ROLLUP: 2025 Market Outlook | Inauguration Impact | Gary Gensler's Parting Gift | Sony Censors Ethereum?

This week’s episode dives into the evolving landscape of crypto as we approach a new administration. We discuss Donald Trump’s upcoming presidency and what it could mean for markets, analyze the recent market turmoil despite positive economic indicators, and break down the SEC’s case against Elon Musk. We also explore Sony’s controversial L2 launch and Tether’s move to El Salvador. Finally, some an exciting new privacy tool teams up with Coinbase. ------ 📣 0x | Start building with 0x v2 https://bankless.cc/0x ------ BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax 🦄UNISWAP | BUG BOUNTY PROGRAM https://bankless.cc/Uniswap-Bug-Bounty ⚖️ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🌐CELO | BUILD TOGETHER AND PROSPER https://bankless.cc/Celo 🎮RONIN | THE FUTURE OF WEB3 GAMING https://bankless.cc/Ronin ----- ✨ Mint the episode on Zora ✨ https://zora.co/collect/base:0x4be6cd4d402fed49eb2de95fbc8e737e8ffd3e7f/17?referrer=0x077Fe9e96Aa9b20Bd36F1C6290f54F8717C5674E ------ TIMESTAMPS & RESOURCES 00:00:00 Start 00:02:34 Markets https://macromostly.substack.com/p/bls-jobs-report-recap-december-95c https://business.bofa.com/en-us/content/market-strategies-insights/weekly-market-recap-report.html https://www.cnbc.com/2025/01/15/cpi-inflation-december-2024-.html 00:11:45 Strong Jobs Report https://imgur.com/MxHgOOe 00:18:28 SEC Sues Elon Musk https://x.com/WatcherGuru/status/1879305674594865284 https://x.com/elonmusk/status/1879322286291054653 https://x.com/GOPMajorityWhip/status/1879319142303498579 https://decrypt.co/301226/sec-appeals-ripple-ruling-seeks-reversal-on-xrp-classification 00:29:26 3 Days Until Trump Takes Office https://x.com/Polymarket/status/1879957585748734158 https://blockworks.co/news/trump-assembles-2025-cabinet https://x.com/QuintenFrancois/status/1879093846493012042 00:36:24 What If Kamala Won? https://x.com/BillHughesDC/status/1877740571831193697 https://x.com/katiebiber/status/1877783826442723365 00:41:59 Sony Launches ETH L2 https://soneium.org/en/blog/soneium-mainnet-is-live https://x.com/a1lon9/status/1879038646231429332 https://x.com/0xKawz/status/1879032105767928026 https://x.com/donnoh_eth/status/1879210463952818472? t=jlmQ8W1KoPgZSEzfP9oq4g&s=19 https://x.com/donnoh_eth/status/1879210463952818472?t=jlmQ8W1KoPgZSEzfP9oq4g&s=19 https://x.com/0xbreadguy/status/1879176334372401191?s=43&t=2ZINVXJQKx6xO_6Wiiu_2g https://x.com/0xbreadguy/status/1879176334372401191?s=43&t=2ZINVXJQKx6xO_6Wiiu_2g https://x.com/VitalikButerin/status/1879560670150017068 00:51:30 Coinbase uses Morpho for Bitcoin Loans https://x.com/coinbase/status/1879902780564951530 https://www.coinbase.com/blog/now-get-a-USDC-loan-without-selling-your-bitcoin 00:53:58 Aevo Moves To EigenDA https://x.com/aevoxyz/status/1879728286093479947 00:56:22 Veil. Cash Uses Coinbase https://x.com/Veildotcash/status/1877827571926053220 01:03:05 An Update From RSA https://blockworks.co/news/berachain-pre-launch-liquidity https://tether.io/news/tether-licensed-in-el-salvador-strengthening-focus-on-emerging-markets-and-innovation/ ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:03Ryan Sean Adams?

  Bankless Nation, it is the 3rd week of January. It's time for the Bankless Weekly Roll-Up. David, we got Donald Trump. He is 3 days from office, from the great inauguration of the 2nd term of Donald J. Trump, the first pro-crypto president of the United States of America. So the big question is, what's he gonna do? What's he gonna do for crypto, David? We gotta talk about that.

• 0:25David Hoffman?

  Markets saw a lot of red earlier this week. First, it was all over, but now we are back

• 0:31Ryan Sean Adams?

  Yup.

• 0:32David Hoffman?

  Back on the backs of very positive US economy data. So, we're gonna unpack a little bit about data and what that means for 2025.

• 0:39Ryan Sean Adams?

  Yeah. Also, Elon Musk, he's being sued by the SEC. Like, Gary's got like 3 days left.

• 0:45David Hoffman?

  Dude, Gary is shooting some shots in his last week in office.

• 0:49Ryan Sean Adams?

  Yeah, I'm pretty sure this is his last week. I wanna say that's true, but I guess...

• 0:53David Hoffman?

  He's got 4 days left, yeah.

• 0:54Ryan Sean Adams?

  Okay, but like, the new SEC commissioner has not been confirmed yet. Anyway, we'll get to that, we'll talk about that. Also, Sony launched their layer 2, but things didn't get off quite on the right foot. At least, it was a little bit weird, because they tried to censor some transactions, David. Vitalik weighs in on that, and we'll cover that. Also, Tether is moving to El Salvador, another crypto-friendly nation, I suppose. But before we get in, we have a message from our friends and sponsors over at 0X, the Protocol. What do they want us to know?

• 1:20David Hoffman?

  Yeah, the OG builders that have been building DeFi infrastructure since 2017 are introducing 0X V2 as a full-stack upgrade of their crypto-trading APIs. It makes 0X perhaps some of the best on-chain order execution in all of Ethereum. They offer multi-hop and multiplex routing. If you don't know what that means, I'm about to tell you. It splits trades across multiple liquidity sources and intermediate tokens to make sure that your trade finds the most optimal execution route, making you always get the best price on-chain. Not just the best quote, but the best final on-chain number of tokens, whether it's ETH, USDC, whatever you're buying, whatever you're selling into your wallet. It works for trades up to very large sizes, very, very large sizes.

• 2:04David Hoffman?

  If your size is size, you wanna trade with 0X on Ethereum. There is a link in the show notes, bankless.cc/0x. If you are building a serious on-chain app, or just wanna make some serious on-chain trades, 0X is for you.

• 2:18Ryan Sean Adams?

  Yeah, I mean, who doesn't want the best price, huh? Everyone wants the best price. Everyone needs Xerxes in their life, especially if their size is size.

• 2:25David Hoffman?

  Honestly, everyone's size is size. No matter what your size is, your size is size.

• 2:32Ryan Sean Adams?

  Everyone's size matters, okay? Let's get to the size of Bitcoin on the week. Where are we at for the prices?

• 2:38David Hoffman?

  We are up 7.5% on the week to almost $100,000. We tapped and then briefly got over $100,000 on the week, but we are not currently there at the time of recording. Yeah, back over 100K. Bull market's still in flight. Starting the week at $93,000, up 7.5% on the week. Coming in at $97,750. Could be over $100,000 by the time listeners are listening to this. Honestly, just open up your app and just check yourself.

• 3:07Ryan Sean Adams?

  Goes without saying.

• 3:08David Hoffman?

  These numbers are 24 hours old.

• 3:12David Hoffman?

  But something that will probably still be true tomorrow is ETH price lagging. That's probably gonna not change.

• 3:17Ryan Sean Adams?

  Yeah, well, tell me about ETH price.

• 3:18David Hoffman?

  Starting the week at $3,250, up a whopping $75, Ryan, to $3,325. That's 2.5% on the week for Ether. Well done, Ether. If you sense the satire and sarcasm in my voice, that's because the ETH BTC ratio is down to 0.0334. For a while now, almost maybe two months, the Ether Bitcoin ratio started to show signs of bottoming, started to show some optimism. And now, if you look at the ratio, it appears to be in that same old downtrend that it's always been in for two years now. Not yet broken through past lows, but it's not providing the same level of optimism as it once was.

• 4:02Ryan Sean Adams?

  You know what? That just feels, at this point, that just feels like home. Isn't that what Ben Cowan calls it? He's like, ETH is gonna go home, and he was totally right. And now I feel like it's within Ben Cowan's home range. And I guess ETH is just comfy here.

• 4:16David Hoffman?

  We're still in the... So he did call that, and it did happen. He also called for the reversal of that.

• 4:23Ryan Sean Adams?

  Yeah?

• 4:23David Hoffman?

  And we are inside of that, when that reversal window would theoretically happen.

• 4:28Ryan Sean Adams?

  It's true. He said second week of January. I'm pretty sure. I remember that, second or third week, so...

• 4:33David Hoffman?

  There's still a chance.

• 4:34Ryan Sean Adams?

  Yeah, I guess, yeah, we're home, but we're right where we should be, according to Ben, and now everything is going to reverse and it's up only. And, you know, okay, so here's a bigger picture. I think a lot of people are feeling bad last week. That was part of the theme of last week's weekly rollup, right? And, but now Bitcoin touching, going over 100K again, feels like the bull market's back on, right? I was like, was that it? Was that the dip that we're going to experience this year?

• 4:59David Hoffman?

  Well, the total crypto market cap is at 3.66 trillion dollars. Whereas the all-time high of the market cap was in December, so about a month ago. It's been a month since we had market cap all-time highs of 3.87 trillion, and we are coming in at 3.66 trillion.

• 5:18Ryan Sean Adams?

  We're right there.

• 5:19David Hoffman?

  We are not that far off of all-time highs. I think one of the reasons for that, Ryan, is because there has been a lot of down-market coins that have moved bigly, and I think started to eat into Bitcoin dominance. I want to turn to our movers of the week, brought to you by Uniswap, where you can buy, sell, trade tokens inside of the Ethereum ecosystem and on basically all of its Layer 2 chains. Thank you, Uniswap, for sponsoring this. I'm going to list off some of the movers of the week, Ryan, and I want you to tell me what year it is. Are you ready?

• 5:50Ryan Sean Adams?

  Yeah.

• 5:51David Hoffman?

  XRP, Iota, Stellar Cardano, Litecoin are all up bigly on the week. What year is it?

• 6:00Ryan Sean Adams?

  All right. I mean, I know we're in 2025. I'm not that cooked yet, okay? But, but that feels like it's 2017. When you just said, that portfolio of coins, in 2017, there was a lot of net buying of that. I can't even call it a shitcoin, because they're doing so well right now. Whatever that portfolio is, it's back, baby. And including, okay, is this true about XRP? I haven't actually validated this, but I saw some tweets about this. XRP, fully diluted value. So that's the price of XRP multiplied by all of the token supply outstanding gives you the fully diluted value. So it's not necessarily what's available and unlocked on the market, but the fully diluted value.

• 6:44Ryan Sean Adams?

  Diluted market cap, okay? Is that getting close to Ether's market cap?

• 6:49David Hoffman?

  Okay, so a pop quiz for you and the listener. You already kind of front ran this. So listener, this one's for you. What percent today on the 16th of January 2025? What percentage move away from flipping Ether is XRP in fully diluted valuation?

• 7:05Ryan Sean Adams?

  Oh, my God, I'm not. Wow, people are thinking about this, huh? So I haven't looked at the agenda on this.

• 7:11David Hoffman?

  Yeah. It's on any agenda. It's in my calculator app right in front of me.

• 7:15Ryan Sean Adams?

  I'm gonna go. I'm gonna go from like what I would guess at this point, just because it was getting kind of scary a few, a few weeks ago. I'm gonna guess we're within 40% of striking distance.

• 7:25David Hoffman?

  We are 16% away.

• 7:28Ryan Sean Adams?

  Shut up.

• 7:29David Hoffman?

  From XRP flipping Ether in fully diluted valuation. Granted, the fully diluted valuation of Ripple is so inflated. It's almost double of what its circulating supply is because that's just the shenanigans of Ripple.

• 7:43Ryan Sean Adams?

  Okay, but what are the shenanigans? Do you know what where the rest of the supply is? It's basically the XRP treasury somewhere, right?

• 7:49David Hoffman?

  XRP treasury, like Ripple holders. I don't know.

• 7:53Ryan Sean Adams?

  All right.

• 7:54David Hoffman?

  But yes, there's it's still for how old XRP is, there's still a lot of like illiquid supply. That's that's locked up. But yes, nonetheless, that is a 16% move away from flipping Ether, which is crazy.

• 8:06Ryan Sean Adams?

  It feels bad, man.

• 8:07David Hoffman?

  Yeah.

• 8:07Ryan Sean Adams?

  It still counts, though, right? Like, I think if the FTV flips Ethereum, then that counts.

• 8:12David Hoffman?

  That counts, that counts. I mean, when the FTV flipped Solana like a couple of months ago, everyone was like, that's when we were talking about it then.

• 8:20David Hoffman?

  Ripple now today is almost three Solanas. It's almost three Solanas.

• 8:25Ryan Sean Adams?

  Okay.

• 8:25David Hoffman?

  And it flipped Solana like a couple of months ago.

• 8:28Ryan Sean Adams?

  All right, so you said we're within 16% of a flipping, right?

• 8:32David Hoffman?

  I might have been wrong. It might have been like 18 or 20%.

• 8:34Ryan Sean Adams?

  Okay, 16, 18, 20%, whatever. It just did 45%, 46% over the last seven days. So it's basically three days and we'll be there at this current trajectory.

• 8:45David Hoffman?

  Honestly, we should just, you know, this whole bankless thing. How about, how about them banker chains, though?

• 8:53Ryan Sean Adams?

  Okay, what, um, I mean, I guess we already talked about this, like, when XRP was on a run back in December, but like, this is just, what, retail, logging back on the exchanges and buying XRP? Because, I mean, I know there's a little, sort of, uh, segment of XRPFi going on, right?

• 9:11David Hoffman?

  Yeah, which I didn't know was even possible, but yes, you're right, yeah.

• 9:14Ryan Sean Adams?

  So there are maybe some users, but like, mostly, it's just this passionate group of retail buyers, isn't it? Like, I don't know anybody in crypto who's like, like, actually in crypto.

• 9:23David Hoffman?

  I'm an XRP believer, yeah, I don't know anyone who says that, yeah. Uh, part of this, I think, is that, is that retail's coming back, crypto is back on the menu in the United States. This is something that we're gonna get into later, but Trump recently said that he would be, he would entertain the idea of promoting United States domiciled crypto companies, which materially boosts the confidence, the ability of Ripple, which is a very centralized organization, which can cozy right up to Donald Trump, pay Donald Trump the tax, the Trump tax.

• 9:55Ryan Sean Adams?

  XRP.

• 9:56David Hoffman?

  The XRP, yeah, like, they could totally do that, so XRP is, like, well-suited to, to do that. Uh, and so perhaps that is also a catalyst for XRP on the work, on the, on the week. That also would explain Hedera Hashgraph, which I think is a United States domiciled company. Yes, Hashgraph is apparently, Hedera is based in Dallas, Texas, so, United States, uh, boomer coins.

• 10:17Ryan Sean Adams?

  Retail coins.

• 10:17David Hoffman?

  Retail coins, up bigly. Is Hedera a retail coin? Retail, Hedera's always been, I think, that kind of niche for, like, crypto insiders.

• 10:24Ryan Sean Adams?

  It's one of the, I don't know if it's insiders, it's one of those things where I've never met anyone, like, building in crypto, in kind of, like...

• 10:30David Hoffman?

  I actually have met someone who works at the Hedera Foundation, who I would call her a crypto native.

• 10:35Ryan Sean Adams?

  Okay.

• 10:36David Hoffman?

  That's the only one.

• 10:37Ryan Sean Adams?

  Well, I don't get out much, so, I mean, you've got one more than me.

• 10:40David Hoffman?

  Oh, and also Karate Combat, Karate Combat is on Hedera.

• 10:42Ryan Sean Adams?

  That was one exception, and I, I thought they had to, like... Pay them a little bit. Yo, come on, build on our chain. Here's some grants, that kind of thing. Anyway, the market's a mystery, as usual, but we'll continue to to report it out. But tell me about the AI sector. So that had a massive loss last week.

• 11:00David Hoffman?

  Right.

• 11:01Ryan Sean Adams?

  Has that recovered at all? What's going on?

• 11:02David Hoffman?

  Yeah, so the AI sector market cap saw almost a 50% drawdown. AI agent market cap touched 20 billion last week. And then from January 6th, where it touched 20 billion, to January 13th, which was the bottom, the recent bottom, it went from 20 billion to 11 and a half billion. And this is just AI agents. I think people are still coming to consensus as to how to count the AI market cap, but agent market cap, I think, is pretty good. So yeah, almost lost 50% of total market cap, down to 11 and a half billion. Today, we are at 17.5 billion, which is up 30% from the bottom. So that is just a classic frothy, high volatility frontier tech bubble that is fun to play games in.

• 11:46Ryan Sean Adams?

  Everything's recovering unless you own Ether. That's the case.

• 11:52Ryan Sean Adams?

  Well, let's talk about the wider market then. So the market's tanked last week. We talked a little bit about that. And I was reading some material as to kind of why. And so here's some analysis. This is a macro Substack BLS jobs report recap. And basically, last Friday, the US stock market's tanked. And this was despite the Labor Department's report that showed we actually had positive data. And so what's interesting about this is we have-

• 12:17David Hoffman?

  We had positive data about the jobs. As in, the economy is doing good, and then the stock market tanked. That's what happened?

• 12:24Ryan Sean Adams?

  Yeah, it's one of those things where, so we announced we had positive data on jobs. We announced the addition of 256,000 jobs in December. An expectation was only 155. So like, pretty large delta to the upside. And you'd think that would be good economic news. But stocks tumbled last week because actually, people were like, oh, well, if the job market's going so well, and if inflation's not so bad, then that means the Fed's not going to cut anymore. All right, so good things happening in the job market and with inflation might lead to the Fed actually not cutting, which means more restrictive monetary policy in the wake of expectations that just like assumed there would be multiple Fed cuts.

• 13:08Ryan Sean Adams?

  In fact, the Bank of America is now even projecting that there will be no Fed rate cuts this year, which is kind of a change. I don't know what you thought. I was like mentally banking in my head. I hadn't looked at this in a while.

• 13:18David Hoffman?

  At least a few.

• 13:20Ryan Sean Adams?

  Yeah, I thought we'd get two or three, right? Especially Trump's in office. He's gonna be like, hey, Powell, do you wanna? I don't know how this doesn't probably work like this, but probably kind of does. You cut some rates, you know? I want a good economy. I'm just taking office, you know? It's the Trump economy.

• 13:36David Hoffman?

  Don't you want to make me happy, Powell?

• 13:39Ryan Sean Adams?

  So anyway, that's some of the good news was interpreted as like maybe not so good news. And so that was responsible for part of the market sell-off last week. What do you think?

• 13:49David Hoffman?

  What do I think? What do I think? Well, I think that is like a good thing because that is a good thing. That means that even though all this surmounting debt that we have is actually being able to be paid back with higher interest rates. So like strictly speaking, that is like a positive outcome for like the country. It's not necessarily a positive outcome for asset holders who are always asking for easier, easy monetary policy. I think maybe it's not bullish. Maybe we're not getting easy money, so it's not bullish. But it's not bearish either. It feels like this is downside protection while we are also trading off upside, like risk on territory. That feels like what that is to me. I feel like we also have some assurances that we're gonna see Donald Trump enter office and start just spewing out Trump bucks everywhere.

• 14:35Ryan Sean Adams?

  Wait, is that a new token?

• 14:38David Hoffman?

  The US dollar, baby. In four days, we get Trump bucks back. And he's just gonna unleash the like the fiscal cannon.

• 14:47David Hoffman?

  I think this is what Lynn Alden has been saying about fiscal dominance.

• 14:49Ryan Sean Adams?

  Yeah.

• 14:50David Hoffman?

  Is like spending from Congress, spending from Trump is going to actually be the reason why we go risk on high inflation era. I think it's time, Ryan, that we do a macro episode to verify that take because I'm not a macro commentator, I only understand vibes.

• 15:05Ryan Sean Adams?

  Good disclaimer, good disclaimer there, just in case all of that was complete garbage and none of that comes true. Well done, David. Well, we got more to talk about, including Trump and the Trump bucks, but first we got to tell you about the SEC's last stand. They were suing Elon Musk this week because of Twitter. They are suing him, yeah. And also, they're trying to get XRP reclassified as a security. I guess that's why XRP is up 46%. So we'll talk about that. And also Sony's Layer 2. So Sony released a Layer 2 that we'll talk about, and they're already trying to censor things, but they weren't successful in that. We'll talk about all that and more, but before we do, we want to thank the sponsors that made this episode possible.

• 15:47David Hoffman?

  Cello is transitioning from a mobile-first, EVM-compatible Layer 1 blockchain to a high-performance Ethereum Layer 2, built on OP stack with EigenDA and one-block finality, all happening soon with a hard fork. With over 600 million total transactions, 12 million weekly transactions, and 750,000 daily active users, Cello's meteoric rise would place it among one of the top Layer 2s, built for the real world and optimized for fast, low-cost global payments. As the home of the stablecoins, Cello hosts 13 native stablecoins across seven different currencies, including native USDT on Opera MiniPay, and with over 4 million users in Africa alone. In November, stablecoin volumes hit $6.8 billion, made for seamless on-chain FX trading. Plus, users can pay gas with ERC20 tokens like USDT and USDC and send crypto to phone numbers in seconds.

• 16:31David Hoffman?

  But why should you care about Cello's transition to a Layer 2? Layer 2s unify Ethereum, L1s fragmented. By becoming a Layer 2, Cello leads the way for other EVM-compatible Layer 1s to follow. Follow Cello on X and witness the great Cello happening, where Cello cuts its inflation in half as it enters its Layer 2 era and continuing its environmental leadership. The Arbitrum Portal is your one-stop hub to entering the Ethereum ecosystem. With over 800 apps, Arbitrum offers something for everyone. Dive into the epicenter of DeFi, where advanced trading, lending, and staking platforms are redefining how we interact with money. Explore Arbitrum's rapidly growing gaming hub, from immersed role-playing games, fast-paced fantasy MMOs, to casual luck-battle mobile games.

• 17:14David Hoffman?

  Move assets effortlessly between chains and access the ecosystem with ease via Arbitrum's expansive network of bridges and on-ramps. Step into Arbitrum's flourishing NFT and creator space, where artists, collectors, and social converge and support your favorite streamers all on-chain. Find new and trending apps and learn how to earn rewards across the Arbitrum ecosystem with limited-time campaigns from your favorite projects. Empower your future with Arbitrum. Visit portal.arbitrum.io to find out what's next on your web3 journey. Uniswap Labs is making history with the largest bug bounty ever: $15.5 million for critical bugs found in Uniswap V4. This isn't just any update. Uniswap V4 is built with hundreds of contributions from community developers and has already

• 17:59David Hoffman?

  undergone nine independent audits, making it one of the most rigorously-reviewed codebases to be deployed on-chain. And with $2.4 trillion in cumulative volume processed across Uniswap V2 and V3, without a single hack, the commitment to security and transparency is rock-solid. Now, Uniswap Labs is taking an extra step to make V4 as secure as possible with a $15.5 million bug bounty. Head to the link in the show notes to dive in and participate in the Uniswap V4 bug bounty. All the details, from eligibility and scope to the rewards, are there. And we're back with everyone's favorite headline: "The SEC sues Elon Musk." Man, we should have brought up the tweet of me and Elon Musk saying, "I do not respect the SEC." He said that a while ago, right? He said that a number of years ago.

• 18:40David Hoffman?

  And so, this is kind of, that same arc, though, is like Elon Musk and the SEC have had beef. And so, like, I'm gonna, I'm gonna talk about the details of this suit against Elon Musk and the charges, but really, like, the SEC and Elon Musk have just, like, beef. They're just beefing. They really are. And this is the latest in that episode. So, on the 14th- Can I be, can I be honest with you for a second, David? It's like-

• 19:04Ryan Sean Adams?

  I also do not respect the SEC.

• 19:06David Hoffman?

  I also do not respect the SEC.

• 19:08Ryan Sean Adams?

  There are members of the SEC Commission that I do respect, and some people inside of that organization that I'm sure are respectable people. But by and large, the current leadership is like not respectable.

• 19:18David Hoffman?

  The current direction, yeah.

• 19:20Ryan Sean Adams?

  But, but, okay, so Elon Musk, and by the way, some of the context for this too, I saw some of this on Twitter. If you go to other spots on Reddit, it's basically you see sort of the population, like a lot of people cheering this on. Because what it looks like to outsiders is basically billionaire, cutting corners.

• 19:38David Hoffman?

  Who bought Twitter, supported Donald Trump.

• 19:40Ryan Sean Adams?

  Bought Twitter.

• 19:41David Hoffman?

  Changed the algo.

• 19:42Ryan Sean Adams?

  Yeah, evil alt-right guy. And now here's the good SEC trying to rein this like robber baron in.

• 19:48David Hoffman?

  Good guy Gary Gensler. That's what they all say.

• 19:50Ryan Sean Adams?

  And they clap for it. And that's kind of the simplicity of the message. And like, honestly, I don't know the details of this case. Maybe you'll give some details, we'll talk about it. But like, that's kind of part of the mainstream narrative. You're either like a pro Elon Musk guy, or you're an anti. And if you're an anti, then you're cheering on the SEC. You're like, go get them. That's what, that's what seems to be like going on in the public sentiment, anyway.

• 20:11David Hoffman?

  All right, so here are the details. The SEC said in a January 14 filing in a Washington DC federal court that Musk's late disclosure, his too late disclosure of his Twitter stake allowed him to continue purchasing shares at artificially low prices and underpay by at least 150 million for his shares that he purchased after his beneficial ownership report was due. So they're saying that he's tardy on a report about shares that he held and was able to artificially suppress the price. The SEC said that Musk started purchasing Twitter stock in early 2022 and owned over 5% of Twitter's outstanding common stock by March 14 of that year. Musk should have filed a report disclosing his Twitter holdings

• 20:53David Hoffman?

  with the required 10 days after he owned more than 5% of the company's stock. But he did so 11 days after that report was due. He did it on April 4, 2022. He then bought Twitter for 44 billion on April 25, 2022. The SEC said that day, the day of the report, Twitter's stock price increased more than 27% over its previous day's closing price. Musk responded on Twitter, which he owns now, totally broken organization. They spend their time on shit like this when there are many actual crimes that go unpunished. Well, I do feel like there are many actual crimes that have gone unpunished.

• 21:30David Hoffman?

  Musk's lawyer Alex Shapiro told CoinTelegraph, one of our crypto native media organizations, the SEC's multi-year campaign of harassment against Mr. Musk culminated in the filing of a single-count tiki-taki complaint against Mr. Musk. Today's action is an admission by the SEC that they cannot bring an actual case. Mr. Musk has done nothing wrong and everyone sees this for a sham for what it is. So the SEC is asking for a jury trial and Musk to pay the disgorgement of his unjust enrichment alongside a civil penalty. So if he does pay disgorgement for his unjust enrichment, who is he paying? Who does he pay?

• 22:07Ryan Sean Adams?

  The SEC, right?

• 22:08David Hoffman?

  The SEC?

• 22:09Ryan Sean Adams?

  Yeah, I think so. I think they want to collect the fines here.

• 22:13David Hoffman?

  I think that's right.

• 22:14Ryan Sean Adams?

  By the way, did you say tiki-tac? I've not heard that term. Mr. Musk culminated in the filing of a single-court tiki-tac complaint.

• 22:21David Hoffman?

  Tiki-tac complaint. What is a tiki-tac complaint? I feel like that's a legal term somehow.

• 22:24Ryan Sean Adams?

  Maybe.

• 22:25David Hoffman?

  Maybe not an official one.

• 22:27Ryan Sean Adams?

  It sounds like a small fry kind of complaint, like just incidental details. Is that what that means?

• 22:31David Hoffman?

  Well, if you, I'll tell you why. If you Google tiki-tac complaint into Google, it comes up with SEC sues billionaire Elon Musk over Twitter act.

• 22:39Ryan Sean Adams?

  It's all recursive. Dead internet, it works again. All right. So what's interesting about this is like, hmm, let's see. It feels like it's kind of incidental, like they're trying to smack Musk down for being tardy. Maybe it's more significant than I really know. Maybe this is a real breach and infringement, but the timing is really interesting, right? It's like, what, four days, five days before?

• 23:03David Hoffman?

  Six days. Six days before Gensler is heading out.

• 23:06Ryan Sean Adams?

  Yeah, so that's kind of funny. And speaking of funny things that Gensler is doing on his way out.

• 23:12David Hoffman?

  That was not it. That's not the only thing the SEC did in the last week of Gary Gensler's reign. Okay, so remember, Ryan, when we were in the depths of the bear market and everything was just looking terrible for us and we had no bright light, any sort of tunnel? We did not have the Bitcoin ETF. We did not have BlackRock even filing for the Bitcoin ETF. What happened, the thing that started to give us a glimpse of hope is that there was this court case that Ripple won against the SEC that restated what makes crypto assets into securities or not, where the position of the SEC was anything that was bought or sold on an exchange, secondary markets, is a security. Basically, every token. Every token that's ever traded. A tokenized Pokemon card. Yeah.

• 23:55David Hoffman?

  And what happened was that a judge ruled that initial agreements to sell bundles of XRP off-chain, like just manual paper agreements to sell it to banks or whoever, these like partnerships from Ripple, those were securities. Initial sales of XRP was securities. Contracts, like the contracts for the sales. Actual contracts. But on-chain DEX transfers or any transfers on any centralized exchange did not constitute a securities transaction. Like the token itself is not a security. The token itself. Buying or selling XRP on Coinbase, on Binance, did not constitute the fact that that made that thing a security. At this time, Ripple had been removed from Coinbase, it had been removed from Kraken, it had been removed from all of the exchanges because the SEC had ruled Ripple to be a

• 24:40David Hoffman?

  security, and this undid that. And this was the first glimpse that kicked off the upwards price movement of 2023 was up, right? I think so. 2023 and 2024. It was the first glimmer of hope. The SEC is asking for a repeal on that securities classification. Just again, five days with Trump coming into office in five days. That's so funny. They're trying to take it away from us. The thing is, Trump is just going to come into office and say, no, no. Okay, so this is a report from Reuters that says, "Commissioners Hester Purce and Mark Ayuda are weighing in initiating the process that would ultimately lead to guidance or rules clarifying when the agency considers a cryptocurrency to be a security and reviewing

• 25:22David Hoffman?

  some crypto enforcement cases pending in the courts," two of these people reported. In the absence of Gary Gensler, who is bye-bye Gary in three days, on the 20th, then Hester Purce and Mark Ayuda weigh in, and Trump's new SEC leadership says they're poised to kickstart a crypto overhaul, which includes... Expecting to fall back on potential new regulations and to kick off other positive crypto changes and freezing some enforcement actions. Basically, Command Z on probably everything that we just reported on.

• 25:54Ryan Sean Adams?

  I totally think so, and including stuff that we didn't report on, but like is out there. So like, there's a big question of when Trump takes office, what is he going to do? He is the, he's branded himself as the pro crypto president. He's wrote some checks, let's say, to us on the campaign trail with respect to promises. And so what's he gonna do? Like, what's he even gonna do? Day one is a question. One thing I think he's going to do, David, is dismiss all of the frivolous cases from the SEC. And remember, it was like seven different US-based crypto companies that got Wells notices in 2023, late 2022, 2023. Uniswap, Kraken, Coinbase, Robinhood, I could go on. I think that those things probably evaporate.

• 26:38David Hoffman?

  Gone.

• 26:39Ryan Sean Adams?

  One other thing that was on the menu as well, which this is, this is still in the rumor phase. Okay, so some of what we're about to see, we'll see, we'll see next week. Some of this is speculation. But here is a post that says, "Trump receptive to the idea of a reserve with coins founded in the US." Okay? So you know that idea of a strategic Bitcoin reserve? And like, he announced that at the Bitcoin conference last summer, and the crowd goes wild, right? He's probably thinking, well, like, why does it just have to be Bitcoin? Maybe we just have a Bitcoin plus also coins founded in the US strategic reserve.

• 27:19David Hoffman?

  Homegrown, grass-fed, organic, United States coins.

• 27:22Ryan Sean Adams?

  Yeah, because why not? People will love that, right? Investors will love that.

• 27:25David Hoffman?

  We love American manufacturing. All the coins that are manufactured in the United States need to go into the United States strategic reserve.

• 27:33Ryan Sean Adams?

  Minted in the US. All right. So again, this is speculation, but this is a tier 10K post with a clip here that says, "While many in the cryptocurrency community have been cheering on pro crypto executive orders Trump is expected to issue, one idea is causing more controversy. That's the idea of an American-first strategic reserve that could prioritize digital coins found in the US like Solana, USD coin, a stable coin." Doesn't even make sense. And Ripple, XRP. In recent weeks, Trump has met with the founders of these coins and sources say is receptive to the idea. So I'm sure Brad at Ripple has met with Trump.

• 28:09David Hoffman?

  Is stoked.

• 28:10Ryan Sean Adams?

  He's like, you know what would be a great idea, Donald Trump? You know, it'd be a great idea. You like Bitcoin, right? Well, like XRP is like Bitcoin but fast.

• 28:20David Hoffman?

  Us oligarchs. It's Bitcoin for the oligarchs, you know? Just like, put it in the reserve.

• 28:25Ryan Sean Adams?

  I don't think it would take very much for Trump to be like, oh, okay, sounds like a good idea. Anyway, this is all speculation. We don't know if it could happen. Like, what do you think about this idea? What do you, do you think this could happen?

• 28:35David Hoffman?

  I think this is like news that is, God, me, I don't know, man. News that like, I think, I think you're right. I think Trump meets with United States people and say, I like things in the United States from United States companies by United States leaders. I like those things. And that can get reported as Trump is receptive to those ideas. Like whether or not we are actually putting Ripple into a strategic reserve, I think is, there's a huge leap there. But like, this is some classic, this is a thing that would pump Ripple because this is what Ripple holders love.

• 29:05Ryan Sean Adams?

  Do you feel like there's an element, a little bit of an element of like, okay, I'm like glad we have a pro crypto president, but like, oh, too much, too much. Like, like, like, not this pro crypto. I mean, I don't know if we want XRP as part of a strategic reserve for the United States. Like, we could go a little far on this, I think.

• 29:23David Hoffman?

  We absolutely could. I'm kind of just like fatigued.

• 29:29Ryan Sean Adams?

  Whatever. You know, one, one thing I think he actually will do, and this is a good report, something we totally need. This is breaking, Trump to repeal Sab 121 on day one. Remember Sab 121? That was Gary Gensler's little like loophole that banned.

• 29:43David Hoffman?

  It's why banks can't custody crypto.

• 29:45Ryan Sean Adams?

  Yeah, any bank in the US can't own like custody crypto and that needs to be repealed. Biden, this got through both, both like houses in Congress and then Biden vetoed it. Trump could just like reverse that day one. I sort of expect that that could happen. And then we also have the cabinet ahead. David, give us a recap on who is going to be in the Trump cabinet, who's projected to be here to set some of this policy.

• 30:10David Hoffman?

  Yeah, this is currently underway, so Trump cabinet positions are currently going through the process. A lot of people who are currently getting reviewed are just not necessarily related to crypto. Starting with the Treasury Secretary, the replacement for Janet Yellen, right? Janet Yellen, the person who I am suing. She's going bye-bye, unrelated to that fact. Scott Besant. Who is Scott Besant? He's an investor and hedge fund manager, partner at Soros Fund Management, founder of Key Square Group, a global macro-investment firm. Besant was a major donor, fundraiser, and economic advisor for the Trump 2024 presidential campaign. Recognized for his progressive stance on crypto, he has described digital assets as an integral to economic freedom and innovation, emphasizing that crypto

• 30:54David Hoffman?

  is about freedom and the crypto economy is here to stay, which has generally aligned with Trump's goal to position the United States as a global leader in crypto. If he is confirmed by the Senate, Besant, fun fact, this is a fun fact, would also be the first openly gay Secretary of the Treasury. Cool. Unrelated to crypto, but I thought that was interesting. And so that he is probably going to get confirmed. Polly Market is coming in at a, what is this? 98. A whopping 98% chance. So that's basically assured, according to Polly Market. There's also the SEC Chair. The Senate Banking Committee has not yet scheduled SEC Chair hopeful Paul

• 31:33David Hoffman?

  Atkins confirmation hearing, but there's just widespread Republican support from Atkins. He's considered to be a shoo-in. In the meantime, Trump will either select Hester Purse or Mark Ueda to serve as Acting Chair. We will probably see the timing on this. If not this week, then next week, probably. CFTC Chair, Trump has also still not picked a name for the CFTC Chair. Current Chairman Rossin Benham will step down on Monday. Rossin has not been our friend. He has pursued the crypto industry with a number of actions. Caroline Pham or Summer Messenger, who are both Republican, CFTC Commissioners, are expected to head the agency in the interim. The shortlist is CFTC Commissioner Brian

• 32:16David Hoffman?

  Quintenz, former CFTC Commissioner, who went to A16Z Crypto Policy team.

• 32:21Ryan Sean Adams?

  Former bankless guest.

• 32:22David Hoffman?

  Former multiple bankless guest and permissionless host, what he's most famous for, obviously. Or it could be former agency official Josh Sterling, or it could be attorney Neil Kumar, or it could also be current commissioner Summer Messenger.

• 32:37Ryan Sean Adams?

  Also former bankless guest.

• 32:38David Hoffman?

  Also former bankless guest. I think all of those outcomes, I think, are pretty good.

• 32:42Ryan Sean Adams?

  Yeah.

• 32:43David Hoffman?

  Summer, I think is great. Brian Quintanis, I'm the most familiar with. I hope it's one of those two. I don't know Josh and I don't know Neil as well, but I think they're all good. Lastly, and there's others as well, but as it relates to crypto, Howard Lutnick is Trump's nominee to run the Treasury Secretary of Commerce, and this is the latest cabinet contender to have a confirmed hearing held up by paperwork delays. So that's what's going on. I don't know how significant that is, but they're like paperwork delays. That's why we don't know the date, but he is going to be, he is the nominee for Secretary of Commerce, best known as the chairman and CEO of Cantor Fitzgerald, which acquired a 5% ownership stake in Tether, valued at 600 million. And then a date for Lutnick's hearing, like I said, has not yet been announced. So cabinet nominees

• 33:27David Hoffman?

  are currently undergoing Senate confirmation hearings this week and next week, with many others still to be scheduled. We will probably do the segment again next week as well to update you all.

• 33:36Ryan Sean Adams?

  Look, man, that is a pro crypto roster. All of those names on the list. And one other name I, like, we should probably add is the crypto and AI czar, you know, the crypto czar.

• 33:45David Hoffman?

  Not a cabinet position, but like a.

• 33:48Ryan Sean Adams?

  Advisor.

• 33:49David Hoffman?

  Advisor.

• 33:49Ryan Sean Adams?

  With influence, with like probably some ideas in terms of like what policy Trump should implement via executive order. So that's the executive branch. That's what you like Trump will kind of assume. The other good news actually is on the legislative side. So we also know that that Republicans have taken over the Senate and also the House. Representative Tom Emmer has been appointed as the Vice Chair of Digital Assets Subcommittee. So this is a Subcommittee responsible for digital assets, finance, AI, that kind of thing. And he says, with President Trump in the White House and Gary Gensler confined to the waste bin of Washington, wow.

• 34:30Ryan Sean Adams?

  I wonder where they keep the waste bin of Washington. We have an excellent opportunity to ensure that the future of digital assets is guided by Americans with American values. I look forward to working with Chairman French Hill and Representative Brian Stile? Stile? I'm not sure. And the rest of our colleagues to foster an environment where digital asset innovation can thrive. So there you go. Okay, so you got the executive branch unwinding some things, right? Like making some other things possible. The big, the big news on the legislative side, as Chris Dixon would say, legislation is how you get things actually like hardcoded into this operating system, into the software of governing the United States of America.

• 35:09David Hoffman?

  Out of the mempool and into the blockchain.

• 35:11Ryan Sean Adams?

  Yeah, that's exactly. That's how you get things to kind of like stick and be lasting and be multi-years that companies can actually build on top of. So legislation is really important and hopefully we get some key legislation, including stablecoin legislation, possibly this year. You know, remember the Fit 21, the difference between a commodity and a security? Hopefully we can figure that out in this Congress and do some other great work. So, man, things are, things are really going in a positive direction for crypto and a complete 180 from what 2022 and whatever 2023 was.

• 35:46David Hoffman?

  Yeah, Tom Immer also shared his vision for what a Republican-led government could look like as it relates to crypto in 2025, prioritizing market, market structure frameworks like Fit 21, restrictions on central bank digital currencies and promoting global dollar-backed stablecoins, which I enjoy all three of those things. I think those three things are great.

• 36:04Ryan Sean Adams?

  Yeah, I also enjoy them. You know what? There's another side of this, Stu, which is probably the best thing about this outcome is the bullet that we dodged, okay? Because I think there is a more than fair chance that a Kamala Harris White House would have continued the Biden policies, right? Not 100% certainty.

• 36:25David Hoffman?

  So there were moments, Ryan, where I was. Hopeful that Kamala was more crypto positive than she was letting on.

• 36:32Ryan Sean Adams?

  Yeah.

• 36:33David Hoffman?

  Was I naive? Was I being naive?

• 36:35Ryan Sean Adams?

  Look, I'm not going to comment on my co-host's, you know, like, level of, you know, savvy or naivety with respect to politics, because like, who really knows? But we saw no evidence during her campaign that she was going to soften any of her crypto policies. And she had ample opportunity.

• 36:52David Hoffman?

  No real evidence, yeah.

• 36:53Ryan Sean Adams?

  Yeah. We were like, Kamala Harris, come on the Bankless Podcast, let's talk.

• 36:55David Hoffman?

  Do something.

• 36:56Ryan Sean Adams?

  No answer.

• 36:57David Hoffman?

  Do anything.

• 36:59Ryan Sean Adams?

  So an example of one of these bullets that would have maybe continued to fire in a Kamala Harris administration was this. So this is an interpretive rule drop that actually happened last week. So again, kind of last minute, coming out of the Biden administration. An interpretive rule drop from an organization, like an agency called the CFPB. So it's the Consumer Finance Protection Bureau, I believe, right? So this is kind of like an Elizabeth Warren type of instituted institution. Anyway, what they want to do is apply the similar rules for non-custodial crypto wallets as are on the books for banks, basically making them liable if something bad happens to the assets within those wallets.

• 37:39Ryan Sean Adams?

  Okay, so let's say you had funds stolen from one of your MetaMask wallets or your Phantom wallet or something like this, or your Uniswap wallet. Okay, so that would be the fault, who would bear that liability? Not you, but the wallets themselves. Okay, so if there was a phishing scam, if you lost your seed phrase, if something bad happened.

• 38:05David Hoffman?

  If anything happens?

• 38:06Ryan Sean Adams?

  Pretty much anything. It's pretty broad with respect to liability. It's actually, it's not the user's fault, it's not your fault. It's the wallet manufacturer's fault, okay? So it's like MetaMask's fault, Uniswap's fault. It would be Rainbow Wallet's fault.

• 38:19David Hoffman?

  Whoever gave you the wallet, whoever issued the wallet originally, it's their fault.

• 38:23Ryan Sean Adams?

  Yeah, and how many?

• 38:24David Hoffman?

  You know how many reasons that doesn't work?

• 38:26Ryan Sean Adams?

  Well, yeah, it's crazy.

• 38:28David Hoffman?

  I can take my private key from MetaMask, I can put it into my Uniswap wallet, I can put it into my Phantom wallet, and then... Maybe one of those things is the reason why there's exploit. But like the money in my phantom wallet got drained because my mud mask got exploited. So that doesn't make any sense. Among many other reasons, if that's the case, then they're just going to stop me from exporting the private key so that they can have a higher control over it. So every wallet becomes a custodial wallet. And that's not even going to happen because they're all just going to shut down because they can't take that liability.

• 39:03Ryan Sean Adams?

  Yeah, they really can't take that liability because like lots of, there's lots of ways for a user to be irresponsible with their, their private keys or click a phishing link or like do something stupid. And that can't be the, the wallet's responsibility. That's just insane. Like you wouldn't be able to run a non-custodial wallet in, in the US.

• 39:19David Hoffman?

  It's like- It's the same thing as making open source software illegal.

• 39:22Ryan Sean Adams?

  Yeah, or think about this in terms of, um, you know, an analog. So let's say you buy like a nice leather wallet, you put it in your pocket, you lose that leather wallet one day or someone steals it. Okay. Is it the wallet, the leather wallet manufacturer, is it their fault that this happened? Can you drop a lawsuit on them? Should they have any liability for you losing your wallet at the bus or at the coffee shop?

• 39:44David Hoffman?

  It's just a big nanny state vibe.

• 39:47Ryan Sean Adams?

  Anyway, that's the kind of stuff that was, was happening even as late as last week, which I anticipate would be reversed under a Trump administration. I, uh, man, it would have been a rough next four years if those kind of shenanigans continued.

• 40:01David Hoffman?

  One last thing on the political note, something that's technically not crypto, but crypto adjacent that I'm going to keep an eye on. Donald Trump Jr. has announced that he has joined Kalashi, the prediction market competitor to Polymarket as a strategic advisor. There was a quote on Twitter says, "The Kalashi team has worked hard to sue the Biden administration and achieve the impossible feat of becoming the first legal prediction market in the United States. I'm now excited to be a part of what they are building. Now it's time to trade on whether Biden is going to pardon Fauci or Liz Cheney." Lol, lol. I did like, they, they, I don't necessarily like this. On, uh, the first part of this tweet, the tweet says, "On election night at Mar-a-Lago, while biased consumer outlets called the race a coin toss, my family-

• 40:46David Hoffman?

  Close friends used the prediction market Kalashi to know we won hours ahead of the fake news media. Now, Ryan, this might surprise you, but I was not at Mar-a-Lago on election night. But I heard a very similar story that it was actually Polymarket that they had on the TV screens. Now, they could have had both. I'm not saying that this is a lie. I'm just saying, the last time I heard this story, it was actually Polymarket, not Kalashi, that was being displayed at Mar-a-Lago. And it was actually, they called Shane to tell Shane that they appreciated. Wait, that is the last time I heard this story.

• 41:18Ryan Sean Adams?

  Shane would be the co-founder of Polymarket.

• 41:20David Hoffman?

  Of Polymarket, yes, yes.

• 41:22Ryan Sean Adams?

  Well, it's like, no question that prediction markets are like a valuable thing, and that they are kind of going mainstream and getting more support. So I guess that that's the positive. I would rather Polymarket win than Kalashi, because it's based on crypto.

• 41:36David Hoffman?

  Polymarket is the reason why prediction markets have gone mainstream.

• 41:41Ryan Sean Adams?

  Yeah.

• 41:41David Hoffman?

  And then Kalashi also exists too.

• 41:44Ryan Sean Adams?

  Yes, well, maybe they, Polymarket, you know, didn't give up an advisory seat for one of the Trumps, which maybe that's a net EV good move for companies to do that.

• 41:56David Hoffman?

  Maybe.

• 41:56Ryan Sean Adams?

  Go meet in Mar-a-Lago, like, right now.

• 41:59David Hoffman?

  All right, moving on into some crypto native news, almost totally crypto native, not completely totally crypto native. Sony has launched the Sony M L2. A little bit of controversy, it's an OP stack layer two. This has been announced a while ago. But this is now the Sony Sony M L2, OP stack L2, that I believe is also part of the superchain, could be wrong, is now live. There's a mainnet out there. Sony wrote in a statement, "In this early phase, we aim to maximize creators' creativity benefits and fan engagement on chain. By protecting content rights and creating fair profit sharing mechanisms, we empower them to thrive across both digital and real worlds." Their testnet, the Sony M Minato, was apparently very popular. Thirty-two projects were selected from over 1,700 entries for the Spark incubation program for the testnet.

• 42:45David Hoffman?

  Across entertainment, gaming, social platforms, finance, and the state that they have partnerships with Sony Pictures, Sony Music, and Sony Music Publishing, makes sense, that might use NFTs to grant fans access to exclusive content. Like, this would be like if NFTs granted Amazon Prime Video users access to like, you know, video content, for example. There are two projects on Sonyum, a fan marketing platform that simplifies NFT issuance, data analysis to enable brands, creators, and enterprises to use NFTs for fan engagement and marketing. Wow, what year is it? Sounds like 2021. That's gonna launch in February. There's also S Blox Exchange, a DEX with its own mobile app that offers Bitcoin rewards

• 43:29David Hoffman?

  for new accounts, trades to celebrate the launch alongside an NFT distribution campaign in 2025, available only in Japan. There were mixed reactions from crypto Twitter. One of the founders of Pump.fun wrote, "Sony's new Ethereum Layer 2 is actively blacklisting meme coins they don't like instead of instantly nuking everyone's position to zero. What makes you think that the other Layer 2s won't do the same if push comes to shove? Don't take your freedom for granted." Another user pointed out that Sonyum has frozen some of the deployed contracts and rugged users for over $100,000 in need to purchase meme coins.

• 44:04Ryan Sean Adams?

  All right, wait, wait, wait.

• 44:05David Hoffman?

  The details of this, I would like to see verified, but I think the general vibe is that they are expressing that there is like centralized top-down power on this like Sony Layer 2.

• 44:13Ryan Sean Adams?

  Okay, okay. So like, what I understand is like, first of all, Sony doing a Layer 2. Big corporation, launching a Layer 2. That's exciting, right? Isn't this what we always wanted? The entire world to like build on top of our crypto-native systems and Layer 2s? So from my perspective, that's cool. You know, hard for corporations to pull this off in a crypto-native way, let's be honest. But like, cool that they're trying. The experiment seems interesting. But now, it seems like what they're doing after mainnet is a meme coin launchpad has sprung up, and some of the meme coins that have permissionlessly been deployed are infringing on some IP, right?

• 44:54David Hoffman?

  Right.

• 44:55Ryan Sean Adams?

  Somebody's saying, "Oh, that's against our terms of service." And because they have a centralized sequencer, of course, as like almost all Layer 2s do, certainly all optimism Layer 2s, they are what, like censor, like blacklisting these transactions? And because it's IP infringement, effectively. And so Crypto Twitter is saying like, "Wow, you're already censoring?"

• 45:15David Hoffman?

  This isn't cypherpunk.

• 45:16Ryan Sean Adams?

  This isn't cypherpunk. This isn't what blockchains are about. And that's like the source of the two tweets you just read, right?

• 45:23David Hoffman?

  Yes, yes, yes, yes, that's correct. The Sonium's director told CoinTelegraph "Their restrictions only impacted two specific contracts due to IP violations." Like you said, "Users and developers could appeal the decisions." And the team was already in dialogue with a project whose contracts were restricted. "They are actively updating their materials to comply with policies," it said. "If they meet the policy requirements, the contract will be removed from the blacklist." So this does sound like general Web 2 content moderation. "No funds were frozen," he clarified. But I think like people are kind of like poking, kicking the tires, being like, "What are my rights on this blockchain?" Like, "What are my user rights? What are my property rights?" Donna.Eth, who works for Layer 2B, tweeted out,

• 46:07David Hoffman?

  "Since I've seen a lot of bad takes regarding Layer 2s and their censorship resistance, here's how I bypassed Sonium Sequencer and bought a banned token with a forced transaction through the Layer 1." And they went on to describe how to buy this like censored token through the Layer 1, through like the hatch door. Crafted a call data, called the swap, did the thing. It's technical, it's not going to be for the end user, but you can do it, which is always the point of Layer 2s. So like, this is kind of, in my mind, the point of Layer 2s. They can come in all sorts of shapes and flavors. And this is an extremely corpo Layer 2 to do extremely corpo things, which I think is totally fine, because there are other more cypherpunk Layer 2s out there, where you can trade your racist meme coins if you so choose,

• 46:52David Hoffman?

  or your IP meme coins if you so choose. And so that's always been the promise of Layer 2s. They're a rainbow, they're a kaleidoscope, you can get any source of flavors. And this is one that's built by Sony to do IP Sony things with their Sony IP.

• 47:05Ryan Sean Adams?

  So what are your property rights? So your property rights on Sonium are basically, you have the ability. So like, if their centralized sequencer tries to freeze your funds, then you have the ability to withdraw to mainnet. So they can't steal from you, right?

• 47:19David Hoffman?

  You can also do normal transactions. On the Sony Layer 2, you just have to go through not the sequencer, but through the Layer 1 smart contract.

• 47:26Ryan Sean Adams?

  Do what dono. you've just did, basically.

• 47:29David Hoffman?

  Correct, correct.

• 47:29Ryan Sean Adams?

  So you, they can still censor your transactions in real time. They make it difficult for you, so you have to kind of go through the Layer 1.

• 47:38David Hoffman?

  You kind of need some skills and experience.

• 47:40Ryan Sean Adams?

  So your property rights are nerfed, but not completely limited. And that's

• 47:45David Hoffman?

  Yes.

• 47:45Ryan Sean Adams?

  the trade off of a Layer 2 with a centralized sequencer at this point.

• 47:49David Hoffman?

  Yes, yes, correct.

• 47:50Ryan Sean Adams?

  Yeah, so.

• 47:52David Hoffman?

  And for those same reasons, other Layer 2s have complete MEV protection. And that's the same, same trade off where they haven't done any sort of like blacklisting of meme coins and they actually just protect all their users from MEV like sniper bots and all these other things. These are the trade offs.

• 48:09Ryan Sean Adams?

  Vitalik says, "The Sonyum situation is a good live demonstration of how launching an Ethereum Layer 2 is great for businesses and users. Businesses can make very fine-grained choices around how much control they give versus give to users." I guess we saw that in this case, right? There, you know, Terms of Service and censoring some IP-infringed transactions. Vitalik continues, "But whatever rules they choose, that's what the rules are. Everything is on-chain, transparent, audible by third parties. You can make a very closed system where there's no escape hatch and where their operator can edit the state root, but then users will know exactly what they're getting into. And Layer 2, Vietnam armies of independent internet sleuths will help them. You can also make a fully open system." This is kind of the pluralism that Vitalik has always preached. And I think it's been a core value of Ethereum is basically,

• 48:54Ryan Sean Adams?

  you can make Layer 2 super centralized or not centralized at all and exactly like the Layer 1 or somewhere in between. And you have that flexibility. So I guess that's a pretty standard Ethereum take here.

• 49:07David Hoffman?

  I think that's right. I think that's right. All right, coming up next, Coinbase uses Morpho for Bitcoin loans. What's the word for this, Ryan? What is that called?

• 49:17Ryan Sean Adams?

  DeFi mullet, David.

• 49:18David Hoffman?

  That's a DeFi mullet, baby. Let's go. In addition to that, Base is getting some privacy. I thought, I was playing around with a pretty cool app this morning around. I wanted to tell you all about it. And also Tether is moving to El Salvador. Interesting hodgepodge of topics that we're going to bring to you next. But first, we're going to talk about some. These fantastic sponsors that make the show possible like Frax and its FRX USD stablecoin has to offer some of the best yields in DeFi on the Frax Layer 2. It's like Circle, Athena, and Maker all had a baby. So maybe you want to go play with that cool new toy on the Fractal Layer 2, which is an OP chain brought to you by Frax. With over $1.5 billion in TVL, the METH protocol is home to METH, the fourth-largest ETH liquid staking token, offering one of the highest APRs among the top 10 LSTs. And now, CM ETH takes things even further.

• 50:01David Hoffman?

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• 50:44David Hoffman?

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• 51:26David Hoffman?

  the possibilities. Whether you're a player, investor, or builder, the future of Web3 starts on Ronin. And we're back. Coinbase allows Coinbase users on the Coinbase front end to get a Bitcoin-backed loan using Morpho on the backend. Now, what's Morpho?

• 51:42David Hoffman?

  Morpho is kind of like Ave, it's kind of like Compound, it's a little bit different, but it's a basic, you deposit assets, you can borrow, you can borrow against your assets.

• 51:50Ryan Sean Adams?

  You like Morpho, right?

• 51:51David Hoffman?

  I like Morpho. I am currently using Morpho. We at Bankless have a few of our stablecoins, a bit of our stablecoins in Morpho. We like Morpho.

• 51:59Ryan Sean Adams?

  Good yield, right?

• 52:00David Hoffman?

  Good yield, good yield. Yeah, good safe yield. So Coinbase is now offering Bitcoin-backed on-chain loans of up to $100,000 in USDC. Again, this is to Coinbase users who are going to Coinbase.com and there's no wallet in question for these users. Call it TradFi in the front, DeFi in the back. Say it again, Ryan. What is that?

• 52:19Ryan Sean Adams?

  DeFi mullet. That's what the DeFi mullet is.

• 52:21David Hoffman?

  That's a DeFi mullet, yes.

• 52:22Ryan Sean Adams?

  Yeah, it's suit in front and party in the back, just like a mullet.

• 52:25David Hoffman?

  That's right, that's right. Okay, so here's what happens. When a Coinbase customer opts in for an on-chain loan, their Bitcoin collateral is converted into Coinbase wrapped BTC, no cost to the user, transferred to Morpho on base, and the DeFi protocol then disperses the USDC to the customer's Coinbase account in under a minute. This is all happening on-chain. Somebody just, they don't even know that they're having CB BTC. They just, "I have Bitcoin and I would like a loan," and they get USDC loan, they're paying interest, and they just get USDC in their Coinbase account. They don't know what's going on, they don't know what base is.

• 52:55Ryan Sean Adams?

  They don't have to know.

• 52:56David Hoffman?

  They don't know what base is, yeah. Okay, so at launch, Coinbase's Bitcoin-backed loans are available to anyone in the United States excluding New York, womp womp, with plans to expand into additional markets. While Bitcoin is the only collateral option, Coinbase aims to add support for more tokens in the future. Again, all of this is happening on-base. I think this is so cool. This is something that I think we predicted that would happen to Coinbase for a very long time. Morpho just so happens to be a Coinbase Ventures portfolio company that's building on-base. You can see some of the synergies here. And this is the on-chain-ification of Coinbase. This is part of their big arc of like, yo, DeFi is going to eat our lunch, so let's just do it, let's just do it first. Let's just cannibalize ourselves.

• 53:38Ryan Sean Adams?

  Yeah. I love how excited you still get about DeFi because like this feels very 2020 of like, this is what we hoped would happen, this is the dream. This is so, I mean, this probably sounds-

• 53:48David Hoffman?

  This is can't be evil. This is can't be evil.

• 53:51Ryan Sean Adams?

  Absolutely. It's very bullish, very exciting, and just the start, right? Of a growing trend that we've talked about for a while here.

• 53:58David Hoffman?

  Talking about a different corner of the Ethereum Layer 2 versus AVO, which for those that don't recall, AVO is a Layer 2 on Ethereum. Almost kind of like call it an app-specific Layer 2 because AVO is both the chain and the app. It is a options, perps, other financial strategies Layer 2, built on the OP stack, I think part of the superchain, that has been using Celestia DA. They were one of the first big Layer 2s to migrate to Celestia DA to save themselves a lot of money.

• 54:23Ryan Sean Adams?

  Rather than Ethereum DA, right?

• 54:25David Hoffman?

  Rather than Ethereum DA, which was very expensive. Well, they are moving from Celestia to Eigen DA, which they wrote, "From day one, we believed in modular blockchains. Celestia was an incredible partner on our journey. However, as we evolve, we need even tighter synergy with Ethereum security, lower costs, and near-instant data throughput." Eigen DA checks all these boxes. Last I checked, Eigen DA was cheaper than Celestia, had more throughput than Celestia. So this was kind of the big prediction that everyone's making is like, "Well, if they're gonna go from Ethereum Layer 1 DA to Celestia to save on costs, they're gonna also go from Celestia to Eigen DA to also save on costs because Eigen DA is basically zero-cost DA." And this is what's happening.

• 55:03Ryan Sean Adams?

  Yeah, I guess Eigen DA is a slightly better, well, probably, you know, like, maybe much better for Ether the asset than...

• 55:12David Hoffman?

  Correct.

• 55:13Ryan Sean Adams?

  Because Eigen DA is all based on the value and the economic security of Ether the asset.

• 55:21David Hoffman?

  The reservation demand of Ether. Ether needs to be staked for Eigen DA to work, whereas Celestia needs to be staked. TIA needs to be staked, which is not ETH.

• 55:28Ryan Sean Adams?

  So this is kind of a win for Ethereum as well. But I think that the DA wars will continue to play out, right? It's like, there'll be Celestia, there'll be Eigen Layer, there'll be other alternative DA providers, and then there'll be Ethereum, like, you know, premium, a Layer 1 blob space as well for data availability.

• 55:44David Hoffman?

  Yeah, if this news of AVO moving from Celestia to EigenDA is like, if you think like, "Oh, like, maybe EigenDA is coming to eat Celestia's lunch," go check out how much a DA Celestia is consuming, because that is also up only, especially with the launch of Eclipse. Celestia's doing great. And like, some people will say that it's all like low economically dense transactions. It's just like, it's so cheap, it's easy to fill.

• 56:09Ryan Sean Adams?

  Of course.

• 56:10David Hoffman?

  That's also the point. That's also the point. Like, yes, we need more block space. So Celestia is also doing well in the world of providing much, much more DA to the world.

• 56:19Ryan Sean Adams?

  I mean, this competition is good for consumers, right?

• 56:21David Hoffman?

  Yes, that's right.

• 56:22Ryan Sean Adams?

  This is really cool. I want to read this out and get you to explain it. So veil.cash, this is, I believe, a protocol that is on base. Veil.cash now supports Coinbase on-chain verification via EAS, which is Ethereum Atestation Service, which we had them on a podcast, really cool service, maybe you can explain, on base for verified pool access. This effectively, I think, means Veil can make transactions on base private? I think that's what this means. What is this? Tell me how this works, because right now, let's talk about the status quo, every transaction on base is publicly available. It's pseudonymous, but if somebody knows that you own this address, then they can track everything you do on base. And

• 57:05Ryan Sean Adams?

  that, like, that's not exactly great for a lot of activities.

• 57:08David Hoffman?

  Right. So, in order to understand Veil, I think this is going to be pretty simple. Start with tornado cash. It's basically like tornado cash, basically is tornado cash. Add a gating function, so not everyone is permissioned tornado cash, and then you need to have the right credentials to get in through the gate in order to use tornado cash. Those credentials are a wallet that has been given an EAS, an Ethereum Atestation Service credential, from Coinbase. Coinbase says, "This is a wallet that has been attested by a KYC'd user of Coinbase," and so we know who this is. And if you have that attestation from Coinbase using EAS on your base wallet, then you can deposit Ether into Veil and enter

• 57:54David Hoffman?

  Into the privacy pool, which is how tornado cash works. Then you, if you've never used tornado cash, because you maybe a more recent listener, bankless, and it's been under OFAC sanction the entire time.

• 58:04Ryan Sean Adams?

  It's illegal.

• 58:04David Hoffman?

  It's illegal. What happens when you deposit into tornado cash, rest in peace, is that you are given a note, basically a cryptographic note. And that's a note is, in that sense, is like, kind of like a bill, or maybe like a check. It's like a written check. And that note is good for some amount of ETH that's in the pool. And then you can transfer that note to yourself and then send the amount of ETH that that note is good for to a new wallet. Ryan, what's cool, that new wallet does not need to have a Coinbase attestation. It could be any wallet on base. Only depositors require the EAS attestation in order to deposit ETH into. And the reason why that works is because then Coinbase can tell the powers that be, OFAC,

• 58:49David Hoffman?

  FinCEN, that it knows every source that ever deposited Ether into Vail. It can, it can give you then the information of who that is. It is, does not care, it is illegal to send that Ether out to anyone KYC'd or not. So this is the compromise that we have made. This is not perfect cypherpunk privacy. But this is right up to what is totally defensible in a court of law, in my opinion. I'm not a lawyer.

• 59:13Ryan Sean Adams?

  This should be 100% defensible. No one should have to go to prison for this. Well, in the tornado cash case, to be clear, no one should have to go to prison either. But also, this is privacy with AML KYC, right? So the authorities should kind of bless us.

• 59:29David Hoffman?

  Depositing privacy with KYC AML, yes. Not withdrawing privacy, because I could give it to my drug-running narco friend. And I could give them the note.

• 59:41Ryan Sean Adams?

  Wait, what? Wait, run that by me again. What are you planning?

• 59:44David Hoffman?

  I can, I, as a KYC'd user of Coinbase, could, in theory, deposit Ether into Vail, generate that note, and I could go give that to a drug lord trafficker.

• 59:56Ryan Sean Adams?

  Wait, why would you?

• 59:56David Hoffman?

  North Korea. I could, I'm just saying I could. I'm not saying I will. I'm just saying I could do that.

• 1:00:01Ryan Sean Adams?

  Or, yeah, like, or a political protest. That the authorities like or something.

• 1:00:06David Hoffman?

  Or yeah, or the more savory reasons.

• 1:00:08Ryan Sean Adams?

  Okay, okay. Do you think this kind of like great compromise will kind of hold with the authorities that be?

• 1:00:15David Hoffman?

  I think it moves people in a very good direction towards privacy because like there's there is a tug of war over the privacy over privacy from like the nations, the powers that be and blockchain users. And this moves users into the middle ground of there are people, there are accessing privacy. It's totally legal. We're filling up some space and it just allows us to fight from a better position.

• 1:00:37Ryan Sean Adams?

  Yeah, because that tug of war has currently left us with basically no privacy.

• 1:00:40David Hoffman?

  No privacy.

• 1:00:41Ryan Sean Adams?

  Right? Like no privacy in any Ethereum economy on Bitcoin anywhere. So this is great. And by the way, I didn't mention this, but over half a million Coinbase verified accounts are now eligible to use this.

• 1:00:51David Hoffman?

  Yeah.

• 1:00:52Ryan Sean Adams?

  So a whole bunch of people on base. David, tell me about Barachain. So.

• 1:00:57David Hoffman?

  I don't know much about Barachain. All I know, Ryan, is that it's got $1.6 billion in pre-launch deposits. Rumbleings, murmurings about Barachain launch is getting louder in my feed. So I'm assuming Barachain mainnet is coming soon and it's got $1.6 billion in pre-launch deposits. On Ethereum, this is Ethereum TVL that will become Barachain TVL in the future. Kind of reminds me of like the launch of the beacon chain. You got to put money in and then and then the beacon chain launches and the money's over there.

• 1:01:22Ryan Sean Adams?

  That would make it. Separate layer one, right?

• 1:01:24David Hoffman?

  Separate layer one. Separate EVM equivalent, layer one, with this like new consensus mechanism that's called proof of liquidity, probably.

• 1:01:33Ryan Sean Adams?

  We're trying to be super fast like Monad and you know, like.

• 1:01:36David Hoffman?

  I don't think that's its narrative, but it's gotta be like, imagine launching a slower speed blockchain in 2025.

• 1:01:42Ryan Sean Adams?

  I feel like its narrative in my mind is like memes. It's just like cultural stuff and casino funness. And like that will be on Barachain because it's a fun, cute bear thing.

• 1:01:53David Hoffman?

  Yeah, that's about right.

• 1:01:55Ryan Sean Adams?

  All right, cool.

• 1:01:56David Hoffman?

  That was the extent of my Barachain knowledge.

• 1:01:59Ryan Sean Adams?

  Lastly, Tether moving to El Salvador. So Tether has acquired a license to operate in El Salvador as a digital asset service provider and stablecoin issuer. It plans to relocate its headquarters there, not just open an office there, actually relocate its headquarters. Due to forward-thinking policies, favorable regulatory environment, and growing Bitcoin savvy community. This, I think, just shows generally that nation states that are favorable to crypto will get crypto to build inside of their countries. And so this is El Salvador, of course, putting Bitcoin on the balance sheet, the president being very favorable towards crypto, just like stacking up another major crypto company. Because like, let's not forget, Tether

• 1:02:40Ryan Sean Adams?

  has what, like $100 billion worth of treasuries and stablecoins out there? It's a pretty major financial organization, particularly for El Salvador.

• 1:02:51David Hoffman?

  This just reminds me of a book that I know is very important to both of us, which is The Sovereign Individual, which is countries will fight for internet businesses, internet companies, internet-based individuals to domicile there. And that's just what the future holds.

• 1:03:06Ryan Sean Adams?

  Yeah, and we're seeing a little of that. We're not seeing it all the way, but a little bit. Know me the week this week, but I should tell people that I am actually going on a little mental health break. So I will not be here next week for the Bankless Weekly roll-up.

• 1:03:21David Hoffman?

  Somebody else will be here.

• 1:03:22Ryan Sean Adams?

  Yeah, yeah, somebody else. So I think we'll have a different guest. We haven't decided who, and like maybe another guest for the next week. And well, you know, doing the crypto media thing, I think is it's hard on your mental health sometimes. And I have decided that I need a little bit of a break, just to reset, relax, get some new software deployed, and you'll come back even stronger. So that's what I'm about. So if Bankless listeners notice my voice is absent from the next weekly roll-up, that'll be why.

• 1:03:54David Hoffman?

  Well, Ryan, I hope you have a very relaxing time. I think the one bit of advice that I have for you is that if you are going to take away something from your life and have that work, you need to add something to your life. So what are you gonna go do? What are you gonna, what are you gonna spend your time on?

• 1:04:09Ryan Sean Adams?

  You know what? I'm open to suggestions. So Bankless community, if you have some ideas on hobbies, something that I could get into, please do let me know.

• 1:04:16David Hoffman?

  How are they gonna reach out to you? Why aren't you gonna turn off the data too?

• 1:04:20Ryan Sean Adams?

  And you better do it soon because I'm about to power down Twitter and everything else. Guys, thanks so much for hanging with us. This has been the Weekly Rollup. Got to let you know, of course, crypto is risky. You could lose what you put in, but we are headed west. This is the frontier, not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.