Ep 34 - May 16, 2025 - Coinbase buys Deribit

Most probably 99% of people have probably never heard of Derabit, but Derabit is a a crypto options platform, and it was ended up being a $2,900,000,000 deal for Coinbase to acquire them. $700,000,000 in cash and 11,000,000 shares of Coinbase stock. So, you know, this this I guess, having allowing Coinbase to offer more products effectively or more types of products. So it's, you know, this one caught me off guard. Wouldn't necessarily say I was watching for this one, but it makes total sense at the same time.

So the expected date for them to join the index is May 19. And obviously, with the number of institutional investors and mutual funds and other index funds that have become, you know, just quite common for most investors and 401ks indirectly. All these investors are now going to have exposure, like I said, indirectly to crypto or at least the industry. So just another big milestone, I think. And then obviously, on a a bit of a downer, there was a cyber attack

Right. Are offering instead a $20,000,000 reward for the person's head. So, yeah, it's it's, you know, overall, it's it's not the first company that's had a cyber attack. Right? Right. Lots of financial companies have had had have been attacked like this. It's just it's a news making one because it's in crypto.

That that's a lot of news and just the first bullet point there for Coinbase. Right. Yeah. A lot of it was hidden. But, so our next topic is I shortened it a little bit, but it's Missouri to exempt capital gains on crypto, stock, and real estate.

But, obviously, we probably look here a little bit more about the crypto in this show. You know, obviously, this is just state taxes. Some states don't even have this tax at all. So it's not like it's truly, like, an anomaly, but most states will have a tax on crypto, much like it's a normal capital gains treatment. And starting to see some states go the opposite direction.

So it'd be interesting to see how much of this happens across multiple states or is this just kind of like a one and done for a while type situation?

Being in certain states are well known for places where you would open up a certain type of trust. And there's a lot of companies located there. I always wonder when these states are, you know, passing these bills and thinking about reserves, like, is there a bigger strategic objective at the state? I don't know. You know, I guess this is good for people that live in Missouri or are retired in Missouri or as you know, the capital gains exemptions.

Like the industry there is it's much more diversified. It's not concentrated in in financial services or crypto. So I agree. It'd be a hard, harder sell to compete against places even in the Midwest, like Chicago, so much less a Florida or New York. But but yeah, they're trying to make a play.

Yeah. And it was cool to see that she you know, her idea that she's long had about, like, having a safe harbor so you can issue a token that is intended to be decentralized and therefore not a security, have a period of time for, a sandbox to be able to, like, have a finish line that you need to get past, whether it's two or three years later to prove decentralization and kind of effectively more from being a security into a commodity or whatever they wanna call that second stage. Then you even have and we'll get to it later, but Paul Atkins was talking kinda like at a higher level. And it's just it's cool to see, like, this feels constructive. Right?

This obviously, they can say something and they gotta follow through on it. But we we actually have seen some action in the last three months, and I think we will continue to kinda see some more refinement around this. And it's cool to see the SEC basically saying, you know what? Some of this is not under our jurisdiction because the last four years, you know, even a bottle of ketchup was a security, and it was underneath their jurisdiction. So

And he leads their institutional fundraising business, right? So endowments, pensions, etc. And I talked to him for like ten minutes about crypto and he had no clue that the company was doing any of it. No clue. And it and this is at one of the largest, most prolific, you know, asset managers.

And so I always wonder, you know, are we like in an echo chamber? Or are these things actually making, you know, their way down to retail and into the mainstream? And I think, you know, if one thing the SEC can do is it it's got a pretty big megaphone. So when when it decides to make change or announce, you know, that we're open for business or crypto is going to be more, you know, I'm say less regulated in the sense, but there's going to be more structure. I think that they haven't.

Yeah, more defined. Like they think they have an opportunity to really get people's attention because even folks inside of some of these firms are not just not aware of of all this stuff happening day to day.

But the yeah. It's a I I think what's happening is is, like, it's happening so quickly that it's, you know, all of sudden if they have a yearly training on new products, we're gonna get that wave in a year or so once some of these other firms catch up. So we will see. Our next topic was a bit of a downer and a bit unexpected. So Mhmm.

This last goodness. Was it last Friday, a week ago, or maybe a week ago, Thursday, the senate did do a vote on the Genius Act. It's the stablecoin bill. It had gone through the house. It had gone through the senate.

They had done reconciliation between the two bills. They were back voting on it in the senate, and it it did not get the votes it needed. So it's kind of in a in a precarious spot because it has one more chance if it's brought back for a FloorVoet in its current form without having to be restructured and brought back through as a different bill. Obviously, that takes more time. There's more risk.

This was a political move, it seemed. There were some senate democrats that kind of that were in support of it to the sponsors of the bill voted against it, which was kinda surprising to think that you would sponsor something then vote against it. It sounds like maybe this coming Monday. So I guess that would be the the nineteenth. There there may be another vote. But, boy, man, it's a little bit too Last time

It's actually, this it just reeks the politics to be for something to be a sponsor and then vote against it. And it was a close vote. I don't know. It's we'll see. I you know, I guess there's always drama in crypto in some form or fashion, and here here we are with it. Yeah. Seemingly was a bipartisan, I think, leading up to this. So

Yeah. And, you know, for those that have been in crypto for a while, I guess scrolling back all the way to 2019, '20 '20, Facebook had announced Diem which was gonna be the stable coin that was a basket of a euro, a dollar, and I wanna say the Japanese yen. And man, they that was the wrong time to announce that. At the time, they were still coming out of their whole, Cambridge Analytical scandal where they were manipulating or appear to manipulate the, an election. So it was just obviously a bad time.

They've gone through that. That team is no longer at Facebook, but it's they they plan to use USDC and USCT. Yeah. So they're they're using someone else's products. They're kinda integrating, and I think this is certainly the more safe route for them to go. Yeah. And certainly a lot less political. So

And so obviously, this is one of the largest platforms, not the largest social media platform in the world. Right? Got to be over a billion and a half users or something.

I mean, they still pay with them, but it's it's digital. Correct. So just to think about how quickly the advancements have taken place, and I would think that the adoption and just look at how quickly AI is being adopted and utilized. Like, I just think that we might be underappreciating how quickly crypto and some of these payment Yep. Methods might be mainstream within a matter of years.

I'd imagine the teams are spending more time on all the other things than they are actually the wallet piece. Because again, the rails, the technology are already there. What they haven't announced as far as I'm aware of is which networks they're in which crypto networks they're integrating those stablecoins on because that will also be a boon for those networks. Yeah. So anyways, I'm sure there's more details to come.

This was a very very general announcement that they did back on the twelfth. So moving on here. Man, we have we've talked on the show and offline about this Arizona thing. Yeah. Quite the drama scene down there, or assuming out west.

So they've had two competing bills. One, the governor vetoed the other the one it sounded like she also vetoed in the news, but I have since gone and looked. She did sign it into law. They're the second state with a a Bitcoin reserve. They potentially could use rainy day funds is kinda how they would source the capital to buy Bitcoin in this case. But, man, it's a bit of flip flopping out there. So

Even our home state of Georgia has won early stages. I don't know if it it'll get brought to the floor for a vote, but it is slowly moving along in, you know, whether these are meaningful purchases or this is more of a symbolic some sense marketing. Like, we will see. And it could be just trying to make their citizens happy too, so who knows. On the topic of stablecoins, so the the Genius Act that got turned that got put down the senate was gonna set obviously rules and regulations around, like, how a stablecoin can be constructed and what it has to have, what it can't have as as collateral underneath it And I guess reporting requirements.

USDT is for as long as it's functionally been around, it's had this cloud around it. Some people view it as a black cloud, some people view it as a white cloud. But a lot of suspicions sometimes around like, do they have the collateral? What kind of collateral they have? It's that whole story is morphed over time.

There used to be like rumors that there was Chinese company bonds as part of their collateral. I haven't heard that in forever. If that was the case, I don't think that's the case anymore. But they do hold Bitcoin. So you have a volatile asset as part of the collateral.

They've never done a public audit through a third party. I'll say that upfront, at least that I'm aware of. It's always the accounting department at Tether doing an audit, which by definition is not an audit. So anyways, there's swirl news swirling around like if we were to get the genius act passed in this in kinda in as part of law in The US that somehow it would sweep USDT under US jurisdiction if it's gonna touch US, I guess, consumers. What's interesting about this is when MICA passed in the EU, basically, wasn't compliant and people just don't touch USTT out there anymore.

The same could happen here, which would be a boon for USTC and other, you know, US based. But I don't know. It's just it's splitting liquidity. And admittedly, I think as an American, these stable coins are generally good because it's providing a market for treasuries and other things to, you know, I guess try to support the dollar. You know, I understand that's a political statement, but it is but it is a big driver.

I mean, are billions and billions, almost a hundred billion dollars in USDT. So

So we're just sorting it out. I think it'll get sorted out over the next year or two. But the Yeah. Much of our industry as you and I have talked about on these updates in these check ins, like there's so much regulation and and still politics and, you know, just a sorting, That's got to take place. And then once all that's done and in place, you just wonder like, will will there be, you know, this era of like mass innovation?

Or will there, you know, where will we see, you know, several more years of, you know, trying to put definition, right, and parameters around this.

He was giving his first public speech, and this one was at the the roundtable that happened for crypto. I think they're on their fourth, maybe fifth, roundtable. They're done with different topics. This one was, I believe, tokenization. But he said, the SEC needed to create clear guidelines for crypto issuance and explore new registration exemptions for safe harbors.

Back to the thing we're talking about was history first idea there. Provide consumers with expanding custody options, including self custody, potential updates to the qualified custodian definition. That's a big one. And I think that one will finally hit the radar, but self custody is important to the crypto industry period. And also the whole qualified custodian thing, that can be a bit of a nightmare because that that becomes expensive to be part of.

So giving people a right. You know, at the end of the day, the self custody is no different than you hold some gold bars and you keep them in your safe at home. I mean, that's self custody for crypto effectively. And the third thing, I guess, I'll point out about the speech was explore integrated trading platforms and monetization of ATS regulations to better accommodate crypto assets. I think if you reword that, that it says, basically, make it easier for crypto to be traded on traditional platforms, maybe like a Nasdaq or, you know, those kind of digital platforms that would show in a brokerage account.

Positive news, which is great. And I and I didn't hold my breath when I heard he was gonna talk. We we are very different than we were six months ago. So.

I mean, like I said that or or maybe even more than hope, there's there's a lot of excitement even from folks outside of just crypto, but other alternative investment spaces and asset classes where I'm active that there's gonna be this is gonna be a a much more progressive SEC sort of regime, and there's gonna be, you know, perhaps a broadening of the accredited investor definition, and it's we're starting to see alternatives now moving four zero one ks accounts that was never talked about. And you'd have a hard time thinking that, you know, inside of a four zero one ks that you could buy, you know, or have access to alternative investments, right? Which pension funds and endowments and big institutions have had for decades. And so, you know, there's there's just this overall, I think, movement underway at the SEC. And I think cryptos, you know, potentially the industry really stands to benefit.

So these speeches will be hotly anticipated, you know, over the next, you know, over the next year or two as he gets established and they look for more, you know, ways to provide this clarity that they've all claimed to want to do.

So moving on to our last topic, and there's not tons to talk about here. This has caught me kind of off guard. Thailand is set to sell $150,000,000 worth of crypto to their public. This first, when I read it, I was like, oh, are they launching a meme coin or what's going on here? I could find very little details about it.

But it's interesting to see a country do something. I mean, you've seen countries buy other things. You haven't seen countries sell. Is first country I think I've seen ever sell something.

It was at 85, 80 6, you know, not long ago. Some of the other alt to altcoins, you know, have also, you know, including Ethereum have had, you know, nice nice little runs here. What's your overall sense? Is this a reaction to, you know, the broader economic news around trade and some of these trade deals that are are kind of being announced or pausing these trade wars, if you will? Or is there something else going on, like, more in the crypto cycle?

Right. Or most of the, I guess, equities market wasn't. But I think it's just purely, like, a bit of, like, a little less of the boot on the neck the last couple weeks. Okay. Just generally economically with all the tariff stuff. Okay.

So Yeah. Fascinating. Awesome. Well, thanks for joining us on this episode of the weekly crypto check-in. To stay updated on future episodes, you can find find us in any podcast player by searching T Time Crypto Capital or the weekly crypto check-in. Take care.

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