WEBVTT 1 00:00:00.160 --> 00:00:05.759 Now what Abra's done. Because we've registered this new advisory with the SEC. 2 00:00:06.240 --> 00:00:11.080 We're now offering separately managed accounts where you're not pulling the assets together anymore. 3 00:00:11.640 --> 00:00:18.239 And so this has basically now the benefit that it's legal in all in all 4 00:00:18.280 --> 00:00:22.000 fifty states, and to my knowledge, we're the only company right now in 5 00:00:22.079 --> 00:00:25.640 the US that can even provide staking in all fifty states or lending for that 6 00:00:25.679 --> 00:00:39.880 matter, against crypto holdings. This content is brought to you by Bitco, 7 00:00:40.000 --> 00:00:44.840 which is one of the top crypto custodians in the crypto industry. Bitco works 8 00:00:44.840 --> 00:00:49.600 with many big companies and brands such as Pantera Capital, Bitstamp, and bitcoin 9 00:00:49.719 --> 00:00:56.240 Ira. Nike also selected Bitco to power its wallets for its NFTs and Bitco 10 00:00:56.359 --> 00:01:00.640 has many great services such as hot wallets, custodial wallets, health manage, 11 00:01:00.679 --> 00:01:06.200 cold wallets, and NFT wallets. Many institutions trust bitco with its top level 12 00:01:06.239 --> 00:01:11.599 security and incredible services such as being able to deploy your capital while it's in 13 00:01:11.640 --> 00:01:15.959 custody, which includes lending, borrowing, trading, staking, DeFi access and 14 00:01:15.000 --> 00:01:19.719 more. If you'd like to learn more about bitco, please visit bitgo dot 15 00:01:19.719 --> 00:01:23.400 com link in the description. Welcome to the Thinking Crypto podcast. You're home 16 00:01:23.439 --> 00:01:27.519 for cryptocurrency news and interviews. With me today is Bill Barheit, who's the 17 00:01:27.599 --> 00:01:32.760 co founder and CEO of Abra. Bill great to have you back on Hey, 18 00:01:32.840 --> 00:01:37.560 good to see man Ho's things. Bill great, And I'm always excited 19 00:01:37.640 --> 00:01:41.799 when I'm speaking to you because kind of what I told you the past two 20 00:01:41.799 --> 00:01:45.280 times i've interviewed you, I'm a big fan. You know, obviously your 21 00:01:45.359 --> 00:01:48.519 Web one point zero pedigree, you're now here building in Web three. So 22 00:01:49.120 --> 00:01:53.760 I always appreciate your perspective and thoughts on the market. And there's some huge 23 00:01:53.760 --> 00:01:57.519 news around Abra, the launch of Abra Private and Prime. Tell us about 24 00:01:57.519 --> 00:02:02.359 this, sure so so coming out of what's kind of transpired in the crypto 25 00:02:02.400 --> 00:02:07.280 space the last four years. Obviously, we went through this big boom and 26 00:02:07.359 --> 00:02:13.439 bust in lending and yield, and you know, we took some very valuable 27 00:02:13.560 --> 00:02:15.960 lessons from that. If you look at the companies that aren't here anymore, 28 00:02:16.680 --> 00:02:22.759 most of them were, you know, not necessarily even the ones that had 29 00:02:22.759 --> 00:02:27.759 good intentions that failed, right, A lot of them had significant concentration risk. 30 00:02:28.120 --> 00:02:35.280 The bottom line is is that clients became a liability on those companies' balance 31 00:02:35.280 --> 00:02:38.280 sheets, and when those companies went busted, the depositors had to fight and 32 00:02:38.280 --> 00:02:44.240 it still are fighting to get their assets back. Okay, And the question 33 00:02:44.360 --> 00:02:49.120 became, okay. People want to have a place where they can invest in 34 00:02:49.199 --> 00:02:54.560 crypto, earn yield, steak for proof of steak assets, potentially borrow against 35 00:02:54.599 --> 00:02:58.360 their crypto holdings, which we believe is going to be one of the fastest 36 00:02:58.360 --> 00:03:01.159 growing aspects of crypto, but they don't want to take counterparty risk to the 37 00:03:01.280 --> 00:03:07.759 lending companies. Now DeFi addresses those issues, which we can get into, 38 00:03:08.360 --> 00:03:15.520 but it's way too complex for the average investor to navigate themselves. So what 39 00:03:15.560 --> 00:03:21.680 we did is we started an SEC registered investment advisory that got permission to launch 40 00:03:22.439 --> 00:03:30.560 staking yield lending services within a safe, separately managed account structure for the first 41 00:03:30.560 --> 00:03:38.159 time. And this SMA model that we launched is very common in equities and 42 00:03:38.199 --> 00:03:44.000 even in crypto, but it's not common for staking earning yield borrowing. It's 43 00:03:44.039 --> 00:03:49.840 actually very complicated to give people exposure to DeFi, to borrow, to earn 44 00:03:49.919 --> 00:03:54.159 yield to steak where you're not actually taking counterparty risk to ABRA, and that's 45 00:03:54.159 --> 00:03:58.800 what people want Like I said, they want the benefits of DeFi, but 46 00:03:58.840 --> 00:04:01.639 they don't want to deal with the complex lexity of DeFi, right, and 47 00:04:01.960 --> 00:04:08.759 so that's what we've built with ABRA Private. ABRA Private is basically an SEC 48 00:04:08.879 --> 00:04:14.400 registered investment advisory that allows you to invest, stake, earn, yield, 49 00:04:14.919 --> 00:04:18.680 borrow, or even just hold crypto in a safe, separately managed account. 50 00:04:18.720 --> 00:04:23.519 It's like you getting your own vault, almost like a safety deposit box from 51 00:04:23.560 --> 00:04:28.439 which you can deploy into specific investments. But Abra is not the counterparty, 52 00:04:28.680 --> 00:04:32.519 So if ABRA goes away, you still have your assets, okay. Abra 53 00:04:32.839 --> 00:04:42.639 Prime is our institutional offering that allows hedge funds, mining networks, crypto ATM 54 00:04:42.720 --> 00:04:48.920 networks, venture capitalists to have OTC trading, access, derivatives you know calls 55 00:04:49.000 --> 00:04:58.199 options, structure, products, lending, borrowing in a highly professional environment. 56 00:04:58.839 --> 00:05:01.879 Are are head of op trading. For example, what was that Goldman doing 57 00:05:02.240 --> 00:05:08.959 running the options trading for for them? In crypto, We've got a DeFi 58 00:05:09.040 --> 00:05:12.879 team that and quant team there that's been working on you know, yield and 59 00:05:12.959 --> 00:05:17.920 lending for years. We've got a spot liquidity desk now that's been servicing miners 60 00:05:18.279 --> 00:05:23.240 and managing auto liquidations for bitcoin miners for quite a while. So so there's 61 00:05:23.279 --> 00:05:28.240 a lot of expertise on our desk on the prime side of the business that 62 00:05:28.439 --> 00:05:32.079 is doing a great job of servicing institutions. And so now we have this 63 00:05:32.279 --> 00:05:38.399 private wealth business and prime business that kind of complement each other and actually service 64 00:05:38.439 --> 00:05:43.360 each other in many ways. So, Bill, I have a ton of 65 00:05:43.480 --> 00:05:47.480 questions on there because here's many layers to this. In regards to the private 66 00:05:48.199 --> 00:05:54.480 Yeah, and this is a rookie question. We got the SEC targeting crack 67 00:05:54.560 --> 00:05:58.319 In and coinbase and so forth and regarding their stinking services, So what's the 68 00:05:58.319 --> 00:06:02.759 difference with your service being then register? Great question. So here's my understand 69 00:06:02.920 --> 00:06:06.639 I can speak very well to what we're doing. I think I can kind 70 00:06:06.680 --> 00:06:11.399 of speak to what they're doing and what the issues are. I'll start off 71 00:06:11.439 --> 00:06:15.199 with the basics, which is to say, if you want to steak Ethereum 72 00:06:15.399 --> 00:06:18.680 or Solana or another proof of steak assets, I think there are fifteen to 73 00:06:18.680 --> 00:06:23.279 twenty states in the US where you simply can't do it on an exchange. 74 00:06:23.519 --> 00:06:27.519 The exchange will block you. And based upon where you are, you know 75 00:06:27.560 --> 00:06:30.240 your ID or where your computer is located. When you try to do it 76 00:06:30.920 --> 00:06:36.079 because they're fighting with those states who consider staking to be a security offering when 77 00:06:36.079 --> 00:06:44.920 it's done via a centralized exchange. Now, it doesn't really matter what I 78 00:06:45.000 --> 00:06:50.759 believe, whether I believe that that's you know, legal or whatever. The 79 00:06:50.800 --> 00:06:56.519 only thing that matters is is that you know that's the reality is that in 80 00:06:56.560 --> 00:07:03.000 those states you can't stake Okay, now what Abra's done because we've registered this 81 00:07:03.079 --> 00:07:09.120 new advisory with the SEC. We're now offering separately managed accounts where you're not 82 00:07:09.160 --> 00:07:15.040 pulling the assets together anymore. And so this has basically now the benefit that 83 00:07:15.079 --> 00:07:18.920 it's legal in all in all fifty states, and to my knowledge, we're 84 00:07:18.959 --> 00:07:24.000 the only company right now in the US that can even provide staking in all 85 00:07:24.040 --> 00:07:28.519 fifty states or lending for that matter, against crypto holdings without you going to 86 00:07:29.279 --> 00:07:33.120 a defied network and using meta mask on your own. And even that's you 87 00:07:33.160 --> 00:07:36.639 know, some people are claiming that that might be like, you know, 88 00:07:36.720 --> 00:07:40.439 money transmission or security offering. I don't know. I don't agree with any 89 00:07:40.519 --> 00:07:44.040 of that. It doesn't matter what my opinion is. All I know is 90 00:07:44.040 --> 00:07:47.959 is we worked very hard with our lawyers over the last year to do this 91 00:07:48.079 --> 00:07:54.720 in a way that we're very comfortable works for our clients. So, Bill, 92 00:07:54.720 --> 00:07:56.879 if you don't mind me asking, because I want to make sure I 93 00:07:56.920 --> 00:08:00.199 wrap my head around this. So it's not so much the asset that it's 94 00:08:00.199 --> 00:08:03.360 being staked, but rather the nature or the infrastructure behind it. So if 95 00:08:03.399 --> 00:08:09.279 it's, like you said, centralized exchange, that's what's triggering the securities law. 96 00:08:09.079 --> 00:08:11.319 I think. So it seems to be the case, right, So 97 00:08:11.560 --> 00:08:16.199 the commonality there is is there the states have this opinion that we're several states 98 00:08:16.240 --> 00:08:24.240 like California being their biggest, that staking via a centralized or pooled exchange model 99 00:08:24.879 --> 00:08:28.319 is a security offering. I don't necessarily agree with. That doesn't matter my 100 00:08:28.360 --> 00:08:33.519 opinion. My opinion is irrelevant. What matters is is that's their opinion and 101 00:08:33.600 --> 00:08:37.600 as a result, in many states, I think it's like California, Washington. 102 00:08:37.840 --> 00:08:39.320 Why. I don't know the list, I can't memorize it, but 103 00:08:39.679 --> 00:08:43.679 if you try to stake it won't let you. Yeah, the same thing 104 00:08:43.720 --> 00:08:48.480 happened to me here in New Jersey. I got blocked and got my services 105 00:08:48.519 --> 00:08:52.360 turned off. So Bill, I'm going to go back to you know, 106 00:08:52.720 --> 00:08:56.200 the way ABRA is structured now with this, which I love. By the 107 00:08:56.200 --> 00:09:01.039 way, this absolutely makes sense and I think is the forward because man, 108 00:09:01.080 --> 00:09:05.240 I have PTSD for what happened in twenty twenty two and all these collapses. 109 00:09:05.639 --> 00:09:11.879 So you said you're eliminating counterparty risk And is it because the assets are on 110 00:09:13.240 --> 00:09:16.960 chain versus you custoding them directly. So if ABER goes out of business, 111 00:09:18.879 --> 00:09:22.840 use no, nothing happens. Yeah, that's that's basically right. So let's 112 00:09:22.000 --> 00:09:26.720 there's two parts to this. The first part is is there a counterparty to 113 00:09:26.799 --> 00:09:33.320 the transaction? Right when you stake you don't want a counterparty to the transaction. 114 00:09:33.440 --> 00:09:35.559 You don't want to become someone else's liability. I mean, when you 115 00:09:35.639 --> 00:09:41.039 deposit your cash at a bank, you are now a liability on the bank's 116 00:09:41.080 --> 00:09:43.440 balance sheet. Why because they have to pay you back at some point. 117 00:09:43.799 --> 00:09:48.919 When you deposit into an SMA account, you separately manage the account. You 118 00:09:48.960 --> 00:09:52.279 are not a liability on my balance sheet. I am not a counterparty to 119 00:09:52.360 --> 00:09:56.840 the transaction. So if ABER goes away, it's still your SMA and you 120 00:09:56.879 --> 00:10:00.279 can see that when you make a deposit to do custody, you can see 121 00:10:00.279 --> 00:10:05.399 the assets on chain. That's part one. Part two is you're deploying directly 122 00:10:05.440 --> 00:10:11.559 to steak directly from the SMA into that staking pool whatever it is. May 123 00:10:11.600 --> 00:10:16.399 not using me the right terms, but you're staking directly, meaning meaning we 124 00:10:16.480 --> 00:10:20.039 may be pushing. You may be pushing buttons and using APIs that we provide, 125 00:10:20.480 --> 00:10:26.080 but you're doing it directly to the network. The counterparty is the Internet, 126 00:10:26.279 --> 00:10:31.840 right, So like the counterparty is the staked contract to the counterparty is 127 00:10:31.919 --> 00:10:37.039 the DeFi protocol. Depending on what you're doing. Wow, Bill, are 128 00:10:37.080 --> 00:10:41.799 you guys the first to do it this way? I'm quite confident that we 129 00:10:41.840 --> 00:10:46.519 are. It's very hard, so I think about what we've gone through. 130 00:10:46.600 --> 00:10:50.399 First of all, just to survive this this mayhem. Let's put that aside. 131 00:10:50.600 --> 00:10:56.559 Right that nobody cares, it's my problem. But to have the legal 132 00:10:56.519 --> 00:11:01.000 understanding, we had the lawyer up, multiple firms. We had to rebuild 133 00:11:01.000 --> 00:11:07.240 our platform from what we had with the old retail app, which doesn't work 134 00:11:07.279 --> 00:11:09.759 in the US anymore. Everybody has to use this model now. So to 135 00:11:09.840 --> 00:11:15.879 go from retail trader and borrow to ab a private trader and borrow was a 136 00:11:15.960 --> 00:11:20.720 complete rework from an architectural perspective, and it's still a work in progress. 137 00:11:20.759 --> 00:11:24.039 You know, we're adding more capabilities to get back to parody with what we 138 00:11:24.120 --> 00:11:28.399 had with the app, but using this separately managed account model. Right, 139 00:11:28.799 --> 00:11:31.879 so we're getting close. You can do most of what we had before, 140 00:11:31.919 --> 00:11:35.600 but not everything. And my goal this year is to have all of that 141 00:11:35.720 --> 00:11:39.159 back in place and then eventually have an app again. But one step at 142 00:11:39.200 --> 00:11:43.240 a time. And so it's hard. It was very hard, and it 143 00:11:43.279 --> 00:11:46.840 continues to be hard. You know, we have ongoing compliance issues. We're 144 00:11:46.879 --> 00:11:52.720 now an SEC registered investment advisor, which brings a whole set of requirements to 145 00:11:52.759 --> 00:11:56.519 the company. Compliance, compliance, training and oversight and audits. And you 146 00:11:56.559 --> 00:12:01.559 know, again most viewers may not care about this, but the rules are 147 00:12:01.600 --> 00:12:05.440 the rules, and and we care right and and and so you know we've 148 00:12:05.480 --> 00:12:09.919 gone very deep to uh to follow those rules. Wow. So I guess 149 00:12:09.919 --> 00:12:13.679 my my next question is with specific assets. So let's say there NI thirty 150 00:12:13.720 --> 00:12:20.000 two, eth, the steak, other token of blockchains like Algoran or Cardano. 151 00:12:20.159 --> 00:12:24.159 Not necessarily so you mentioned that you know, you're not part of the 152 00:12:24.159 --> 00:12:28.639 counterparty, You're just providing the buttons in the pathway. So is it going 153 00:12:28.720 --> 00:12:35.480 to like public decentralized pools? Uh? The staking versus avarice staking it in 154 00:12:35.559 --> 00:12:39.000 a pool. Yeah, so it depends on the asset. In some cases, 155 00:12:39.080 --> 00:12:43.240 the user will go directly to h you know, an non chain service 156 00:12:43.279 --> 00:12:50.440 provider that that we basically disclose for them. In some cases it's a yield 157 00:12:50.519 --> 00:12:56.200 generating you know, service like a DEX or like a GMx or something like 158 00:12:56.240 --> 00:12:58.360 that, depending upon where the opportunities are. In some cases you're just straight 159 00:12:58.399 --> 00:13:03.000 staking, and that's always disclosed, So there's not like, oh, we're 160 00:13:03.000 --> 00:13:05.840 just generating yield. No, you actually know it's your investment, right, 161 00:13:05.879 --> 00:13:09.240 it's not abro like just arbitrarily deciding what's the best place for you to get 162 00:13:09.279 --> 00:13:13.919 yield. Today doesn't work that way anymore, and so you always see which 163 00:13:15.000 --> 00:13:18.120 yield opportunity you're getting. Is it's straight staking? Am I? You know, 164 00:13:18.799 --> 00:13:22.799 borrowing and lending into from a DEX? What's going on? And I 165 00:13:22.960 --> 00:13:28.360 have the option to choose that, and I can give ABRA discretion to make 166 00:13:28.399 --> 00:13:33.240 those decisions. But the decisions are transparent, and what I'm getting is transparent, 167 00:13:33.279 --> 00:13:37.360 and the risk disclosures that are required you know, by the regulators are 168 00:13:37.399 --> 00:13:39.480 there as well, which I would pause it. You know, I would 169 00:13:39.519 --> 00:13:46.120 go on podcasts and talk about the risks in the last kind of model, 170 00:13:46.440 --> 00:13:52.840 but now like legally, they're laid out very clear star terms. Bill, 171 00:13:52.879 --> 00:13:56.279 A tough question for you, do you think this is what the future of 172 00:13:56.360 --> 00:14:00.639 staking looks like? Because what you're saying makes sense. At some point we're 173 00:14:00.639 --> 00:14:03.840 gonna have to meet in the middle of the road with these regulators because they're 174 00:14:03.879 --> 00:14:05.399 fighting, Right, We're going to talk a bit about the SEC and so 175 00:14:05.480 --> 00:14:11.840 forth, But what are your thoughts on that? So, look, does 176 00:14:11.879 --> 00:14:16.240 the average web user know what HTTP is and how it works? Does the 177 00:14:16.279 --> 00:14:22.440 average Netflix watcher know what RTP real Time Streaming Protocol is and how it works? 178 00:14:24.480 --> 00:14:28.960 No, they shouldn't have to. And I think DeFi protocols are the 179 00:14:28.000 --> 00:14:31.720 future of banking, and the average user won't know how they work. The 180 00:14:31.759 --> 00:14:35.360 average money market account holder doesn't know what a reverse repo is or why money 181 00:14:35.360 --> 00:14:41.480 market rates are affected by repos and things like this. And I think banking 182 00:14:43.559 --> 00:14:50.320 is going to become decentralized, borderless, always on and very efficient. Right, 183 00:14:50.360 --> 00:14:54.240 The rates that DeFi sets are true market rates because it's a marketplace based 184 00:14:54.320 --> 00:14:58.360 upon supply and demand. It's not a bunch of old white men sitting around 185 00:14:58.399 --> 00:15:03.440 a table deciding what interest rates be arbitrary to grow and shrink an economy. 186 00:15:03.519 --> 00:15:09.519 That's nonsense and that's antiquated eighteen hundreds concept that doesn't work in an always on 187 00:15:09.639 --> 00:15:16.000 Internet world anymore. And watch what happens to crypto when Israel and Iran or 188 00:15:16.039 --> 00:15:18.720 fighting over the weekend when the markets are open twenty four to seven and the 189 00:15:18.759 --> 00:15:24.320 ETFs can't play because they're only open thirty hours a week tradable thirty hours a 190 00:15:24.320 --> 00:15:30.480 week. So, DeFi is the future. Whether the existing banks are in 191 00:15:30.519 --> 00:15:33.360 a position to embrace that it become far of the future, or whether they 192 00:15:33.360 --> 00:15:39.159 become blockbuster and go away in favor of the Netflix of banking remains to be 193 00:15:39.200 --> 00:15:41.799 seen. My bed is is in twenty years, most of them are gone 194 00:15:43.440 --> 00:15:48.320 and they're replaced by Internet native you know, DeFi native banks, who will 195 00:15:48.360 --> 00:15:50.639 be some of the biggest companies in the world that don't exist today. Just 196 00:15:50.639 --> 00:15:54.519 like Netflix didn't exist twenty whenever we started twenty plus years ago, or Google 197 00:15:54.600 --> 00:16:00.960 or whoever. These companies didn't exist in the early nineties. They're trillion dollar 198 00:16:00.000 --> 00:16:04.720 businesses now. That's going to happen to banking, and so it's not really 199 00:16:04.759 --> 00:16:07.759 that hard of a question. It's just I'm not clear on I'm not one 200 00:16:07.840 --> 00:16:11.559 hundred percent sure what the path is. But there's no way you can create 201 00:16:11.600 --> 00:16:15.919 an always let me start off, there's no way you can create a twenty 202 00:16:15.960 --> 00:16:22.039 four to seven always on banking, investing infrastructure for the public that is, 203 00:16:22.919 --> 00:16:29.240 you know, super competitive, hyper competitive, globally accessible, and not have 204 00:16:29.320 --> 00:16:33.960 that be the future versus the monolithic, you know, open thirty hour week 205 00:16:34.919 --> 00:16:40.559 run by white men in a closet system that has pervaded you know, banking 206 00:16:40.639 --> 00:16:44.600 for the last hundred years. The choice is clear, The path forward is 207 00:16:44.679 --> 00:16:48.440 clear. It's just what's not clear is, Okay, did the existing banks 208 00:16:48.480 --> 00:16:52.960 play or do they just go away and die and whether like like blockbusters and 209 00:16:52.000 --> 00:16:57.279 codecs. Yeah, so to your point, in the short term, that 210 00:16:57.320 --> 00:17:02.320 could be maybe a merge of e FI DeFi kind of like what you're doing, 211 00:17:02.679 --> 00:17:06.680 but eventually in mores ten years from now, it's more fully defied. 212 00:17:07.440 --> 00:17:14.720 Yeah. I think c FI ultimately becomes about packaging user experience, you know, 213 00:17:14.960 --> 00:17:22.319 advisory navigation, uh, and less about you know, uh counterparty risk, 214 00:17:23.640 --> 00:17:26.640 which is, you know, we have we have this fd I C 215 00:17:26.799 --> 00:17:30.640 insurance to deal with the fact that there's over leverage by design in the banking 216 00:17:30.680 --> 00:17:36.720 system where everybody has counterparty risk to the banks and the government. But the 217 00:17:36.799 --> 00:17:38.839 fd i C represents, you know, the ability to cover one percent of 218 00:17:38.839 --> 00:17:45.799 deposits, where most banks basically are if you actually value their their you know, 219 00:17:45.960 --> 00:17:52.039 long dated bonds using mark to market standards that everybody else has to use. 220 00:17:52.160 --> 00:17:56.440 You know, the fd i C is a deep ship and and and 221 00:17:56.440 --> 00:17:59.960 and so what do you want long term? Do you want a system where 222 00:18:00.039 --> 00:18:03.519 you don't have that counterparty risk, whether it's to a crypto company or bank, 223 00:18:04.000 --> 00:18:07.720 or do you want to keep the system where you know the government is 224 00:18:07.720 --> 00:18:10.640 going to have to print eventually trillions of dollars to bail out the banks. 225 00:18:11.240 --> 00:18:17.839 So yeah, question for you on the SEC at a federal level versus state 226 00:18:17.920 --> 00:18:21.880 level, are they in alignment with staking and all the different things. Have 227 00:18:21.960 --> 00:18:25.720 you noticed any differences in your you know, working with different states as well 228 00:18:25.720 --> 00:18:29.799 as getting the approval from the SEC. I haven't had a lot of discussions 229 00:18:30.279 --> 00:18:33.240 more nor have my lawyers on the states on their opinion on this, because 230 00:18:33.279 --> 00:18:36.640 federal law Trump's state law is my understanding and I'm not a lawyer, So 231 00:18:36.640 --> 00:18:40.880 that's just kind of builds. Rudimentary perspective on this is federal law generally Trump's 232 00:18:40.880 --> 00:18:44.480 state law. When there is two you know, when there's two sets of 233 00:18:44.559 --> 00:18:49.200 rules, federal comes first. So so at that point, state opinion on 234 00:18:49.400 --> 00:18:55.319 what is what is a security offering and what's not I think becomes a secondary 235 00:18:55.359 --> 00:19:00.759 issue. And you know, in terms of of how the SEC views this, 236 00:19:02.480 --> 00:19:06.680 my understanding is is that when you're an RIA and you're committed to the 237 00:19:06.720 --> 00:19:11.640 separately managed account model and you follow the qualified custody rules, they have to 238 00:19:11.720 --> 00:19:15.799 let you do what you're doing, right, So as long as you follow 239 00:19:15.880 --> 00:19:22.920 those rules, it's more of an approval process as opposed to a licensing process. 240 00:19:22.279 --> 00:19:27.279 It's just very hard when you're doing DeFi to follow those rules. And 241 00:19:27.720 --> 00:19:32.240 so that's why I think we're the first to do it. But I don't 242 00:19:32.240 --> 00:19:36.680 think as it relates to advisory services, the SEC cares that much as long 243 00:19:36.720 --> 00:19:40.400 as you follow the rules, and if you don't, then they care a 244 00:19:40.440 --> 00:19:47.240 lot. How does the fur agenda of the SEC to categorize certain all coins, 245 00:19:47.240 --> 00:19:51.880 many of which are proof of stake, Like there's reports that they're going 246 00:19:51.920 --> 00:19:56.839 after Etheroreum. Obviously they listed Algoran and Cardano and Solana and so forth in 247 00:19:56.880 --> 00:20:00.640 different lawsuits. If they classify those as secure, does it affect the staking? 248 00:20:00.839 --> 00:20:03.119 Have they mentioned anything like that to you, guys? No, No, 249 00:20:03.160 --> 00:20:07.119 it doesn't, just because again the separately managed to count can hold commodities, 250 00:20:07.119 --> 00:20:11.799 it can hold securities. It doesn't matter bonds whatever. Look, I 251 00:20:11.960 --> 00:20:17.759 I have very strong opinions on this topic as it relates to what's the security 252 00:20:17.799 --> 00:20:21.759 what's not doesn't matter. I mean, if you want to get into it, 253 00:20:21.880 --> 00:20:23.519 you know, have fun, sure, happy to share my opinion, 254 00:20:23.519 --> 00:20:30.559 which I'm guessing you can guess. But but as it relates to our business, 255 00:20:30.559 --> 00:20:34.920 I don't think it matters. It's fascinating, Bill, They're just h 256 00:20:36.319 --> 00:20:41.480 and it's it's so interesting because I see almost like this is the way forward 257 00:20:41.599 --> 00:20:44.799 because I don't know how this battle ends, because you've got Congress has to 258 00:20:44.839 --> 00:20:48.119 act. But will they act is a question because politics comes into play. 259 00:20:49.599 --> 00:20:52.599 And then it seems like I don't know if you agree with me here, 260 00:20:52.640 --> 00:20:59.599 but there's a clear agenda to slow down cryptos startups while Wall Street is wrapping 261 00:20:59.680 --> 00:21:06.599 up ETPs, doing tokenization customing funds for certain crypto companies. So where does 262 00:21:06.599 --> 00:21:07.880 this end? Do you see, it needs it needs to go to Supreme 263 00:21:07.880 --> 00:21:12.240 Court. Congress needs to act. What do you think? So let's let's 264 00:21:12.319 --> 00:21:17.559 remind everyone how this because your questions have been very US centric. Let's remind 265 00:21:17.559 --> 00:21:21.279 everyone how the US system is supposed to work. We have three branches of 266 00:21:21.319 --> 00:21:25.599 governments, not four. The three branches of government are the executive, legislation, 267 00:21:25.759 --> 00:21:29.319 legislative, and judicial branch. Now in our world it feels like there's 268 00:21:29.359 --> 00:21:33.200 four, and the fourth being the regulatory branch. There's no such thing as 269 00:21:33.279 --> 00:21:37.359 the regulatory branch of governments. It's a made up idea, okay. The 270 00:21:37.440 --> 00:21:41.640 regulators reports to one of those branches depending upon what the law says and how 271 00:21:41.680 --> 00:21:48.279 they were created, okay. And the three branches of governments, executive, 272 00:21:48.519 --> 00:21:52.200 legislative, and judicial are meant to have extreme checks and balances so that there's 273 00:21:52.200 --> 00:21:56.160 no concentration of power within those branches of governments. And that's been the beauty 274 00:21:56.200 --> 00:22:02.039 of the American system for two hundred and thirty years, is that we have 275 00:22:02.680 --> 00:22:07.039 avoided i would say, up until twenty years ago, and it's significantly changed 276 00:22:07.039 --> 00:22:11.759 in the last twenty years. Up until twenty years ago, we avoided the 277 00:22:11.039 --> 00:22:18.920 significant layers of corruption that have invaded i would say, other well intentioned systems 278 00:22:19.640 --> 00:22:25.359 over hundreds of years because of these checks and balances. About twenty years ago, 279 00:22:25.759 --> 00:22:30.559 for whatever reason, right, the regulatory capture model of business in the 280 00:22:30.640 --> 00:22:34.880 United States took root. The regulatory capture model basically says companies that are in 281 00:22:34.880 --> 00:22:40.480 a position to take advantage of the system, work the regulators, work their 282 00:22:41.119 --> 00:22:47.759 network of lobbyists and whatever can create regulatory models that give their business a competitive 283 00:22:47.799 --> 00:22:51.200 advantage. Then we refer to this in Silicon Valley as a regulatory capture and 284 00:22:51.720 --> 00:22:55.359 it's just not an opinion, it's a fact. There's all kinds of businesses 285 00:22:55.359 --> 00:22:57.480 that take advantage of this. Then I get it, I get why vcs 286 00:22:57.559 --> 00:23:03.079 want that. Okay, the reality is is that it's an abuse of the 287 00:23:03.200 --> 00:23:11.039 system because most people, most of the public doesn't understand what regulators do, 288 00:23:11.119 --> 00:23:15.039 what they're supposed to do, and the fact that they're basically there to implement 289 00:23:15.160 --> 00:23:18.880 laws. They're not there to create laws. They're not even they're really not 290 00:23:18.920 --> 00:23:25.039 even there to interpret laws. They're to implement the letter of the laws that 291 00:23:25.079 --> 00:23:33.400 are passed, and the checks and balances that exist between legislation, legislative branch 292 00:23:33.480 --> 00:23:37.720 executive branch and judicial brands are meant to deal with the nuances of interpretation, 293 00:23:38.359 --> 00:23:41.359 differences of opinion, et cetera, et cetera. So now back to your 294 00:23:41.440 --> 00:23:47.359 question, my humble opinion is is that we are not in a position to 295 00:23:47.519 --> 00:23:52.359 deal with this regulatory capture issue head on right in any branch of government right 296 00:23:52.400 --> 00:23:56.200 now, whether it's Food and Drug administration. Look at what happened during COVID, 297 00:23:56.400 --> 00:24:02.119 you know FAA, look at what's happening with Boeing, you know financial 298 00:24:02.160 --> 00:24:04.480 services where where you know, the warrant camp is on a on a on 299 00:24:04.559 --> 00:24:11.640 a one woman mission to kill our industry using the SEC and the fd A 300 00:24:11.759 --> 00:24:17.759 C and the O c C and you know fincean and what other arms she 301 00:24:17.799 --> 00:24:23.400 can she can use to basically work around the the checks and balances of the 302 00:24:23.480 --> 00:24:30.799 three, you know, the three monolithic organizations that run our government. And 303 00:24:30.799 --> 00:24:36.440 and so unfortunately that means we're going to be dependent upon the checks and balances, 304 00:24:36.440 --> 00:24:42.359 which means the courts right until until somehow we can change that regulate regulatory 305 00:24:42.400 --> 00:24:47.319 capture model. Uh and and sorry for this long entire rade, but you 306 00:24:47.359 --> 00:24:51.079 know others have written about this. Ray Dalio and his latest book on the 307 00:24:51.079 --> 00:24:53.960 principles of a changing World order. Uh, the Fourth Turning is here by 308 00:24:55.000 --> 00:24:57.519 how which is a great book, or the original Fourth Turning book. They 309 00:24:57.599 --> 00:25:04.200 describe late state empires and the things that we're going through are very clear. 310 00:25:04.880 --> 00:25:08.839 And you know, we didn't invent this. This has happened over and over 311 00:25:08.960 --> 00:25:14.359 again in late stage empires that can't get out of their own way. And 312 00:25:14.440 --> 00:25:18.640 unfortunately that's the position we find ourselves in right now. But history has left 313 00:25:18.680 --> 00:25:22.440 so many clues that we are in a position to deal with this if we 314 00:25:22.440 --> 00:25:26.839 can just get our heads out of our asses and recognize that we're creating this 315 00:25:26.920 --> 00:25:29.480 problem for ourselves. And we have, I mean over the last twenty years 316 00:25:29.519 --> 00:25:33.000 that we have created this problem for ourselves because you know, we did have 317 00:25:33.039 --> 00:25:34.880 some issues in the nineties. You know, when I was at Netscape, 318 00:25:34.920 --> 00:25:38.319 I remember it was a little you know, we had the export version of 319 00:25:38.319 --> 00:25:42.160 the web browser that we couldn't export because of Munition's great cryptography law as they 320 00:25:42.200 --> 00:25:45.599 go back to World War Two. But that was the exception. You didn't 321 00:25:45.599 --> 00:25:48.599 sit in a room and make every decision with this. You know, Oh 322 00:25:48.640 --> 00:25:52.079 my god, what are the regulators going to say? Now? It doesn't 323 00:25:52.119 --> 00:25:56.680 matter what industry you're in. It it's a significant part of the discussion. 324 00:25:56.720 --> 00:26:00.759 And it's crazy. We're the only country in the world that I do business 325 00:26:00.799 --> 00:26:06.720 and that's not communists or dictator based where we're having this discussion. And when 326 00:26:06.759 --> 00:26:11.440 I talk about crypto to people in Dubai and Singapore and places where they feel 327 00:26:11.480 --> 00:26:15.759 free to do business, they think we're nuts. You've all lost the plot. 328 00:26:15.960 --> 00:26:21.240 What's going on over there? That's the basic kind of like narrative that 329 00:26:21.279 --> 00:26:25.200 I get back from people who aren't American, And they said, you all 330 00:26:25.240 --> 00:26:29.000 had the power, why are you punting it away like a football or a 331 00:26:29.079 --> 00:26:32.799 rugby ball? It makes no sense. And I don't have a good answer 332 00:26:32.880 --> 00:26:36.799 for that other than what I've just said, which is, unfortunately, this 333 00:26:36.880 --> 00:26:41.559 is historically what happens when you go from a good checks and balances system to 334 00:26:41.640 --> 00:26:47.839 a regulatory capture model that we find ourselves in today the bill. Do you 335 00:26:47.960 --> 00:26:53.640 think that part of it is generational, that the Elizabeth Warren generation will eventually 336 00:26:53.680 --> 00:26:57.880 pass away and it will be a changing of the guard. And as blockchain 337 00:26:57.920 --> 00:27:04.880 technology becomes more prominent, there's better iterations and people being able to use DeFi 338 00:27:06.000 --> 00:27:07.920 like we've been talking about, and can be their own bank, so to 339 00:27:07.960 --> 00:27:12.839 speak. Right the convergence of these different factors, would we can at least 340 00:27:12.839 --> 00:27:18.720 fix some of this And maybe an example would be for voting it goes on 341 00:27:18.759 --> 00:27:23.440 the blockchain and campaign donations and these things are more transparent and instead of raising 342 00:27:23.480 --> 00:27:27.640 from corporations, you're raising from people. It's on the blockchain, it's verifiable. 343 00:27:29.079 --> 00:27:32.400 I know I'm spitballing here a lot, but do these things help to 344 00:27:32.400 --> 00:27:36.400 solve some of the problems that we have? Oh? Oh, they clearly 345 00:27:36.440 --> 00:27:38.759 solve the problems. The question is, you know, is it going to 346 00:27:38.799 --> 00:27:45.960 happen regardless of our stupid decisions or are we going to kill ourselves in the 347 00:27:45.960 --> 00:27:51.119 process. So then I keep referring to us as the US. So I'm 348 00:27:51.200 --> 00:27:56.240 convinced that what you're saying is going to happen in places like Africa, you 349 00:27:56.240 --> 00:28:00.319 know, parts of the Middle East, Southeast as you like saying, poor 350 00:28:00.440 --> 00:28:07.200 Indonesia where they don't have the baggage that I'm talking about in terms of our 351 00:28:07.240 --> 00:28:11.000 regulatory capture model to get in their way, other than maybe the politics of 352 00:28:11.039 --> 00:28:15.160 having their partnership with the US be be heard in some way, But long 353 00:28:15.240 --> 00:28:18.319 term. I don't think that's going to matter, right. You know, 354 00:28:18.559 --> 00:28:22.680 Dubai was a fishing village fifty years ago, and they have a better chance 355 00:28:22.720 --> 00:28:26.799 of becoming the financial center of the world in twenty five years, in my 356 00:28:26.880 --> 00:28:32.240 opinion, than New York does given the momentum. Now that sounds crazy to 357 00:28:32.279 --> 00:28:36.480 people in New York right now, but they're looking at the ground from five 358 00:28:36.519 --> 00:28:38.279 feet I'm looking at the ground from five thousand feet, going, this is 359 00:28:38.279 --> 00:28:44.000 where the momentum is going, and you don't get it right. And so 360 00:28:45.599 --> 00:28:48.440 the world is going to do what it's going to do. The question is 361 00:28:48.480 --> 00:28:53.960 what role are we going to play in the future financial system and are we 362 00:28:55.079 --> 00:28:59.759 going to be Is the dollar hegemony going to continue from a place of strength 363 00:29:00.480 --> 00:29:03.400 or is its value just going to keep getting eroded, eroded, eroded and 364 00:29:04.079 --> 00:29:07.240 not matter at some point in twenty five, thirty, forty fifty years. 365 00:29:07.400 --> 00:29:11.200 I don't know the answer to that. I know what I would like the 366 00:29:11.240 --> 00:29:14.920 answer to be, but a lot of things have to change for what I 367 00:29:14.960 --> 00:29:18.119 would like the answer to be to happen. So on the dollar, right, 368 00:29:18.319 --> 00:29:22.079 we know it's the world reserve currency, but there's other countries. Bricks 369 00:29:22.119 --> 00:29:26.920 countries and so forth, which are challenging that. I guess this is a 370 00:29:26.920 --> 00:29:30.960 tough question, but one part one of it is if we get stable coin 371 00:29:32.079 --> 00:29:36.599 regulations right, because we see the world really wants US dollar back stable coins, 372 00:29:36.680 --> 00:29:41.000 USDC to other whatever it is. And then second, is it a 373 00:29:41.039 --> 00:29:45.559 digital dollar CBDC that's coming, which has its own baggage and problems, potential 374 00:29:45.599 --> 00:29:51.240 problems which can be dystopian? Is that also a solution? Okay, they're 375 00:29:51.240 --> 00:29:55.279 two different issues, right, So the dollar is the world reserve currency, 376 00:29:56.279 --> 00:29:59.240 has its own set of issues which have nothing to do with technology. It 377 00:29:59.279 --> 00:30:03.640 has to do with the fact that we switched from a commodity backed, commodity 378 00:30:03.640 --> 00:30:07.119 based currency in the early seventies to fiat, which basically, you know, 379 00:30:07.160 --> 00:30:11.720 fiat basically means you know, managed by government decree, and so in other 380 00:30:11.720 --> 00:30:15.279 words, the government decides to tell us that this money has value and therefore 381 00:30:15.279 --> 00:30:18.680 it has value, as opposed to post Brett Woods, when the money had 382 00:30:18.759 --> 00:30:22.359 value because there was a certain amount of gold in the banks and Fort Knox 383 00:30:22.400 --> 00:30:27.000 that represented the value of the money. And so I don't think the world 384 00:30:27.039 --> 00:30:32.440 is going to accept that for another fifty years. I just don't right, 385 00:30:32.480 --> 00:30:38.079 because the military industrial complex, the bargain of that is eroding quickly. People 386 00:30:38.119 --> 00:30:42.319 don't trust us anymore to cut to the chase. And it's not that I 387 00:30:42.319 --> 00:30:45.279 don't want that to happen, and it doesn't really matter what I want. 388 00:30:45.319 --> 00:30:52.160 It just is right. So can we reverse that? It's possible, but 389 00:30:52.559 --> 00:30:57.119 given our debt structure and the rate at which the interest is rolling over into 390 00:30:57.200 --> 00:31:02.359 principle on the debt now, it's very unlikely. I mean, we would 391 00:31:02.400 --> 00:31:07.240 have to absorb a solid twenty years of pain as a society to undo that 392 00:31:07.839 --> 00:31:11.680 that I don't think we're willing to absorb or even fully understand the level of 393 00:31:11.680 --> 00:31:14.839 the problem we've created, and the fact that it's now become a hockey stick 394 00:31:15.279 --> 00:31:18.359 in terms of the rate of change of the problem and the increase of the 395 00:31:18.400 --> 00:31:26.079 problem. And so I think the dollars days are numbered as a world reserve 396 00:31:26.160 --> 00:31:32.559 currency in that regard, I think that there will be competing reserve currencies over 397 00:31:32.640 --> 00:31:37.440 time, and I think different factions will create different reserve currencies. And it's 398 00:31:37.440 --> 00:31:41.799 simply a function of this problem that we created, which has been there for 399 00:31:41.799 --> 00:31:45.200 fifty years. It's just, you know, it wasn't acute until now, 400 00:31:45.200 --> 00:31:51.279 and it's becoming acute, and so there's no stable coin rules or central back 401 00:31:51.359 --> 00:31:56.319 digital currency rules that are going to fix that. Right, you can make 402 00:31:56.759 --> 00:32:00.559 the dollar a stream of ones and zeros, doesn't prevent you from printing another 403 00:32:00.599 --> 00:32:05.440 twenty five percent of the float. And so now, in the short term, 404 00:32:06.079 --> 00:32:13.039 do I think that having stable coin legislation and making a kind of network 405 00:32:13.119 --> 00:32:17.119 of competing stable coins is a good thing for America and the world. Absolutely, 406 00:32:17.680 --> 00:32:21.519 you know, I think there should be a thousand stable coin issuers all 407 00:32:21.519 --> 00:32:25.599 competing with each other and let the good ones win and survive and flourish. 408 00:32:27.000 --> 00:32:31.839 I think having the government basically create a world monitor coin, which is what 409 00:32:31.920 --> 00:32:37.279 a cb DC probably is, is a really bad idea, and it scares 410 00:32:37.319 --> 00:32:40.839 the hell out of me. Right, It's like every dystopian nightmare that I've 411 00:32:40.920 --> 00:32:45.599 ever read about kind of all rolled into one. And so, you know, 412 00:32:45.680 --> 00:32:50.440 is it possible to create a central back digital currency that isn't isn't a 413 00:32:50.519 --> 00:32:54.480 monitor via Big Brother token? It is, but it's unlikely. And so 414 00:32:54.559 --> 00:33:00.160 I think a stable coin set of rules that creates competition at both the state 415 00:33:00.240 --> 00:33:04.319 and federal level is very interesting to me. Doesn't solve the long term structural 416 00:33:04.319 --> 00:33:07.839 issues, but it definitely helps from a short term technology adoption perspective. So 417 00:33:08.039 --> 00:33:13.079 the long term issue that we're facing right that we're heading down the path with 418 00:33:13.200 --> 00:33:17.440 let's say Argentina or Venezuela or something like that, is there any hope that 419 00:33:17.640 --> 00:33:25.000 maybe blockchain tech and maybe even bitcoin as a truly hard asset that's find out 420 00:33:25.720 --> 00:33:30.640 and it could be the future generation's gold, right and bretton Wood's I don't 421 00:33:30.640 --> 00:33:35.680 know what are we up to two three? But the central banks could go 422 00:33:35.720 --> 00:33:37.839 to that model, and like you said, it may not happen, and 423 00:33:37.920 --> 00:33:43.559 there's a lot of pain ahead to do fix some of these problems. But 424 00:33:43.920 --> 00:33:49.920 could they do that, of course, But again the problem is we don't 425 00:33:49.960 --> 00:33:57.920 have a technology problem, right, we have a a governing by decree problem 426 00:33:57.920 --> 00:34:00.640 when it comes to money, which is what FIAT is, right. So 427 00:34:00.680 --> 00:34:06.920 if we changed the system back to be the gold based or commodities based, 428 00:34:07.480 --> 00:34:12.239 even eventually partially bitcoin based or whatever, that would solve the problem long term. 429 00:34:12.400 --> 00:34:17.599 It would require massive pain in the short term because of the debt load. 430 00:34:17.840 --> 00:34:22.079 The debt burden, we would have to stop investing in other things in 431 00:34:22.159 --> 00:34:24.840 order to pay off the debt because you can't put money anymore, right, 432 00:34:27.559 --> 00:34:31.519 and so are we willing to absorb that pain that hasn't Again, I'm sorry 433 00:34:31.559 --> 00:34:35.760 to keep saying that that is not a technology problem. It's a mindset problem. 434 00:34:35.840 --> 00:34:40.440 It's a belief problem. You know. I see these clips of the 435 00:34:40.440 --> 00:34:45.199 Bill Maher types lately that I've been talking about how bitcoin is a Ponzi scheme, 436 00:34:45.239 --> 00:34:49.159 and I just sit there, I go, oh, my god. 437 00:34:47.920 --> 00:34:54.840 The government has been running this overt Ponzi scheme in front of your face for 438 00:34:55.000 --> 00:35:02.039 fifty years, and you're calling the tech works and that creates a new monetary 439 00:35:02.119 --> 00:35:06.320 system, the Ponzi scheme. It's literally the opposite of what you're saying, 440 00:35:07.280 --> 00:35:12.280 and that's what we're up against, right, And it is fun talking heads 441 00:35:12.280 --> 00:35:15.079 that don't understand, because it's they don't understand how money works in the first 442 00:35:15.079 --> 00:35:17.960 place. So if you don't understand how money works in the first place, 443 00:35:19.000 --> 00:35:23.320 how in God's name are you going to understand that what we've built to fix 444 00:35:23.360 --> 00:35:30.000 it actually fixes it because you don't even believe that it's broken, right, 445 00:35:30.000 --> 00:35:32.679 you know, funny, it's funny built. And as you're saying stating that, 446 00:35:34.119 --> 00:35:37.920 I've been talking to people about that at like what the US government does, 447 00:35:37.920 --> 00:35:40.000 and that the whole barring and lending treasury and the FED and all that 448 00:35:40.239 --> 00:35:45.199 it's one giant ponzi. And then I realized that some of these talking heads 449 00:35:45.199 --> 00:35:49.199 are they just distracting us from that. That's why you don't teach us about 450 00:35:49.239 --> 00:35:52.159 how money works in school. No, I don't. You've given them too 451 00:35:52.239 --> 00:35:53.960 much credit. I think the monetary system is a boiling frog. You put 452 00:35:54.000 --> 00:35:57.960 a frog in cold water and you turn the heat on. It doesn't know 453 00:35:58.000 --> 00:36:02.239 it's dying. And I think the monetary system is a boiling frog. And 454 00:36:02.320 --> 00:36:06.880 we're all in We're all in the water. And a few of us that 455 00:36:06.880 --> 00:36:09.719 that focus on the monetary system, that deal with the tech, that understand 456 00:36:09.719 --> 00:36:15.920 the intersection of the tech and capital markets and decentralization and bologies and networks, 457 00:36:15.960 --> 00:36:21.639 the state ideas and Toshi, you knows, white paper, we get it, 458 00:36:21.840 --> 00:36:23.440 and and and and yes, there's a chance that we don't have at 459 00:36:23.440 --> 00:36:27.360 one hundred percent right, and that we are wrong in many ways. But 460 00:36:27.440 --> 00:36:30.599 I think when it comes to the basics, I don't think we are okay. 461 00:36:30.840 --> 00:36:35.320 But for everybody else, they're like a frog being boiled in a vat 462 00:36:35.400 --> 00:36:43.599 of water slowly. Bill, you've been a bitcoin whether you knew a bitcoin 463 00:36:43.639 --> 00:36:45.159 for a very long time. I saw your ted talk and everything. You've 464 00:36:45.199 --> 00:36:49.719 been here a long time. I would love to get your perspective on the 465 00:36:49.880 --> 00:36:53.239 spotty tast and how significant that was when the market. What are your thoughts 466 00:36:53.239 --> 00:36:57.400 and the performance and outlook for the rest of the year. I think, 467 00:36:58.519 --> 00:37:00.400 what do I think about this? So I think the couple of things. 468 00:37:00.440 --> 00:37:07.679 One. I think having black Rock and other institutions, major institutions market bitcoin 469 00:37:07.960 --> 00:37:13.920 to the public is great, right, just creates awareness. Why is black 470 00:37:14.000 --> 00:37:16.159 Rock interested in this? That's the question that a lot of people are asking. 471 00:37:17.039 --> 00:37:24.079 That's good. Right, is an ETF the best way to have an 472 00:37:24.119 --> 00:37:30.920 insurance policy on everything we're talking about? I don't think so. But again, 473 00:37:30.480 --> 00:37:37.559 who cares, right, it's just Bill talking so so marketing value love. 474 00:37:37.559 --> 00:37:44.760 It certainly helps ABRA because our high net worth clients and aber private right 475 00:37:44.920 --> 00:37:49.840 once they dig in, an SMA account that's accessible one hundred and forty four 476 00:37:49.880 --> 00:37:53.000 hours a week is significantly better. Not only not only can I hold other 477 00:37:53.000 --> 00:37:58.639 assets besides bitcoin, but but it's significantly better than an ETF that trades thirty 478 00:37:58.679 --> 00:38:01.360 hours a week, five hours a week, whatever it is. And it 479 00:38:01.440 --> 00:38:06.360 was, like I said before, that was very acute when when Iran was 480 00:38:06.400 --> 00:38:09.960 sending drones and planes to Israel a few weeks ago and the bitcoin price fell, 481 00:38:10.079 --> 00:38:14.639 which you know, it recovered, but if you wanted to do something 482 00:38:14.679 --> 00:38:19.079 about it during that timeframe, you couldn't because the banks and the stock markets 483 00:38:19.119 --> 00:38:22.960 were closed. And so that's not the way the markets are supposed to work. 484 00:38:23.000 --> 00:38:30.519 Bitcoin as an asset doesn't mesh well with the existing banking system. It's 485 00:38:30.559 --> 00:38:32.960 its own matrix, and the ETFs are trying to build a hard line into 486 00:38:34.000 --> 00:38:37.519 the matrix, and that can take you so far. It creates awareness for 487 00:38:37.599 --> 00:38:42.239 the matrix, but it doesn't put you fully inside the matrix. Do you 488 00:38:42.239 --> 00:38:45.199 want to be inside the matrix? You use bitcoin the way it was intended. 489 00:38:45.320 --> 00:38:49.960 The SMA model you know, gets you like very very close because they're 490 00:38:50.000 --> 00:38:52.119 your assets, right, do you have title to your assets? Still, 491 00:38:52.159 --> 00:38:58.440 regardless of what happens to ABRA. So again, great marketing tool helping us 492 00:38:58.480 --> 00:39:01.760 tremendously. Obviously, the price narrative find You know, I hope bitcoin, 493 00:39:01.840 --> 00:39:05.519 I hope it goes to Balhalla. That's fine, but I care just as 494 00:39:05.599 --> 00:39:12.039 much about the system as I do about the price, and the ETF is 495 00:39:12.079 --> 00:39:15.280 good marketing for the system, but it doesn't represent the system. Yeah, 496 00:39:15.320 --> 00:39:20.840 I have this similar feelings love hate relationship. I see it as a kind 497 00:39:20.840 --> 00:39:23.559 of a trojan horse almost because I believe in self custody. I do self 498 00:39:23.559 --> 00:39:30.119 custody majority of my crypto bitcoin, of course, But is it you know, 499 00:39:31.679 --> 00:39:35.440 I always think in the back of my mind because I know human beings 500 00:39:36.079 --> 00:39:38.519 were the same, the same psychology and emotions and things play out. It 501 00:39:38.559 --> 00:39:44.239 could be decades generations. Could they confiscate bitcoin now easily? Because of that? 502 00:39:44.280 --> 00:39:47.280 Because you put it all in ETF and two, you know, are 503 00:39:47.280 --> 00:39:52.119 they going to do the same leverage bullshit on top of bigcoin now because they 504 00:39:52.159 --> 00:39:54.519 have it, They're in the majority of capitals coming in like they would real 505 00:39:54.639 --> 00:39:59.800 estate. And who knows what happens in the future, right, Yeah, 506 00:40:00.000 --> 00:40:01.880 I agree, I agree, We don't know. Again, I think the 507 00:40:01.920 --> 00:40:07.800 operative point here is that bitcoin itself, and Caitlin Long has been the master 508 00:40:07.920 --> 00:40:13.159 of making this point for five or six years, Bitcoin itself doesn't mesh well 509 00:40:13.199 --> 00:40:16.760 with the traditional banking system. You have settlement issues, you have timing issues, 510 00:40:16.800 --> 00:40:22.719 you have banks or closed issues, you have leverage issues. You know 511 00:40:22.800 --> 00:40:28.079 banks can leverage themselves significantly. Well, we you know, bitcoin and re 512 00:40:28.119 --> 00:40:31.760 hypothlication don't really mix very well, right. You know, it is possible 513 00:40:31.800 --> 00:40:37.360 to generate a relatively safe DeFi yield on bitcoin today, right. I think 514 00:40:37.480 --> 00:40:40.000 there's been times this year where you can make seven eight nine percent on the 515 00:40:40.039 --> 00:40:47.159 carry trade. The long term yield on bitcoin is zero, right, So 516 00:40:49.760 --> 00:40:54.320 that's an issue because the natural yield on a deflationary asset at scale is zero, 517 00:40:57.480 --> 00:41:00.280 and it's it's simply a trade of productivity for bitco point at that point, 518 00:41:00.760 --> 00:41:04.559 whether I'm mining or I'm working and you're paying me in bitcoin, or 519 00:41:04.559 --> 00:41:07.039 I'm giving you goods and you're paying me in bitcoin, right, and you 520 00:41:07.039 --> 00:41:12.400 may have a return in equity for your business, but the natural yield on 521 00:41:12.480 --> 00:41:15.519 holding the asset should be zero. So anyway, my point is is that 522 00:41:15.239 --> 00:41:21.679 the two systems don't mix well, and people should be thinking about bitcoin as 523 00:41:21.679 --> 00:41:27.000 an insurance policy on government run amok and not oh, let's you know, 524 00:41:27.079 --> 00:41:34.639 integrate bitcoin into the banking system. Bitcoin is pristine collateral for lending, but 525 00:41:34.679 --> 00:41:37.519 I don't think it's going to be banks that own that market, right, 526 00:41:37.559 --> 00:41:42.679 I think it's going to be companies like ABRA that help people borrow via DeFi 527 00:41:43.360 --> 00:41:46.280 so that you can avoid the trials and tribulations of having Tom know how defile 528 00:41:46.400 --> 00:41:52.519 works in detail, right and still safely borrow without having to take counterparty risk 529 00:41:52.559 --> 00:41:55.079 to a bank or to ABRA for that better. And that's the future of 530 00:41:55.159 --> 00:42:00.159 lending. Right. You have this pristine collateral that Araid's twenty four to seven 531 00:42:01.000 --> 00:42:06.199 where you don't have to worry about somebody's credit score because the Defie network is 532 00:42:06.239 --> 00:42:10.920 holding the collateral. I want to get your thoughts on the Etherorem's BODYTF because 533 00:42:10.960 --> 00:42:15.119 there's a race for that as well. But there's complications going back to what 534 00:42:15.119 --> 00:42:19.079 we were talking about before, the SEC seemingly trying to categorize as security in 535 00:42:19.079 --> 00:42:22.559 addition to other blockchains and tokens. Do you think we see that approval of 536 00:42:22.559 --> 00:42:28.239 this cycle or this thing goes to the courts again. Yeah. I think 537 00:42:28.239 --> 00:42:30.559 it goes to the courts again. But I think there's a two different issues. 538 00:42:30.599 --> 00:42:36.000 I think whether whether the eth is a security shouldn't matter, because obviously 539 00:42:36.239 --> 00:42:39.719 there can be ETFs of other securities happens all the time. I don't think 540 00:42:39.719 --> 00:42:44.480 ETH is a security, but that's irrelevant. But I do think it goes 541 00:42:44.519 --> 00:42:47.400 to the court just because they'll drag their feats and they want to delay it 542 00:42:47.400 --> 00:42:52.079 as long as possible, and the logical outcome is the court. But given 543 00:42:52.119 --> 00:42:54.559 the precedents that have been set, I would suspect that they would lose again 544 00:42:54.639 --> 00:42:59.519 and we'll have our ETF. And now whether that takes nine months or eighteen 545 00:42:59.519 --> 00:43:04.760 months at this point, I don't know. But and I'm trying not to 546 00:43:04.800 --> 00:43:09.400 be pessimistic or sarcastic about it, I do I think, I do genuinely 547 00:43:09.440 --> 00:43:14.039 believe that this is headed to court again, and I don't see any reason 548 00:43:14.079 --> 00:43:16.679 why the outcome would be any different. Staking makes no difference in the day. 549 00:43:17.360 --> 00:43:24.719 It's just a really consensus algorithm. So right in regards to Etheroreum, 550 00:43:24.880 --> 00:43:30.159 we saw black Rock is tokenizing bonds, Well, it's gonna be funds and 551 00:43:30.199 --> 00:43:34.079 so forth, and there's a big move for tokenization, taking real estate, 552 00:43:34.079 --> 00:43:37.280 taking stops bonds and all these things putting on the blockchain. What are your 553 00:43:37.320 --> 00:43:39.480 thoughts on that? And is Abra exploring any of these opportunities. No, 554 00:43:40.079 --> 00:43:43.719 I love it. I'll give you two reasons why I think it's interesting. 555 00:43:43.840 --> 00:43:46.599 Tokenization of real world assets I think is interesting for two reasons, at least 556 00:43:46.599 --> 00:43:52.400 to me. One, it creates fungibility across asset types. I can trade 557 00:43:52.400 --> 00:43:57.599 bitcoin for real estate. And two it basically, well, it's kind of 558 00:43:57.639 --> 00:44:00.360 related to one. It creates fungibility for trading, and to it creates fung 559 00:44:00.440 --> 00:44:06.480 ability for lending because now you can basically collateralize everything easily and have a single 560 00:44:06.519 --> 00:44:10.000 lending network that was traditionally access accessible to the wealthy. So in other words, 561 00:44:10.400 --> 00:44:15.199 prime businesses at Goldman and Morgan Stanley like you know, and those desks, 562 00:44:15.199 --> 00:44:21.920 they would traditionally lend against equities to the wealthy. Robinhood doesn't do that. 563 00:44:22.559 --> 00:44:24.920 They don't they don't pay you interest on your equity holdings while they're lending 564 00:44:24.920 --> 00:44:30.960 them out right. So so, but with tokenized assets, everyone can play 565 00:44:30.000 --> 00:44:34.800 in that world, right you can. You can stake your collateral on a 566 00:44:34.880 --> 00:44:38.000 decks, whether it's real estate or stocks or whatever, and you can earn 567 00:44:38.000 --> 00:44:42.880 a yield on that collateral, or you can borrow against that collateral, and 568 00:44:42.920 --> 00:44:46.800 you've got a normalized, interoperable way to do that across all asset types. 569 00:44:47.440 --> 00:44:52.239 And it creates tremendous liquidity opportunities that don't easily exist today, right because you 570 00:44:52.280 --> 00:44:58.079 can get liquidity in gold, the yacht, real estate, stocks, bitcoin, 571 00:44:58.719 --> 00:45:04.599 whatever a and homes that you know where you have complicated helocked processes and 572 00:45:05.039 --> 00:45:07.679 and and it's all fungible in some way. That's where I think this is 573 00:45:07.719 --> 00:45:12.039 headed. Not there yet, but but I think that's why companies like black 574 00:45:12.079 --> 00:45:15.880 Rock are interested in this because it unlocks a tremendous amount of liquidity in trillions 575 00:45:15.920 --> 00:45:22.559 of dollars in assets. Mhmm, are you are you guys trying to do 576 00:45:22.599 --> 00:45:29.320 anything on your end or you're just watching right now? And then stable coins 577 00:45:29.320 --> 00:45:31.599 are a form of real world asset. I would actually positive Bitcoin has become 578 00:45:31.639 --> 00:45:35.840 a real world asset in so far that it's a it's a digital physical ass 579 00:45:35.960 --> 00:45:39.440 you can hold that that you can borrow against. What what's too early is 580 00:45:39.440 --> 00:45:46.239 is other stuff, you know, real estate, you know, other other 581 00:45:46.280 --> 00:45:52.199 assets. We're interested in it. It's unclear to us how DeFi markets will 582 00:45:52.239 --> 00:45:54.440 evolve, but I do think it's going to happen this cycle, and I 583 00:45:54.480 --> 00:45:58.519 think it's going to happen outside the US first, for all the reasons that 584 00:45:58.559 --> 00:46:04.559 we that we've been toscussing mhm, and we'll figure out what our you know, 585 00:46:04.599 --> 00:46:06.920 what our clients want and how they can take advantage of it when it 586 00:46:07.039 --> 00:46:09.679 when it's ready. I want to get your thoughts on meme coins, and 587 00:46:09.880 --> 00:46:15.239 not that I watch your meme coin picks, but just the speculation and human 588 00:46:15.320 --> 00:46:20.320 psychology here because you've been here since the dot com boom and bus all right, 589 00:46:20.440 --> 00:46:23.480 uh and seeing speculative bubbles. What are your thoughts on meme coins and 590 00:46:23.960 --> 00:46:29.079 how human beings are interacting it seems you know, it started with AMC game 591 00:46:29.119 --> 00:46:34.800 stop. Now it's much greater with with tokens. Yeah. So when I 592 00:46:34.840 --> 00:46:38.519 was at netscape, there was this animated gift of of I don't know if 593 00:46:38.559 --> 00:46:40.360 it was an animated gift, but it was a video. I think it 594 00:46:40.400 --> 00:46:44.800 played the an animated gift of this thing called the Dancing Baby. Do you 595 00:46:44.840 --> 00:46:51.880 know what the Dancing Baby was? I remember that there was in around two 596 00:46:51.920 --> 00:46:54.119 thousand, I think, when Push was running against Carry, this company called 597 00:46:54.199 --> 00:47:00.880 jib jab that made videos. Yeah, Okay, where I'm going with this 598 00:47:01.039 --> 00:47:07.360 is is that we've had these kind of memes that were culturally relevant for decades. 599 00:47:07.400 --> 00:47:12.239 Now. What's interesting about Web three is you can own a piece of 600 00:47:12.239 --> 00:47:17.719 it, right, And I'm fascinated by that. I've never been the person 601 00:47:17.760 --> 00:47:22.679 who was closest to pop culture. Like you wouldn't come to Bill and say, 602 00:47:22.719 --> 00:47:23.800 Bill, where do you think pop culture is going to go in four 603 00:47:23.880 --> 00:47:28.480 years? You'd have to be a moron to come to Bill to want to 604 00:47:28.559 --> 00:47:30.840 learn where pop culture is going in four years. That having been said, 605 00:47:31.159 --> 00:47:37.079 I've come to realize that there's these patterns in pop culture as it relates to 606 00:47:37.159 --> 00:47:43.800 memes visa be the Internet that we've had since Dancing Baby, through jib Jab, 607 00:47:44.119 --> 00:47:51.079 through Pepe and Bonk and you know, doge and with and you know, 608 00:47:51.280 --> 00:47:54.679 Mew and whatever whatever. I think it's fascinating now. I also, 609 00:47:55.239 --> 00:48:01.480 as part of ABER, we run a token fund for old coins and you 610 00:48:01.519 --> 00:48:05.800 know, it's small but growing. It's done very well the last few months, 611 00:48:06.280 --> 00:48:08.519 and it's got a small exposure to me mean coins, and that exposure 612 00:48:08.519 --> 00:48:15.519 has grown way faster than our exposure to well performing tokens. And it's not 613 00:48:16.079 --> 00:48:21.280 an irresponsible exposure, but I think the couple of percent grew to ten percent, 614 00:48:21.360 --> 00:48:24.119 and we're pretty bullish on it. And so you know, look, 615 00:48:24.719 --> 00:48:34.400 I think it's very interesting this idea that you can participate in internet based pop 616 00:48:34.440 --> 00:48:39.719 culture own a piece of it, the same way that my now grown kids 617 00:48:42.320 --> 00:48:45.400 collected Pokemon cards. There was one they wanted that they didn't get in the 618 00:48:45.400 --> 00:48:50.840 packs they were buying. They could go on eBay and buy it right. 619 00:48:51.639 --> 00:48:57.119 Well, if you want to own you know, with or whatever it's called, 620 00:48:57.159 --> 00:48:59.840 dog we've had because you think that you know it's going to be on 621 00:49:00.360 --> 00:49:04.039 the sphere. When they raised three hundred thousand dollars how much they raised to 622 00:49:04.079 --> 00:49:07.880 do it, go buy it right. Just to me, it's no different 623 00:49:07.920 --> 00:49:12.280 than being able to buy that Pokemon card off of eBay, except now it's 624 00:49:12.280 --> 00:49:16.320 easily accessible twenty four to seven globally, which is pretty damn amazing. And 625 00:49:17.199 --> 00:49:23.480 it's also showing us in an inadvertent back to our way that this is this 626 00:49:23.559 --> 00:49:30.360 is a relevant means of understanding how the banking system in the future is going 627 00:49:30.440 --> 00:49:35.159 to work. You were asking about tokenized assets. Well, here's tokenized non 628 00:49:35.280 --> 00:49:40.360 real world assets memes that we made up. They're not securities, and they're 629 00:49:40.400 --> 00:49:45.519 tradable twenty four or seven to some degree. They represent pop culture and other 630 00:49:45.599 --> 00:49:50.119 things. You know, you know, I was following bank pretty closely late 631 00:49:50.199 --> 00:49:53.480 last year, you know, we put a little tiny amount in the fund, 632 00:49:53.519 --> 00:49:55.960 which grew a lot, and they had this like, you know, 633 00:49:57.039 --> 00:50:00.039 twelve days of Bonk miss and all this crazy easy stuff that I thought was 634 00:50:00.119 --> 00:50:05.880 very engaging, you know. And again, you know, do I think 635 00:50:05.920 --> 00:50:10.400 it's going to change the world the way bitcoin is changing money. No, 636 00:50:10.440 --> 00:50:15.480 But it's changing the world in a different way where it captures people's imagination around 637 00:50:15.480 --> 00:50:21.119 pop culture, in a way where you can actively participate. It's not just 638 00:50:21.199 --> 00:50:23.880 gambling. It's more than that. And I think if you just look at 639 00:50:23.920 --> 00:50:29.239 this as stupid gambling, you're missing the bigger picture. You're missing the point. 640 00:50:30.360 --> 00:50:32.079 And that's why I start with this example of I'm an older guy, 641 00:50:32.119 --> 00:50:37.119 so I start with this example of dancing babies from the nineties, because wouldn't 642 00:50:37.199 --> 00:50:42.679 invent memes in the last three years. But we've been able to put value 643 00:50:42.679 --> 00:50:46.519 on memes for people, you know, and and and I think Chris Dixon 644 00:50:46.559 --> 00:50:51.639 talks about this in his in his book you know, reading right own and 645 00:50:51.800 --> 00:50:55.280 and we can own a piece of that meme culture. Now. Yeah, 646 00:50:55.320 --> 00:50:59.679 it's a great, great point. And I've been thinking a lot about this 647 00:50:59.719 --> 00:51:02.079 because initially I had the new jerk reaction of meme coins. This is all 648 00:51:02.119 --> 00:51:06.280 bullshit, Like, what is this? But then I realized it's culture on 649 00:51:06.320 --> 00:51:12.119 the blockchain. It's just human beings tokenizing their ideas and their husurn or whatever. 650 00:51:12.519 --> 00:51:16.159 And I was young, you know, back in two thousands. You 651 00:51:16.199 --> 00:51:19.639 know, I was in high school. I graduated in two thousand and one. 652 00:51:19.639 --> 00:51:22.679 But I remember all these things, and I remember jip Jab and me 653 00:51:22.679 --> 00:51:24.599 and my friends laughing at the different stuff on there. But now, like 654 00:51:24.639 --> 00:51:28.639 you said, this time around, I'm older. I can participate. I 655 00:51:28.920 --> 00:51:32.679 actually have equity and be part of a movement and get rewarded for that. 656 00:51:32.920 --> 00:51:38.639 So it's pretty incredible. You know, we're coming up on time. I 657 00:51:38.679 --> 00:51:44.800 do want to ask you about what are you most excited about for the future 658 00:51:44.800 --> 00:51:46.199 of crypto. There is obviously a lot of hurdles, right, we talked 659 00:51:46.239 --> 00:51:51.119 about it, But what are you most excited about? Look, I think 660 00:51:52.519 --> 00:51:57.760 I think the future here is decentralized. I think the pundulum towards monolithic centralized 661 00:51:58.719 --> 00:52:04.000 power bases has reached its zenith, at least as it relates to the West. 662 00:52:04.239 --> 00:52:06.639 You know, we'll see what happens in China. And I think this 663 00:52:06.800 --> 00:52:10.519 movement towards decentralization is super early, starting with crypto, and you know, 664 00:52:10.639 --> 00:52:15.760 I think it's going to make its way to AI and other things, and 665 00:52:15.679 --> 00:52:20.880 I'm bullish on it. Right I think we need the checks and balances in 666 00:52:20.920 --> 00:52:24.519 the system that transcend governments because right now we have this kind of fourth leg 667 00:52:24.559 --> 00:52:29.199 of government that wasn't meant to be in the US and in the West, 668 00:52:29.800 --> 00:52:36.039 and we need to check against that fourth legs, you know, unchallenged power, 669 00:52:36.679 --> 00:52:40.920 and I think decentralized systems gives power to the people where it belongs. 670 00:52:42.360 --> 00:52:46.719 And I'm super bullish on it. Bill always a pleasure. I'm really excited 671 00:52:46.920 --> 00:52:51.119 for the future updates around ABER. I think you guys are doing something incredible 672 00:52:51.599 --> 00:52:54.079 and what I potentially see as the meeting in the middle of the road with 673 00:52:54.159 --> 00:52:57.679 the regulators, but we'll have to wait and see. But thank you so 674 00:52:57.760 --> 00:53:00.480 much for joining me. Ye good to see you. Thanks for having me