CME vs. CFTC, SpaceX HYPE, and Wall Street's Tokenization Push

[00:00:00]Heat.

[00:00:14]Hey, Heat.

[00:01:40]Welcome to Crypto in America Live, the only show bringing you candid conversations on the biggest news stories, legal issues, and policy development. shaping the crypto world every Friday afternoon. Hey guys, >> happy Friday. Happy Junth.

[00:01:55]>> Happy Friday.

[00:01:56]>> Happy Junth. How was the uh Salana Salana Policy Institute event in Chicago?

[00:02:03]>> It was good. It was very good. We sat down with Rep. Dusty Johnson from South Dakota. We had a great chat with him on stage. We broke a little bit of news. I think Gerald, he told us that the House could pass clarity quickly if the Senate sends them down a bill that isn't a pile of horse manure, which is a great quote.

[00:02:24]But I think the sentiment there was basically we can move quickly as long as the Senate gets us something good, which I think a lot of the crypto industry was excited to hear just because I think there's been some question I think well there's been so much focus on the Senate, right? and the house kind of gets forgotten about in situations like this when there is so much focus on just this first part of the process and I mean the first part it's like the 18th part of the process but good to hear about what's going to happen next and kind of get a picture of where we might go in the next couple of weeks.

[00:02:56]>> Yeah. No, it was great. You were missed.

[00:02:57]Yeah. But u >> Yeah.

[00:03:00]>> Yeah. I think the disclaimer is don't try and fly internationally would be the the next time around. That's my fault.

[00:03:07]Uh, I was supposed to be there and then my first short flight was so delayed that I missed my long haul flight to Chicago.

[00:03:14]>> That's all right. Our our forest foreign correspondent >> foreign correspondent Jaclyn.

[00:03:20]>> We have another one coming up in September though in Washington DC. So we will be there at that one.

[00:03:26]>> Y >> yeah, exactly 100%. All right, Ellie, bring us to the headlines.

[00:03:31]>> All right. Well, the government is closed today. The markets are closed.

[00:03:34]So, everybody in theory should be watching Crypto in America Live, but we will get into the headlines and tell you all that you need to know going on on this Friday. Probably the biggest headline of the week and something the crypto industry cares a lot about is the CME suing the CFTC over perpetuals. And let's get a clip of Terry Duffy up and ready to go so we can kind of give you an idea of where the CEO of the CME is coming from. He's actually soon to be the executive chairman of the CME because he's actually stepping down in March of next year. He says he's been planning this lawsuit for eight months and alleges that the CFTC chair Michael Celig has circumvented laws including DoddFrank and the Commodity Exchange Act by allowing Khi to list perpetual contracts as a future rather than a swap. And we can get into what that means. Let's roll the clip from Terry Duffy.

[00:04:29]>> We are not taking this lightly. I'm not trying to pick a fight with anybody. I'm just trying to state the law. So, it's not personal. Just trying to state the law. Melissa asked me the question, would I list as I need to understand what the rules of the road are first before I list anything. And I don't think the rules of the road are very clear. There's a lot of in uh I would say misrepresentation of certain facts.

[00:04:53]>> Do you think the CFTC is misrepresenting certain facts?

[00:04:57]>> I do, Melissa, to an extent. They said on your show last week that they created a rule around 247. They did not create a rule around 247. There's a handful of things that the chairman has said, his own words, that are are just not true.

[00:05:12]He said that as it relates to how the commodity exchange act defines a futures contract. There are a lot of things that are and he also suggested, as I said earlier, that there's case law to suggest that his decision was the right one. Well, he forgot to look at DoddFrank and what that legislation said. So, I think there's a lot of problems here. So, yes, I do.

[00:05:37]>> Yeah.

[00:05:38]>> Take us home, Gerald.

[00:05:40]>> I Well, so yeah, point out a couple things. So, one, so Terry Duffy is known as the sixth commissioner. Uh, the head of the head of CME typically has a pretty tight relationship with the CFTC.

[00:05:50]So, kind of interesting to see them breaking on this. And then I also just want to point out kind of a fun fact for where the industry stands more broadly.

[00:06:00]Tim McCort, who's the global head of equity, FX and alternatives at CME, was the closing keynote at SPI's event that we were at on Tuesday. So CME clearly very interested in where these products are going. Uh, I think we probably have enough guests on the show today for me to not try to get into the weeds on how this applies with DoddFrank and like whether or not they are swaps.

[00:06:23]Obviously, the CFTC has has taken positions here. They also made it uh I want to point out like typically when you're you're listing a new futures contract, it's under what's called rule 40.2. It's selfcertifying.

[00:06:36]And the CFTC also didn't do that with perpetual futures. they they do it under 40.3 which is still a different pathway.

[00:06:44]So they're not kind of opening the floodgates here and uh we'll have to we'll have to explore this further with with uh folks who are smarter than me but I it's it's really interesting to see the break here just given how closely you know CME and and the CFTC have have worked in the in the past.

[00:07:00]>> Yeah. From CME's perspective though they've built a massive business around traditional future contracts you know that expire require rolling positions etc. Whereas like perpetual futures don't really have the same MMO so to speak and if they gain traction there it could kind of alter trading behavior but that doesn't mean CME can't kind of jump on the perpetual futures board as well right >> yeah I I don't want to make like a onetoone comparison here but it does kind of feel similar to what we've discussed on the show before with the yield and the stable coin issue of banks really really fighting delaying >> trying to trying to fight the the regulatory battles and then also like launching their own products. Like it's, you know, >> trying to trying to keep a regulatory moat.

[00:07:43]>> Yeah. Like described, >> you know, like you you fight it while you have your guys in the back room figure out how to do it and then once you're ready to do it, you're okay with it. But um yeah, we'll we'll see.

[00:07:55]>> Also fighting words there from Terry Duffy saying that the CFTC is misrepresenting certain facts and kind of really coming for Celig himself in this lawsuit. I think it is CME versus CLIG, not CME versus CFTC. Or maybe it's CEG and CFTC, but >> and yeah, >> and yeah. So, >> yeah.

[00:08:16]>> Coming at the CFTC from all angles. I mean, you've got the states, you've got the CME. I mean, there's a lot of fire raining down on the CC.

[00:08:23]>> You want them to regulate. You don't want them to regulate. You want them to, you know, it's >> they're busy over there.

[00:08:28]>> They're busy.

[00:08:29]>> Yeah. Well, we will definitely get into more of that with our some of our guests. But uh something else that's happening on the hill this week, we will see a lot of national, tribal, and state gaming groups that are going to come to Capitol Hill to make a push to appeal to some senators to get them to include a provision in clarity that would ban sports betting on prediction market platforms. So another shot at some of these prediction markets here. They sent a letter this past week, the American Gaming Association, the Indian Gaming Association and about 50 others actually basically saying that Kelsey and Poly Market's ability to offer sports betting undermines their own ability in the states to support jobs, generate tax revenue, and fund their communities.

[00:09:10]They're also saying that CFTC lacks the expertise and infrastructure to regulate gambling. So, we're going to see a big push here to get some of these provisions into the Clarity Act. My sources are telling me that that is unlikely to happen just because of the issues that we're running up into trying to get the Clarity Act passed on its own. As you guys know, ethics and BRCA, just two of the things that we're running up into as time is not on our side as we keep saying, right, Gerald?

[00:09:38]You said at the conference, right? There should be a billboard. Time is of the essence.

[00:09:43]>> Yeah. I I I want to point out so on this I understand the economic argument that the gaming industry is making. Like I understand the job creation, all that kind of stuff. Um the legal argument I think is much shakier and we've talked to folks about this in the past. The difference between a binary future on an event that happens to be a sporting event does not require a house, right?

[00:10:07]It's so even when we talk about Poly Market and Khi offering these products, you're not betting against Khi, right?

[00:10:14]Whereas with casinos, like you are betting against the house and the house obviously has to employ a lot of people.

[00:10:19]It has to do a lot of things. So I I I respect again like the economic argument from the gaming industry, but the legal argument it is not sound. Like it's it's a totally different kind of product, totally different market. It functions in a different way. It settles in a different way. you know, you you can get I guess you can get kicked out of a casino for cheating and you can get kicked out of Poly Market for cheating, but like that's kind of where the similarities sort of end um in my view anyways on the legal side. So, >> you kind of see it as more transparent and maybe more efficient prediction markets then because the prices are determined either by the market participants rather than the odds just being set by a book maker.

[00:10:59]>> Yeah, exactly. Yeah, I mean I there there have been discrepancies in the past over how like the fine print settles some of these futures like you know so uh the like you know did we actually invade Venezuela? Yeah, like that kind of thing like that that definitely there is some authority of the like uh I don't want to use market maker the wrong way but the the the the market the you know the designated market.

[00:11:22]>> Yeah.

[00:11:22]>> Yeah. or like you know the the people who are determining what kinds of binary futures to list like they they do have some control over that but otherwise like the line starts at zero right there's no there's no house saying you know well we we think that the the Knicks are going to win by eight right and then and then you know gamblers and and everybody else kind of move that line around it's there there is no house setting setting the market here it's it's just uh it's just you versus somebody who thinks they're smarter than you.

[00:11:53]>> Mhm.

[00:11:54]>> Yeah.

[00:11:55]>> I will point out I I did hear a poly market ad on the radio and I was coming home the other day and it they are marketing themselves as a better version of a sports book. So I don't know how advisable that is in this current environment as you are sort of getting the rules written as we're going. The CFTC has come out with guidance. There's no real sort of anything set in stone yet. But it was along the lines of, you know, we you stop letting sports books steal from you. We are a better version of your sports book. Close your sports book and come to come to Poly Market.

[00:12:26]Um, but to your point, it was, you know, you bet against others, not the house.

[00:12:32]So, we are better for that. So, >> and the other we've we've talked about this on the show before and I know we got to keep it moving, but you know, the other thing here is the the big piece is gambling is regulated by the states and preeemption says that the CFTC has federal oversight over these products.

[00:12:49]So, it'll be interesting to see how some of these court cases play out and you know whether something on this preeemption whether it's with binary futures or somewhere else because I know preeemption is a huge part of clarity and the industry is looking for federal guidance uh rather than having to deal with all 50 states on every issue. So, I'm I'm sure we could see some interesting precedent there just on like the the reach of federal authority kind of overall >> Supreme Court territory.

[00:13:15]>> Yeah.

[00:13:17]Uh let's move on to the tax that was signed into law this week by Illinois Illinois Governor JB Pritsker. We knew this was coming, but basically Illinois businesses have not been slapped with a 20 basis point tax. Crypto firms not even crypto firms, just firms in general that deal with crypto. Uh the transfer custody exchange of crypto will have to pay 20 basis point tax. A lot of people we've talked to have called this a toll booth on the internet. Taxing email. I think Miles Jennings actually put that up on Twitter this week. But what's interesting about this, I thought, is that all these funds, according to Miles anyway, are going to be set aside um rather than actually be allocated to go towards any spending on anything. And and he says that's because the tax will likely face challenges in court. I've actually verified this independently.

[00:14:06]Folks are currently talking to law firms to try and figure out how viable um like a big group lawsuit might be. Um and Miles said likely litigation will be one of the only ways to fight this because actually those Illinois lawmakers are out for the rest of the year. Um the session has ended so there's really very little limited time to be able to to fix anything like this from a legislative perspective. So folks are looking to the legal side to to try and make this not happen.

[00:14:36]>> Yeah. I I mean, you know, the I I think one of the other takes that I kind of saw permeating on on Twitter was like, "Great for Miami, you know." Um >> Right.

[00:14:47]>> It's a Miami ad. Move to Florida.

[00:14:49]Exactly.

[00:14:50]>> For Dallas. Dallas is now a business hub, too, right?

[00:14:53]>> Yeah.

[00:14:54]>> Yeah. For sure.

[00:14:55]>> You know, yeah, we we talked to old about this. like it is I I guess it's disappointing to see Illinois kind of ignore just the the commodities driven base and and obviously crypto is now a big part of that with big market makers you know exchanges there um it's interesting to see that they would you know approach the industry this way and then you know the other thing is you know it's only 20 basis points but you're talking about like trillions in volume like this this could potentially be a a pretty big financial I guess boon for Illinois if it if it goes through unless they lose everybody to different states and then you know just with the amount of volume we're talking about like that does add up you know it's a lot of states will do this for certain other activities like a penny tax to like build a road or you know a new stadium or something um but interesting approach here and and I guess we'll have to see how these challenges play out as well because yeah like you said Elanor there's there's nothing else to do from a legislative perspective so >> see in court I guess >> yeah there's a potential session, but people don't think that's likely given the politics of this thing as well.

[00:16:01]>> Yep.

[00:16:01]>> Yeah.

[00:16:02]>> I see Brian Armstrong's tweet tweet here essentially saying the Illinois law is remarkably bad. It will end up hurting the state, kill jobs, and push innovation out of the state. And I saw this on my timeline as well, just like critics arguing that it's effectively attacks on the movement. Digital assets can make it a less attractive place for businesses. Going off what Gerald said, uh, welcome to Miami. I guess that is um maybe the response. I like how he pointedly pointed out the voters here, too. Kind of making this a a voting issue, right? If you're unhappy with it, go to Stand with Crypto and tell your legislators that you're not happy with it.

[00:16:35]>> Yeah, >> midterms are coming.

[00:16:38]>> Yeah.

[00:16:38]>> Um Yeah. So, we'll we'll see how that goes. But, uh just a quick update on the Clarity Act here before we go to our first guest. Uh we are now down to this coming week will be the last week before lawmakers leave for the two-week July 4th recess. But this week we had some negotiations between Republicans and Democrats on the Senate Banking and Senate Agriculture Committee. They basically talked about where they are, where they need to get to in order to get the bill to the Senate floor. I think it's pretty clear at this point that we're not going to get a Clarity Act be before July 4th. they are talking about bringing it to the floor sometime after the recess. Um some of the big three uh focuses that we we know are still you know big part of the conversation are kind of getting the agriculture committee texts to a good workable place. you ought to merge those techs still banking and agg uh getting getting uh buy in on the BRCA and to that point acting uh attorney general Todd Blanch met with law enforcement groups uh yesterday basically to reassure them that the BRCA is sound and that a law enforcement will have all the tools that they need to be able to go after uh bad actors. And um yeah, that's the update from this week.

[00:17:54]There's more meetings to come next week, so we should have some updates there.

[00:17:57]And we have our Friday show uh following week. But uh just a reiteration that Rep. Dusty Johnson did tell us this week that the House is poised to move quickly once the Senate passes the bill down if they send a workable bill that they won't have too many changes to. But again, we will have to see how that all plays out in the coming weeks. Um, so moving on to our first guest. Hyperlid has been in the spotlight this past week following the platform's successful price discovery during SpaceX market debut last Friday. SpaceX perpetual futures have become its largest market, accounting for roughly 30% of daily trading volume. Joining us now is David Sheamus, CEO of Hyperlquid Strategies.

[00:18:40]It's a digital asset treasury company focused on the Hyperlquid ecosystem.

[00:18:44]David, welcome to Crypto in America.

[00:18:47]>> Thanks. It's uh it's good to be here.

[00:18:49]Sorry, I'm sitting in my car. Hopefully that's okay. I'm not driving though. I'm just sitting.

[00:18:55]>> We won't we won't tell. It's okay.

[00:18:57]>> Yeah, exactly.

[00:18:59]>> David, you were you were one of the early people arguing that the hyperlquid market was giving a more accurate picture of the investor demand for SpaceX than the traditional IPO process.

[00:19:11]Why do you think that the market got it more right than the underwriters?

[00:19:17]>> Look, I made a couple points. Uh the obvious one is that I think for years, and I've been carrying on about this for way longer than I've even known about Hyper Hyperlid or longer than Hyperlid even existed. But, you know, when the investment banks price these IPOs, they do it very conservatively. And they do it conservatively. One, I think because they want to make sure with like 100% certainty their deal gets done. Um, and two, it's a really nice, you know, giveaway to the buy side who gets their famous, you know, IPO pop that they all love. Uh, it's like free money for the best clients. And on one hand, I get that. On the other hand, you know, we can't be surprised when actual liquid markets with actual people trading in advance of that do a better job of predicting where where it's going to trade following the the IPO. And we saw that with Cabbrris uh whatever that was four or five weeks ago and we saw that with SpaceX like you know and I was tweeting about it and lots of people had lots of criticisms for me. I don't know what I'm talking about. hyperlquid markets are too thin, etc. Uh, and it turned out, you know, in both those cases, and I'm guessing many cases going forward, you know, real people with real money trading on real markets are a better um a better gauge for where uh things are going to real life than people sort of putting their air their finger in the air, picking a price, and picking a price with all sorts of other uh concerns as we just talked about.

[00:20:49]Yeah, David, I know we're going to talk a lot about hyperlquid and and price discovery, but I I want to ask you about like IPO pricing specifically because I think it's a pretty opaque price uh process to a lot of the folks in our industry who are, you know, more familiar with these like I'll call them commodities driven markets. Um the the size of the companies that are coming up now means that there is so much liquidity, so much price discovery kind of already built in. Matt Lavine, who we've we've talked about on the show before, you know, the the columnist Money Stuff, had a great column on this where basically the day before the IPO, obviously, there was that raise at 135 and then he said basically one of four things is going to happen. And one of those things was essentially Elon and his team have talked to so many banks and you mentioned kind of the the bump on day one is kind of meant to price in about a 20% bump and that's almost like yes Hyperlid was was building that in on the price discovery side but that also is almost exactly what happened with SpaceX. So, do you think there's so much that went into kind of this road show and conversations and the pricing with the banks that this went kind of exactly how you would expect it to go? Or what do you think was different about this one and and maybe anthropic and open AAI later this year where they they have so much capital, they have so much price discovery from all these late stage private raises and and these really extensive road shows. like how do you expect the the the IPO sort of pricing and and like pop on day one and then and then trading going forward to to go knowing that like all this information is available.

[00:22:28]>> Yeah. I think there's a couple things.

[00:22:29]One again like we shouldn't casually talk about the IPO POP as if that's something that should actually exist, right?

[00:22:37]>> Like it's really crazy, right? Like, you know, when you own a company, when you're running a business for many, many years, you know, a 20% increase in price is like a major thing, right? Like, that's supposed to be something you're working really hard to achieve. And the idea that it just happens for all the f the IPO investors because they're lucky enough to be on some list is nuts. Like, it's crazy. Um, so that's item one. I don't want to sort of casually go past that. Um, as far as how the process going to go, I think they're going to go pretty similar to how these went, which is, you know, the investment banks pricing them conservatively.

[00:23:13]Um, and I've, again, I've seen this before. I've been on I've been involved in the IPO process many times. you know, the investment banks you have, you know, when when you're the company, when you're the, you know, when you're the company that's that's being IPOed, you know, you have sort of one or two or three of your bankers that work for you over the years and then you have like a hundred salespeople at the investment bank on the other side who like team up on those on that guy and it's really a terrible process. Um, up until now we didn't have a great other way to to >> Oh, he's saying something so good. I think we lost him.

[00:23:50]>> Yeah. Like gota got to turn on that that car that maybe he's in a Tesla. He needs to turn on that hot spot.

[00:23:56]>> He's Starling. Yeah.

[00:24:00]>> Yeah.

[00:24:00]>> But yeah, it it is really interesting what he was what he was talking through and and hopefully we'll get David back on. uh just the the pricing mechanism itself is just fascinating to me because it is crazy that it's it's kind of this like free money on day one for all these insiders and we've we've talked before on the show about how many of the exchanges were willing to like change rules around lockups or all kinds of things to actually get SpaceX uh to list on their exchange. So it's it it does feel to me like some of these companies were just in like a a brave new world in terms of how companies go go public. And you know, I know Cherry Atkins has talked before about like, you know, making IPOs great again and, you know, there's so much capital in private markets. It's going to be really interesting to see how how this plays out. I saw uh an interesting tweet about how SpaceX I think had surpassed Microsoft in terms of market capitalization >> and Microsoft I think did I'm going to get these numbers wrong, but I think it was like a hundred billion in profit on like 140 billion in revenue. And again, those those numbers aren't right, but it it's that ballpark. Whereas SpaceX had lost 4 billion on 19 billion in revenue.

[00:25:10]And so it's it's just really interesting to see like obviously like never get a bet against Elon. I think that's like a rule that you know most of the market has learned at this point. But uh yeah, the math the math uh is not mathing uh for for a lot of a lot of traditional investors here. So >> it's going to be I mean for the >> Go ahead. I was just going to say it's been really interesting to see these, you know, outlets like CNBC, Bloomberg talk about these places like Hyperlquid actually pricing these IPOs really correctly, right? I I was watching a segment with Chairman Celig on CNBC a couple days ago and they brought that up. They said, you know, we're talking about novel products. What's your take on how correctly Hyperlid priced the SpaceX IPO? and he basically said, you know, we are watching these products out offshore and how successful they are and, you know, thinking about how that relates to products here in the US and how we're thinking about them. And it's just uh it's really interesting to see just how some of these, you know, decentralized uh tools that people have built have uh done a better job than some of these, you know, institutionalized uh mechanisms that have been around for for for years, right? for tens and you know tens of years at this point.

[00:26:25]>> Yeah.

[00:26:26]>> Yeah.

[00:26:27]>> And for the SpaceX perpetual futures, it now represents about 30% of Hyperlid's daily trading volume. Kind of going back to what David was talking about. So it's like obviously there's strong demand from traders there wanting exposure preIPO, maybe post IPO as well. Um and it kind of goes back to the promise that crypto has been creating of like creating markets for assets that traditional finance had that wasn't really easily accessible, right? um retail investors couldn't really access or trade SpaceX stock until it opened about a week ago. Um Hyperlquid kind of properly priced it. Um and then secondary markets for like private shares are illquid or restricted at the moment.

[00:27:06]>> Yeah. And David was also bringing up the sort of counterargument that some have made that liquidity is is too thin on some of these markets to accurately price which is like just proving not true, right? I mean like it's it's interesting. You know, crypto started out with this mission of like democratizing finance. You know, traditional finance has gotten involved.

[00:27:24]People have done a lot of really interesting things in the space. But we've seen time and time again is like the people who either have information or are informed uh whether it's like elections with prediction markets or you know other outcomes. And then obviously moving on to like price discovery. I think we'll probably be able to talk to Chris Perkins a little later on the show about about this as well.

[00:27:46]um it seems like that is like a real kind of utility that that we have in the space. So um yeah, we'll we'll see. I think I think more more accurate pricing and and kind of outcome discovery is is better for everyone. So, you know, I think it's great that, you know, we have very limited perpetual futures approved in the US right now and then hopefully we'll expand into other types of assets and and have, you know, more efficient markets in the United States.

[00:28:15]Yeah, I think I hear David from the uh skies above if we want to bring him back in.

[00:28:20]>> Yeah, >> the voice of God. The voice of David in the car.

[00:28:26]>> My wife says, "Yeah, >> there he is."

[00:28:28]>> Sorry.

[00:28:28]>> There you are. Welcome back.

[00:28:30]>> Voice of God is the nicest thing anyone's ever said to me.

[00:28:35]>> No, David, we were just >> Yeah, go ahead.

[00:28:38]>> Sorry about that, guys. I'm not sure what happened there.

[00:28:40]>> No problem.

[00:28:40]>> It's okay. You're in a car. That's why.

[00:28:42]David, >> I'm not anywhere.

[00:28:44]>> Next time we'll get you in checking in from a desk with a podcast mic and everything like that.

[00:28:49]>> Should have done that. Yeah, >> it's all good.

[00:28:52]>> Do you kind of think products like the SpaceX perpetual futures kind of represent maybe a niche crypto use case or is it actually we are witnessing early stages of something much larger in a shift of how investors access private market exposure into maybe the public markets as well.

[00:29:10]Yeah, I I I I think we're we're the latter. I think we're witnessing um you know, people talk all the time about real world assets, TRDFI, going on the crypto rails, and this is it. This is how it's starting. This is, you know, the first real evidence of it happen.

[00:29:27]Not only it happening, but actually making a real difference, right?

[00:29:30]Actually having a real a real outcome in what where things should trade. Um so I think it's definitely the latter. It's it's this is real. this isn't just some niche thing. Um like a lot of things that become real and maybe it started with a niche thing it start you know two years ago or a year ago a lot of people didn't know about hyperlquid but you know as we saw you know like when um when the Iran war started and hyperlquid was the only place to get liquidity for oil trading for 48 hours over the weekend. you know, liquidity goes to where liquidity is and and market participants will find that liquidity.

[00:30:08]And I think that's not new. It's not something we hadn't seen before. And there's a reason that, you know, the CME kind of panicked and very quickly announced 247 trading because this is not just some niche thing that, you know, some some guys in the proverbial parents basement are doing. Uh this is real. It's real money. It's real price discovery and it actually matters.

[00:30:32]Yeah.

[00:30:33]>> Yeah. Um I'm glad you brought up the CME. I I mean I think that lawsuit, you know, raises, I think, a a lot of questions, but maybe perhaps more more broadly, you should regulators be adapting existing rules to accommodate some of these more novel products like perpetual futures or should the industry adapt its own products to to fit these existing rules?

[00:30:55]I think we'd have people on both sides of of that argument, but how how do you come down on that?

[00:31:01]Well, it's a funny thing, right? Because normally when you talk about stuff like this, you talk about how, you know, industry participants are moving quickly and the regulators are sort of dragging their feet. The opposite is happening here, right? The regulators are being pretty open and pretty front front-footed on things like pers, obviously allowing Khi to do their Bitcoin per and the CME who's supposed to be about innovation and and their customers are the ones trying to stop them are the ones are the ones suing their own regulator for letting this happen. So, it's it's definitely not normal. Uh it's super strange and I I don't know. I don't um suing your regulator is never a great strategy and I'm not I don't I'm not sure how successful it's going to be for them. I also think the CME, you know, should be happy about this, right? Um oil trading on hyperlquid, I'm pretty confident has generated volume uh for the CME, not reduced it.

[00:31:58]>> Yeah, David, you have mentioned that one of the most common criticisms was that Hyperlid is still a relatively small market and doesn't represent the full spectrum of investors. Why do you think people should trust Hyperlquid's pricing signals at this stage then?

[00:32:15]>> Well, um, a couple reasons. One, so far it's been pretty accurate. Uh, when you look at Cabris, you look at SpaceX, look at some other things, it's done a pretty good job. So, so far it's track record has been pretty good. Um and secondly, you know, I think it's again, it's not because there are, you know, 50, you know, people outside the US trading their parents' basement doing this. It's real people with real liquidity flowing there. So, what do I mean by that?

[00:32:43]Right? uh before the SpaceX IPO, if you were an original SpaceX investor 10 years ago or whatever and you had a huge long SpaceX exposure and then you found out that before the IPO you can get liquidity on on Hyperlid at a price above the IPO price, you know, you might have figured out how to go do that. And you know, not every SpaceX investor did it, but I bet a lot did. And that's what who's trading on it, right? not just the dudes in their parents' basement. It's real people with real exposures on both sides trading this stuff. So, it it's, you know, I said that the point I made before, you know, liquidity finds liquidity. Um, you know, people with exposures that were looking to get sell at 195 versus 135, like you can understand why they were sort of trying to figure this out and walking over hot coals because that's that's a big difference. So, um, it's not, again, it's easy to sit here and dismiss this and say, "Oh, it's just a couple people outside the US." But that's not what's happening and and the dollars are just too much to be there.

[00:33:49]>> Yeah. David, I I want to ask you about sort of the resilience or the the ability to handle volume that Hyperlid has shown both in as you mentioned like the oil markets off hours and then with the IPO. There were some centralized platforms they kind of got stuck and had to unwind customer positions.

[00:34:06]uh Hyperliquid kept operating with without any interruption. You know, when you think about that in the context of all the liquidations that happened on 1010, um do you think decentralized exchanges need to have kind of regulatory back stop? It seems like they operate very well, but like sort of outside of the realm of of traditional kind of CFTC oversight for now. Where do you see that going in terms of, you know, centralized platforms versus more decentralized architecture? Yeah, I think there's there's two two parts to that question, right? The first part is there's no doubt Hyperliquid has performed incredibly well in stressful times, better than a lot of both centralized and decentralized places.

[00:34:49]And I don't think that's just necessarily by virtue of them being decentralized. I think it's by virtue of the Hyperlquid blockchain being purpose-built to run exchanges on top of. You know, my understanding is that when Jeff Yan founded Hyperlquid a number of years ago, um he wasn't initially planning on building his own blockchain. Uh but when he looked at what blockchains were available, none of them were able to handle the volume he expected to have. Hyperlid, the Hyperlquid blockchain can handle 200,000 transactions per second. So that's sort of a technical point, which I think Hyperlquid has done incredibly well. The second point you brought up though around ADLs that in a lot of ways is a is a is a more difficult point. Um on 1010 Hyperlquid did not go down like a lot like a lot like a lot of other exchanges. I think Coinbase, Binance, they all had to send their customers sort of dear customer letters and >> yeah, >> but the problem was um that there were ADLs and ADLs are really not okay and investors who want to trade on these platforms don't want to have to worry about being ADL out at the most um you know sort of interesting and exciting moments. So there's no doubt it is incumbent on the hyperlquid ecosystem, which we're part of, to be working on more solutions going forward that reduces the risk of ADL by a lot because that that that's that's really not okay.

[00:36:18]>> It worked as it's supposed to, but it doesn't mean it's supposed to happen.

[00:36:21]>> Yeah.

[00:36:23]David, before we let you go, I I mentioned before that I I watched an interview with Chairman Celig this week and and he was asked about Hyperlquid's pricing accur accuracy for the SpaceX IPO. Does that signal at all? I mean, he he kind of referenced that, you know, we are watching these types of products, these offshore products and trying to figure out, you know, what's best suited for the US markets in in terms of what we think about when we're looking at products to come here. Does that signal to you that markets like Hyperlquid or even Hyperlquid themselves could eventually have a path to operating here in the US?

[00:36:55]>> Uh, I think it does. Look, I think that that Chairman Seleg, there he is. Um, you know, and and the the whole regulatory apparatus around this these days is pretty forward-looking and understands that allowing for innovations like Hyperlid is a good thing, not a bad thing. And in the end, it benefits the end users and the end the end clients and customers. Um, and I while I don't I'm not breaking in news here like I don't know how or when that could happen. Um, it seems like there's a lot of interest in fig you know from on the regulatory side to try to make that happen and needless to say we think that would be a great thing.

[00:37:32]>> Awesome. All right. Well, David, thank you so much for coming on today.

[00:37:36]>> Good. I'm sorry about the technical problems.

[00:37:38]>> No, we'll uh we'll live >> we'll have to come to you next time.

[00:37:41]We'll do car carpool crypto in America.

[00:37:43]>> Yes, exactly. That'd be fun.

[00:37:47]>> All right. Thank you guys.

[00:37:48]>> Thanks.

[00:37:50]>> I like that idea. Gerald episode.

[00:37:54]>> Yeah.

[00:37:55]>> New series.

[00:37:57]>> Yeah.

[00:37:58]>> Well, a new coalition seeking to modernize the regulatory framework for tokenized securities, funds, and collateral launched earlier this month as tokenized real world assets reached a new all-time high of 29 billion in May.

[00:38:11]Let's bring in Chris Hayes, executive director of the Coalition for Tokenized Markets. Chris, welcome on.

[00:38:17]>> Great. Thanks for having me. Nice to see you.

[00:38:20]>> Nice to see you, too.

[00:38:21]>> Good to see you. You're not in a car, so that's good.

[00:38:27]>> Yeah.

[00:38:28]>> Next time, next time I'll be in the car, I'll be driving.

[00:38:32]>> So, so Chris, you've got some of the biggest names on Wall Street as founding members of the coalition. You've got JP Morgan, Franklin Templeton, Janice Henderson. Five years ago, I would say probably like a coalition like this would have been made up entirely of crypto companies. Now you've got basically all Wall Street names. Is tokenization more of a Wall Street story now than a crypto story, would you say?

[00:38:54]>> I I do think we're seeing a bit of a shift um from retail to institutional.

[00:38:58]So when I first kind of I spent about 15 years being a financial regulatory policy advocate here in DC and came over to the crypto native industry to work at a layer 1 back in 2022. And when I joined then it was very retail driven as I'm sure all your viewers kind of see.

[00:39:16]And I think a major part of that is sort of the regulatory landscape. And so coming in and this sort of openness to have institutional businesses come into the space has kind of reached fruition.

[00:39:28]And so that's why we're seeing so so much rapid development I think in tokenized securities and traditional finance coming on chain because I think traditional players see the value um that the technology can provide and they're freely able to innovate now given that they have sort of a friendly regulatory environment.

[00:39:47]>> Yeah. Chris, you've said that one of the biggest obstacles today is that tokenized assets still sit within walled gardens. What do you think needs to change for investors to move these tokenized assets more easily and freely as you know we can with traditional crypto assets today? Traditional. It's crazy I just said that.

[00:40:04]>> Well, I think it's like a a really good point because when you when you think about how are we going to have adoption, right? So, I think we see a lot of adoption particularly with the tokenized money market funds uh in cryptonative communities who are like, "Hey, great. I can have this sort of traditional product pays me some yield uh for my corporate treasury or to back my stable coin etc. But to have wider adoption for individuals and have them see the real benefit and and that also helps the policy conversation, you really need to be able to have that peer-to-peer transferability of these assets. And right now, right, for many of these tokenized funds, just because of the Bank Secrecy Act and some of these AML requirements, they have to sit in individual accounts. And so I can't send my tokenized money market fund to to one of you directly without being fully onboarded in in their wallet. uh and so it kind of defeats some of the whole point of the technology and changing that and allow that frictionless movement first of all would allow a lot of this to come on shore I think we're seeing a lot of this sort of permissionless movement happen outside the US um but also would meet some of the the government's objectives right so if you can create sort of a permission perimeter where these transactions can keep take place you're going to have that sort of uh the AML requirements of the government sort of satisfy and they'll feel comfortable about it. Uh and then you'll have the benefits of the technology and some of these regulated players like like many of the folks in our cohort can participate because they are delineated in the bank secrecy act.

[00:41:36]So investment companies uh registered funds all have to comply with AML and the CIP requirements and they don't operate on a level playing field. So you guys may have seen yesterday the the rules that came out that were proposed by the bank regulators for stable coins.

[00:41:51]when stable coins move in the secondary market, you don't have to have that uh AML, KYC, CIP requirement, investment companies, you still do. And so it puts them not on a level playing field with stable coins. Um when you think about particularly tokenized money market funds or kind of other types of tokenized mutual funds and so unlocking that unlocks, I think a lot of different kinds of um products that could be created. I I I I can't conceive of them all now, but um being able to borrow against some of your assets would be more fully uh adoptable. Being able to put them into DeFi for investment purposes, um being able to have that atomic settlement 365 247 and hold a basket of different types of funds. The idea is basically if you can create that that tokenized market where things can move more quickly within a regulated environment, then um you can grow the pie for all of these firms. Obviously, all of our members are essentially competitors in this market. So, >> yeah. Chris, do you think so, you've been, as you mentioned, kind of in the space for a long time. You've been in a lot of these rooms, whether it was on the genius collateral side or, you know, SAB 121 like moving into this kind of new era of tokenization. You mentioned we have treasuries, we have money market funds, private funds, and then secondary liquidity is really kind of locked up.

[00:43:07]Do you think BSA is like the the biggest regulatory barrier or or what do you think are the biggest objectives for the coalition in terms of getting getting rules that fit the products here?

[00:43:18]>> Look, I I I think we're driven by our members. What what we're trying to create here is not another trade associations. There there's a lot of great trade associations. There's three on the crypto side. There's some on the traditional finance side. And we felt there was sort of a gap in the middle and an opportunity to really try and drive product adoption. Um, and so when when we think about that, we wanted to partner with sort of the product teams at these firms, whether they're asset managers who are in our initial group, but we're certainly welcoming more folks if they're interested in joining, being part of it. Um, what what are the regulatory hurdles that prevent their product from being adopted in the market and how can we surgically go try to address those and bring awareness to those so we're not trying to boil the ocean on every issue. You know, that's what trade associations are really great at. Um, I've worked for three trade associations in the past, so I'm familiar with it. Um but we wanted to create a space where sort of you have these traditional players like Franklin Templeton, Wisdom Tree, Janice, JP Morgan asset management, but then we could have some of these more um you know kind of infrastructure players in uh folks coming from the crypto native side who want to innovate here come into this market uh and tell us hey what what is the regulatory hurdle? I'm always telling my clients kind of well what is what you say there's regulatory burdens to adoption of your product but what are those? Let's find out what that exact rule is and what we need to change. And at least I think there's a friendly environment to have those conversations right now with policy makers in the US that didn't exist before. I think Gerald, as you were pointing out, the difference having been in this space before, you know, this administration, if you were regulated platform, you you had to hive off any business you had in digital assets. You you couldn't taint your regulated business because you were at such enforcement risk for doing it.

[00:44:59]So, it really hobbled the ability for these traditional players to come into the space. And what you're seeing now obviously is a bit of a a battle about, you know, where disintermediation happens. How are people going to adapt to the technology? Do new players have a voice? And we're we're hoping we can give some new players a voice, but also help traditional players who want to innovate, right? Many of these asset managers have decided to come into the space, I think, pretty early with, hey, we we want to be innovators. We wanna we want to come into the space, whereas, you know, many others are are potentially ignoring it. So um that's where I think we can move the needle. We want to pick like three to four goals and really kind of move them forward in the US and Europe. Um obviously I think AML as you pointed out is a major issue.

[00:45:40]This this walled gardens issue is is significant. Um but there are other issues right there's tokenized collateral. There's how do we have crossber passporting right which which also ties into that sort of permissionless uh movement between jurisdictions. Um, and then looking at things that are coming out, right? The innovation exemption, um, these changes to reggga NMS that we've seen, and I I I think I saw you guys put uh had an article about them this week. Those things are really changing the landscape, and it's sort of, you know, I think unclear where where it's going to hash out and we want to make sure these guys have a voice in those conversations. Um, but like I said, I I have maybe lots of thoughts, but my thoughts don't matter. our members thoughts are what we're there to help um try and move forward and and try and uh execute on.

[00:46:28]>> Chris, do you expect crypto native firms to join the coalition over time?

[00:46:33]>> We we've had a lot of interest. So, as you know, we launched about last week and I've had I don't know at least 10 calls with different types of firms, a lot of traditional finance firms. It's actually been a real education for me.

[00:46:43]Uh for me it's really enjoyable to talk to these folks and understand how they're thinking about this business whether they're traditional players coming into it or cryptonnative folks who are who are coming into it. And so we've we've definitely had interest from both. I think the challenge obviously with these things and and they're changing so quickly is sort of how do we drive alignment right so uh you know one of the challenges when you run a large trade association is are our members all align and sort of uh trying to understand where sort of our launch cohort of folks are aligned with with other entrance and and I think there can be a lot of alignment with sort of uh cryptonnative folks as they're coming into this space um and as we kind of identify hey where what's our positioning on these specific issues because our members aren't exactly where SIFMA is either, right? So, uh I think there's sort of uh you know it it depends where where you are. I wouldn't say all of our members obviously. Yeah.

[00:47:36]>> What would you say is your position and expectation for tokenization to develop state side versus overseas and what's going to be maybe the biggest differentiating factor going forward on that front?

[00:47:47]>> I I I think it's all happening here, right? We have the largest capital markets in the world. I I think I was just talking to someone yesterday who's based in Abu Dhabi who thought, hey, the Middle East thought they were going to be the leaders in this and we've completely blown up the system because, you know, now everybody's like, well, I can I can try and do all these things in the US. I have a very friendly SEC, uh, you know, a more open Treasury Department administration. Uh, I mean, I've been working advocating for the SEC for 15 years. I haven't seen dramatic changes like this come out of the SEC in my entire career doing this. Um, and so they are willing to move rapidly. So I I think Europe, you know, a few years ago I was lobbying on the trial logs in Nika when it was being created in my first crypto job and everybody was like Europe's so great. Uh, and it's going to be great over there and and I and I was kind of like I I lobbied in Europe before I came to digital assets and I'm like they don't understand like this is always going to end up uh when you're in Europe there's sort of this this need to plug uh rule. You can't just like interpret things. you have to plug the the hole with a rule or regulation. Uh and I think that's that's a challenge.

[00:48:54]Uh and they're going to be sort of uh displaced again because we we've we've had this sort of innovation come to the US. So there's a real opportunity here.

[00:49:02]We have you know friendly folks who are open to the technology, open to making some changes. I think the the question is what is the balance of um you know you know how far do you go right uh around some of these requirements and and the permissionless nature of the assets. Yeah, Chris, you guys you have obviously a great group of founding members and you know to your point about not creating just another crypto trade association. It does make sense to me that like tokenization in and of itself deserves kind of a a focus on the hill because you know your your challenging or your challenges include not just securities law you know transfer agency custody you talked about collateral SRO models if we come back in in maybe like 5 years and you guys are successful what is like a a normal tokenized capital market look like to you and and how different do you think that experience could be than you know what what we're dealing with and just like buying ETFs today.

[00:50:00]>> I mean, I I I think you're going to So, I was talking to one of our members, their head of product, and and I was asking them about it, right? They were like, "Okay, how do you think about these issues, right? You're you're someone creating products for this market, and they're like, "Well, we think of it as a third asset class. We have ETFs, we have mutual funds, and we have tokenized funds. Uh, and we think adoption is going to happen because younger people are already working going in these sort of like Coinbase, Robin Hood, sort of I I would call them super apps that do crypto and traditional finance. Uh, and I think we're seeing crypto natives kind of come over and do more traditional finance in a tokenized way. Uh, and you're seeing traditional finance players who say, "Hey, we need we need to offer crypto on our platform." And I think younger folks are going to be like, "Well, wait, my crypto settles immediately.

[00:50:45]Why shouldn't my securities trans uh settle immediately? So there'll be demand for those tokenized assets. I actually hadn't thought about this way, but you sort of have this organic growth of younger folks who grow their assets over time will create I think a migration uh especially if you could deliver the similar utility for these types of assets um as you can for sort of crypto assets. So I I think there's a a lot of opportunity that's just in the retail market. uh like for a good example is right now wealthy people can borrow against their assets without taking the taxable hit of selling them.

[00:51:17]Maybe that could move down market with this peer-to-peer transferability.

[00:51:21]That's just an example of of one idea.

[00:51:23]Um there's also institutional benefits, right, where I think many of these folks are seeing the the ability to move things back and forth. What I think is going to happen is just like with stable coins, I think you're seeing it happen is this idea that folks don't really care how it works on the back end. We spent a lot of time talking about infrastructure, but I think like when I I I was talking about stable coins a few years ago, and I'm like, "Okay, so the person sending a remittance to Mexico needs to like go to a sign up on a digital asset exchange, buy stable coins, then send it to someone, they need to convert it back to cash. What they'd really do is rather just, hey, I go to this place, they do all that in the back end, and then I get cash out of both ends." that right that that's kind of what and I think you're going to see that happen with markets too where kind of like hey however I'm transacting my exchange or or the platform on the institutional side will handle all that on the back end for me so I don't need to have this bifurcation between different onchain and off-chain markets and so there's a bit of transition to happen and for all of us and I know Gerald I think you spent some time at traditional financial services companies let's just say the technology is not not the uh it's been, you know, you're using like a 1980s computer system. So, uh when when this stuff integrates, I I think, you know, it'll be interesting to see how how those things get updated and and talk to one another.

[00:52:44]>> Absolutely.

[00:52:45]>> Yeah.

[00:52:46]>> Chris, we'll we'll love to see uh you know, how it plays out and and we'll have to have you back on once once you guys have tackled some of these issues.

[00:52:53]So, appreciate it.

[00:52:54]>> Appreciate the time. Thanks, Chris all you guys.

[00:52:57]>> Thanks.

[00:52:57]>> Appreciate it.

[00:53:00]>> All right. All right. Well, last but certainly not least, we are joined by 250 Digital CEO Chris Perkins. Chris has been bullish on the state of US derivatives markets, saying he hasn't seen this level of innovation and excitement in years. So, we're going to get his take on what's driving it, as well as the ongoing CME CFTC legal battle over perpetual futures. Chris, welcome back.

[00:53:20]>> Hello. Uh, awesome to be back. How you guys doing?

[00:53:23]>> Welcome. Doing well.

[00:53:24]>> How are you?

[00:53:25]>> Awesome.

[00:53:27]>> Your tweet from yesterday.

[00:53:28]>> I was gonna say, yeah. Yeah. How are you my uh my USA supporting friend? But I guess all of you are USA supporters, aren't you?

[00:53:36]>> One here, Ellie.

[00:53:37]>> I almost won today just for you.

[00:53:42]>> We are undefeated against the UK. Let's not forget. So, >> yeah, we'll see. We'll see how long that holds up.

[00:53:47]>> All right.

[00:53:48]>> Um we could have a whole episode talking about soccer. Maybe we'll do that one day. But, um what would you say is driving the excitement here? Is it the fact that the CFTC is opening up, the possibility of products like PERS and all of the exciting things we've seen with sort of the regulatory uh landscape opening up and being a bit more friendly? What would you say? Is it something bigger?

[00:54:09]>> You know, I was thinking about this and I came to finance back in 2006. Um and and back then, Wall Street was like the one of the hearts of innovation, uh particularly in the derivative space.

[00:54:22]Um, obviously it got over its skis a little bit, maybe a lot I would say. Um, but it was a completely unregulated landscape. Uh, I was on the floor of Lehman when it went bankrupt. I remember people crying under their desks and like the world is ending and it's hard for people, you know, years later uh, understanding how how much of a traumatic event that was. Um, after that all the governments got got together in 2009 in Pittsburgh and they said that's it. um we're going to take care of this derivative stuff once and for all. They put out a G20 accord and it said, "All right, guys, the solution is hyper centralization. You're going to have to to report all your trades. We need to look at them. You need to put all your exposure in this hyper centralized central counterparty. We're going to dump a lot of collateral into it and then uh we're going to force you to electronically execute where you can. Um we're going to get our hands around this derivatives market." Um after that we've seen like innovation largely dry up for the next I think DoddFrank was was what 2010 uh the governments went back home Japanese put out the first law DoddFrank followed Europeans eventually got there um and then really since that time you the only innovation that you really saw was like regulatory innovation like cleared businesses this whole concept of clear swaps evolved and so it's been relatively stagnant until recently and and the one thing that cryto people have gotten wrong since the very beginning is they're like, "Oh, these are this crypto. It's it's not regulated. There's no regulation." That's complete BS.

[00:55:54]Derivatives have always been regulated post DoddFrank, whether they're a swap or a future, a security or a commodity.

[00:56:02]Now, we didn't really know which was which, but derivatives have always been regulated. And now we're finally seeing these green shoots of innovation starting in the crypto space in many cases. um like with per um really amazing innovation. It really scares the incumbents. We're maybe we talk about you know Terry Duffy's view about them but amazing innovation. Um you're also seeing the emergence of prediction markets. Two forms of derivatives that I think can you change the world in a very positive way. Also, it's a continuation of this concept of the democratization of finance where retail players can finally participate. And so, like, frankly, you know, I'm not surprised that a lot of incumbents don't like it very much. What do they do? Um, they rely on what they can slow it down. It's going to take me a little much longer to turn my ship. Regulatory mode. Um, defend, defend, defend. Not all. I mean, I think we've seen some incumbents be very proactive. We could talk about that.

[00:57:06]Yeah, Chris, you kind of uh beat us to our next question. We talked about the CME CFTC dispute in the beginning of the show and Terry as well. Essentially, the dispute over perpetual futures has become one of the most closely watched regulatory situations, so to speak, in the industry right now. What do you think is really at stake here from your perspective? And ultimately, how do you think it will be resolved?

[00:57:28]>> The stakes are incredibly high. Um, derivatives markets rule the world. And if you don't believe me, look at why ICE bought bought Nisy and not the other way around. Derivatives are where the money is. Derivatives, you know, really form the foundation of risk transfer. They've been around for a really long time. If you know your history of derivatives, they started in Japan, I think in the 16th or 17th century with with rice futures. They they've really create the foundation for risk transfer. Um, and so it's really, it's no surprise to me, and by the way, I've known Terry Duffy for many, many years. Um, he's saying he's not threatened by perpetuals. I would say the complete opposite. I testified in Congress with him a couple years ago.

[00:58:14]He was fighting them then. Um, um, he wasn't very nice to me and uh, I was fighting back and and he's fighting them now. And the the point is is what he's trying to do is he's using a very technical um thing to try to to slow them down and suppress onore futures.

[00:58:34]And what but what he's essentially saying is these things are swaps, not futures. Well, I happened to be in the room when we designed the the way to treat cleared swaps after the global financial crisis. The Fed sat a number of us down and we came up with with various designs. Eventually rules came out and what they said was swaps are they they defined them under DoddFrank.

[00:58:57]They put it into the Commodities Exchange Act and they said well we think that they're like more risky than futures which is kind of dumb but remember like it was political. It was after the crisis and people had this hangover about swaps but they said if you call it a swap and it has certain behaviors it's more risky than a future which is like completely not the case.

[00:59:15]We're actually seeing this again today where they're saying just because it's crypto it's more risky. it has nothing to do with like the label. It's what's underneath it. Um, but anyway, for swaps, they put much more strict uh regulation. And one of those regulations was what we call the margin. Um, so you have to post margin and collateral before you trade. That really underpins your leverage. And they said for swaps, you have to hold five days. And futures traditionally, it's been like one to two days, one day or so. And so if you do the math, it's square root of time. It's like you have to hold more than twice the amount of margin if you call something a swap.

[00:59:54]>> Now, it's pretty Go ahead, Gerald.

[00:59:56]>> No, no, I was just going to say I I like uh I'm really glad you brought that up because I I know I was talking at the the top of the show about how complex some of these issues are and how technical they are and it'll be really interesting to see how that plays out. I know we're we're running out of time here and we'll have to have you back on, but Oh, sorry. Uh I I want to ask you just quickly, you know, you mentioned kind of the hangover from the financial crisis, the evaluation of these types of instruments. You and I talked previously about like if these were onshore and regulated then 1010, you know, wouldn't have been possible. Just can you briefly kind of like what is the like this time it's different about this sort of set of of assets?

[01:00:36]>> Yeah. So, so right now in the post in the postfrank world, we have the these instruments are regulated. And so whether you're a swap or a future, you're you're subject to certain types of of protections that really mitigate what we call um ADL, like we we abstract counterparty risk. And so you can be confident that for regulated products, your hedge is probably going to stand up. And that's really the design behind the system. The issue here is that, you know, if you're trying, the bottom line is this. The CFTC is a principles based regulator. When you're looking at a product, you should look at the risk of that product and if there's sufficient liquidity, it should be treated a certain way. This is a novel new product. I'm pretty confident that the CFTC is doing the right thing and and trying to create a framework that manages responsible innovation, thoughtful regulation, and uh I wish them all the best in the courts. I hope this this time this time around I'm I'm rooting for the regulator.

[01:01:30]>> There you go. Well, Chris, we'll I we'll probably have to talk about this for an hour in the near future. Uh we'll have to sit down and and dig into it, but thank you so much for for hopping on and and going into the weeds with us.

[01:01:41]Appreciate it.

[01:01:42]>> Good to see you.

[01:01:42]>> Thanks, Chris.

[01:01:43]>> Thanks, Chris.

[01:01:46]>> All right, guys. Wrapping up. Good show today. And we will be back same time, same place next Friday.

[01:01:53]>> All right. Game of Three, >> USA. I believe >> USA. USA. I'll give you that one. Let's go USA.