What the SEC Crackdown Means for Bitcoin

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1:30What's going on, guys? It's Ash Bennington. Welcome to Real Vision Crypto Daily Briefing. Today, I'm joined by Bruce Fenton, CEO of Chainstone Labs and host of the Satoshi Roundtable. Bruce, welcome to the show. Thanks for having me, Ash. It's a pleasure to have you here with us for the very first time. Lots to talk about. We'll get to that in just a second, but I want to take a look at price action here on the day. Bitcoin trading right now at$24 ,931. Lost the 25 handle there. It's down about 4 % trailing 24 hours, down about 6.75 % trailing 7 days. We also have Ether trading at$1 ,640. Also down, down about 6 % trailing 24 hours, trailing 7 days.

2:17It's off nearly 12%. Obviously, it's been a little bit of a sell-off when we look at these numbers. I also want to take a look at Tether, which has once again broken the buck, trading on my screen right now at 99.89, or I should say 0.9989. Obviously, what you're looking at there is a peg break. You can see it sort of reaches its trough around 6 a.m. Eastern time today. That's obviously something we're going to be keeping a look at as well. All right, let's get back to the main event. Bruce, it's great to have you here with us. Obviously, people in the Bitcoin space, you are renowned the world over for your work in Bitcoin.

2:57For those who are new to this space, tell us a little bit about your background and your journey into Bitcoin. Well, I started in the traditional markets. I've been registered with the SEC in some form or another for 30 years now. So I and actually even even before that, I worked unregistered ever since I was a teenager. So I started in the Wall Street business basically at around 14. And then I became a professional when I was 19. And, you know, I've been registered ever since. So and I had a wonderful career in that doing all kinds of different things, you know, working with, you know, some of the global poor all the way up to some of the wealthiest and largest pools of money in the world.

3:34But I always was interested in emerging markets and emerging technology. So, you know, how the world changes. And that brought me into the, you know, the dot com boom and bust and the, you know, the growth of emerging markets like China and the Middle East. And then I was very interested in this emerging technology of Bitcoin starting back in 2012 or so. And by 2013, I was, you know, sort of full time in the in the Bitcoin business and have been, you know, ever since kind of merging those two worlds, the traditional finance world of securities with this exciting new technology of Bitcoin and distributed ledgers.

4:06You know, you and I share some aspects of that background. I think you were at Morgan Stanley. I was at Credit Suisse during the dot-com bubble. It was an exciting time, but got hooked on the intersection of finance and technology. Talk to us specifically about how you discovered Bitcoin and how it struck a chord with you personally. Well, you know, I'm a freedom person. I've always been interested in liberty and libertarian ideals. You know, I was a Ron Paul fan, and I'm up here in New Hampshire now. But even before I moved to New Hampshire, there's an event here. It's actually coming up in a couple of weeks called Porkfest.

4:40And that's where a lot of Bitcoiners heard about Bitcoin. That crew, the sort of Liberty New Hampshire crew, was the first group that I heard of it back in, I think it was as early as 2011. People were talking about it. But there was an event, you know, almost, you know, 12 years ago this month that Eric Voorhees, Roger Veer, Charlie Shrem came up and were talking about, you know, liberty and the problems with fiat money and how Bitcoin can change this. And those were messages that a lot of us have heard now, but kind of nobody had heard back then. So, you know, I think blockchain.com got like a record number of new wallets that weekend and the rest is history.

5:19So tell us a little bit about the current state of play in Bitcoin. How do you see the ecosystem right now? Obviously, you've been looking at this for over a decade. Talk about the evolution that you've seen and where you think we are right now in Bitcoin. There's an exciting emerging, you know, ongoing narrative where I think, you know, Bitcoiners have become increasingly sophisticated with an increasingly sophisticated narrative over the last decade. You know, and that's just because we've brought on higher and higher caliber people. You know, the Ross Stevens and the Safedines and the sailors of the world who all have, you know, an ability to articulate a very clear vision, you know, for Bitcoin as money and also putting real money behind it in the cases of people like Michael Saylor and institutions like Fidelity.

6:05So I think Bitcoin has become much more mature. It's a real asset. I've said many times going back, I don't say it as much now, but I used to always say it's a kind of binary play. It's either going to work or it's not going to work. and the odds of it not working are less and less over time. Every day that it survives is another day. And even the biggest critics, it's less common for people to say, okay, this is going to get wiped out and down to zero. It's a real asset category that's significant. It's bigger than a lot of global money. It's bigger than a lot of other major global commodities.

6:36So it's big and it's here to stay. And there's an interesting narrative now about how it's going to be used, money or also things being built on top of Bitcoin, second layer, ordinals, tokens, these kind of things, and where it fits into the overall ecosystem with other types of digital assets. Yeah, you've just touched on a lot of important points there, a lot to cover. Let's talk about how you see philosophically Bitcoin. I mean, it's interesting. It's one of those things that's kind of like touching the elephant in different places. You see different things. We could talk about the technology, the idea of how you come to distributed consensus.

7:11But one of the aspects about Bitcoin, I think, that especially excites people who are passionate about libertarian ideals is this idea of essentially decoupling the money supply from the state. This technology allows you to do that. Talk a little bit about that framework, how you think about the relationship of the money supply to the state. Yeah, you know, the idea that the state should be in charge of money is just kind of a broken idea. You know, for hundreds of years, the state was in charge of the church and the church and the state were. And then America came along and said, no, we're going to separate that.

7:46And I think most people, very religious people and atheists alike would agree that that was a good idea. And if I ran for office here in New Hampshire, I ran for U.S. Senate last year. And if you asked 100 Republicans and 100 Democrats what you think the ideal world should be and what the government should do, you'd get very different answers. You know, on the left, they'd say different priorities than the right would say. but almost none of them would say they want the government dealing with money. If you ask 10 Democrats or 10 Republicans, they just don't really care about that. It shouldn't be a role that government should even be involved in.

8:19And we don't need them. And Bitcoin proves that we can have global money that is sound money, that is based on the rules of math and the laws of code rather than the whims of bureaucrats. It's just a vastly superior form of money. And big picture, what's important about that is that sound money has meaning. You know, if they can print money from thin air as they do, there's no accountability and it enables governments and tyrants all over the world to do evil things. So it's actually quite, you know, serious magnitude. You know, it's actually good versus evil. You know, you can there are great evils in the world that are a result of the fiat money system.

8:55And there's a lot of also, you know, other drawbacks that may or may not be evil, but they're certainly I mean, even health, you know, health even suffers because, you know, the ability for money to print, print politicians to print money. from thin air, they put that into all kinds of poor health policies, corn syrup subsidies, seed oils, these kind of things. And then there's more obvious uses of government money like war, never ending war in a surveillance state and for profit prisons and all of these kind of things. So at the end of the day, that's the most important use case of money is to be better money, that sound money, that stops some of these shenanigans and some of this evil in the world.

9:34Now, the counter arguments that from particularly from Keynesian economists, you've heard these before. The idea of, of course, there are bad things that happen in the world. But on balance, the United States had a pretty incredible century in the 20th century, especially the second half of the 20th century, where they had fiat money. And in fact, used at times, this is just the argument from the Keynesians, they would say, they used control over the money supplier, independent banks, independent central banks control over the money supply here in the United States. the Fed, was used to balance out, they would say, periods of recession and inflation.

10:07And that on balance here in the United States specifically, and also in Western Europe, pretty good 50 years for democracy and freedom. What's your response to that, Bruce? Well, you know, a lot of our best years were when we were on a gold standard. You know, we had a lot of really great growth in the 50s and 60s, you know, the post-war, you know, post-World War II boom. And we had a lot more freedom. We had a lot more economic freedom. And, you know, yes, they started tinkering with the money, but it was a little bit and a little bit more and a little bit more. And I think we've all seen the charts from the Federal Reserve and others where it's just been an absolute hockey stick.

10:43You know, you can kind of get away with it and have economic growth in spite of bad economic policy. And there is a difference. There's a difference between, you know, printing a few billion dollars and a few trillion dollars. You know, it's a it's a thousand times more. And that's what the situation is now. You know, we're printing more in a year than, you know, the entire history of the United States, all the way up into the early part of my career. You know, we print more in a month sometimes than our entire national debt used to be. You know, we've seen this hockey stick chart. So, you know, and this happens again and again.

11:13It happened in the Weimar Republic. It happened in the Roman Empire. It happened in Zimbabwe. You know, politicians get out of hand and they have worse and worse policies that print money from thin air and are ineffective. So I think if we went back to our roots, back to more of a sound money system, net net, we would be much better and also much more free. Hey, everyone, we're going to take a quick pause and hear a word from our partners. We'll be right back.

11:43Bruce, I want to ask you about something you just mentioned, which was your run for the United States Senate. Talk a little bit about what inspired you to do that. Obviously, that's not a decision that anyone makes lightly here in the 2020s. I mean, they come after you, whether you're a Democrat or a Republican, your life gets scrutinized in a way that it never does as a private citizen when you run for office. What made you feel so strongly about the race that you wanted to jump into it? Well, you know, I think we're in a fourth turning. There's a great book in 96 that came out called A Fourth Turning, which talks about how every hundred years or so we have these major cycles and shifts in the way that the whole world works.

12:19You know, the way that maps are changed and language is changed and beliefs are changed, money changes. And we're definitely in those kind of times right now. We are in epic times of change. And it's going to come out either, you know, a generation of evil and tyranny or it's going to come out to be one of the greatest generations in history. And so I felt that it was important to try because I think America is in a very, very crucial spot. So I felt it's important to try because I care about my country. I care about humanity. I care about these deeply care about these issues of, you know, human rights and freedom and peace.

12:57So I threw my hat in the ring. I the job doesn't appeal to me at all. Honestly, I feel I know all respect to people who try hard. And I know some people with great careers who've gone on to do things like U.S. Senate. For me personally, I felt it's a bit of a step down in lifestyle and enjoyability. But I was willing to kind of take one for the team. If I would have been sent down there, I would have done it. I might not have liked it, but if I could help America, I think that's worth it. And everybody should do their part to try and even working in technology, I'm still continuing to do that.

13:32I think I might even be able to do more to help America and help the world by pursuing things like Bitcoin and decentralized ideals, cypherpunk ideals. than I might have been able to do down there in the U.S. Senate. It's interesting, you know, the perspective of Bitcoiners here in the United States, you can almost divide it into two categories. There are people who see Bitcoin as very much a global movement with benefits for mankind in aggregate. I think everybody in the second category believes that as well. But there are also people such as yourself who are very pro-America. You obviously served in the United States Navy, a background of really being patriotic, wanting to serve the country.

14:06Talk a little bit about Bitcoin specifically as an American phenomenon. I think there are a lot of people who particularly come from the traditional finance side who say, hey, look, you know, the United States dollar is one of the reasons why the U.S. had such an incredible century. We shouldn't risk it by switching away to a different standard. Talk a little bit about your view of America and Bitcoin and why you think Bitcoin specifically would be good for this country. Yeah, the best years we had for the dollar was when the dollar was backed by sound money and backed by gold. And we can do the same.

14:37We could have the dollar backed by Bitcoin. We can make Bitcoin legal tender. Bitcoin is sound money. At the end of the day, all of the shenanigans and tricks that politicians can do can't make an economy good. Otherwise, Zimbabwe would be the wealthiest country in the world. At the end of the day, the basis of a sound economy must be sound money. And that's what Bitcoin does. So anybody who cares about the economy, even if they don't like Bitcoin, should. But more broadly, for your question about America, Bitcoin is freedom. Bitcoin is, at the end of the day, speech. What happens is somebody named Satoshi took some code and wrote it down and gave it away for free.

15:13That's how Bitcoin was started. There was no fundraise. There was no pre-mine. There was no securities offering or anything like that. Somebody wrote down some code and some ideas, and they shared that and said, this is open source. You can use it how you want. You can copy it. You can use it. You can run it. And people decided to run that code. The Supreme Court has already said that running code is a form of speech and writing code is a form of speech. So at the end of the day, that is that is a protected act in the United States. And, you know, the fact that that running that code spins off these widgets that we call Bitcoin and we decide that those have value because we know that they're backed by math and code rather than by the whims of politician.

15:50that's a free market solution. And it also, you know, bringing us back to sound money has all kinds of benefits for the economy. And like I said, you know, it decreases evil. You know, Americans wouldn't support some of the most evil things we do, the war on drugs, invasions all over the world, drone bombing people in different countries. We wouldn't support that if you had to come to each person and knock on their door and say, hey, give me 70 grand so I can go bomb someone or give me 70 grand so I can lock up, a weed grower in a prison for a year. Americans don't support those things, but the politicians can get away with it because they can print money from thin air.

16:26So we'd have a much better economy, much better jobs, and we'd have a lot less evil if we embraced sound money. And it's just a good idea. It's pro-freedom, and that's what we're all about. We should have a lot more freedom in everything, securities and everything across the board. Pris, I want to give you some time to unpack and articulate your vision of what this looks like. But let's go flash forward into the future, three, five, ten years. Talk a little bit about your vision for Bitcoin and how it would actually work in terms of the functional mechanics of a Bitcoin standard rising here in the United States and more globally.

17:02Well, the most important thing is viewing more people viewing Bitcoin as money. Bitcoin has been my form of money since 2013. I went in all in and never came back. I've never been able to buy any more Bitcoin since then because I've always been all in. other than any incoming new money. So I think more people that embrace Bitcoin and see Bitcoin as money, more countries that embrace Bitcoin. We have El Salvador, and I think there's going to be others. There's a lot of countries decoupling from the dollar. So I'd like to see the United States and pretty much every country recognize Bitcoin as money.

17:38It might not be the only money. They may have their own form of fiat. But to have Bitcoin broadly, globally recognized and free and also have it interacting with other digital assets. You know, I'm excited about the stock market, for example. I think you can tokenize the world. And I think that there's no reason that you should have stocks bound by borders the way they are now. There is, you know, there's a few regulatory hurdles, but the technology exists now for us to be able to move. we should be able to tokenize stocks and be able to move them around to have people carry them in wallets and move them across borders and have much smaller companies become tokenized and have bitcoin kind of driving this entire uh you know digital-based economy you know it's it's been called uh global money before you know it's borderless money and it's been called uh you know the money of the internet before you know so i'd like to see that kind of those you know those narratives go forward where this is money that the whole world accepts uh you know pretty much every country accepts it and it's widely used for settlement of the major transactions, the trillions of dollar markets like securities and real estate and these kind of things.

18:44Yeah. You mentioned something that's been controversial in the Bitcoin community, which is the idea of ordinals and inscriptions. Where do you come down on this? This is something that's divided Bitcoin or some saying, hey, it's a free and open platform. People should be able to do what they wish. Others concerned about it clogging up the Bitcoin network in terms of volume of transactions. What are your thoughts? Yeah, that's interesting. It's a great debate to follow in Bitcoin. And there's kind of, you know, a couple camps, a couple major camps, and then a couple subcategories. There's some people who just think that all digital assets are junk and nothing should ever be built, and they don't see any legitimacy of any tokens.

19:19I disagree with that for the reason I just mentioned. Securities is a very simple and obvious example. Collectibles is another. Although, you know, a lot of the collectibles, I certainly don't advocate spending six figures on a JPEG. But, you know, I love collectibles. Collectibles is a multi-billion dollar market. Always has been, always will be. By the way, we should tell our listeners who are listening to this on a podcast about your incredible background. You have some really amazing comic book art behind you. Some incredible collectibles back there. A couple orange coins too. Yeah. And, you know, so art is a real market and digital art should be, you know, World of Warcraft has suits of armor that cost a thousand dollars and they've held their value for, you know, 15 years now.

20:00You know, there's public companies that haven't lasted that long. So I believe digital assets is a legit market. And although maybe a smaller, you know, it's actually quite a big market, but it's certainly not like securities, which is a very vast and very serious market. So I think there is legitimate uses for tokens. Some people don't think there is at all. So they may be in Bitcoin and say the only legitimate use is just money. But if you're in that category of, yes, there's other legitimate uses of tokens, well, then the question is, where do you build them? Do you build them on Ethereum or another chain or do you build them on the Bitcoin chain?

20:34I like Bitcoin because I'm a Bitcoiner and I think that's the strongest chain, the most secure chain, the most censorship resistant. But you may not necessarily need that level of censorship resistance for certain tokens like centralized collectibles. You may not need that level. So I'm open-minded to other chains and I certainly love and support the idea. And personally, if I was to issue a security, I'm not that smart technically. So the caveman brain of me says, go with the simplest chain, the strongest chain, the most secure chain. At least I don't have to worry as much about Bitcoin being hacked or wrecked or, you know, validators or nodes or something, you know, messing it up.

21:13And then you only have to worry about the second layer. So, you know, to me, it makes a lot of sense. But I'm, you know, certainly open minded and supportive of other chains as well. Hey, everyone, we're going to take another quick break and hear a word from our partners. We'll be right back to the Real Vision Crypto Daily Briefing.

21:32So what do you say when people say, like, this is just an outrage, Bitcoin is here to be the settlement layer, to be the strongest form of money globally? Keep your collectibles off of it. Well, I say you might be more happy in the closed source environment. This is open source software. Satoshi gave it away and there's nobody who can say whether this is a valid use or not. Satoshi Dice started by my good friend Eric Voorhees way back in the early day, did a whole mess of transactions. A lot of people were very angry because he was doing so many transactions and kind of spamming the blockchain.

22:08But any use that anybody can have, even trolling, even trying to clog it on purpose, any use is fair. All is fair in an open source decentralized centralized network. And we, as participants in that network, must rely on its ability to, it's going to be okay. It's going to, the fees are going to adjust and scaling is going to adjust. You know, David Bailey says, you know, he's driving, he wants to drive higher fees so that he drives more scaling. You know, if it always costs a hundred bucks to do a transaction, that drives more people to second layer. So it's all going to work out. Don't be afraid of open source is what I'd say, you know, let it go, let experiments happen.

22:46And by the way, with this idea of tokens and ordinals and things like that being built on Bitcoin. If you have a permissionless network, scams will be built. On Bitcoin, we will have scams just like Ethereum had scams. And I think that's healthy because a network that can prevent scams, by definition, is a closed network. And I'm all for openless and permissionless. It doesn't mean I'm for scams, obviously, but I'm for the base layer protocol to be as open and flexible and as cypherpunk as possible. Yeah, that's really interesting, the idea that on open networks, bad things are going to happen, but bad things are going to happen anyway, I guess the argument goes.

23:26So why not do it in an environment of maximal freedom and maximal openness? So that goes the argument, at least, so that the better ideas can chase out the worse ideas. Yeah, exactly. You know, you just let markets work. And this is part of the broader conversation going on about securities and everything. Although I'm securities registered, I'm one of the most licensed regulated people in the space, and I have been for a long, long time. But I'm actually against the idea of these regulations. I think that there isn't a good moral and ethical justification for them. And I don't believe that politicians are the answer.