US Government grants preliminary blockchain bank charter; Trezor customer data exposed in shipping provider breach
Solo presenter Rob from Digital Asset News covers crypto regulatory news, a cold storage data breach, and market commentary.
Summary
The OCC has granted preliminary conditional approval of a national blockchain bank charter for Open Reserve — backed by A16Z Crypto, Jump Capital, and Coinbase Ventures — while 67,000 Trezor customers have had their data exposed through shipping provider ShipMonk. On the regulatory front, the House of Representatives has cancelled two weeks of September voting sessions, putting the Clarity Act at serious risk of being pushed past the November midterm elections into a lame duck session. The Trezor breach exposed customer names, emails, phone numbers, shipping addresses, and order numbers — data that could be used to profile and physically target people in affluent zip codes. This connects to a separate FBI investigation into the leak of 153 million US and Canadian driver's licenses now circulating on the dark web.
Key Takeaways
FULL TRANSCRIPT
OCC Preliminarily Approves Open Reserve Blockchain Bank
Rob: It's a good day in the crypto sector. It looks like the US government — more specifically the OCC, the Office of the Comptroller of the Currency — has just preliminarily approved a blockchain bank. I think this is actually pretty big. This isn't the first one, but moving forward, the chips are being stacked in our favor.
Unfortunately, we do have some bad news, and that is yet another cold storage device has been a victim of a data breach that could seriously affect a lot of customers. So let's jump right into it.
Now, I know people are worried about the banks taking over, the banks taking over payments, CBDCs, all of that. We've taken a look at this and we can break it all down by the amount of transactions being done. We know that Swift is a massive conglomerate and is of course global — it's for settlement, it's been around since the 1960s. We're not going to dissipate or disappear that for massive payments globally. They do about $150 trillion per year.
When we take a look at other options for payments, it's all private companies — the Visas, the Mastercards, the Venmos, the PayPals, and so on. There is one called Zelle which is in the middle of the pack. But I believe that private organizations and layer ones are going to be the next big sector for payments, and they're going to take over the banks.
This is what was interesting today. This is from A16Z Crypto. If you don't know who they are, they're massive angel investors, billionaires, and they wrote a piece this morning. I thought it was interesting — why do they write this piece right now? It's titled "Investing in Open Reserve: The Bank That Never Closes." And this bank is based on blockchain technology. Now, are they talking about blockchain decentralized, or are they talking about something like China's blockchain — centralized permissioned layers?
It gets interesting because over on A16Z Crypto, they actually interviewed the co-founders — Dubny and Richard Kra. This was just dropped yesterday, September 3rd. It's about an hour and six minutes. Very entertaining. But there was one piece that stuck out to me out of the whole hour. These 45 seconds stuck out to me. This is the co-founder talking.
A16Z Co-Founder on Layer One Business Models
Open Reserve Co-Founder: "Amongst many other people, invested a lot of money to make blockchains much more efficient. And that, I think, really compressed a lot of the business model of being an L1 — where if your transaction fees are super low and your throughput is very, very high, it's quite unclear then precisely how an L1 maintains defensibility or thinks about value capture longer term. And the answer to that in some sense might be that the L1 itself should inherently have a business model because it is offering a financial service that's very legible to the rest of the world. And so that match, I think, is sort of one potentially made in heaven."
Rob's Analysis of Open Reserve and the OCC Charter
Rob: Interesting — just talking about using a layer one as the entire bank. I have never heard that framed quite that way. That sounds like a pretty good idea. And hopefully it would be one that is permissionless and decentralized. They can actually do two things: have it as an open ledger, but also keep transactions private — because let's be honest, I don't think everybody wants all of their transactions out in the world for everybody to see. You would need something like Zcash or Monero where you can keep things private. I don't want everybody to know just how much cotton candy I buy, whatever.
These types of things — I think it's a pretty good move in the right direction. And it's just weird timing, because I think they knew what they were doing. You can see the marketing around it, because guess what? The OCC comes out and says they're going to grant Open Reserve a preliminary conditional approval to charter a national bank. This isn't a reserve — it's depository. This is a national bank.
Now, it's preliminary conditional approval, but if they've already gotten this far, and we know that the OCC, the SEC, and the CFTC are pretty much moving things forward — because the Clarity Act is going to be a challenge, and we'll talk about that in a second — a national bank charter built on blockchain technology with 24/7/365 operations and payments on the rails that actually move is the next service sector for finance. This is a big thing, but it comes down to the details.
Here's what we have. This is a press release from BusinessWire. Open Reserve's intended offerings include commercial and retail lending products — I can get behind that — a treasury management platform, traditional and tokenized deposit products, and stablecoin infrastructure that is purpose-built for global capital markets and designed to comply with the GENIUS Act.
When we take a look at all of this together, this could be a nice catalyst moving forward. And again, like I said before, altcoins will run. What they need is two things: speculation and just a touch, a sprinkle of utility, and then off they go. Take a look at what happened with Helium and that city right outside of the Dallas–Fort Worth area — about 40 miles out, population around 63,000. It did a double in price just because they adopted Helium, even though it's a town of 63,000 people.
Anyhow, that is the good news. Let me know what you think about that in the comments section.
Bear Market Context: This Cycle vs. 2022
Rob: Before we get to the bad news, I will say that if this is your first bear market, you're so lucky. You don't have to deal with 77%, 85%, 86% drawdowns. And if this feels bad to you, I get it — it's your first one. But most of us here, this is our second, third, or in my case, I'm going into my fourth cycle. This is the easiest bear market I've ever been through.
We can take a look here. Four years ago, September 4th, 2022, we were 70% down from the all-time high. The all-time high in 2021 was $67,000, and we perfectly hit $20,000 at that point. I remember in 2022 — this was right around the time when I started to hear rumblings that FTX, which was a major exchange, was about to go down. And I thought, if that goes down, we're going to go down even more. And of course that went down around October or November. Right before that in June, we had Celsius go down. In July, we had Voyager go down two weeks later. And then Luna collapsed — I can't remember exactly when, but it was just a massive smorgasbord of pain. That's where we got to the 70% down level, and then we did go down another 7% to around the $15K level.
But right now we're only down 37%. Look at that. 37%? That's a Tuesday. So if this is your first cycle, don't worry — you're going to be fine. But if this is your second, third, or fourth, we've got it easy.
Clarity Act at Risk as House Cancels September Voting Sessions
Rob: Unfortunately, we need to have a little balance. The bad news: the Clarity Act might not pass. I've been very vocal — I never believed this would actually go through because of the timing with the midterm elections, and this is looking pretty grim.
This was just broken by Coin Bureau a couple of hours ago. The House of Representatives just cancelled two full weeks of September sessions, putting the Clarity Act at risk of a post-election vote. If you're not from the United States, we're having the midterm elections. The House of Representatives are running again. You've got other senators — some, not all — running to keep their seat or get a new one. That's going to happen in November, which means we're not going to have a vote until after that.
House Republicans cancelled voting sessions for the weeks of September 21st and September 28th, leaving the chamber with only one more week of voting before heading home ahead of the November midterms. And of course, if they do vote for it and there's an amendment — all it takes is one group to say, "I don't like this one part" — the bill has to go back to the House of Representatives before going through Trump's desk. Although I would say the House of Representatives passed it with a breeze. In the Senate, you're looking at like a 56–44 split, and we need 60 votes. We need four Democrats to come over. But unfortunately, a couple of Republicans have already said they don't like this act either. So good luck.
Crypto market structure legislation can now be pushed into the post-election lame duck session. The lame duck session is of course the last period of the presidential term held by Donald J. Trump. But if that goes into lame duck session, I think this is dead.
FBI Investigates Leak of 153 Million Driver's Licenses
Rob: And lastly, this is awful. We have to be paranoid and we have to be careful out there. Because let's be honest, I think Bitcoin and a select group of altcoins are going to do fantastic. But the problem is it's not how much you make, it's how much you keep.
This was also from Coin Bureau. The FBI opened an investigation into a massive leak of 153 million United States and Canadian driver's licenses. So if you think it's all these data leaks from private companies that are screwing you over and that's where all the spam is coming from and how they're trying to social engineer and steal your crypto — no, it's the government. They screwed up, and they now have your driver's license. Not everybody — in the United States we're around 360 million people — but they only have 153 million. I couldn't say that with a straight face. They only have 153 million United States and Canadian driver's licenses, and that's being sold right now on the dark web.
So everything that's out there — they have your ID, they probably have your email, your address, your social security number, your date of birth, everything. If you don't have two-factor authentication — not that junk that is text messages, but actual two-factor authentication like Google Authenticator, and also not something you have backed up on your Google Drive — it's very important to get that set up. We did a whole video about that. I'll try to link it in the description.
All these things are just leading to massive hacks. This is my stolen crypto — Steve Wozniak, who was on the show, great guy, LA Raiders football player, Hall of Famer, lost I want to say 2.8 or 3.2 million dollars to a hack. We had him on. It was brutal to listen to. But he also said scammers had a valid copy of his driver's license. Beware.
Trezor Data Breach via ShipMonk Shipping Provider
Rob: So that leads me to my last issue. Trezor — I'm sorry to report that Trezor, which is a great company, a good company — they just lost a bunch of your data.
Two days ago, they stated: "We received an update from our shipping provider, ShipMonk." We are deeply saddened to share the news that the recent data breach affects more customers than originally thought. There are another 67,000 customers from the United States who ordered between November 2019 and August 2021 who were affected, with their full details — name, email, phone number, shipping address, and order number — exposed. And of course, if the hackers also have your driver's license, they just became you.
Trezor states — and I have to agree with them here: "Throughout our entire relationship with ShipMonk, we repeatedly requested and received written assurance confirming the deletion of the data in line with our contract data policy and past communications. We are very disappointed that despite receiving this confirmation, the data was not deleted in their systems."
How angry would you be if you worked with a provider for years — from 2020 until today — and they're like, "Yeah, yeah, we're doing that," and they totally don't do what they say they're going to do? You must do the things that you say you're going to do, or else everything falls apart.
I was thinking about this and talking to my XRP whale friend here in Puerto Rico. I said, "Well, that's not too bad. They got a name and a date of birth, but that's all over the place, right?" He said, "Yeah, mate, that's right. But you have to understand — if they have the address of that person, it's very easy to do a profile. You can take a look at zip codes and find the most affluent areas in the United States or around the world. If you have that name and that zip code and that address, you can profile somebody. And that person is like, 'Hey, this guy lives in a million-dollar neighborhood — maybe we should go pay him a visit with a couple of wrenches.'" Not that that's what is going to happen. I'm just saying it's a very easy way to profile somebody. And this is a problem. That's why I say KYC is essentially "kill your customer." Watch out, everybody. That is a big issue. Only the paranoid will survive.
As a reminder, you can put things in iTrustCapital. We had Jordan on yesterday from iTrustCapital to talk about how they're actually moving these things around — it's very difficult. I've gone through it. It took me 10 days to get my funds out, and that's me being me. So I use iTrustCapital, I use Tangem, I use Ledger, I use ETFs, because in those situations it's very difficult to get at. Tangem, ETFs, and iTrustCapital — those are probably the gold standard. I'll be honest with you, even though it's "not your keys, not your crypto" — maybe it's not your keys, not your problem, moving forward. And of course, you can also look at Roth IRAs, the same type of custody service that Strategy and BlackRock use. You can also do retirement accounts and a whole host of things.
Also, always use a PO box. Try to get a Google Voice phone number as best you can. And if you want to use an email that's a throwaway when you're ordering a cold storage device that you're going to put a bunch of money on, maybe fire up a couple of single-use emails from Yahoo or iCloud or something like that, and then just delete them after you're done.
Live Q&A
Rob: Let's get into some Q&A and I'll answer your questions to the best of my abilities.
Meme asks: "What kind of insurance does iTrustCapital have on its digital assets?" None, as far as digital insurance goes. I don't think anybody has digital insurance — there might be some, maybe Swan or something. They are FDIC insured, but that's for dollars. We'll talk tonight and I'll tell you exactly how they do things and secure things, and you're going to be like, "Yeah, that's a pain, but it's very valuable."
Mike has a good point — I keep forgetting to talk about this. YubiKeys. I just bought a pair of YubiKeys today, and those are pretty cool. You can put them in your USB slots, and they also have biometric verification so you can use your fingerprint, which I like doing with my Mac Pro, and also Face ID. Then people say, "Rob, you're a moron," because if you're giving your face data, that goes right to the government. I'm like, have you ever heard of a driver's license? It's the same thing. So when I'm using biometrics, I'm like, yeah, just use my face. And of course, because I have a big head, I have to move the camera back — but then it gets it, and I'm able to get access to the exchanges. I'm going to use that all day long. I despise passwords. They are worthless, all of them, all the time. I have a poor memory.
Master Blaster is correct — reporting taxes is a nightmare. But I will tell you a nice one-two punch would be Coin Ledger and Claude to do things. It makes things a heck of a lot easier, I must admit.
On the Trezor situation — yeah, ShipMonk. It sounds like it was a reasonably good provider. They stuck with them for five years. It's just that they said, "Yeah, we deleted all that information," and they totally didn't. Sorry.
A1 says they have social security numbers too — had a third party get hacked back in the Biden years, and that took over two billion social security numbers. Two billion. I don't know why the banks are asking me for my social security number when I open up an account. Just go to the dark web. It's over there.
Someone mentions Pete Hegseth — and you can see that it's Pete's driver's license that is on the dark web. Yeah, you can't make this up. Pretty crazy.
Jean Louise asks: "Hey Rob, you still not bored by the Bitcoin prices?" Nope. Feeling pretty good. I was feeling good when I was buying in the $60K range. I'm feeling okay at $77K. Buying at $80K would feel a little difficult for me right now, but I'm waiting for Monday. I'm hoping there's some crazy post from Truth Social from El Presidente that does something crazy for the market and it drops. That would be fantastic — that way I can buy some cheap stuff. But I'm still in the belief that we're in the right place at the right time, and since we're buying in the bear market, we should do quite well moving forward.
I'm also probably going to work a little more closely with Wes over at Smart Money Tracking and Ivan on Tech to bring forth more options for a bit more trading-oriented content. Those guys are really good at what they do. I like both of them.
Master Blaster is correct — I think Tron is one of the most reliable for price stability. Tron is one of my best holdings, as we all know — Binance, Ethereum, Solana, Tron. I always thought it was a goofy project with Justin Sun being the head of marketing constantly. But if we take a look at it over a year, not too bad. 33 cents. Over three months, not too bad. Over a month, over seven days — not too good in seven days. But it is a good point — this is pretty stable. 33 cents here and roughly 33 cents there. That is a good point.
Marcus Jackson says: "I must say I feel the sincerity and the sorryness of the title. It truly touches and comes from the heart. I can feel it." Yeah. The Trezor data breach. Sorry. It's like that meme from South Park — "We're sorry. So sorry. We're sorry." But yeah, it sucks, and it makes you nervous, especially if you're in a high-income area and a high zip code. You're like, "Damn it, shouldn't have bought that Trezor."
Jimmy says: "Over the past year, I've had six different notices from Norton LifeLock of attempts to take out payday loans. They need all your information to do that. Luckily, all three credit reports are locked." This is a great way to leave it right here. Jim gives us great insight about pretty much the future of what we're going to have to go through consistently over and over again because of all these data breaches. Maybe we can actually use AI for something good — besides stupid AI slot videos — and actually combat that. We'll see how it goes.