On The Brink with Castle Island

Latest Episodes:

Weekly Roundup 12/18/20 feat. a pseudonymous fixed income trader (Our MSTR mea culpa, are CME futs cursed, what isn't a commodity?) (EP.159) Dec 18, 2020

Show notes

Matt and Nic return to cover a blockbuster week of ATHs. We invite a pseudonymous bond trader to give a rebuttal to our somewhat misguided take on the Microstrategy bond offering on last week's episode. Also in this episode:

Our take on the STABLE Act (again)
Are balances on the Dunkin and Starbucks apps stablecoins
Paxos raises a $142m Series C
SBI acquires B2C2
The BITW premium explodes
Ruffer's telling reasons for investing $740m in Bitcoin
The CME announces ETH futures
... three years to the day since the CME Bitcoin Futures launch
Did the CME futures pop the 2017 Bitcoin bubble?
We screwed up with our take on the MSTR bond offering
We revisit the MSTR convertible note
Who is buying the MSTR fixed income offering?
Coinbase inches towards an IPO
ErisX introduces sports-based futures contracts
Why onions aren't a commodity
Bitcoin values are American values

Content mentioned:

Nic in Coindesk, Nationalizing Stablecoins Won't Improve Financial Access

Amber Scott (Outlier Canada) on crypto-bank relationships in Canada (EP.158) Dec 14, 2020

Show notes

Compliance expert Amber Scott joins the show to explain why crypto-firms are systematically excluded from the bank sector in Canada. In this episode:

Our objective in launching a series on bank suppression of the crypto industry
The current bank landscape in Canada
Why crypto firms struggle to get access to banking in Canada
Why money transmitters face a more burdensome treatment from banks
What derisking is and why it is so common
Whether MSBs and crypto firms deserve the treatment they get from banks
Why derisking often forces crypto firms into using grey market payment processors, exposing them to the risk of fraud
The underlying reasons for reluctance on the part of banks to bank crypto firms
Why informal guidance from regulators is so critical
How US regulations are structurally imported into Canada
How a service provider called Central One imports US policy for thousands of credit unions

Follow Amber on Twitter and learn more about Outlier Canada.

Weekly Roundup 12/11/20 (What's Treasury up to?, MSTR's bond offering, would the STABLE act kill Dunkin?) EP.157 Dec 11, 2020

Show notes

Nic and Matt return to cover an avalanche of news and deals. In this episode:

Blockstack's transmutation
Bitso raises $62m
Matt breaks down the Microstrategy bond offering
Mass Mutual buys $100m worth of Bitcoin through NYDIG
A bipartisan group of Representatives asked Jay Clayton for clarity on broker dealer custody for cryptoassets
The looming crackdown on noncustodial wallets from Treasury
The effect of requiring transactional metadata for on-chain transactions
More comments on the STABLE Act
Matt's plan to primary Stephen Lynch via Dunkin talkin points
Would the STABLE Act kill Dunkin Donuts?
Why Bitcoin is pristine collateral
Fidelity Digital Assets partners up with BlockFi for Bitcoin-backed loans
Bitwise launches their index fund
Square goes carbon neutral
Standard Chartered launches a crypto trading service
Singapore's DBS bank launches a crypto exchange
Paxos and BitPay file for national bank charters
The Financial Times changes their tune on BTC
Our call for data portability legislation

Muneeb Ali (Blockstack) on Bitcoin-based Smart Contracts (EP.156) Dec 09, 2020

Show notes

Muneeb Ali, cofounder of Blockstack, joins the show to talk about the launch of Stacks 2.0 and its evolution from a securities offering to a freely tradable instrument in the U.S.

New developments with Stacks and a novel legal opinion
What constitutes sufficient decentralization and how Blockstack took cues from regulators
Why Blockstack felt empowered to list their token on public US exchanges
The current state of Blockstack governance
Reflections on Ethereum's purported transmutation
How Blockstack did the first reg A+ securities offering for a cryptoasset
Why securities registration is worthwhile for token issuance
Whether the SEC disclosure framework is suitable for the issuance of a token
Alternative disclosure and securities offering frameworks for registered token issuance
Whether Blockstack was willing to treat Stacks as a security in perpetuity
Why security tokens haven't taken off in the US so far
The evolution from Stacks 1.0 to Stacks 2.0, and the differences between the two
Why Blockstack chose to build on Bitcoin, and how they managed to do so in an efficient manner
Why Blockstack chose not to build a distinct chain in its own right
Why Bitcoin's inflexibility as a base layer makes it a suitable underlying protocol
How Muneeb thinks about Stacks value accrual
Blockstack's transaction-based consensus mechanism relying on Bitcoin
Why Blockstack chose not to use OP_RETURN
The relationship between Blockstack usage and BTC value accrual
Muneeb's response to the criticism of their regulated token issuance model

Key readings:

Wilson Sonsini's Summary of Memorandum Regarding the Status of the Stacks Tokens Upon Adoption of Stacks Blockchain 2.0

Sponsor notes:

Withum is a forward-thinking, technology-driven advisory and accounting firm committed to helping our clients be more profitable, efficient and productive in today's complex business environment. Our Digital Currency group is proud to partner with members of the cryptocurrency community. Get to know us at withum.com/crypto.

Mustafa Yilham (Bixin) on the industrial Bitcoin miner perspective (EP.155) Dec 07, 2020

Show notes

Mustafa Yilham, VP of global business development at Bixin, joins the show. Bixin is an early Asia-based Bitcoin miner; they operate a popular wallet app, and they run a Bitcoin-denominated quant fund of funds. We cover prevailing myths around industrial Bitcoin mining and the reality of sourcing energy at competitive prices for mining. In this episode:

The story behind Bixin's Bitcoin-denominated quant fund
How Bixin's fund of fund employs a Bitcoin benchmark
Why Bixin as a firm is not market neutral and does not hedge their mining operation
Whether miners have a procyclical or countercyclical effect on the price of Bitcoin
Whether or not miners are fundamentally long Bitcoin
The key considerations for finding a good source of electricity for mining
Why Central Asia, Russia, and North America are promising locations for mining
Why Mustafa expects more hashpower to end up in North America in the near term
The factors leading Mustafa to expect less hashrate concentration in China in the future
Whether the CBECI mining map is a reliable guide to where mining is located
Miner attitudes to Iran and OFAC
Current electricity prices required to competitively mine
What sold out hardware means for the price of Bitcoin
Was the hashrate drop earlier this year was due to the seasonal migration of hashpower in China?
Bixin's approach to seasonal electricity costs
Whether the withdrawal issues at Okex and Huobi prevented miners from selling and 'caused' the recent Bitcoin rally
Mustafa's take on the "China controls Bitcoin" narrative
Why Bitcoin mining is getting progressively more decentralized
Why Bitcoin miners are positively disposed towards Bitcoin
Whether Bixin plans to support Taproot
Mustafa's view on who controls Bitcoin
Mustafa's experiences in Turkey and why it is so popular there
Why central asian and post-Soviet households like gold

Sponsor notes:

Weekly Roundup 12/04/20 (The Dastardly STABLE Act, USDC partners with Visa, Larry Fink evolves on Bitcoin) (EP.154) Dec 04, 2020

Show notes

In this week's episode, Nic and Matt torch the STABLE Act cosponsored by their local representative Stephen Lynch (MA-8). Also covered:

Stephen Lynch and Rashida Tlaib's STABLE Act
What the STABLE Act requires of fintech providers hosting user balances
What stablecoin issuers are not like banks
Why the STABLE Act would be disastrous for competition in the Fintech space
Why the moral positioning for the bill is internally inconsistent
The prospects for the STABLE Act
Why legislation like the STABLE Act will likely become
USDC partners with Visa, and what it means for the industry
Why the USDC-Visa partnership solves a critical issue that the industry has had for years
BlockFi announces a Bitcoin-back credit card
Larry Fink starts to shift his tone on Bitcoin
Garry Cohn's bizarre new Bitcoin critique
Our takeaways from the BCAP Bitcoin survey
Will Bitcoin outlive the Euro?

Content mentioned in this episode:

Spencer Bogart, Bitcoin is (Still) a Demographic Mega-Trend
Niall Ferguson, Bitcoin Is Winning the Covid-19 Monetary Revolution
The STABLE Act press release
Coin Center, The Unintended (?) Consequences of the STABLE Act

Mathias Imbach (Sygnum Bank) on the importance of crypto banking (EP.153) Dec 02, 2020

Show notes

Mathias Imbach, cofounder and CEO of Sygnum Singapore, joins the show. In this episode:

How Mathias came to cofound Sygnum
The state of affairs in Crypto Valley in Switzerland today
Why crypto banks are necessary and useful
Why the company is split – cofounders, offices, and investors – between Zurich and Singapore
Why Switzerland and Singapore are suitable venues for a crypto bank
The case for convergence between traditional financial infrastructure and the crypto industry
Sygnum's product lineup
Current regulatory attitudes towards the crypto industry in Switzerland in Singapore
How Sygnum compares with the entities receiving crypto-focused bank charters in the U.S.
Switzerland's treatment of the Travel Rule for crypto exchanges
The current state of EU regulations for crypto service providers
How Sygnum created a tokenized Swiss Franc backed directly by central bank liabilities
Differences between tokenized base money and a state-issued CBDC
Mathias' explanations for the renewed enthusiasm for Bitcoin in the market
Why Bitcoin and gold decoupled earlier this year – and how Bitcoin stopped being a rates bet
How Sygnum's clients are an indication of the changing nature of Bitcoin investors

Pelle Brændgaard (Notabene) on how crypto service providers are dealing with the Travel Rule (EP.152) Nov 30, 2020

Show notes

Pelle Brændgaard, the cofounder and CEO of Notabene, an enterprise software company building compliance tools to enable trusted cryptoasset transactions between financial services firms, joins the show. In this episode we discuss:

Pelle's early work in distributed systems and pre-bitcoin cyber-cash projects
His path to cofounding Uport and his views on decentralized identity systems
The vision of Notabene how the firm is addressing the compliance needs of financial institutions and crypto exchanges and brokerages
His views on the travel rule and how this will impact market participants
The unhosted/hosted wallets debate

Learn more about Notabene here.

Sponsor notes:

Weekly Roundup 11/27/20 (What we are thankful for, USDC in Venezuela, is GBTC behind the rally?) (EP.151) Nov 27, 2020

Show notes

Nic and Matt return with a special Thanksgiving issue of OTB. In this episode:

How Castle Island VC was almost Brink VC
The difference between financialized walled-garden gold and its Bitcoin equivalent
How USDC is being used in Venezuela via AirTM
How stablecoins are now tools of geopolitical power projection
Vaneck lanches an ETN on the Deutsche Bourse
Is GBTC the cause of the rally
The OCC proposes fair access to banking services
A few people and organizations that we're thankful for
- Chaincode Labs
- Bitcoin Optech
- Greg Schvey and Adam Ludwin
- Caitlin Long
- John Pfeffer
- Fidelity Digital Assets
- Coin Center
- Three Arrows and CMS Holdings
Should thanksgiving turkey trots be cancelled?

Content mentioned in this episode:

Jeremy Rubin's collegiate BTC sweater
Adventures in Capitalism, Why this Reflexive Ponzi Scheme will Continue
Office of the Comptroller of the Currency, Proposed Rule Would Ensure Fair Access to Bank Services, Capital, and Credit

Sponsor notes:

John Newbery (Brink) on funding Bitcoin development (EP.150) Nov 24, 2020

Show notes

John Newbery, Bitcoin Core developer and founder of Bitcoin Optech, announces an independent nonprofit organization to support Bitcoin development, Brink. Donate here.

In this episode, we discuss the formation and mandate of Brink, as well as the developer funding context that we find ourselves in. Covered in the episode:

John Newbery's core developer story and how he came to found Brink
Why John left Chaincode and struck out on his own
Brink's mandate and foundational purpose
Lessons learned from the Bitcoin Foundation
The future of Bitcoin Optech
The state of funding for Bitcoin development
The accessibility of Bitcoin protocol development today
Does the existence of financial incentives cannibalize the intrinsic motivation to work on open source?
Why John works on Bitcoin
Why ossification might be more remote than we expect
Whether Bitcoin's developer funding model exposes it to corporate capture
The political implications of Bitcoin having a sole reference implementation
The importance of distinguishing the validation element of Bitcoin Core from the other components
Is Bitcoin protocol dev meritocratic or technocratic?
Why the structurelessness of Bitcoin core dev raises the barriers to entry
Is Bitcoin protocol development adequately funded right now?
Does developer funding equate to influence in the Bitcoin protocol development
The dispersion of Bitcoin protocol development influence

Content mentioned in this episode:

Joseph Jacks on On The Brink
Bitmex Research, Who Funds Bitcoin Development?
Nic Carter in Coindesk, Bitcoin's Patronage System is an Unheralded Strength

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