20VC Crypto Roundtable: How Will US Elections Impact Crypto? Why Will Trump Lean Into Crypto in 2024? Should FTX Investors Have Known About SBF? Will Opensea Ever Be Worth $13BN Again? Will NFTs Come Back with Kyle Samani and Nick Tomaino

25:01What are you then? I'm like a crypto maximalist. I want crypto to be everywhere. I think it's very important for sovereignty and freedom. I want to be everywhere and I want to be aggressive in terms of marketing and building product and commercial orientation to get crypto everywhere. We spoke about kind of Salona and Nick said at air back in the utility value of Salona and maybe just copying a lot of other projects. I'm actually when you look at a lot of crypto firm investment strategies They seem to invest in just a lot of copycat projects more generally with tokens and then maybe pump them on retail First like is that fair and does all fantasy really matter?

25:38Authenticity absolutely matters. Let's do that for a second here before America People were like what do you mean freedom of speech? What do you mean democracy and people voting people are are stupid? And that's gonna be bad and and like that people can't govern themselves That was the prevailing thing. Not only elites in Europe and other places believed. There's also, I think, a thing that most people who lived in other places also believed because people could not fathom the notion of collective freedom for everybody. And we have now a representative democracy and, you know, first amendment and all those things.

26:06Turns out those are net good. And I look at money and finance are explicitly a form of speech as is recognized in the United States. And today, the financial system is explicitly regulated and limited and censored in many, many ways. That's the world you've grown up in and lived in. It's very hard for you to appreciate what is the counterfactual world in which those things are unsensored and open and free. It's very easy to not appreciate the value of that. It's also very easy to then look at the very first instances of people expressing that freedom and doing so in negative ways and saying, ah, therefore freedom bad.

26:39That's what you see happening today. Kind of perfectly embodied by Elizabeth Warren. And the more people have exposure to understanding what open permissionless censorship system finance means, the more they will appreciate that, Like, look, there will always be some bad actors, like whatever. But the system is a net improvement over the legacy system. Hey, how do you feel? Does authenticity really matter and copy cat investment strategies? Authenticity does matter. And I think in a space that's open source where anything can be easily copied and marketed well, it can appear in the short term that authenticity doesn't matter at all.

27:10And I have this conversation with founders all the time because sometimes the founder that creates the original authentic music NFT marketplace, for example, you know, has a little early traction and then someone copies it and maybe, you know, does marketing better. And that can be frustrating. This is definitely like a real issue that I think, you know, a lot of founders and investors think about in space is like it can feel like just the loudest, you know, is winning. Being original, sticking to your true self doesn't matter at all. I believe in the long term and you have to take a long -term perspective that actually it does matter a lot.

27:46And if you are the authentic and you persist through and do something meaningful and don't worry as much about like attention and marketing in the short term, that's actually where the biggest rewards come. And that's been true to my own journey as well. I've tried to stay authentic and true to myself. And I think I've particularly noticed that when people have success, they tend to focus is more on attention and money than their true selves. And if you get it far away from your true self, again, I think you can appear to be very successful, but you're really not happy at all. So being authentic is something that I think about and talk about a lot.

28:23And I do think even outside of crypto, I had a discussion with some family members that love, Harry, we talked about Taylor Swift last time, is Taylor Swift authentic. And people lover, right? And her biggest fans, my wife's family, they all love her and they're like, oh, she's so authentic. But to me, she's kind of the definition of someone that has this like soulless greed for attention and money and is not authentic at all. It's something that's hard to know, right? It's kind of a judgment call. Well, what may she say that? She's like, sorry, I didn't plan on going here and then I'm going to take it to the other direction.

28:58But like, well, I actually think this like this question is going to be increasingly important to actually authentic was like the Webster's dictionary a word of 2023 and especially with AI, it's going to be harder and harder to tell if something's authentic or not, if someone's genuine human or not. So I think authenticity and kind of an assessment of the vibe of authenticity is going to be increasingly important. Agree authenticity really matters. I think maybe where I diverge from Nick is does marketing and does loud marketing mean you are inauthentic. That does not have to be the case. Now, people who are inauthentic often times will aggressively market.

29:33That is clearly true. But there are also many people who are good actors who are authentic and loud. Most obviously would be coinbase. I mean, coinbase runs super bowl to ads and producers commercials. They have a nationwide, some ones with the NBA, etc. You can market well and be authentic. To me, being authentic means like being true to yourself and sticking to what's unique about you and not being too concerned with what other people think. If you think about Super Bowl ad marketing, the way Coinbase did it, I thought was something that was true to themselves, true to the brand and it wasn't getting the biggest celebrities and just putting them in the ad and doing something that would get the most attention.

30:12It was being true to what makes Coinbase unique. Versus something like FTX, which I thought, you know, we all know all the celebrities involved and stuff like that. I actually tweeted this out during those two Super Bowl ads. It's like the FTX Super Bowl ad felt very inauthentic to me. It was like blary, avid, and tombrady or something. And it was just, it was clearly very concerned with what other people think and just trying to get the maximum attention in the simplest way. And people that optimize for marketing, that's often what they try to do. You can ask, speaking of loudest voice, Kyle, you said you didn't mind some of the Twitter mentions.

30:48The other adamant that just came up in the DMs a lot was SBF and FTX and I had so many people say should you have seen it and What signals would have shown to you that it was a fraud that you missed? I look talk about Sam should be have seen the coming could be have detected it I mean the original reason we passed on the FTC around in March April 2019 was because we were like hey man No separation of a church in state you can't run Alameda and FTX people are not gonna trade here and we were like okay pass and then we passed and then nine months later we were like shit our assessment was wrong like people are trading here like we called up all the trading firms were like yo man are you trading here they're like yeah it's great we're like okay well like our assessment we visited our priors and we're like okay and you know that that's when we first bought our FTT tokens was December 2019 you know fast forward two years later like could we have seen a coming I mean look there we know now there were four people who knew Sam Caroline the shot in Gary, no one else knew.

31:44When you keep the circle small, you can keep information hidden. Explicitly, in this case, the information was, go make arbitrary changes in the database in the code base and don't tell anyone else about them. That is as hard to detect as possible, right? I mean, I don't know how you catch that stuff ahead of time. And shit, he was a bad guy, bad soul, like bad faith actor, no questions asked. I wish we could have seen it, but we did not. I know Nick, you saw something, so props to you for seeing something, we obviously missed it. What did you see, Nick? I mean, to be honest, it was a vibe check.

32:14Like, the vibes just felt off from the beginning, and it goes to what we're just talking about, authenticity. CM and FTX and the whole thing, just from the very beginning, felt very inauthentic. It's the signaling, you know, you put together that Bahamas conference, right, where we had Bill Clinton and Tom Brady and Giselle, and, you know, the whole thing. I did a tweet thread right after that about counter signals. This concept of counter signals and when someone signals something, the opposite is often true. The most common term that's used politically is like virtue signaling, right? Which I think is an example of a counter signal.

32:54And the person that signals that they're virtuous, that they give away a lot of money or something, they're focusing on perception when the reality is probably different than what perception is. And then in the case of Sam is like he's kind of signaling that he is a legitimate through celebrities and through government and and shit like that and the signal was Legit but if you understand counter signals you know that the opposite is likely true I don't know it was obvious to me that something was off that the you know the vibes were off and This counter signals concept is what helped us do it.

33:30It wasn't just us by the way if you look you know the other thing that you know helped was a lot of people on Twitter, right? There's a lot of non -s and crypto people that saw this coming. I think this isn't not very well known, but Richard on my team, my partner, tweeted out on October 13th that Sam was working behind closed doors on a bipartisan bill that would have been very good for FTX but bad for DeFi. And that tweet went viral. Obviously, a lot of other stuff happened after and that tends to be what people focus on on the coin desk article by Ian Allison, CZ of course. But October 13th, Richard tweeted that.

34:07That was actually the first tweet that went viral where people on crypto Twitter, I think, recognized that Sam wasn't this good guy for crypto and a whole bunch of shit obviously followed. And then a month later, the whole thing was gone. So it was pretty wild. And again, we didn't see it playing out that drastically, but the vibes were certainly off from the beginning. On CZ Adam Binance, I feel like he's almost been completely unloved by the media. It's like, S .B. I've got all the attention, and I, yes, he's got a little bit, but nowhere near in any weight, and I know it's very different situations and so, but media tend to cluster crypto in one bucket.

34:44Can you just help me understand what happens there? How do we expect that to play out? I think it's definitely different. I mean, Sam fucked over customers, you know, a fraudulent actor and screwed over millions of customers. CZ never did anything bad to customers as far as I'm aware. His issue is with state actors, governments. And so to me, that's why, you know, CZ, actually, I think most people in crypto still like CZ. And Sam was, you know, a complete fraud. So there's a big difference there. What happens? He goes to prison for a couple of years. The rule, but it doesn't get thrown at him does it in the same way as SPF.

35:22I believe consensus is he will be less than 18 months. So we take that, if we move to more positive scenes, which is we mentioned Coinbase, I do want to discuss Kraken. My question to you was like, Blondney, it feels like the SEC is quite unfairly targeted to the good act as being Coinbase and Kraken. Do you agree with that? What would you do if you were Brian at Coinbase or, you know, Sea of Kraken? I mean, if I was Brian at Coinbase, I think he is roughly played it correctly, which was, did his best for many years to play nice, go ask for permission, show up, do the dance, talk to the regulators, be as above board and transparent as possible, did that for three, four, five, six years, something like that.

35:59Effectively, at the end of it, the SEC was like, JK, we don't care, we're gonna sue you now. And as a result, he's now publicly turned more, you know, and talking to him and Paul, and his obviously been a bit of a coordinated strategy on their part of being more rebellious. That was absolutely the right way to play it. Chrony capitalism is real, right? I don't think the public recognizes how insane it is. The second largest donor to Joe Biden was Sim Bankman Fried, right? Biden appoints Gary Gensler as the chairman of the SEC, and then Biden has meetings with Sim Bankman Fried, where it's not confirmed, but the rumor is that they were talking about no action letter.

36:37Biden allows one of the biggest frauds of all time, you know, Biden administration with Gary Gensler as the chair, you know, he misses one of the biggest frauds of all time. Now he's going after two companies in Coinbase and Kraken that have been clearly good actors in the space for 10 plus years. It's really insane. There's never been super political, but the more you peel the onion, you see that when people talk about the deep state, the administrative state, whatever it is, But what it is is unelected bureaucrats who are acting in their own self -interest and against the interest of the people.

37:15And that's clearly what's happening with the SEC right now. And the good thing is, five years ago, I wouldn't have guessed that there would actually be like congressmen, you know, incendators that are calling this out as well and calling for Gensler to step down. So, do you think Gensler worked that down? He actually just issued a statement this morning. The SEC is going after Coinbase, saying that it's an unregistered securities exchange. and then Coinbase is actually suing SEC saying that they didn't do its duty basically creating clear laws around crypto and now Gensler responded and said yes they are so I have no idea if he'll step down or not but again the vibes are off with Gensler and hopefully he's out at some point but I don't know when that'll be.

38:00We mentioned you know cracking on Coinbase I think a big question is also that you mentioned that Biden and the links to SBF and the funding in terms of presidential elections. How do they impact the US and the crypto markets in the US do you think? And how impactful do you think the election is? Very important. I mean, Sher Clayton, who was the chairman of the SEC prior to Chair Gensler, who was just generally more, I'd say, like, libertarian free markets than Chair Gensler. Chair Gensler clearly has wanted to do more stuff and not only with crypto, but with ESG and with a regulating AI and all the capital market structure with Peavoff and Robinhood.

38:34I mean, he's been very aggressive on many fronts, whereas Chair Clayton was more, hey, let the market do it well. And so if the Republican is elected, safe to assume that the new Chair of the ESGC that the President will appoint is much more likely to be closer to Chair Clayton in ethos than Chair Gensler. Yeah, it doesn't have to be a Republican necessarily, although that's likely, right? I think there's five candidates right now that would be good for crypto. Trump, DeSantis, Vivek in the Republican Party, there's Dean Phillips in the Democratic Party, and there's RFK as an independent. All five of those, and it's not just crypto, like it's the administrative state, right?

39:14To varying degrees, all five of those candidates, I think, recognize a problem in the country is this unelected class of bureaucrats that are acting in their own self -interest and one way or another talked about reducing the power of the administrative state. So any of those would be great for crypto. Of course, Dean Phillips and Democratic and RFK has a better shop but still low. That's kind of how I rate it. I do think though that even in the past four years under Biden, how much has the Biden administration really heard crypto? I'm not sure. It's not hurting the innovation. New startups are just happening.

39:52It is hurting kind of the perception and kind of new people, you know, coming into some degree, but at the innovation level, which I think is the most important thing, it's maybe in the US slowing it down a little bit, but overall I don't think it's hurting it that much. And I think even in a scenario where there's like a antagonistic administration to crypto, crypto is still going to move forward. There's still going to be new applications built. And maybe the US plays less of a role, which as an American, that would obviously be bad, but that's kind of how I think about it. Well, Trump win. I think so.

40:26And my assumption is you will be in jail before the election. So I don't know if you can. You can. I think he'll be running and winning from a jail cell. The most entertaining outcome is the most likely, right? I'm just not happy. If you're in jail, you can't run. No, you can't. Your nation never fails to stagger me. Like, really? I love the way this. I didn't need it. Needed the free world. That is fucking terrible, hang. Okay, good. Well, that we covered that. Is Trump good for crypto? That remains to be seen. A lot of people think no. You know, he tweeted in 2018, cryptocurrencies are bad. One of his, you know, standard mean tweets.

41:05My feeling is that back then he wasn't really paying attention to it. He had some authoritarians that were working for our Steve Mnuchin and Gary Cohn that kind of crafted that belief. This week, I don't know Harry, if you saw him, Shrewd Kyle did, he dropped an NFT collection, the Trump Mugshot collection of NFTs. He's selling NFTs on Polygon. If you think about Trump, we know he loves memes, we know he loves attention. I personally think he's gonna be leaning into crypto in a big way in 24, that's my prediction, but we'll see. The Mugshot edition worth almost $10 ,000. There you go. When will IPO windows open for the static crypto companies?

41:45We've got a circle, we've got cracking, there's a couple of other candidates. When do you think IPO windows will open there? Well rumors are suggesting that circle will IPO in 2024. I'm not sure if the basis of those rumors are not, but that's been circulating in the press fairly recently. I have no idea. Okay, final one for you guys, and this was again another one to come up. NFTs, when do they come back? Do they come back? Will open see ever we were a 13 billion again Nick? Help me understand this. I think NFTs are going to come back in a big way. I've said, and I think still, NFTs have a good chance to be bigger than cryptocurrencies in terms of mainstream adoption.

42:24And the reason is because I think more people in the world care about culture than they do about finance. NFTs bridge culture and finance in a really unique way. And they're just a better business model for creators. I don't have a view, you know, strong view when, I think in the next three to five years. I'm not saying they're going to bounce back right away, but I think NFTs will be back bigger than ever. Will OpenSeap be worth that? Again, I don't know, maybe. I think it will be worth a lot, but like any exchange, I think the successes that bet on the growth of the asset class. Guys, what do you think is light vape who had today that many other people think is valuable?

43:01Look, there's a lot of assets in the top 10 that most people who are sophisticated retail, market participants view as garbage, XRP, Cardano, Litecoin, Bitcoin Cash, etc. I cannot explain to you how those assets are trading nine to ten figures a day and who is buying them. It has been a mystery for a very long time. They need to be one. But like very clearly, there's nothing of substance happening there. Well, they're good memes, right? Don't you think memes matter a lot in crypto and if you have a meme that persists over time, then you have value? Memes clearly matter. That's not a question. Memes treated crazy prices.

43:37Again, empirically, that is true. I don't love it, but obviously it's true. Guys, I want to move into a quick fry. So I say short statement. You give me your immediate thoughts. Nick, we're gonna start with you. What worries you most in crypto state? Carl got some nicer ones. Sorry on this one. The administrative state, right? I think it is true that there is kind of a ruling class in the US and and around the world that has the power. And crypto, I think it's still not fully appreciated, how empowering crypto is to people. And the ruling class is not going to give up their power easily. That is concerning.

44:14Kyle, what excites you most in crypto today? Payments, stable coin, payment, rails. US dollars are the most in demand currency in the world. That has been true for a very long time. stablecoins on crypto rails enable billions of people to acquire dollars and use dollars. Now, what if he changed your mind on the last 12 months? So one of my magic moments in crypto recently has been on -chain messaging products. You know, this has been kind of a meme in crypto for a while. There were a bunch of ICOs around this back in 2017 and combining crypto and messaging has always been an idea. And I kind of dismissed the idea.

44:49I didn't really get it until this year when I used a messaging product within Coinbase wallet. And the magic moment that I think is pretty interesting and kind of crypto -native is that any Ethereum address or Solana address or whatever you want to call it, any crypto address can have a messaging component. You can have a conversation with someone that persists across applications. So I messaged someone on Coinbase wallet with my address that I was logged into on and Coinbase Wallet, and I'm also logged into Converse, which is another app, Flaw and Chain Messaging app, and the message persists across two applications.

45:24So I now think every wallet is going to have a messaging component, and on Chain Messaging is gonna be a big crypto use case, eventually. Carl, most painful lesson that you've learned, they also pleased to have learned. Until your thesis is invalidated, keep holding on and keep trying to make more bets than not thesis. What does that mean, like? I mean that goes against all theory of diversification. It's kind of concentration risk to the extreme. I'd definitely not believe in diversification. I absolutely believe in God's decision. But the civility I'm referring to is Salana. I got in a crypto in 2016.

45:56In 2017, I went to DevCon in Cancun. November 2017 was like the pico top all eyes on the theorem and Vitalik gives everyone's like sharding scaling plasma something like what's a scaling plan and Absolute crickets and just nothing and I remember leaving incredibly disappointed and frustrated and that's when I started looking for alternative Scaling approaches we our first bet we made was EOS that was absolutely wrong There were a lot of valet technical criticisms that we ignored and all of those technical criticisms turned out to be correct It was a absolutely forecastable set of errors and we made them and fell on our face and got a lot of extra Anatis for it rightfully so however the core thesis was there are valid alternative scaling solutions approaches other than the one a theory Mistaking focus on high performance and the radio systems and we've been on slana.

46:45This is the final one Crypto and five is time. Where are we then? What is the regulatory environment like? What would you ideally like the landscape to look like? For me new use cases, right? like I think we need beyond speculation. And what that might be, I'm not sure. Prediction markets, I think, to centralize social media, to centralize messaging, dows, stable coins, we need to get beyond just a shit coin casino, which is I think how a lot of the outside world still perceives crypto. Now, do we need that? I still think there's a chance where we get to 10 trillion in total market value without that.

47:24The idea of, you know, empowering billions of people around the world with this kind of new financial system is revolutionary. But I hope we get beyond that and we get kind of non -speculation use cases that are really useful for people in the world. Cal, let's use. I want everyone in the world to have a private key built into their phone that is secure and that they can use for arbitrary financial movements, whether those are payments or investments that they can do so across any application. And I have a hydro -reviewed conviction that will be true. It's the one of the phone? Maybe not in five years, I'm maybe too optimistic on timeline.

47:56Maybe it's 10. Thank you. It's like, right smile across your face Nick and I'm like, what do you think? I like to wrap the salon of phone because that, you know, salon of phone went crazy, sold out. They're air -dropping bonk. You got it? Nice. Right here. It's beautiful. Wow, there we go. Guys listen, thank you so much for doing this. This has been so much fun and I really appreciate you putting up with my basic questions. Harry, thanks for having us on. Was a pleasure. Yeah. Good hanging out with you guys. My God, I love doing that show and if you want to watch the full debate on YouTube you can by searching for 20VC, that's 2 -0 VC.

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