The Quantum Debate Dominates Bitcoin 2026 | Bitcoin Policy Hour Ep 36

If we popped that quantum solution today, I think we'd be at 150 in like 2 months. I think it is on some level holding a little bit of the market market action back because important actors are starting to ask questions and these important actors have a lot of money and a lot of money buys you a lot of developers. All right. Well, we're back another week with the Bitcoin Policy Hour. As Ken likes to say, the number one Bitcoin policy podcast in the world. And uh as usual, joined by Ken Egan, head of government affairs at the Bitcoin Policy Institute, and Zach Shapiro, head of policy at BPI. And I'm Zach Cohen. Uh and we've got a good docket this week. Uh we're going to do a little debrief from the Bitcoin 2026 conference in Las Vegas. Uh plenty to talk about there. Uh in particular, I think, you know, Quantum was really the uh the center of attention. Um and so we'll dig into that for sure. Uh, also a little bit of movement or maybe quite a bit of movement on the Clarity Act, the market structure legislation that uh, everyone's probably tired of hearing about, but uh, plenty to talk about there and we'll dig into that. And then some fun kind of national security uh, game theory on the nation state level with Admiral Paparro and uh, Hegsth, the Secretary of uh, the Department of War. and uh couple more things and um yeah, some fun price action too. So maybe we'll we'll get to that at the end. Stay tuned for that. Um if you haven't already subscribed, be sure to do so. If you want to share this with your friends and family, that would be be much appreciated. All right, let's dig into this. >> Also, also people should smash that like button. >> And smash the like button. Can't forget about the like button. >> Can't forget about the like button. >> All right. Uh Clarity Act section 404 deal locks in. And we have a May 11th markup window. So we have reports that Tillis and also Brooks released their stable coin yield compromise on May 1st. And the detail here is that the the sort of agreed upon provision bans yield um that are or that is economically or functionally equivalent to a bank deposit but explicitly preserves rewards tied to a to bonafide activities or bonafide transactions namely payments transfers market making staking governance and loyalty. We had Coinbase Circle and 100 other crypto trade groups backing the deal within 24 hours. And of course, the five major bank lobbies issued a joint statement opposing the uh the final language there. So, Ken, let's let's dig into this here. Um, for folks who are kind of trying to figure out exactly what's going on here, what does it mean that this uh sort of stable coin log jam has broken? uh what does it mean that they're going to mark up and and ultimately, you know, what's your view of this piece of legislation and its chances of passing, you know, before basically the uh the summer recess? >> So, yeah, the it's been a really interesting week that I I'll tell you my personal opinion. I think the banks are overplaying their hand a little bit. Um remember everyone, like six months ago, stable coins were not part of the Clarity Act. All of a sudden, they were. Um, and the banks are really, the banking lobby, um, is really trying to shut off anything that resembles yields or rewards. It's interesting. Somebody tweeted out a picture of Jamie Diamond walking into the other BPI this week, Bank Policy Institute, which I meant to re meant to retweet, but you know, Jamie Diamond has done me no harm, so I will do him no harm. Um, so yeah, but the banks have really, I think, overplayed their hand. Um, the Republicans in the White House have really bent over backwards to make a deal that makes sense to them. um because they understand there are a lot of Republican senators that have, you know, come from rural states where community banking is very important. They express concerns. Um I've restated my view many times that the biggest threat to small banks or bigger banks, but that's that's neither here nor there. Um and the the sort of what rewards look like. I I I people have asked me like what what does that look like in terms of the way that the the text is well the deal has been described. What does that look like? I I can't really tell you what that looks like. >> Can we read out the text one more time? >> Okay. So the the compromise that was reached says and again this is summarizing uh it bans yield economically or functionally equivalent to a bank deposit but explicitly preserves rewards tied to quote bonafide activities or bonafide transactions namely payments transfers market making staking governance and loyalty programs. Yeah, I think the nearest the nearest um comparison is probably credit card rewards, what what they're what they're aiming for. But, you know, now now that agreement has been reached, the banking lobbies decide they don't like it. I I think it's going to I I I think it gets through committee. So, what that means in markup is that um when there's an agreed upon text, every committee in Congress, the Senate has Senate Bank Committee has to because they have jurisdiction has to pass the bill and send it to the floor for consideration. Um this is a chance for members to add amendments, to do whatever is necessary um to get that bill out of committee. That's happening next week. Um and I think it will ultimately leave committee. Uh the challenge for us um is that stable coin rewards have dominated the discussion for months. Um the problem now is the less discussed but more consequential issue for Bitcoiners on clarity are the blockchain regulatory certainty act provisions. These are software provisions that protect uh de sorry provisions that protect software developers, prevent replays of samurai and trainer cache prosecutions. Um there's there is some kind of arrangement going on that will slow that will kind of shave away the provisions as they were initially drafted in the initial amendment that senator lus uh the senator lus introduced. Um we've not seen the text yet. Um, I've been told by some very reliable, good friends of Bitcoin, members of the Senate, that it provides guard rails. I The way I I I think it's best described as described to me by staffers who know is that if you would listen to um acting general Blanch's uh talk at the Bitcoin conference, he that seems to be their reading off the same script. That seems to be how they would describe it. That they will not be pursuing these cases for now while they're in power. um and that there will be carveouts for intent. You have to build software knowing that somebody is going to use it for legal purposes. Of course, that I don't I didn't mean Zach could Zach can parse that on a legal I it's it's certainly not the protections that we wanted. Um so we expect to see language coming out of um the judiciary committee this week. Here's what happened people like you know that the BRCA mentioned um criminal statutes 1960 in this case. Um the Senate Judiciary Committee um just said we have well you're talking about now criminal laws that we have we have jurisdiction over. We want a piece of it. Um Senator Cortez Masto from Nevada, a former attorney general, former prosecutor um has been under a lot of pressure from law enforcement groups saying that you can't you cannot you any clarification 1960 will damage our ability to you know conduct prosecutions. Um we can debate that. Um but nonetheless that's what happened. Um, so we are waiting this week to see what text looks like. This is again one of those calls to, you know, Bitcoiners. Make sure you you call your representatives and let them know this is important because we haven't seen it yet. Um, and I've heard, again, I'll restate this. I've heard from member offices that I think Bitcoiners can reliably call friends or comfortable with it, but when they tell you, but we're not giving another inch, let you know that they're really shaving it close. Um, so I we're all concerned to PPI. We're waiting to see what the text looks like. Zach, just to go back to the the banks and stable coin yield question, then you know, I think there's a little bit more of a thread to pull on there with what Ken was talking about. Um, are you surprised that it kind of landed in this way? Did you think this was the the logical conclusion of of these debates? >> Um, maybe. I mean, I I read like, well, I guess like let's do some parsing and then and then talk about it that way. Um, there is like the intent and then there's like what the rule is actually going to mean. And these are very different things and this is sort of like why uh crypto lawyers have a job. Um but like when I hear the language that you read out about the stable coin compromise, it seems like each side is like maybe getting something right. What the banks are getting is so there's no yield that's equivalent to a bank deposit. And so they can say that's a win. Okay. Like anything that's equivalent to a bank deposit our domain you can't do. Um but what what does equivalent to a bank deposit mean? Right? Right. Bank deposits, you're mostly making peanuts, right? Like Coinbase is paying way more on USDC than uh most people are getting on their bank deposits. So, is that not equivalent because Coinbase is paying way more? Um I think that's like pretty unclear what that means. And like at least so far, right, you could just call it a reward and then it's not equivalent for a bank deposit. Uh right, you're not getting it pursuant to the same type of agreement. The other part of it I think is more meaningful which is um there is a carve out for so the first question is like is there something we need to carve out of like what is equivalent to a bank deposit is going to be the first legal question and maybe that'll be tested in the court but like Coinbase is going to try and poke lots of holes in that. Um then there's the carve out for bonafide activity or transactions. What the banks have in mind here is um if you're you know whether it's like credit card reward points for shopping or like governance rewards for staking or you know you are like doing something active you can get paid for that but you can't get paid for holding a balance but like clever lawyers are going to be like all right how close to the activity we're talking about is depositing your stable coins can we possibly get and have that be bonafide activity so that's going to be the other part Um, I guess I'm not surprised that this is the type of compromise they got to because it's this rorchack test of like vague language that either side can see a win in and can also see, you know, like the loophole that they can take advantage of. But I think as like much of the laws that Congress passed, like this is a little bit of a punt ultimately to the courts about what this actually means because like there's enough, you know, like this is there's more holes than Swiss cheese, right? You can like you drive a truck like this is this is going to have to be figured out adversarially like where the actual boundaries of this thing are because it's it's deeply unclear uh from the language. Um, and then to move on to some other parsing on the other topic, right? Nearer and dearer to our uh, collective heart here is the sort of BRCA stuff. Um, and I don't know, Ken, you mentioned intent. Um, we talked about this a bit from the live desk at the conference, but um, the actual words that Todd Blanch used um, were, you know, intent and knowledge. I think you just used both of those words. And here too, like the legal parsing is very important. Um there is a giant world of difference between intent and knowledge when it comes to BRCA protections. Um if you are a uh Uber driver, right, and you pick someone up in your car and you're making conversation and the person's like, you know, you're getting close to their destination and you're like, "Oh, by the way, like what am I dropping you off for?" And the guy's like, "Oh, I'm going to rob a bank." Um the fact that you know that like the person is taking your car to go commit a crime doesn't make you guilty of that crime. It doesn't make you complicit. it doesn't make you part of a conspiracy. Um, knowledge of criminal activity uh is not itself typically a crime. Whereas intent, if you're the car on the other side, you're the getaway driver and your intent is to help the person escape justice after he's robbed the bank. Well, that that is a crime, right? You are complicit. You know, you are um involved there. I think it's relatively uncontroversial, I guess, except for sort of like crypto anarchist crazy land that like, you know, it's understanding, it's understandable why moneyaundering is a crime. If you are trying to help criminals commit or get away with their crimes, it is understandable why the United States government would want to criminalize that activity. And we don't want to create just a loophole for moneyaundering uh using new technology. But there is a world of difference between intending to help a criminal and knowing that a criminal might use your your tool. Right? Apple computers knows that people use MacBooks to commit crimes. Right? Manufacturers of USB cables know people, you know, in some instances are going to use a Logitech USB cable to commit a crime at at some point in time. Victory Knox that makes Swiss Army knives know that some number of people are going to get stabbed um with a Swiss Army knife. That doesn't make any of those companies culpable for the underlying behavior. So, um I mean let let's wait and see what this language is. But in so far as this is about intent. Well, that was already criminalized as moneyaundering, right? That's not about unlicensed money transmission. If the carveout is going to be, which I'm worried it is exactly what it's going to be, is like there are these different sort of theories of how you can charge someone under section 1960 which criminalizes unlicensed money transmission. There's um one which is basically you are an unlicensed money transmission transmitter if you are required to be licensed under federal law and you don't have that license uh which is about you know are you a money service business and and sort of the non-custodial question we talked about there is uh subsection B you know there's one under state law um right did did you fail a state licensing regime and then there is this weird third subcategory which is what the defendants in the samurai wallet and uh tornado cash were actually, you know, respectively um pled to and then were convicted of, which is operating a money transmission business with the knowledge uh that someone was committing crimes with it. And here like we're like back to the question of like what is what is money transmission? Who is transmitting what if you just merely know that a criminal might be using it and you're not intending to help them. And if they are like sticking that in, they're like, "Okay, like we're not going to do these prosecutions." Um, unless you know, and and you're not going to be treated as a money transmitter, unless my transmitter if you're non-custodial, unless you know that people might use your non-custodial tool for crimes, that becomes a worthless protection. And so, uh, we'll need to see what the exact language in, but that is, but like you need to think about this type of stuff adversarially, right? like how is right just like we're think about okay when when Coinbase looks at the yield language where are they going to try and drive a truck through the loophole like when we see the BRCA language all right where is a federal prosecutor going to try and drive a truck through the the opening that is left to them and if it's something that like gives us no protection that's something we need to be sort of like loud about >> yeah let's double tap on the the blanch comments from last week because I think you know we had a short segment on the live desk um and you know we've got some more time time now to uh to dig into it. Look, I think like the the biggest irony here is is even like in the name of the fireside chat that they had, which is code is free speech ending the war on Bitcoin, right? Like there's a there just seems to me to be like a very obvious inconsistency there. Like either this is, you know, code as free speech, right? And in that case, you know, I think everything you're saying, Zach, is like look, this is totally different than like intent, right? Um, and then ending the war on Bitcoin. Okay. Well, do we get any clarity about what's going on with, you know, Robin Storm's retrial, right? I just think there's like a lot of kind of uh posing here or or um, you know, playing to the crowd that we're not actually really getting much clarity on. Um, do you think that's the right read? Were you surprised uh, either of you about, you know, what what came out of that particular fireside? Um, and you know, again, I think for the folks who are watching, like clarity is really our opportunity to to do this the right way. Um, and so, you know, what's the what's the call to action there? >> Yeah, I'll take that. So, I I think of it I mean, I know that Zach and I have same opinion. We just looked at from different angles and why this why this might have happened. You know, I think of the attorney general of the United States like who are his constituencies, right? It is it's prosecutors, it's law enforcement organizations. Um it's sort of the the whole apparatus in Washington um that that DOJ uses to enforce laws whether it's a Treasury, you know, the FBI is part of DOJ. Um all of the all of the um all the prosecutors globally, all across the country, right? So they have they have a constituency that they have to manage um based on I I imagine imagine like SD uh you know, subd district New York. I mean, Zach can speak this better than I am. You know, they've people have made careers prosecuting crypto uh developers um on various on various various charges. Um I think SDI SD New York, for example, a very powerful voice, is probably very unhappy with the way BRCA was written. Um Todd Blanch, who was attorney general, yeah, he's attorney general, but he can't just he he can't or he probably won't just ignore those voices. And I'm picking on SDI New York because I'm speculating, but I I I would bet that I'm right. um you know they have they have constituencies that they have to live with work with um and I think he's trying to balance between what he kind of wants to do on principle and the realities of trying to be the attorney general and actually running the department of justice and not not not um not causing schisms with his sort of various law enforcement constituencies. So you know when I listened to him talking that that's the first thing I heard was he he's sort of hedging his bets. He kind he came to the Bitcoin conference. Well, he virtually, but he he spoke um he kind of he believes what I think he believes what's in the BL memo other wouldn't have written it. Um but you know, now he's acting in general and he has like to live in a world that has certain physics that physics includes a whole breath of actors of of interest groups of constituencies um that he just needs to be able to live with and work with. So when I heard when I listened to him talking I that that's that that was that's where my mind went. like he's trying to he's trying to do the right thing where by keeping some of his corkas happy. >> Yeah. Yeah, I think that's right. Um it certainly seemed to me like there was a little bit of hedging going on. And also, you know, Zach, I think you said this on the desk, which was there's some things to be hopeful about here, which is that, you know, we have the acting attorney general um you know, speaking at the Bitcoin conference. He's saying these sort of symbolic things that um you know directionally are right, but we're really like in the minutia here. And you know, like you said, when when we're thinking about this, we're thinking about it from the perspective of you know, what novel legal theory is the Southern District of New York going to throw at us? And you know, that's what we need to see out of clarity. So, um I guess final question here and then and then we'll move on is is like what's it going to take to get what we want out of clarity? Do you think that's still feasible? And you know, how can people watching the show, I guess, you know, make their voices heard on this? >> Um, I mean, let's see what the language is, uh, in order to get what we want out of it. It it can't be that people are criminalized, uh, just for publishing code absent some criminal intent. And, um, you know, call your senator and let them know that this is an important issue. Uh, specifically, call, you know, we've said this on the show a ton, call, don't write. um and explain that this is a you know this matters to a lot of constituents both for uh making sure that we can benefit from uh you know 21st century financial technology and increasingly as AI blurs the line between code and action uh we just need clear guard rails for how our laws apply. >> Yeah, I'm I'm Yeah, you have to call I know a lot of Bitcoiners don't think it matters but but it does. we we've all sat in lobbies of these offices waiting for meetings and heard you know listening to staffers write up notes on phone calls. Um so I I I'll raise a sort of flag of concern like I mean some of the the staffers I've talked to again these are friendly offices and the staffers were ky and they're kind of hedging their bets um not because they're trying to pull a fast one because they're they're trying to thread a needle between trying to do what I think their member would like to do if they were king for a day and the reality what's happening with the bill. Um, so the more constituents that call and these people these these members hear from, the better it is because I, you know, based on the way the banking discussion, the the stable yield, stable coin yield discussion is is is breaking down right now with deals announced and then sort of like backtracking and Jamie Diamond walking around DC going to the Bank Policy Institute like that's that you know clearly the deal is not a deal. Um, and we we do not Bitcoiners, we do not want to be the ones we you do not want to be a poker chip um when they're looking for a deal to get this bill passed because everybody wants this bill passed. Believe me, they do. They're tired of it and they want it passed. It's also a signature signature piece of President Trump's agenda, right? They want this bill passed. You do not want to be the chip that they trade uh in order to get the bill passed. So, call your members, talk to them nicely, be nice, >> of course. And um you know, Zach, you flagged a tweet for us uh earlier that that someone was saying, "Hey, look, like we don't care about the Clarity Act. Um that this is sort of irrelevant for Bitcoiners and you know, all this talk about it is is like not important to us." And I think the key message here before we move on here is like look, the window is now, right? This is going to mark up in the next like week here. >> Um this is the time to make your voice heard. It's it's been the time up to now, but now is really the most important time. And we do care about this. Like this is really important to the work we're doing at BPI, you know, Bitcoin being allowed to thrive in America. Like this is not the time to to rest on our laurels. >> Yeah. Um, look, I don't like to call anyone out in particular, but in this case, like, >> yeah, I'll let you do it. >> Listen, Corey really doesn't like crypto people. That's his whole bit. That's part of his marketing for Swan. He also really doesn't like Tether because he feel like they slighted him in a business transaction. I don't know the merits of that, but like I am pretty frustrated with like his marketing pitch of oh crypto is so bad and this bill is corrupt. Like this type of cynicism is just deeply unhelpful right now. This is something we've been working hard on and driving forward for, you know, months and years. And this is, you know, realistically our one shot at getting something cottified into law that is going to stop uh the government from having this like deeply Orwellian ability to throw software developers in prison. So, like I understand there are a lot of Bitcoiners out there who like love the you know uh Scoiner slur and this is all you know crypto giveaway stuff and listen if they trade away the developer protections uh to you know legalize ICOs I'll be right there with you. But for now that's like really not what this bill is and like we can't get lost in cynicism and we need to stay focused and you know notwithstanding Cory's misinformed policy takes like this is actually the most important piece of legislation we've ever had as relates to Bitcoin. Nice. >> Boom. >> Nailed it. All right. Um, let's see. Next up on the list, we've got some interesting testimonies from the House and Senate Armed Services Committees. Uh, so our good friend, Rep. Lance Gooden, is he he's from Texas. Is that right? >> Texas. Yeah. Dallas area. >> Awesome. Um, so he actually got questions in uh I believe this was last week to Senator Paparro. And Ken, I'll let you share with the audience who uh sorry, I meant Admiral Paparo. Uh correct the record there. >> Back to your Civics 101 class. >> Yeah. uh Admiral Paparro um who was who was testifying in front of the House Armed Services Committee and got some really interesting testimony from a very important person uh in the United States military and particularly in the uh Indo-Pacific region. So Ken, um tell us kind of what what was going on here. um you know if you can share how you know BPI was involved if at all um I think folks would be interested in in how the sausage is made a little bit here um and yeah if you want to share kind of the significance of of this testimony that I'm sure most people saw on their Twitter feeds. >> Can I do a backdated like massive news gamechanging announcement flame flame flame? Is that is that is that acceptable or is that not >> No, please do. We're uh >> it's hard to do. Yes. Game changing announcement. We're shipy. >> Yeah. So, um, the National Defense Authorization Act is the annual military budget. As some of you may know, the president has asked for a 50% increase this year from $1 trillion to $1.5 trillion. Um, as part of that authorization process, Secretary of Defense, Secretary of War. Um, and then combatant commanders, those are the commanders who control the regional commands for the Department of War, come in and testify. They testify to their requests. They testify to threats. It it is Congress's chance to talk to senior military leadership about things that are part of the bill or matter and some of the stuff is really important and some of it's just like you know like the barracks in my district are are a mess like you need to come fix them. Um but there are some some there are some top level strategic discussions that happen. Um and they get to go before the house and the senate. Um, so Admiral Saparo is the fourstar admiral, the commander of Indo-Pacific Command, which is East Asia, which of course is the is the uh is is the China theater. Um, but it's not just China. It's it's all Pacific. So, he's responsible for the defense of, you know, Korea, Japan. Um, keeping those waterways open, huge responsibility. Um, and he's he's an impressive guy. So during his Senate testimony um and during his House testimony um he was asked questions by in the Senate by Senator uh Tommy Tubberville coach from at from Alabama and then from Congressman Lance Gooden on the House side from Texas. Um Congress uh Senator Tuberville asked Paparo whether he thought Bitcoin was an important degree strategic asset. And now again remember me remember these are uniform wearing members right these members they these are members of the military they are very cy about about commenting on things that that are political or involve anything that's being considered legislatively um so I think any hope of having admarro say I think we should bow Bitcoin as a country it's not going to happen it's just yeah it would have been frankly inappropriate for him to do that but he did it was interesting to see the sort of Jason Lowry software thesis um alive and well uh at Congress he testified to uh Bitcoin's u potential as a network as a computer science project and also as a peer-to-peer um as a peer-to-p peer transfer of value. He also commented that the that Indopaccom as part of the Department of War is running a Bitcoin note. So, thank you for your your your your leg up on centralization. Um here's the key though. So, there as you all know there's a lot of FUD. Um and Congressman Congressman Gooden asked similar questions and got slightly more nuanced answer. But the but the but the the theme on both in both testimonies was that the commander were responsible for the China theater believes that Bitcoin is an important tool for national security. Um and again people can quibble about you know how he chose to express that. Uh but keep in mind that you know he he lives in a narrow lane and can't be advocating for things that he knows are are are act or being actively considered in Congress. Not appropriate. Um the response was great. I mean the man clearly understands us very deeply. Um he the way he described why um and he always get this reference because it's like in classified discussions we can talk about more things. Um but he clearly has thought deeply about what Bitcoin as a network and a protocol means for all kinds of things. And I it was it was kind of funny to see um you know Jason Lowry's been kind of quiet since he you know since he got pulled back in in the tent but see people tweeting out with tweeting out pictures of their copies of software. Um but for from our perspective it's a tremendous development. Um you know we look at Bitcoin both as a network and of course as a monetary unit. Um we think part of Bitcoin's power for overall competition is its monetary properties but you know there is also Bitcoin mining and when you talk about Bitcoin as a computer science experiment or Bitcoin as a network you're talking largely about mining as well right. Um so he you know he articulated a really good case for why all these things together can serve US national interests. Um I know some people will quibble about that and we don't like that and the government should be using it. Um reason those are fine positions. Um the fact is every government's going to use it in some in some way. Um and Amaparo put sort of Congress on notice saying that we're experimenting with this. Um because we see potential and absent something really strange happening uh executive order I mean he's going to continue experimenting with it. Uh, and I always imagine these these testimonies, right? What you saw is literally tip of the iceberg. Like, you know, look at those images you see, right? If he's giving you that answer, there's a lot going on underneath. Um, so it was a great it was a really interesting moment. It was the first time that um we had a senior national security official actually talk about why this this this protocol is important for for the United States. Um, which theoretically could, you know, could mean it's important for other countries as well. Um yeah, it was really tremendous and you know we you know we as part of our we discussed some of the work we've done at NDAA hoping to get a study amendment passed allow to allow the department of war to conduct a study to review the implications of Bitcoin what it means for national security uh in an unclassified way. Um so we've been talking to members of the armed services committees on both houses in both sides for months about this. Um, and to see that culminate in questions from two from two prominent members was was was really great to see. >> Ken, I'm I'm curious. Um, you you talked a little bit about NDAA. You talked a little bit about kind of this national security like parallelism with the work that we're doing um, you know, particularly in Congress. I'm curious like how much of this is sort of a permission structure for the national security audience or people in the national security world to like really step up and say this is a serious thing something we should be paying attention to. Um and I think the other angle of this is uh you know looking at at what's coming out of China and um you know I think maybe uh a little bit ago I don't know exactly when this came out but within the last year you know they were citing BPI's work on Bitcoin as a strategic asset right like to me it just seems very obvious that there's this parallel track going on where um >> you know Bitcoin is becoming a part of this national security question um and you know this testimony is really just evidence of of the progression there. Is that do you think that's the right read on this? >> It is. Yeah. Just just for a quick background for everybody. So, as part of the that the NDAA, the budget, um BPI has worked with member offices to get um an amendment that would allow the the department of war to conduct a study about these implications. That's important because a lot of the of the FUD you hear is from members like, "Oh, I'm on a committee. If you knew this stuff is classified, I can't tell you. If you knew that, you'd you'd you'd think I mean, you know, I'm retired CI officer. I know a lot of classified things, right? And I still think Bitcoin's really good. So, like, you know, there's close some divergence of opinion there. Um, having a study done that would allow that to be reviewed to the public. I I think they'll there are certainly from the government perspective, there'll there'll be things that come up that are challenges, at least certainly the way we do business. Um, which I don't doubt that, but I we're confident enough that we think the prepoundonderance of evidence will show that this is really really good for the United States. um which is why we've been, you know, we've been we've been like, you know, we've had we've had the um the conviction to actually push this amendment through. So, I I think it's going to pass. Um I think it's going to be part of the bill. Um it's not asking for money. It's just literally asking for a an analytic assessment of what this means for national security. I think I think I think that's really important. Uh then on national security side, you know, like there's been people like I've told the story before like you know, you know, closet closets bitcoiners. Well, sort of people corners inside CIA I've crossed the whole national security establishment. um you know the my little quip about like the the young guy with like the weal Satoshi bumper sticker on his desk. Yeah. Um they're there and there have been also been a lot of voices in the Pentagon, but the Pentagon is the military, right? And you know, you're not they're supposed to be following commander-in-chief's orders. Um >> without without that direction, you know, they can't just go off, you know, conducting science experiments. Um so now though when you have the commander of new paycom and then a couple days later have the secretary of war Pete Hexth um say uh in front of the house armed services committee that he believes that Bitcoin holds a lot of potential. Um and he you know he he referenced it both as a monetary asset and as as as a protocol and also made reference to like some classified projects they're working on. So that that signals to that entire establishment and guys like I know we know this but the Department of War is a beast. um it is a it is a huge enterprise that does all kinds of things. Um there are a lot of Bitcoiners throughout that whole that whole um infrastructure now they have like signal from their leadership that we can actually talk about this and highlight why we think it's important. So it's a it's a it's a huge sea change from where we were you know two years ago where you know you were sort of like you know whispering over coffee in the cafeterias about why you think this is why this was good or not good but you know it was a huge change monumental. Zach, final question here. Um, what does it mean for Bitcoin, you know, I guess across whatever dimensions you you want to take here, for Bitcoin to be a national security asset of the United States? Like what are the implications of that? >> Um, it's kind of a good question. Uh, you know, and I don't know I don't know exactly what like there there are various versions of this, right? There's the Jason Lowry software thesis. Um if I were to sort of you know explain what what I would mean by that um at its face uh bitcoin is something that while it is neutral right it is not controlled by a state it doesn't follow the laws of any particular jurisdiction it is sort of a uh natural embodiment of American values sort of meaning sort of open free markets property rights you know inclusivity um and uh is sort of more of a natural fit to the world order um that you know the United States is trying to pursue than to for example one that uh the CCP is trying to pursue right that involves capital controls and um you know surveillance system and and social credits and whatnot and um especially paired with dollar stable coins. Bitcoin is an incredible, you know, tool for US foreign policy to export the dollar um to sort of allow capital to move freely um and uh to sort of bring down any attempt at you know a digital Berlin wall uh that we might start to see um in in the 21st century. It's also um you know this is more controversial, but it's capable of being used as a source of truth, right? To time stamp things. Something that's likely to be around for a while. there's very high fidelity uh that if something was put in the Bitcoin blockchain a certain time that um it is real and so there I think lots of different sort of non-monetary use cases for Bitcoin as a uh sort of digital highway of value uh that can reach anywhere in the world. Um and then I think there was a part you know I'd be very curious to see when the rhetoric changes on this but then there's the to my mind more important uh tool bitcoin uh you know use of bitcoin as a tool for foreign policy which is just on the on directly on the economic side which is bitcoin is held in the United States if we are moving to a world that is like less uh just on the sort of monopolar US treasury standard as a reserve asset and it's going to be treasuries but also gold but also So maybe foreign currencies and potentially Bitcoin. Um the more that Bitcoin is a part of that mix, the better it is for the United States because disproportionately the Bitcoin is here. Disproportionately the gold is elsewhere. Um Bitcoin is easier to move. Bitcoin is uh you know, like I said, sort of more congruent with American values. And uh I think the monetization of Bitcoin is really sort of the most powerful lever that we have. >> Ken, anything to add before we move on here? >> Don't forget is an instrument of credit. digital credit >> digital credit >> and and on the mining side like >> I don't know not to get too far a field into AI stuff but um it seems like we're hitting a moment in AI where the model weights from the frontier labs are getting less and less important to performance and raw compute is getting more and more important. Um, I think that like Anthropic's Opus models like really are sort of bestin-class in terms of their model weights and how smart they are. But Opus 4.7 is just less performant uh on average than some of the earlier models even though it's a smarter model because Anthropic is short on compute and having to sort of throttle the amount that it it rations to its users. Now, uh, as a user, I I would say this is something that the uh, economics has long had a fix for, which is just you charge higher prices and then let people buy compute. But uh alas, I'm not in charge of rationing uh and products compute. Um but sort of upstream of all of that is power. Um we have the best chips in the United States. Increasingly, we're going to have the best chips being made in the United States. We have the best Frontier Labs. But where we are falling behind China is our power infrastructure. Um a lot of that is is you know just physical issues, right? Like it takes a really long time to create a gas turbine. And so while we have a lot of uh LG in the United States, turning that into electricity um is, you know, you just can't do that without these turbines that that turn the gas into power. Uh and to the extent that we embrace specifically Bitcoin mining uh as a way to incentivize all like types of power generation, that is something that can be deployed very quickly. You can bring Bitcoin miners uh in shipping containers to any source of energy, get something up and running, start a build out and um you know, Bitcoin miners are profitable even if you run them for the short term as opposed to like an AI training run or AI inference where you really need longer sustained uptime for a training run because you need to complete the training run and those take a while. And then for inference, you know, you can't have like clawed crap out halfway through answering your uh your question. Um and and Bitcoin mining works works differently because you're just uh you know trying to get to a knots. Um and so as a uh just a sort of symbiotic power generation tool to the sort of you know hyperscalers I I think that like Bitcoin mining is you know would be very powerful in getting us ahead and like having the the grid and energy infrastructure of the future we need that I think are going to be more and more important as like the thing that gets you better AI is less uh you know what was the last release of a frontier model and is more like just how much compute can we throw with this thing which is gated by how much energy >> and stay tuned people. I mean there's a lot of stranded energy in the United States that can be monetized. A lot of it is under the control of either department of war or the army corp of engineers. You know this is something we're thinking about at BPI. How can how can the United States actually monetize some of these assets? Um so stay tuned. I think we're going to be putting out some some thoughts about that pretty soon. >> Fantastic. All right. Next topic, the everyone's favorite conversation right now, which is the Bitcoin quantum question. And uh we talked about this I think a couple weeks ago uh following the release of the couple of papers from um from Google and a couple of the universities. Um I think the major development going into Vegas was this Project 11 uh Qday prize. Um, for folks who are unfamiliar, Project 11, uh, is a ventureback startup. Um, I think their their seed round was led by Nick Carter's Castle Ventures, who has obviously had quite a loud voice on Twitter recently. Um, but basically they're selling postquantum security tools for Bitcoin, and they're running this Q-day prize, which is a one Bitcoin bounty for the largest public quantum attack on Bitcoin's underlying cryptography. And on April 24th, they awarded it to a researcher who had claimed to have broken a 15-bit elliptic curve key on IBM quantum hardware. Um, and then within hours, uh, you know, the Bitcoiners took to Twitter and, uh, and debunked it, uh, having reproduced the result in 20 lines of Python with no quantum computer at all. Um, Zach, you you >> That's a good day's work for uh, you know, 20 lines of Python, right? >> No kidding. one one bitcoin for 20 lines of Python. I I'd take that trade any day. Um, Zach, you had some comments on Twitter for uh I think you were you were kind of calling out um Project 11 and maybe not so much the CEO, but their social media strategy here. Um, can you tell us more about kind of what you make of this, how serious you think this startup is, and um, yeah, any other thoughts on the matter? Look, I I have no idea and I don't really understand like how meaningful this challenge was or not. Although the consensus including like subsequent admissions by Project 11 seems to be like this was not terribly meaningful and this was more or less a publicity stunt. But like taking at face value that this is something that they care about. Um I am just like in such despair about the quality of the discourse around this quantum issue. I think it's a real issue. I think it's something we should take seriously. Uh I am not an expert on quantum physics even though I pretend to be one sometimes. Um like maybe it's a problem, maybe it's not. It does seem like something we should focus on. But I think both sides of this debate and we can talk about you know the the sort of Bitcoin maxi uh discourse around this too leaves a lot to be desired. But what frustrated me about the project 11 thing is is they're just out there and their social media strategy is like dunk on Bitcoin and and rooting for you know like they deleted one of these tweets I think after I called them out but that like their social media intern or maybe Alex I don't know who's doing it is like posting the chart and being like it's you know Peter Shore up in this and it's just like what are you doing? What are you doing? Like we're talking about like cryptographic standards like it can't be that this is like you know and look the way to fix Bitcoin is to reach consensus consensus. The word is consensus around a uh quantum resistant cryptography scheme. you're not going to reach consensus by like teasing and goating people and look like you're rooting for you know Bitcoin to fail and um you know and so I had a little back and forth with the coven labs on that and and he agreed in principle to come on the show at some point and we can debate it now I'd want to narrowly keep that debate about like how should we talk about it what are the productive ways to reach consensus which I think is something maybe we we have something to say about as opposed to getting mired in a debate about quantum physics where like you know like who know like I have no idea if he understands it well. Uh like that's just like a deep science thing. Um but like if if we're going to reach a like good result here, uh there is a tricky coordination question and like step one is like let's learn how to communicate without like sounding silly and alienating ourselves. >> Yeah. Yeah. Yeah, and I think that's been sort of emblematic of of the larger discussion and um you know certainly a lot of discourse following the the the Vegas conference. Um >> there were some great memes out there about how we can fix quantum. It's like half cash, half stock. >> Yeah, it's I got to find them. I said it before the show. There were some funny ones out there like how we you know what's the quantum solution? It's half cash, half stock after. >> Yeah. Is that a reference to the the GameStop and Yeah, >> that was really good. That was good. But >> I'll say this on a Oh, go ahead. >> Yeah, go for it. No, no. >> On a serious note, like I have to I'm wearing a tie, so I'll I'll earn my my suit coiner epithet epithet. Um, so yeah, we had I I think the conference probably didn't do a great job. I thought it was a good conference. They didn't do a great job treating it. Um, we, you know, we get institutions reach out to us because they want to know what's happening on policy and that sort of stuff. Um the I the I've only been back in the office for three days and we've had several really big institutions reach out to us to be like, "Hey, we saw the conference and we're nervous. Um can we like have a quantum chat with you guys?" Um I think real big money actors were not cons were not sort of consoled by what they saw. Um I think they thought because they've got even a decent software guy be like uh I don't know what that means. what's 10 minutes have to do with anything. Um so yeah, I think it raised a lot of alarm bells with some institutions um that and and we we you know we're always want to talk to them when they're calling us. We know that there's they're a little bit concerned. Um so I think the conference probably could have spent more time um diving into what the real solutions were and what they made why they made sense on a technical level. Um because I mean it's good news that institutions are watching and a lot of them were there. I mean we all met some we all met some of these folks. Um, people probably met, you know, they're they're around they're they're there because they're watching specifically quantum. I think they're interested in like other stuff, but um, you know, the big institutions care about quantum because it affects their billions and billions of dollars. Um, and a several of them walked away feeling not so great about where the community was after they watched how it was presented at the conference. >> Yeah. Yeah. I think there was really like two conversations that were in the limelight and maybe one more than the other which was the the conversation with Jeff Booth and I I think that was that in the whale lounge only I can't remember um but basically they were citing this I guess 222page paper that they had written um you know with with some sort of convoluted argument at least in my view about um you know basically the the 10-minute block time of Bitcoin deny the existence of, you know, quantum physics. And basically this whole like 30 plus minute conversation that was seemed to me to be mostly gobbledygook. Um, and I think a lot of people were like, "Wow, like this is these are the people we're platforming. Like this is really bad." So I think, you know, Zach, that goes to your point. Um but I think the real like the real thing that emerged for me and and has emerged previously but I think was became more obvious was um you know this division between the sort of BIP 360 and BIP 361 sides right one saying hey we should be on this very and I'm talking about BIP 361 here we should be on this very particular schedule of you know after year one we should hit this milestone and um you know importantly that involves freezing um you know certain coins. Um, so I'm I'm curious for you guys and I know we're still early in this and and obviously BPI has not come out with a public view on this and and I think it's unlikely we probably will um until much later in the conversation, but um do you see one side sort of having more merit at this point in the conversation? Are you inclined towards, you know, not freezing over freezing? Uh, and do you have a a sort of pulse check on on maybe where the community stands at large on this? >> You're trying you're trying to get me in trouble? >> I love it. Just >> no answer. >> I think there's no there's no costless just wait patiently. He'll do it. He'll do it. He'll do it. He'll do it. >> There's there's there's no costless answer here, right? Like the argument on one side is you're denying property rights in Bitcoin by quote unquote freezing or confiscating coins, but and that's a real legitimate concern. Um, but I think it doesn't quite take seriously enough the like downsides of like equivocating between you got Bitcoin by buying or mining it versus you got it through a quantum computer and we don't know whose keys or whose for what reason and like how does that undermine like what property rights in Bitcoin are supposed to be, right? Bitcoin is um uh it's backed by game theory and cryptography and quantum computing can to some extent if it can break both of those things that's a real threat to sort of Bitcoin's value proposition and so I think like this is something that needs to be taken seriously and I guess to retreat to my earlier point about the discourse like I don't think there's an obvious answer here and I think it is important to take all of the options seriously that's that's the way I'm not going to get myself in trouble. >> Mhm. >> But that mean but that that's consistent with what what BPI is going to do, right? Like we all have personal opinions about this stuff, but like that's not BPI. BPI despite it's fun to make Zach say funny stuff at the show. You know, we need to be because again we have the relationships with with developers, we know the institutions, we know the policy makers, all people all of them are starting to ask about this. You know, we we're trying to be the ones who are in the middle of this and to get make sure everybody knows everybody thinks. Um I honestly like you look at the way the market's going. I think Bitcoin would be if we popped the quantum solution today, I think we'd be at 150 in like two months. I think it would I think it would erupt the price if we want to talk about price, but I I do I I think it is on some level holding a little bit of the market market action back. Um so I you know I think we're I another no another reason you know there's some some sort of community interest in getting this done. Um but you know I think we we need to unless something goes off the rail I think BPI needs to be the one who is making sure that the you know who's who are talking to each other. Um because important actors are starting to ask questions and these important actors have a lot of money and a lot of money buys you a lot of developers. Um and you know all of a sudden you know some of the the sort of the the traditional core constituency might not like what some of these new players put forward um if they let if they wait in the wings long enough um where these these institutions feel compelled to act. >> Yeah. Yeah, I mean I think like my my view um obviously not representing BPI here, but is that you know these institutions are interested in some kind of solution because it's straight to their bottom line, right? like >> it's obvious that they're like hey how do we solve this issue like right now so that we can unlock whatever you know Ken you're saying capital is sitting on the sideline right and you know I think the other side is that like hey if we rush this we risk getting this wrong and that has major implications sort of further down the road right um and so like that's where I see the like kind of the battle lines being drawn of like hey the people who have like a very like shortterm horizon here on we want Bitcoin to keep going. Um, you know, we want whatever ETF or, you know, whatever it may be to to keep succeeding versus the like, hey, I've been in Bitcoin for a little bit now. You know, we've seen this kind of thing before where where it sounds like there's some kind of imminent threat that maybe isn't an imminent threat. And of course, we don't know the answer to that. Um, but we should take this slowly and see if there really is a threat here. Um, >> and we don't want we don't want we don't do not want a White House or Treasury working group studying the Bitcoin quantum problem. that is not good and >> if that we just nobody wants that. Um so we should hopefully >> do things that avoid >> that from happening. >> Yeah, >> that's no bueno because then who's on it, right? Like do I have to sit on a Bitcoin quantum panel with like Brad Garlinghouse? Like I don't want to. Um you never know, right? So yeah, so let's let's not let the government start their quantum panel and let's maybe hopefully as a community figure out ourselves. >> I like it. Okay. Um, little touchy subject there, so we'll we'll move on. Um, some fun news from from BPI. Um, we just >> expressionless. He just won't he just won't take the bait. >> Yeah, it's good. He's dialed in. Um, okay. BPI goes global. uh we we worked with a great friend uh Zappo Bank to launch BPI International and in particular uh a specific program in the United Kingdom. Uh so super exciting news there. Um this isn't the only sort of uh theater that that we're in right now on the international front too. I think this this largely went under the radar because we were in Vegas, but um Legislator Co. uh in Taiwan delivered BPI's Taiwan Bitcoin Reserve report directly to uh Premier Cho I'm not even going to try to pronounce that. Uh a premiere in Taiwan um on April 30th and basically what what I think we're seeing here and Ken, I'll let you kind of run with this. um is that there's there's a lot of institutional or sorry international um attention on Bitcoin policy probably in large part because of what's going on in the United States and um you know and at least some of that being the work that we're doing at BPI. So what prompted the the uh creation of BPI International and I guess you know what does that mean for for both our you know sort of international presence but even more so for what we're doing in the United States. But ju just just to just to comment on on your on the Taiwan comment like imagine a world where you're an intelligence analyst in Beijing and your job is to watch you know us and you see the commander of Paycom talk about Bitcoin you see the secretary of war talk about it and then in the Taiwan parliament they introduce a bill to to stock Bitcoin in part because it provides resilience in in the case for you if you need a government exile or a case of a conflict with China. >> Hilarious. I um yeah I I'm where where I fly on the wall. I'd be really curious to hear what you know I'm be really curious to know what what what they think but I guarantee you they think something. Um yeah so international. So at the end of the we all know this Bitcoin is a global asset. It is a global network. Um and if we want to see Bitcoin adoption which at BPI we do we all do personally that's kind of our mission here. Um the the adoption the world needs to be open to it. Um and the best way to do that and there there there it's interesting as you as you look regionally there are every region has different different concerns about about we'll call them digital assets in general mostly stable coins and mostly bitcoin um but um Asia in particular has become very interesting um because there's a lot of angst in um in Asian capitals about what's happening on the US digital asset policy front in general um what that means for their economies all these economies love the fact that money can flow in easily. They don't love the fact that they can flow out easily. Um so we're getting a lot of questions. Um and we do not want to see and these are some of these are major financial hubs, right? Certainly they're big economic players. We do not want the answer to be we're going to close it off. We want the answer to be understand it and this is how you can adopt it to your country's advantage. So this is what in large I mean I think we have we've had some initial international efforts based on inquiries and you know relationships we have all over the world with with you know with different bitcoiners. Um but this more organized effort is for that I mean countries are starting to react. I every everybody moves in the wake of US policy and now they see that digital asset policy is becoming more or less established in the United States. They're they're looking for ways to deal with it and there if you think we're early here I if you go you know I was at an event at with Azon this week um there's a lot of interest and there's a little bit of concern but also a lot of interest because they want to understand what's happening but then they they some of these countries want to see how they can benefit from it. Um and there's just not a depth of policy knowledge out there. So, we're fortunate that we have some good relationships um abroad. Um and again, let's be honest, like you know, this Bitcoin success depends on it being adopted everywhere freely. Um the more countries, the more people in the world that are allowed to use this this this this asset, um the better it'll be for everybody and and the network. So, that that's our core premise like this should be this is a global network. It should be um free to be it should be free to use globally. Um our international efforts are going to focus just on that. Zach, um, most of the work that you've done for BPI has been focused on US policy. Um, and obviously you're our head of policy. How much do you think your job uh, sort of gets more difficult? Uh, you know, as you're working on these sort of like international policy questions or do you think largely the questions remain the same? >> I think the questions are basically the same. Um I I I mean like of the sort of pillars we talk about of Bitcoin policy, a lot of it is sort of regulation of Bitcoin, the the network um we think the sort of like principles of sort of non-intervention there makes sense globally and then um Bitcoin you know like public investment of Bitcoin which we think also makes sense internationally uh to the extent that we're advising sort of friendly nations. um we just think that's good policy and and even extent that that like we get involved in in places where that have sort of a more difficult geopolitical relationship to the United States um the sort of Bitcoin is money for enemies I think just like the like game theory for the United States and Bitcoin is better if this is sort of more broadly adopted and so um you know I think the mission sort of scales neatly out >> nice okay for the fun part and uh this is both of your opportunity to get in the the little teaser clip here. So, we'll see. We'll see who can bull post harder. But, um, let's see. We're recording today, Wednesday, May 6th. This morning, the price was running up. I think we peaked around $82,750 US. Um, I think there's some speculation that it has to do with ETF inflows, maybe a little bit from from our friend Michael Sailor. um or you know maybe it has to do with uh some of the policy developments. So curious uh what each of you thinks is is pushing us up. Obviously we've been pretty rangebound in the you know 76 78 uh,000 territory, but Ken, why don't you kick us off and then Zach, you'll uh you'll close us out. >> There's liquidity pump pumping, taxes are paid, the TGA is being emptied, there's a lot of money slloshing around, the credit cycle is accelerating. um real interest rate we're you know we're kind of on the verge of an inflationary cycle it looks like um which makes real interest rates they are now well lower um it's all the all all the ingredients that make Bitcoin pump um you know my we we we we discussed this earlier in the year I 150 is my mark for for uh for New Year's Eve this year um and we're we're in a midterm we're in a midterm election year um there is going to be a lot of liquidity floating around the Um, I think when wars gets into the Fed, you're going to see some more um of the um you know, the the the abbreviated organizations, you know, the um you know, the acronyms, you're going to see a lot more acronyms uh to keep things flowing. Um but everything lines up for I mean this is why the stock market despite the fact we we joked about this, right, in Vegas, you know, five years ago trader hormone is closed. Are you longing or shorting the S&P? You're like, "Yeah, five years ago, you're like, I'm shorting the hell out of the S&P." Now, you know, the stock market's making new highs um every, you know, every day or every week anyway. Um so there's a lot of liquidity floating around. Credit cycle is on fire. I you know, it's it's a good it's a great setup. I think, you know, as long absent I don't even know what kind of black swan you could have now. Like we closed the trade of horm moves, right? We we've lost um we've lost a million barrels a day um in in in oil circulation. Um and yet things are like flying. So more than that actually. So I you know I you the required black swan becomes so dire when you if you can shut off the straight hormuz and have Marcus flying you know what you need to make that stop is is pretty frightening. So hopefully that doesn't happen. Um but I I just think you know the the credit cycle is is is favorable and it's going to it's going to continue to pump. >> Um I agree with Ken. It's mostly risk on macro environment. Um, I also think it's the market pricing in, you know, Trump not wanting to escalate the war with Iran and some end to that based on his rhetoric. Um, I think where I disagree with Ken is like how hard it is to imagine uh really negative outcomes. I think it's like Catrini research. Um, right? We could just have a lot of job loss and then, you know, that screws over private credit and, you know, mortgages and whatever. Now, like in that world, like we'd probably pump in a lot of liquidity and so it would be sort of price down and then price up. Um, but I think I think things are, you know, things are fragile, but the wall, you know, the market climbs a wall of worry. And so, you know, like until until something bad happens, it seems like we are on a uh expansionary trajectory. >> All right, that's it for this week. >> Whoa, whoa, whoa. Cohen, whoa, whoa, whoa, whoa, whoa. What do you think? You can't just be like, what do I think? >> Yeah. Hey. What's which number, dude? >> What's my number? >> What's your number? I want to hear >> I'll have to answer that next week. We'll see everyone then. >> Signing off.