Crypto Investors Await Clarity Act as Bitcoin, Ethereum Hold Rally

**SPEAKER_1** (0:00)
We welcome in Adam Lynch, Director of Equity Research, Charles Schwab. Thank you so much for being with us. We know we've been on a recent upswing. We know that September 15th is a big day for the possibility of the Clarity Act, so people can understand the magnitude. Month to date, it's up 27% Bitcoin. Some of your thoughts in the current situation.

**Adam Lynch** (0:21)
Yeah. Hi, Nicole. Thanks for having me back. It's been a great couple of weeks here for the cryptocurrencies.
Obviously, we had a nice run-up last week. What had happened was the Treasury came out and announced a surprise buyback that caused the market to pop a little bit. There were also a big short squeeze. There was a big short position around 70, 75K, so we blew through those. It's really helped the currencies increase in value. Now what we're seeing is them being able to maintain those levels due to some increased fund flows. It's great to have the market pop because of some short squeezes, but we want to see some of these higher crypto prices caused by increased demand rather than just sort of market dynamics.

**SPEAKER_1** (1:06)
Right, so with lower leverage, this is real. This is more the real deal than the folks who believe or hold for the long term and maybe cause less volatility. When we talk about crypto regulation, and crypto folks want regulation, in fact they appreciate that clarity, no pun intended. Let's talk about that.

**Adam Lynch** (1:27)
Yeah, so you had mentioned the date coming up here, September 15th. So whether or not clarity is dead in the water is still a little bit of a question, but we are going to see some progress there. So on September 15th, what's basically going to happen is the Senate record confirms that Senate Majority Leader Thune has filed cloture on the motion to proceed. What that essentially is, is a vote before the official vote. But even during that cloture, the bill must clear the 60-vote threshold. So it'll be interesting to see whether or not they can get that done.
Regardless of whether or not clarity makes it, though, we've seen some signs this week of the SEC and the CFTC and their willingness to step up and maybe fill the void with rules rather than legislation.

**SPEAKER_1** (2:15)
Is one better than the other when you think of rules rather than the legislation? I mean, the rules would be sort of less desired than an actual law, right?

**Adam Lynch** (2:24)
Exactly. I mean, rules could probably be a little bit easier to implement, but they would be obviously easier to remove. So if there was a change in the head of the CFTC or the SEC, they could immediately reverse the rules. That would be a lot more difficult to do with legislation. So we'd really prefer to see legislation so that we can have kind of some long-term guardrails to be operating.

**SPEAKER_1** (2:49)
Right. And so when I think about what happens next, people are still focusing most on Bitcoin. A lot of the guests I have on, they really like to put a majority in Bitcoin and because they question the big gamut of crypto. What say you about all the different crypto digital assets that we can look at, especially on the debasement trade? You know, Ethereum is in there and that's sort of different from crypto and that has a lot of demand. Tell me about the big picture.

**Adam Lynch** (3:23)
Yeah.
So there are obviously quite a few choices. And I think Bitcoin has obviously been the classic. It is more the store of value sort of play, what you're going to be investing in if you do have some sort of debasement of the fiat currency concerns. And you've got Ethereum, which has a little bit more functionality towards it. You've also got others like Solana, XRP, Ripple is another one that we've talked about, Hyperliquid. I think oftentimes what you want to do is maybe have some amount of your portfolio allocated to this asset class, a majority of it in the majors, and then maybe some other allocation within some of those other alternate cryptocurrencies, which may be a little bit more volatile, a little bit more risky than your classics.

**SPEAKER_1** (4:11)
Yeah. Yeah. And by the way, Hyperliquid, that symbol is PRR, right? Or, and so I was watching that one on the move higher as well. You know, I was also, I have to correct the ticker symbol, but I was looking at it.
Oh, and so anyhow, I just wanted to talk about the rate environment because you talked about Besson's move, and that sort of gave a boost.