Transcript

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

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1:20 Join us at masters of scale dot com slash apply twenty six. That's mastersofscom slash apply. Twenty six. The Biden administration was so anti-crypto. I was like, oh my god, it's just like watching Blockbuster and Netflix is coming, and Blockbuster is not changing and doesn't know what to do, and in fact thinks that they're invincible. This is like literally watching the US deal with crypto.

1:50 And it's very nerve-wracking as an American. That's Laura Shin. Крипто ест о подкаст Unchained. With the crypto industry booming under the Trump administration and Trump and his family engaged in their own personal crypto ventures. I wanted to talk with Laura about the emerging economic, political, and geopolitical implications. Laura takes us through the twists and turns in layman's language, along the way providing a primer on how crypto really works, why stablecoin use is growing so fast.

2:31 and what Coinbase joining the S P 500 means for your portfolio. Plus her advice on how each of us should be experimenting with crypto right now. I'm Bob Sathien, and this Із рапід респанс. I'm Bob Safian. I'm here with Laura Shin, journalist and host of the podcast Unchained, covering all things cryptocurrency. Laura, thanks for being here.

3:00 Thanks for having me. I I am so eager to have this conversation because crypto fascinates me about how you embed a new currency with trust and what's hype and what isn't and how the landscape Maybe shifting here in Trump's second term. You call yourself a no-hype crypto journalist. So can you give us a short No hype overview of where we are right now in in crypto's evolution. Yeah, I would say we're probably on the cusp of um more widespread adoption. The number one biggest reason is simply that the Trump administration is really embracing crypto. And that has not been true of previous administrations. And in fact, the Biden administration was probably

3:46 You know, uh I wanna say actively hostile. Um, I don't know if people will um will love that term, but but that's probably a pretty accurate description. For a long time there were a lot of entrepreneurs who were cautious about doing things in the US. And you would see constantly, you know, there would be these popular projects, but they would always um say like, you know, you can't participate if you're from these countries. And it's like, you know, North Korea, Iran, the United States So so that's definitely shifting. The administration is kind of more not only open minded, but even in some regards like almost a little bit too embracing of crypto, you could say. The day that we're recording is the day that the circle IPO is happening and that In and of itself is another sign of um how this is shifting. I think there's gonna be probably a decent number of crypto IPOs this year, but then on top of it, um, you know, stablecoins are probably the first major application that has really found what the industry likes to call product market fit. We seeing that stablecoins have

4:52 a huge amount of uptake, especially in so many other jurisdictions where they don't trust their local currency, you know, it could be like Argentina, which has seen hyperinflation multiple times, or Venezuela or Turkey, or Nigeria, you know, there's just a lot of places where um People don't actually have a great way to save their money. And they maybe don't also have like really great ways to send money across borders. And so stable coins are really fulfilling that role in the and Congress is probably on the cusp of finally passing legislation here in the US around stablecoins. So um, you know, these are all things that kind of show how all of this has changed. For a lay person, someone not engaged in the crypto world, can you just Explain what is a stable coin relative to a meme coin, relative to whatever the portfolio might look like.

5:43 Yeah. Yeah. So a stablecoin is any blockchain based asset that is pegged to the value of some other asset. Ninety nine percent of all stablecoins, they're pegged to the value of the US dollar. The way that stablecoins really took off initially was that on a number of crypto exchanges, people wanted to be able to buy and trade using dollars. I read this book called The Cryptopians, and it kind of it covers kind of like 2013 to till 2018. And even at that time, people, they would recite back to me the price of Bitcoin or the price of Ether in dollars, no matter whether they were European or Asian or you know, just wherever they were in the world. They always knew the price in dollars, these other places in the world that they don't have a good way to save their money. Here's a really simple example. I feature this entrepreneur on my podcast.

6:38 Um, so she's a a serial entrepreneur in Afghanistan. Her name is Roya Maboub, and she had this micro blogging platform. And I think a lot of the people writing for it were women. And they had a hard time paying them because a lot of women in Afghanistan, they don't have bank accounts. Or if they do, then their male relatives might actually take the money that they earned from them. And so um, they set them up with Bitcoin wallets and then taught them how to use them. one of the women was in an abusive marriage and um saved at the Bitcoin and then used that to eventually divorce her husband. So, you know, that gives you some kind of agency. Like I have some close Turkish friends and I think it was in twenty eighteen, like the the valley of the Lero is just going down and down, you know? So it it's like people in those places, I think, grasp these kinds of things a lot more quickly, like the value of crypto, like having a a form of money that isn't influenced by a central bank. That's stable coins.

7:31 Because the stable coins are generally linked to to the US dollar. It's like a way to sort of have dollars without having dollars, right? I mean you're getting the stability of that US market. It w which is there's some irony in that because of course one of the philosophical ideas around crypto is that it's not linked to a government, that it's separate. Now we're gonna get really deep into this. So

7:59 You're correct that This is people wanting US dollars, which is a uh you know form of currency linked to a specific government. But of course, the people that want those dollars are people who don't otherwise have the privilege of easily accessing them. Bitcoin, of course, existed before stablecoins ever existed. There have been times when, you know, the Bitcoin price would go up and then it would kind of crash for a little while and then it would go up again and then it would crash. And so that's kind of when you started to see stable coins also take off. A lot of people view Bitcoin as a good kind of like long term investment, but on any like short term time scale, you don't really know where the price is going to be. So if you need the money like on a shorter term time scale, then you would probably rather have something more stable. And so that's where the interest in stable coins came about. There's a reason why 99% of the stable coins are um denominated uh in or or pegged to the belt of the US dollar.

8:55 And it's of course because we're the global reserve currency. So there's a lot of safety there, you know? I mean there's so there's so many different reasons people access crypto as you're talking about, right? Sometimes it's an investment. Sometimes it's is a currency, basically. It's what they want it to be more stable. One way to think about it is You know, putting something on a blockchain is just giving it a certain wrapper.

9:20 I there is actually a uh an NYU professor who a business school professor who's very kind of pro crypto and he will Um make these funny statements because the Biden administration was just anti all of crypto, no matter what it was. And he was just saying that's like saying that You're against something because um it's not in a SQL database anymore and now you're using Microsoft Excel. He was like there's the the technology that you use for the ledger doesn't matter, but somehow the Biden administration just said anything using Excel was bad. And he was like this just fundamentally doesn't make any sense. It's the the type of asset should, you know

9:58 kind of provoke a different response based on what it is. And and Trump seems like he's he's done like a a full one eighty on crypto. I mean he said it was a scam during his first term and then it supported it very strongly in his campaign. He's now launched his own Trump coin. Three days before the inauguration. Do we know how much of Trump's crypto position is about? political opportunity or financial opportunity or some larger philosophy about markets. I don't think there's a larger philosophy.

10:32 I think most people probably know uh what Trump's MO is, but Let's just say you know, uh like He's president and he took like a luxury jetliner from the Qatari. So whatever it is that you think that says about him, it applies to his activities in in the crypto world. What I will say though, like aside from his personal dealings, which by and large, in my opinion, they're

10:58 business dealings, things that would like help his family or him. He launches this meme point, which by the way, like to make one of these things costs almost no much, no money. So I just want to make that clear. And you're basically like kind of printing money out of thin air, right? But then on top of that, the people who got in very early, they it just had some agreement where they had to hold their Coins. Until you know, whatever it was. I you know, uh ninety days or I I forget what the what the number of days was.

11:26 Now fortuitously when that deadline came, he announced that He was gonna have a dinner, and in order to participate in the dinner, you had to be one of the top holders of this coin. So of course the price shot up right at that time when this unlock was happening for those insiders. you know, just note the timing there and put those two facts together and you can make your own conclusions. But You know what well let me put it this way. Trump saw that the Biden administration alienated The crypto, he realized these people have money and they hate the Democrats. I'm gonna pick up those votes. I I like I think it's so obvious, you know, to me. He said, I, you know, I'm I'm the crypto candidate. And he, you know, he even went to the Bitcoin conference last year. He made all these promises to the crypto community and and Bitcoin communities.

12:09 And on top of that, people in his personal orbit, his family realized this industry is Going to get bigger. This industry's all about money. And so they have been taking advantage. And so you will see, and this is very interesting, there were a number of people that were um very passionately pro Trump during the campaign. And then once the meme coin thing happened,'cause not only Trump, but also Melania, she also launched at Meme Coin. Yeah. And they

12:38 were not happy about what he was doing. Um, they still are happy they voted for him just in the sense that they think that this administration is better for the industry, but I don't think they love What his family is doing, and in fact, um It was reported that their company, World Liberty Financial was doing deals with different token teams where basically They were just exchanging money, like I'll give you this amount of money if you buy the World Liberty Financial Token and we'll buy this amount of your token. I'll scratch your back and you scratch mine. But people

13:11 in the industry also kind of look down on that'cause it's not organic. So so there are people in the industry who, while they may be um happy to have the sort of regulatory environment and support that the administration can offer To them. The personal activity that Trump and his family is under sort of Uh uh undercut some of their enthusiasm about

13:35 What that says about crypto more largely. Yeah, yeah, I think some of them feel like it almost hurts the industry a little bit. You mentioned the Bitcoin conference. Last year that

13:48 That Trump spoke at. This year's one recently closed was in Las Vegas, JD Vance spoke Was there any uh uh any news or important signals that that came out of that event? The main thing that I would note is that this was the first time there were literally no Democratic politicians who won. Um, even though Bitcoin had originally started as kind of a more libertarian thing, um I would say that up until 2021, it was kind of like there were there were both sides and um

14:19 Yeah, it it it wasn't super partisan at that point. Like you could say that maybe certain Republicans seemed more enthusiastic, but it was not as clear as now where It seems like kind of like the whole Republican Party is definitely pro. And then the Democrats are mixed sort of in a generational way. Um JP Morgan, the largest bank in the US by assets, just changed a policy around crypto. It now will let some clients use crypto backed assets as long collateral. It sounds it sounds a little arcane, but it i is this a big deal? Does it mean that like JP Morgan is Counting crypto as real money in a in a new way.

14:59 It is a big deal. And it's a big deal for actually a few different reasons. So You're right that in a way you could say that they're finally looking at it as real money. And uh the reason why this is notable is because Jamie Diamond himself has been on the record many times being anti-bitcoin, but clearly he knows that no matter what his personal views are, that there's an opportunity to make money here. So, you know, um they They're definitely going down that road. But the other reason why it's significant is because you may remember in 2022 there were a series of collapses in the crypto industry. And one of the kind of contagion factors is um this asset uh called GBTC.

15:40 It was sort of like a Bitcoin ETF before Bitcoin ETFs existed, but because of the rules around how it could trade, the price was super distorted from the actual price of the Bitcoin it held. So there were times when it was trading at like thirty percent less than the value of the bitcoins in it. And when that happened That is partially why we saw all these collapses because people were using that as collateral to take loans. And not everyday people, but like institutions. Mostly crypto related out. They were saying, Hey, I have this GPT C, I'd like to put it up as collateral and take a loan. But then when the value of it kept dropping and dropping and dropping. then suddenly they would have to kind of top up the collateral in order to retain the the amount of money that they had borrowed, or they'd have to pay some of it back.

16:29 But they didn't have the money to pay it back. Basically, once you collapse, then whoever you owe money to also maybe can't pay their bills. And then whoever they owe money can't to can't pay their bills and it keeps going on. So anyway, the reason I'm just mentioning this is that The industry is a little nervous about these types of loans, right? And so the fact that JP Morgan is kind of doing a similar and obviously the Bitcoin ETFs, they literally trade pretty much in line with the value of the underlying. So you don't get those weird distortions in the market, but uh the point is just that um The fact that they allow you to borrow money based on your Bitcoin ATFs, that that is uh very notable. There is something that feels inevitable about the growth of crypto, maybe because it serves a real need in certain parts of the world, maybe just because it's a way to make money, whether you're JP Morgan Chase or the president of the United States. So why are cryptocurrencies so volatile and are they destined to stay that way? Or should everyone be investing?

17:30 Investing in crypto. We'll talk about that after the break. Stay with us. Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show. Because every Friday we release a second rapid response exclusively in the Rapid Response feed. The guests and topics are just as compelling and timely from Ford's CEO to NASA's administrator to the lessons from The Devil Wears Prada. It takes about 10 seconds to find, just search rapid response wherever you listen to podcasts and hit follow to make sure you never miss an episode.

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19:04 Before the break, Laura Shin of Podcast Unchained talked about how the crypto world is changing with Trump in the White House. Now she gives us a primer on crypto volatility and explains the impact of crypto exchange Coinbase joining the S P 500. Plus the best ways to test out crypto if you're a newbie. Let's jump back in. You mentioned this sort of cycles of boom and bust in in crypto prices and in Bitcoin and and other and other coins. It Is volatility like a A permanent feature of the industry?

19:41 You know, are there are there Are there specific signals that would indicate crypto m stabilizing more, or do you think this is just part of this kind of asset? That's a difficult question. Probably one of the reasons it is so volatile is just because it's a new market. So if you look back at like the early days of like stock. trading and things like that. It was very similar. You know, um, I've been covering this for 10 years. I remember 10 years ago writing articles where I was asking the same exact questions. All of these assets are very different. They all have their kind of little particularities. So you know, Bitcoin is very different from Ether, and Ether is different from Solana. And there, you know, there's more out there. And so each of each one of them kind of deserves its own analysis. Every blockchain has what's called its

20:26 uh tokenomics or crypto economics, you can design a token in a way where there's incentives around it that, you know, kind of try to get people to do different things on on the blockchain itself on a network. I'm sure this is very confusing, but for listeners who don't know, like a blockchain is a ledger. And you could imagine like you live in Brooklyn. So imagine that everybody on your block in Brooklyn All lived in one village. And the village's financial system was that you would gather in the town square every day at noon and every person would just call out verbally, like these were all the transactions I had yesterday. I paid so and so ten dollars for this cab ride. And then, you know, that person might say I paid

21:09 You know, this other person for babysitting or whatever. So there's no bank. Right, because right now we rely on the bank to do it, right? You agree that the the one quote unquote authoritative ledger is in the cloud, and all it is is just whatever the majority of the ledger say, that's the correct ledger. So anyway, point is this is the same as as a blockchain, except that instead of people in your village, it's just all these anonymous computers all around the globe.

21:34 That are collecting these transactions and every twenty four hours in the example of the village, or every 10 minutes in the example of Bitcoin. This new block of transactions gets added to the chain. of the transactions that forms the ledger. That's why they call it a blockchain. So anyway, um, point is that like of course in the village you're all doing it just because you want to keep the village financial system running, but in Bitcoin, The reason people do it's'cause they can make money doing that.

22:02 So every blockchain has its own version of this where they have like different incentives where they're trying to get, you know, the different people to do different things on their network. So there's many different functions that they could try to incentivise, but that's sort of how it works. And and that's why like when you ask this question about the volatility. Um, yeah, like all these new things are being started. So uh figuring out how to value all of them, that I mean, that's a whole project in of itself that could take a really long time. There have been people who've theorize that as crypto grows,

22:34 It will become less volatile because you know, all all of these systems will be more mature and sophisticated and there will be um better traders that are, you know, working on keeping the price um at the at the correct levels in in all these different places. But then also Just the fact that All of these things work so much faster because it's on the internet than our traditional banking rails. That could also mean that that perhaps they might end up being more volatile.

23:01 The reason why I'm mentioning this is just do you remember when Silicon Valley Bank Collapsed. Yes. Yeah. And they were saying that gone are the days where you would go into the bank to withdraw your savings. You everybody was just doing it on their mobile phones. And so banks had never seen a bank run happen that quickly. So we're in a new era, right? And the it's the same thing with crypto. Hm. How do you sort of think about it?

23:24 differentiate between what what the hype is and, you know What's solid. I think Probably so for so for people who are interested and who don't want to fall for hype. You probably would want to

23:39 Educate yourself before you start. investing in some way that like puts real money at risk. So you could, you know, take like one hundred or two hundred dollars and just try to do different things, like using the technology, right? So you could get a little bit of Bitcoin and try to send it to yourself or someone else. Like you could mint an NFT, you could

24:02 Buy an NFT, you could buy a meme coin. But the point is just that You know, I feel like all of those things would help you kind of understand like You know, why are people talking about this? Like what is the innovation here? Like how does this work? And then even just each of those actions that you're doing, you would kind of understand like what are the risks? And by the way, the other reason people should

24:24 Try this out first is because It is so easy to literally lose and like you no longer have access to these funds because you know maybe you like lose a password or or maybe you get fished. Uh meaning like a scam sends you a link and you click on it thinking it's an okay link, but instead it just gave them the the keys to snatch all of your crypto. I mean, there's so many kind of security risks here because it's, you know, a new space and people are newbies and they don't know what they're doing. And so I mean, we see these scams happening all the time. Like, you know, Coinbase was just some people on their uh customer service team were bribed to give away, you know, customer information. So Coin is just like

25:04 through that exercise, I feel like you would learn a lot and then it would help you kind of understand like what's out there. But you know, s like I said earlier, sometimes when I hear people who are very critical I'm I'm like Yeah, your your privilege is showing because they they just think the US dollar won't be here forever and and you know, I'm sure people who were under like Napoleon's empire thought it would be the dominant currency forever. And you know, for a long time people transacted with seashells. Like Cowry shells like I literally keep one at my desk. I have this little cowry shell here, you know, this is this is This used to be a a currency um for a long time. So, you know, it's just what people believe. And um, yeah, the younger generation probably is gonna be more into this than maybe uh somebody who

25:48 Can't think to how the world might change. Mm. And are are are we all impacted Buy crypto today. Even if we don't have a crypto wallet or Is it still

25:59 Too early for for that. For it to be that case. No, we are all impacted by it, I would say, because the world's changing and uh you know, the government is um in competition with other governments, whether or not it likes to think that or realizes it. Bitcoin and stable coins, they're getting into this very geopolitical space. Like you see China doing all these different blockchain initiatives and they already have their digital yuan. And You know, they probably don't like it that the US dollar is the global reserve currency.

26:31 And so um they would love it if like more of the one was uh the global reserve currency, right? And so The fact that they 'Cause they did their digital you want a long time ago. They could use this, for instance, in their Belt and Road initiative, where They are going into develop these less developed countries. And maybe they'll say, like, if you want to do business with us, then you have to pay us in digital yuan. So then those businesses start holding digital yuan. Honestly, as a journalist, just watching this all go down, especially with the way the Biden administration was so anti-crypto.

27:08 I was like, oh my God, it's just like watching Blockbuster and Netflix is coming, and Blockbuster is not changing and doesn't know what to do, and in fact thinks that they're invincible. This is like literally watching the US deal with crypto. And it's very um nerve-wracking as an American. And yeah, it hurts me to see. you know, whatever administration just being kind of anti-progress, anti-technology, um, anti things that would kind of continue the US's dominance in in different financial areas to benefit to all Americans. So Hopefully the Trump thing will bring positive change, but like I said, his Personal activities are uh that's in a different category.

27:51 Is enough money flowing to crypto that it impacts other asset classes yet? You know, stock market or real estate. So Coinbase just entered the S P 500, the first crypto company to do so. So if you have invested in an index fund that invests in the SP 500, you are also invested in Coinbase. Then there's um this whole slough. This is the latest trend, I'm sure it's a bubble. The latest trend is um what are called Bitcoin treasury companies or crypto treasury companies. These are publicly traded. uh you know, companies that are trying to accumulate whether it's Bitcoin or another crypto on their balance sheet. Even Trump media is getting into it. They announced that they were gonna purchase two point four billion dollars worth of Bitcoin to put on their balance sheet.

28:39 Right now it's uh gold rush season, I guess you could say. It's totally a bubble. And uh there's likely to be some kind of crash at some point. The roots of crypto uh have this sort of like you know, utopian spirit about democratizing finance, right? Um, I saw a news report about the Bitcoin conference that said there was like this divide between old school cryptos and sort of the MAGA crowd. There are so many camps. Bitcoin started with something called the Cypher Punk mailing list, which is um the this is a kind of community of people that are technologists, but also a little bit like like code is more important than like the government. And so that that allowed Bitcoin to then catch on with more like libertarian people. Now, I mean, like, yeah, there's like this group progresses for Bitcoin. And of course, the Ethereum people, they're more like just these open source developers, and they want this like decentralized open system. They're maybe not as political, and in fact, they're maybe more.

29:37 kind of like liberal progressive. So point is yeah, now now all of crypto is just There's all kinds of people into it. Well, uh Laura, this has been great. Thank you so much for uh for doing it. Oh yeah, I had so much fun. Thanks for inviting me. Ha ha ha ha ha.

29:54 The more I learn about the crypto, the more fascinated I am, and the more confused I become. I see a lot of positives, I also see a lot of negatives. The competitive need to engage with crypto as an individual, as a political party, as a country, that's clear enough. But for all the gains and all the support of the Trump White House, and maybe because of it, the area still feels like a chaotic frontier. Then again, everything feels chaotic these days, from AI to trade to the price of eggs. All we can do, keep learning, stay vigilant about downside risks, and keep pushing forward on those levers that actually enable human progress. Easier said than done.

30:37 I'm Bob Safian. Thanks for listening. Rapid response is a wait what original. I'm Bob Safian. Our executive producer is Eve Tro. Our producer is Alex Morris. Associate producer is Mashumaku Tonina.

31:00 Mixing and mastering by Aaron Bastinelli. Our theme music is by Ryan Holiday. Our head of podcast is Le Tal Malad. For more, visit rapidresponsshow.com.

31:12 Yeah.