I was like, oh my God, it's just like watching Blockbuster and Netflix is coming and Blockbuster is not changing and doesn't know what to do and in fact thinks that they're invincible.