Speaker 1: The investment environment is really exciting right now. We have
Speaker 1: capital markets are open, that's a wonderful thing. We have
Speaker 1: some really interesting structural buyers coming into our space. If
Speaker 1: you think about it. We have a stable coin bill
Speaker 1: and that's going to result by our own government's reports,
Speaker 1: three trillion plus and stable coins are coming into the
Speaker 1: crypto ecosystem, right. What does that mean if you have
Speaker 1: trillions of dollars coming in that's non yielding. Well, I
Speaker 1: personally think it's going to be the token of choice
Speaker 1: in the developing world. Would you rather have your local currency?
Speaker 1: Would you rather have dollars? Probably greenbacks? Right.
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Speaker 2: like to learn more, please visit the link in the description. Hey, folks,
Speaker 2: welcome into the Thinking Crypto Podcast. I'm your host Tony
Speaker 2: Edward and we are recording out a Station three in
Speaker 2: New York's Financial District, and my guest is Chris Perkins,
Speaker 2: who is the president of coin Fund. Chris, great to
Speaker 2: have you, Tony.
Speaker 1: Amazing to be back on. How are you.
Speaker 2: I'm doing well. The market is ripping after Jerome Powell's
Speaker 2: statements this morning. I'm excited.
Speaker 1: How can you not be? I was literally in Jackson
Speaker 1: Hole yesterday, was spent the week there, amazing time. It
Speaker 1: was really amazing conversations with some very senior policy makers.
Speaker 1: I mean, look, from my perspective, everything's changed, Chris.
Speaker 2: It's kind of surreal. We were talking before the recording
Speaker 2: like you almost have to pinch yourself.
Speaker 1: Like four years.
Speaker 2: Over the past four years, it was dystoping, it was scary.
Speaker 2: People are getting lawsuits, and now so many of trad
Speaker 2: fin institutions are coming into crypto.
Speaker 1: Yeah. One of my frustrations is that today even people
Speaker 1: were nervous, right when you know the phone rings and
Speaker 1: it's the SEC and was like, what did I do wrong?
Speaker 1: That's not the way it's supposed to be. The way
Speaker 1: it's supposed to be is that regulators in the private
Speaker 1: sector work together. Like we're trying to solve like really
Speaker 1: hard problems. We're trying to position the US as the
Speaker 1: innovation and the crypto capital of the world. Right, we
Speaker 1: have issues around security. Maybe we'll talk about maybe some
Speaker 1: issues around how do we balance that with customer protections, privacy,
Speaker 1: national security. These are hard problems and the best way
Speaker 1: to solve them is to sit down with policy makers
Speaker 1: and talk, right, And that's exactly what I'm seeing now.
Speaker 1: But that's normal. That's the way it should be. Right,
Speaker 1: this should not be exceptional. We're supposed to be engaging
Speaker 1: and solving problems together, right, And then people are like WHOA.
Speaker 1: Like the IPO markets, the equity markets, they're open, Like
Speaker 1: that's the way it should be, right, our public markets,
Speaker 1: we have the greatest capital markets in the world. They
Speaker 1: should be open. We shouldn't be as scared and afraid.
Speaker 1: And so, you know, I feel like we've been gas
Speaker 1: lit into this feeling that oh my gosh, this is exceptional,
Speaker 1: not you know, no, this should be the norm. And
Speaker 1: I just wanted to thank all those people who stepped
Speaker 1: up to serve. You know, it's not easy to serve,
Speaker 1: like it's you know, you leave the private sector and
Speaker 1: you lose a lot of flexibility, wear a suit every day.
Speaker 1: We have some really amazing people that are trying to
Speaker 1: make things right, and I'm grateful.
Speaker 2: Yeah, and to your point, like Hester Purse, Paul at Cher,
Speaker 2: Paul Atkins, and Mark E. Wada as well, did a
Speaker 2: complete well change the sec completely. We got roundtables, we
Speaker 2: have transparency who they're meeting with. I mean, to your point,
Speaker 2: this is how we should have been, but it was
Speaker 2: completely different.
Speaker 1: Yeah, Like I saw Atkins a couple of days Ago
Speaker 1: and chairman Atkins, I should say because I respect the
Speaker 1: man immensely and he, uh, you know what did he?
Speaker 1: What did you start off with? On his panel? I'm
Speaker 1: gonna make IPOs great again because they should.
Speaker 2: Be, right, and Chris isn't amazing speaking IPOs. You have
Speaker 2: all these crypto companies now going public doing IPOs. It's
Speaker 2: again surreal but also very exciting. I'm just really curious
Speaker 2: what the future looks like from an innovation standpoint, Which
Speaker 2: new companies are going to come in, what new technologies
Speaker 2: are going to build the much more.
Speaker 1: Yeah, so the IPO markets are open, and that's a
Speaker 1: good thing, but I think there's an even bigger thing
Speaker 1: under the surface that's about to happen right now in
Speaker 1: the US. Did you know eighty one percent of companies
Speaker 1: with a one hundred million dollars in revenue they're private,
Speaker 1: and so normal people have been locked out of that market, right,
Speaker 1: And guess what where are the most innovative, exciting, fastest
Speaker 1: growing companies. Where do you make your money? How do
Speaker 1: you really get rich? You invest in those private early
Speaker 1: stage companies. But we're not allowing Americans to do it.
Speaker 1: It's crazy. Eighty one percent right. It's good to hear
Speaker 1: the chairman. He's saying, listen, it's time for us to
Speaker 1: unlock these things. And I think the solution here is
Speaker 1: through what we call Internet capital markets or tokenization. I
Speaker 1: think they're going to work on a couple of exceptions,
Speaker 1: like we have a company called Superstate with a program
Speaker 1: called opening Bell. But really in the United States, there
Speaker 1: are three ways to take a company public. One is
Speaker 1: through IPOs, where you go with bankers. We're seeing some
Speaker 1: of this happen with Circle, right, and this is a
Speaker 1: good thing because we're making private companies become public via
Speaker 1: the old fashioned way.
Speaker 2: Right.
Speaker 1: We're also seeing a lot of spack activity in verse takeovers.
Speaker 1: I think we're going to talk about dat here in
Speaker 1: a second. But the third way to bring a company
Speaker 1: public is via a direct listing, and that's where you
Speaker 1: Coinbas did this a couple of years ago, where you
Speaker 1: take your shares, your private shares, and you directly list
Speaker 1: them right without those intermediaries. This is where things get
Speaker 1: very interesting because if you can come up with a
Speaker 1: way through tokenization to allow people with access to the Internet,
Speaker 1: you know, the market sets the price in a direct listing.
Speaker 1: Guess what our markets are pretty robust. If you look
Speaker 1: at the last administration under Gensler, there were only two
Speaker 1: tokens that were that we were known commodities. That was
Speaker 1: really bitcoin and meme coins. Right. And by the way,
Speaker 1: I talked about the eighty one percent, what's like the
Speaker 1: one thing that you could have gotten really early stage
Speaker 1: if you're just a normal person, that was bitcoin, right,
Speaker 1: and it made a lot of millionaires because people were
Speaker 1: able to access that market. Okay, but anyway, let's step
Speaker 1: back and look at meme coins. Meme coins last year
Speaker 1: one hundred and forty billion dollar market cap. Do you
Speaker 1: know what the market do you't know how much money
Speaker 1: was raised in IPOs last year in twenty four thirty billion? Right?
Speaker 1: So Trump the Trump token, people hate it, they love
Speaker 1: it whatever, fifteen billion dollars market cap over thirty six
Speaker 1: hours on a weekend. So the true power of these
Speaker 1: blockchains is capital formation because anyone with access to the
Speaker 1: Internet can buy something. Right. I'm very excited about the
Speaker 1: future of direct listings where we're able to take companies
Speaker 1: using tokenization on chain and make them available to the
Speaker 1: masses earlier stage. That's going to be cool.
Speaker 2: That absolutely makes sense and to your point of it
Speaker 2: hasn't been fair, right, You had these accreditation laws and
Speaker 2: the SEC has talked about possibly rolling those back or
Speaker 2: do they even need to roll it back if it's
Speaker 2: going to be in a tokenized form and I can
Speaker 2: buy two tokens if I want.
Speaker 1: Yeah, so if you tokenize the security, it's still a security.
Speaker 1: And so we do have to go and look at like, hey,
Speaker 1: what are the principles behind these rules, like why do
Speaker 1: we not allow certain types of people who don't make
Speaker 1: enough money to access certain markets? Is that equitable and
Speaker 1: fair or is it not? And by the world, the
Speaker 1: world has changed. People have a lot more access to information.
Speaker 1: They have access to CHET, GPT or LM of choice, right,
Speaker 1: so people retails a lot smarter these days. And so
Speaker 1: you know, does it really do these rules make sense?
Speaker 1: I don't think so.
Speaker 2: Yeah. And to your point, like as myself who first
Speaker 2: got into crypto and investing, you know, I didn't know anything.
Speaker 2: I'm an immigrant kid. My parents don't know. They're just
Speaker 2: working hard, right, And when I started learning about trading
Speaker 2: view and how to look at charts and then how
Speaker 2: do I look at SEC filings? And what is the
Speaker 2: FED saying? And everything's online. I got more knowledgeable, So
Speaker 2: why can't I participate? Why do I have to be accredited?
Speaker 1: Totally agree with that, but yeah, I mean I think
Speaker 1: the the investment environment is really exciting right now. Right,
Speaker 1: we have capital markets are open, that's a wonderful thing.
Speaker 1: We have some really interesting structural buyers coming in to
Speaker 1: our space, if you think about it. We have a
Speaker 1: stable coin bill and that's going to result. By our
Speaker 1: own government's reports, three trillion plus in stable coins are
Speaker 1: coming into the crypto ecosystem. Right. What does that mean
Speaker 1: if you have trillions of dollars coming in that's non yielding. Well,
Speaker 1: I personally think it's going to be the token of
Speaker 1: choice in a developing world. Would you rather have your
Speaker 1: local currency? Would you rather have dollars? Probably? Greenbacks? Right?
Speaker 1: And now you can access them for the very first
Speaker 1: time in a very easy way. But the problem with
Speaker 1: that is that they are non yielding. They're depreciating assets.
Speaker 1: So what are people going to do. They're going to
Speaker 1: go into DeFi, right, and then they're going to go
Speaker 1: and they're going to find their agents. We have a
Speaker 1: company called Giza and they have a really cool agent
Speaker 1: called Arma and this is not investment advice, but they
Speaker 1: can actually go and optimize that yield, right. And so
Speaker 1: you have this one structural buyer coming in. Those are
Speaker 1: the stable coin folks, right, and the hop is going
Speaker 1: to be DeFi and AI agents to optimize. You have
Speaker 1: another structural buyer, which are the four one case coming in.
Speaker 1: Trump made that executive order, so that's new capital coming
Speaker 1: into the system. And then you have this third innovation
Speaker 1: that a lot of people didn't see a coming, and
Speaker 1: those are the dats, the digital asset treasuries, and so
Speaker 1: against regulatory risking, against that structural buying, against macro we
Speaker 1: saw you know what Jpal said today, It's a really
Speaker 1: interesting time to be in the market.
Speaker 2: Yeah, it's exciting. Feels like we've crossed the chasm and
Speaker 2: it's not looking back. This thing is ready to go.
Speaker 2: You worked at City Bank just last week, I think
Speaker 2: it was we heard a report at City Bank once
Speaker 2: to launch your own stable coin, get involved in crypto.
Speaker 2: What are your thoughts on all these banks now looking
Speaker 2: to jump in.
Speaker 1: It's pretty funny. I've spoken to some very very senior
Speaker 1: people at the banks at the operating committee level, and
Speaker 1: what they'll tell me is pretty similar it's a little
Speaker 1: bit different per bank, but essentially, hey man, for the
Speaker 1: last four years, the regulators would come in and say
Speaker 1: what are you doing in dough and I would say,
Speaker 1: I'm not doing anything and they would leave me alone.
Speaker 1: And He's say. Now they come in and they say
Speaker 1: what are you doing in crypto? And I say and
Speaker 1: they say, you know, why are you not trying to
Speaker 1: fix your settlements? Why are you not trying to improve,
Speaker 1: you know, your tech systems? And they're like, so effectively,
Speaker 1: they're really trying to catch up. I think it was
Speaker 1: pretty amusing. You saw the ABA come out against some
Speaker 1: of the Genius Bill provisions, so like, wait a second,
Speaker 1: you can still get interest and as they start learning
Speaker 1: about that, they're like, uh oh, but look, the banks
Speaker 1: are smart. There's one thing that continues to hold them
Speaker 1: back though, and that's those are the regulatory capital rules,
Speaker 1: the bosal rules, so banks have to hold capital based
Speaker 1: on their behaviors, and the the BIS still requires them
Speaker 1: to hold a lot of capital, so it's still kind
Speaker 1: of holding them back. So that has to get solved
Speaker 1: for them to really participate. It's a long story, but
Speaker 1: watch the Basal rules and you can go to BIS
Speaker 1: and they continue to indict, and they hate stable coins
Speaker 1: and they hate crypto. They're gonna have to either figure
Speaker 1: it out or be left behind. But that's holding the
Speaker 1: banks back. But generally speaking, all the banks you know,
Speaker 1: are now moving. The other thing that they' struggled with
Speaker 1: over overtime is talent. Right, so when bull markets come,
Speaker 1: people as they start learning about the opportunity in the space,
Speaker 1: like wait a second, I can do go into aving. Wow,
Speaker 1: this is so cool, they tend to jump native pretty quick,
Speaker 1: but you don't see too many native people jumping back,
Speaker 1: so they're gonna have to really figure out talent. I
Speaker 1: know there's a lot of talent challenges across the traditional finance.
Speaker 2: So I'm curious what the pie looks like when you
Speaker 2: slice it. Maybe by twenty thirty, right, will banks be
Speaker 2: offering crypto, custody, trading, and access to all these things.
Speaker 2: And maybe it's more for the boomers and the generation after,
Speaker 2: but for the younger folks, maybe they're just doing it in
Speaker 2: a robbinhood or their apps.
Speaker 1: Man, it's really hard. I'm a big believer in convergence,
Speaker 1: and so you know, let's just look at the dats, right,
Speaker 1: the digitalistic treasuries. So we spent all this time talking
Speaker 1: about tokenization of real world assets. Right. That's where you
Speaker 1: take something and you turn it into a token, right,
Speaker 1: and then once it's a token, it like runs around
Speaker 1: in crypto land and you know, you can you know
Speaker 1: how it works there, send them to defile whatever. Now
Speaker 1: all of a sudden, we have these dats that pop up,
Speaker 1: and what we're doing is we're taking crypto native tokens
Speaker 1: and we're turning them into securities. Right. Securities used to
Speaker 1: be a death sentence under Gensler. Now it's not. Now
Speaker 1: it's actually really exciting because as a security you can
Speaker 1: navigate all the very scalable enterprise ready infrastructure, prime brokerages,
Speaker 1: margin lending, all this stuff. Right, And so as we
Speaker 1: see the world folk going forward, Look, people are asking
Speaker 1: me all the time these dats, is it a bubble?
Speaker 1: Is it this you know? Or is it is it here?
Speaker 1: Are they here to stay? My answer is usually like yeah,
Speaker 1: because look there's a little bit of there's a lot
Speaker 1: of hype right now. But at the same time, if
Speaker 1: you're a major foundation, it makes sense to have that
Speaker 1: foundation going forward, and also that DAT because now you
Speaker 1: can avail yourself of all that traditional infrastructure and capital
Speaker 1: markets that really make our country great, very scalable. Right, So,
Speaker 1: so how did the banks end up somewhere in between?
Speaker 1: I mean, they can service a lot of the dats today,
Speaker 1: it's just plug and play. A lot of the traditional
Speaker 1: players can enter the dats, and for some folks entering
Speaker 1: through the traditional window is going to make sense, you know.
Speaker 1: But for others, you know who, you know, like my
Speaker 1: kid who's trying to figure out how to open a
Speaker 1: bank account, but and then he open to phantom all
Speaker 1: and goes crazy, like maybe that's more natural for them.
Speaker 1: But in the end, these worlds are going to converge
Speaker 1: and it's going to be really really interesting. And by
Speaker 1: the way, there's gonna be a basis, right, There's gonna
Speaker 1: be trading opportunities, you know. Can you trade an ETF
Speaker 1: against a DAT or a future like I think the
Speaker 1: future is is like one common UI where you have
Speaker 1: your equities, you have your tokenized products, you have everything
Speaker 1: all in one place. They all have slightly different economics
Speaker 1: and things going on, and you can trade them against
Speaker 1: each other with the.
Speaker 2: Digital acid treasury companies. Are there any risks that you
Speaker 2: see outside of uh mismanagement that happens in every industry,
Speaker 2: every company, right, doesn't matter if it's cryptoi lated or not.
Speaker 2: And related to the bubble conversation, you know, are somebody
Speaker 2: spokes raising too much debt? I don't have a problem
Speaker 2: if a company says we're taking twenty percent of our
Speaker 2: cash and our balance, you know, and buying some bitcoin
Speaker 2: or ether or whatever. But if I go raise billions
Speaker 2: of dollars to buy that asset, does that open up
Speaker 2: a new level risk?
Speaker 1: I think that's come with incredible opportunity and also incredible
Speaker 1: and not incredible, but they also have risk. Let's let's
Speaker 1: talk about some of those scenarios. So I talked about
Speaker 1: the opportunity, you know, having that rapper that allows you
Speaker 1: to access those capital markets, collateral you know, you know,
Speaker 1: you can leverage all these things you can do with
Speaker 1: any other equity. That's the opportunity set, and it's a
Speaker 1: very scalable opportunities set to access capital markets. What's the risk?
Speaker 1: The risk is, Like, dude, I was in futures, right,
Speaker 1: I remember when oil the price of oil went negative
Speaker 1: on futures, right, Like, weird stuff happens, Bad things happen.
Speaker 1: The market is the market. And like in my career,
Speaker 1: I've always you always end up in the tail one
Speaker 1: way or the other. And so could you have a
Speaker 1: negative m NAV which is a multiple to NAV. Yes,
Speaker 1: it's happening, It's happened, it will continue to happen. A
Speaker 1: good management team will be able to navigate those instances, right,
Speaker 1: And so as you start thinking, and I'm again not
Speaker 1: investment advice, but if you start thinking about underwriting one
Speaker 1: of these investments, what do you which would you consider? Well,
Speaker 1: you got to look at the management team. You got
Speaker 1: to look at the fundamentals of the underlying token, right,
Speaker 1: you have to look at their ability to interface with
Speaker 1: those Do they have the expertise you know, not only
Speaker 1: the treasury operation side, you know when to issue equity,
Speaker 1: when to hit the ATM, when to you know, issue
Speaker 1: converts or whatever else. They have to have that expertise.
Speaker 1: They also have to have amazing investor relations. So there's
Speaker 1: many many elements where could things go wrong. Well, if
Speaker 1: they don't have you know, sufficient capital put aside to
Speaker 1: help support the m NAV, you know, should it drop
Speaker 1: into a negative situation, do they not have the right controls?
Speaker 1: You know, is there an issue with you know, security
Speaker 1: or slashing. You know, do they have insurance? But as
Speaker 1: these things mature, you're going to see or do they
Speaker 1: take too much debt? Right, and then the token crashes.
Speaker 1: That's why you have to really understand imagining. Now here's
Speaker 1: the good thing. These are public securities, so they have
Speaker 1: like like it or not, some people hate sucks. They
Speaker 1: have regular you know reporting, you know where you where,
Speaker 1: they have disclosures, they have all those things that every
Speaker 1: equity needs to have. So you know, if you're a
Speaker 1: normal person, you can read it or you can load
Speaker 1: it up into chat GPT and see what it says.
Speaker 1: But but for sophisticated investors, they're gonna be able to
Speaker 1: look at how the company is being run, just like
Speaker 1: any other security and this is some of the beautiful
Speaker 1: this is one of the beautiful things of that rapper.
Speaker 2: In addition, do you want to also look at if
Speaker 2: these companies who have the normal business operation where they're
Speaker 2: generating revenue as a real business and not just we're
Speaker 2: just gonna buy crypto.
Speaker 1: Yeah, I'm so happy that that you made that point.
Speaker 1: There's a couple of things to look at. Do they
Speaker 1: have an operating business, does it contribute or not, but
Speaker 1: even within the asset itself. This is what gets me
Speaker 1: really excited and us talking to some analysts today about
Speaker 1: this who now are looking at and researching the equities.
Speaker 1: Take a take an asset like ethereum. Right, Yes, we've
Speaker 1: seen Michael Sailors prove that dats can work, you know,
Speaker 1: through through various treasury operations and he's been able to
Speaker 1: drive a really superior MNAV. So good good on him.
Speaker 1: But bitcoin doesn't natively yield. Ether does. And so one
Speaker 1: of the things that we built at coin fine, which
Speaker 1: we built something called CAESAR, which is the compost ethereum
Speaker 1: ether staking rate. It's essentially the risk free rate of
Speaker 1: ether ethereum. And so essentially that serves as a beta.
Speaker 1: Now if you're in ethereum, because that's going to be
Speaker 1: one of the natural drivers of your m NAV because
Speaker 1: you have eth and now you have this real yield
Speaker 1: round three percent or whatever. That's just that's table stakes
Speaker 1: because if you took that eth and you staked it,
Speaker 1: you should make at least this SASER rate. Right now,
Speaker 1: what we're looking out for how do they outperform that rate?
Speaker 1: Right And and again the higher yielding asset the higher
Speaker 1: you can yield, the more it contributes to the m
Speaker 1: NAV because it's going to generate additional profit, additional yield
Speaker 1: and profitability over that that that that asset. So this
Speaker 1: is where things get really interesting as the sophisticated folks
Speaker 1: come in to manage treasury apps not only on the
Speaker 1: equity issuance, but also on the yield, the yield side
Speaker 1: of things. Do they know how to use defive, do
Speaker 1: they know how to use you know, staking restaking, and
Speaker 1: you know, do they deploy insurance? Do they ensure the yield?
Speaker 1: You know, we you know, we were actually seeing for
Speaker 1: the first time not only insurance on slashing but also
Speaker 1: yield itself. And so as you start entering into this
Speaker 1: world of yield, there's a lot of opportunity, but there's
Speaker 1: also risks. Anytime something is yielding there that you know,
Speaker 1: usually there's some kind of risk associated. So you need
Speaker 1: to make sure you're able to manage slashing risk, you're
Speaker 1: able to manage lost yield. And we're already seeing products
Speaker 1: coming out in the insurance from that. Do that and
Speaker 1: then expertise, and you know, there's other types of risk
Speaker 1: as you enter into DeFi. You know, hacking and things
Speaker 1: of that sort of smart contract risk. This is where
Speaker 1: things get really interesting. We've got a number of different
Speaker 1: you know, token projects out there now. Their ability to
Speaker 1: drive that yield, in addition to having that knowledge of
Speaker 1: treasure operations is going to be really interesting to watch.
Speaker 1: That's how they're going to differentiate.
Speaker 2: Are is coin fun assisting any of these companies are
Speaker 2: working with any of them?
Speaker 1: Look, we've been in the space for a long time
Speaker 1: and we work with a ton of projects. We've been
Speaker 1: highly involved in this space. We have some some real expertise.
Speaker 1: One of the cool things about our background is that
Speaker 1: many of us come from traditional backgrounds. My background was
Speaker 1: largely in the futures in derivive space. My partner Seth
Speaker 1: you know, he spent eighteen years underwriting equities and so
Speaker 1: as you see, and that was always our thesis. It
Speaker 1: was one of convergence, and so we wanted to bring
Speaker 1: the best of the old with the best of the new.
Speaker 1: And so as we're starting to see new forms of
Speaker 1: derivatives evolved, I'm like, okay, that makes sense, or you
Speaker 1: know this new type of equity of dat you know,
Speaker 1: we're able to say, well, okay, let's look at it
Speaker 1: through an equity lens now, because we have we have
Speaker 1: done underlying expertise and so we've been we've been very,
Speaker 1: very active in the space.
Speaker 2: How long do you think this trend continues? Is there
Speaker 2: a point of where these assets become less wolatile because
Speaker 2: in more liquidity comes in. Is it a ten year
Speaker 2: lifespan or more than that?
Speaker 1: So markets go through cycles. I don't think we've seen
Speaker 1: the top of this cycle yet. Personally for the dats,
Speaker 1: I think we're still starting to see some amazing projects
Speaker 1: coming online, and I think as we get into into
Speaker 1: the fall, you'll see a number of really interesting, innovative
Speaker 1: new products and that's going to be you know, that'll
Speaker 1: track additional capital flows. And remember this is all against
Speaker 1: the backdrop of regulatorid D risking, so a lot of
Speaker 1: institutions they're still getting their act together to say, okay,
Speaker 1: now I can do it. How can what's my business model?
Speaker 1: So I still think we're looking pretty good. But markets
Speaker 1: are cyclical, right, they go up, they go down. I
Speaker 1: think in the long term, as I mentioned, I think
Speaker 1: these dats are going to be a permanent part of
Speaker 1: market structure, right where you're going to have a foundation,
Speaker 1: and you're going to have a DAT maybe if you
Speaker 1: have if you're a big project like Bitcoin or theem
Speaker 1: you'll have a few of these things. But again, the
Speaker 1: data is that interface to the traditional side, right. The
Speaker 1: data is where you're using that token exposure, you know,
Speaker 1: to be cross margined against something else from another equity
Speaker 1: that's somewhat correlated. Right. So this is going to be
Speaker 1: a permanent part of market structure, I believe, and it's
Speaker 1: going to have a pivotal role. I was talking to
Speaker 1: a founder of one of the top projects in crypto,
Speaker 1: and you know, he was really struggling with the DAT.
Speaker 1: He's like, I don't you know, I don't I don't
Speaker 1: know if this makes sense. Da da da da. And
Speaker 1: after a long conversation I tried to explain, you know,
Speaker 1: he's like, do I support one of these guys as
Speaker 1: a foundation or not? I don't know why I want
Speaker 1: to do it. But it's really important to recognize that
Speaker 1: this is a new important part of market structure that
Speaker 1: provides structural buying potentially and also a really important interface
Speaker 1: with the very scaled world of traditional finance.
Speaker 2: And as you mentioned, the DeFi component where they can
Speaker 2: do a lot more with the asset and continue to earn.
Speaker 1: So let's let's talk about this a little bit. So
Speaker 1: we talked about tokenization. You take a real world asset
Speaker 1: and you make it a token, right, and now we're
Speaker 1: talking about the inverse, which is you take a cryptoonative
Speaker 1: asset and you make it a security. Right. Pretty soon
Speaker 1: we're going to go another hop and we're going to
Speaker 1: take a cryptonative token, we're going to make it a security,
Speaker 1: and then we're going to tokenize the dat. Right. I
Speaker 1: don't know if we're going to make a security as
Speaker 1: to that, but but why wouldn't we have a tokenized dat? Yeah,
Speaker 1: because now we can trade that against other tokenized products
Speaker 1: as well, you know, bitcoin against the dat. Now you
Speaker 1: have a natural delta. If there's a postive veendmap, you
Speaker 1: can start trading basis in the same tokenized world. Right.
Speaker 1: So again, what does this tell me? It's this massive
Speaker 1: period of convergence made possible through some of the regulatory
Speaker 1: progress we're made. And there's so much opportunity out there.
Speaker 1: You know, we haven't even got to tokenize dats yet, right,
Speaker 1: but pretty soon you're gonna be able to trade them
Speaker 1: against each other, against against the native asset.
Speaker 2: To your point, a lot of the crypto platforms are
Speaker 2: now launching tokenized stocks looking to go twenty four to seven.
Speaker 2: You know, what does that world look like with twenty
Speaker 2: four seven markets? Is it? To your point of convergence,
Speaker 2: we have AI agents that can help us monitor our
Speaker 2: portfolio while we're sleeping.
Speaker 1: I mean it has to go to twenty four to seven.
Speaker 1: And if you look at some of the the I'll
Speaker 1: tell you I think the biggest systemic risk that we
Speaker 1: have right now is that we have one market that's
Speaker 1: that's moving twenty four to seven rebalancing riskus rebalancing, and
Speaker 1: you have one that's taking time off at night and
Speaker 1: on the weekends and during holidays when there's a stress.
Speaker 1: One system is going to quickly rebalance, the other ones not,
Speaker 1: and that system's going to die. So that that is
Speaker 1: not a good space to be in. You know, that's
Speaker 1: one thing that we definitely have to address.
Speaker 2: Chris, do you think stock markets will still exist twenty
Speaker 2: years Yeah.
Speaker 1: Yeah, one hundred percent. I'm very excited about this. So
Speaker 1: if you look at tokened equities right now, like I
Speaker 1: talked about the way that we're going to be able
Speaker 1: to use them for new capital formation. I'm really excited
Speaker 1: about direct listings as well, but I'm actually most excited
Speaker 1: about private equity tokenization. All right, So Robinhood did something
Speaker 1: around this with open AI. You know, love those guys.
Speaker 1: I know vlat was just on here and it was
Speaker 1: executed a little bit clunky, but I thought it was genius.
Speaker 1: And so like, let's talk a little bit about what
Speaker 1: that meant. As I mentioned, you know, eighty one percent
Speaker 1: of companies are a private that's not cool. And then
Speaker 1: you have this thing called tokenization where anyone with access
Speaker 1: to the Internet can get access to these things. What
Speaker 1: I think is going to happen in the future is
Speaker 1: that you're going to have exciting companies and rather than
Speaker 1: someone just like acquire some of their private equity and
Speaker 1: try to tokenize it, they're going to work with a
Speaker 1: provider and and the regulators. You know, I think there's
Speaker 1: some regulatory work to do as well. But what if
Speaker 1: you're you ever see one of those like anglerfish down
Speaker 1: in like the great depths of the ocean. It has
Speaker 1: a little like it has like the little light like
Speaker 1: attract people, then it bites it. I think that you're
Speaker 1: going to see companies work with through tokenization to start
Speaker 1: issuing out a little bit of private equity to see
Speaker 1: how the market responds on crypto rails right, and to
Speaker 1: the extent that it's received well and there's they can
Speaker 1: capture a pretty liquid price pretty quick, it'll give them
Speaker 1: an indication is when to take their company public. So
Speaker 1: I think that's going to be something on the horizon.
Speaker 1: I'm excited to see more. We need to find a
Speaker 1: way to get private equity and early stage investments to
Speaker 1: the masses with risk. We need to disclose those risks
Speaker 1: and then people need to be able to underwrite, do
Speaker 1: their research and have access. But I think these days
Speaker 1: of telling people that they're not allowed to participate in
Speaker 1: the most innovative companies is coming to a quick end,
Speaker 1: and I think a guy like Chairman Atkins is going
Speaker 1: to do that.
Speaker 2: So with that access being opened up, are you envisioning
Speaker 2: it's a global movement because right now certain people in
Speaker 2: Africa or India they can't access the neu K stock exchange.
Speaker 2: But if you tokenize it, I could be in anywhere.
Speaker 2: To your point, having a smartphone with internet connection, boom,
Speaker 2: I can buy a five tokens of a tokenize private equity.
Speaker 1: It's already happening. It's already happening, and you're just going
Speaker 1: to see more and more of it. I think that's
Speaker 1: a great thing for capital markets. Why wouldn't we want
Speaker 1: our capital markets to be global Why the SEC's job
Speaker 1: is one of their jobs is capital formation and to
Speaker 1: protect investors. Clearly they're focused on the US, but like why,
Speaker 1: I mean, look at stable coins. This is the best
Speaker 1: thing that ever happened to the dollar, right, there's almost
Speaker 1: an insatiable demand for it overseas and a developing world.
Speaker 1: Why wouldn't we want to take this step after stable
Speaker 1: coins and let our companies, let let anyone in the
Speaker 1: world with access to the internet access to the innovation
Speaker 1: that's happening on shore via our companies. I think it's
Speaker 1: a very good thing. Now, look, there's some national security
Speaker 1: things that we have to be monitoring, and there's ways
Speaker 1: to do that, and we could talk about it, but
Speaker 1: I think it's a good thing to globalized markets.
Speaker 2: Yeah, and you know, one of the items in the
Speaker 2: thesis of opening up blockchain rails and stable coins was
Speaker 2: to bring financial services to people who don't have access
Speaker 2: to banks, and they'd be living in poverty and now
Speaker 2: this could help them change their lives.
Speaker 1: I got so annoyed the BIS, the Bank for International Settlements,
Speaker 1: they published this paper and they said stable coins are
Speaker 1: going to undermine local monetary policy and the right like
Speaker 1: it is going to undermine local monetary policy, and they said,
Speaker 1: you know in some places like Zimbabwe and Venezuela, And
Speaker 1: I was like, yeah, and that's probably a good thing,
Speaker 1: I think for the people. You know, I've lived in
Speaker 1: some pretty rough places in my life, and like, yeah,
Speaker 1: you know, it's not a bad thing to keep despotic
Speaker 1: government honest. Right by providing a dollar alternative and giving
Speaker 1: people access to financial services for the very first time
Speaker 1: on their phone, I think that's a good thing.
Speaker 2: Good thing. Yeah, It's like the local center bank is like,
Speaker 2: we want to keep printing and debasing, how dare you
Speaker 2: bring in your stronger.
Speaker 1: Currency, right, And look, we have a problem with the
Speaker 1: basement in this country as well. Maybe that's why we're
Speaker 1: having strategic pitcoin reserve. And there's an answer for that
Speaker 1: with like you know, some crypto assets and commodities. But yeah,
Speaker 1: I think it's a good thing to have people being
Speaker 1: able to access the dollar Chris, A.
Speaker 2: Hard question, because with the emergence of this technology and
Speaker 2: all the benefits, maybe fifty years from now or one hundred,
Speaker 2: we're gone. Do you think this technology can be used
Speaker 2: to fix the FIAT system or change it to a
Speaker 2: brand new system where there's not this debasement.
Speaker 1: I don't know, man. It feels like when I just
Speaker 1: had to chat with Arthur Hayes, and when a government
Speaker 1: has a printer press, it's really hard not to use it.
Speaker 1: So I think that's the underlying thesis of you know
Speaker 1: what we saw with bitcoin and its white paper, so
Speaker 1: that I think maybe the dollar keeps local currencies honest,
Speaker 1: and maybe crypto keeps the dollar honest.
Speaker 2: Yeah, that's a good way to put it. Yeah, you know,
Speaker 2: I have a seven year old, so I'm curious what
Speaker 2: her life is going to be like in the new
Speaker 2: world with all these technologies. But also will they continue
Speaker 2: to debase or will they somehow use blockchain and AI
Speaker 2: to curb this debasement.
Speaker 1: I think then keep going, keep going. I'd be surprised
Speaker 1: if it doesn't.
Speaker 2: Sure now with I want to jump back to banks
Speaker 2: offering crypto, So do you envision that, Chris, I don't know.
Speaker 2: Who you banquet, but your local bank manager may call
Speaker 2: you up and say, hey, we now offer the ability
Speaker 2: to access bitcoin, eth and so on and so forth,
Speaker 2: will custody for you and could you also get access
Speaker 2: to certain stable coins to earn yield?
Speaker 1: Probably, yeah, I think, I mean, I know many of
Speaker 1: the banks are already working on their custody solutions now.
Speaker 1: They're starting pretty slow with things like bitcoin and eh,
Speaker 1: they'll continue to go down. I think the curve. It's
Speaker 1: gonna be interesting to see how they compete with the
Speaker 1: robin hoods and and the coinbases. Like you know, you're
Speaker 1: seeing a lot of convergence now as well, where you know, coinbase,
Speaker 1: you know has an account you can use that for
Speaker 1: almost a bank account. They're competing with the banks direct.
Speaker 1: You know, do people start you know, it's not banking
Speaker 1: per se, but it's it's using those same services. So
Speaker 1: I do think that there's going to be an interesting
Speaker 1: battle and interesting partnerships that will be forged. Like you're
Speaker 1: gonna hear announcements about big partnerships because like a lot
Speaker 1: of these banks, they don't have it's hard to get
Speaker 1: the talent, so it's either build or buy, and so
Speaker 1: in many cases, partnerships are going to be forged. Be
Speaker 1: on the lookout for some of those in the near future,
Speaker 1: because that's the only way that they can kind of
Speaker 1: leap frog the competition is through big partnerships M and
Speaker 1: A as well. M and A is tougher for banks
Speaker 1: because a lot of reglatory reason to prevent them from
Speaker 1: time to time. But so you'll see some building, I think,
Speaker 1: a lot of buying and a little bit.
Speaker 2: Of M and A. I just had a Coinbas's chief
Speaker 2: business officer on the pod and they just announced their
Speaker 2: partnership with JP Morgan and PNC Bank. Of course it's happening,
Speaker 2: and of course I would love to be a fly
Speaker 2: in the wall. They see what Jamie Diamond is saying.
Speaker 1: I think Jamie demon likes to make money. He's good
Speaker 1: at it.
Speaker 2: It's so funny.
Speaker 1: I don't know.
Speaker 2: He's been Crypto's final boss, if you want to call
Speaker 2: it that, and he's capitulated bigcoin's final boss.
Speaker 1: Yeah. So like even Searan Brown, one of the senators
Speaker 1: who just hated crypto last cycle now yesterday, said that
Speaker 1: it's part of the economy. Like, oh interesting.
Speaker 2: I used to call him the top general in Elizabeth
Speaker 2: Warren's anti crypto army.
Speaker 1: Yeah, he said something like not negative yesterday and I was.
Speaker 2: Like, huh, oh man, how things have changed. I would
Speaker 2: love to get your thoughts on the market. Obviously, we're
Speaker 2: recording this. On August twenty second, Jome Powell made his
Speaker 2: speech at Jackson Hall and the markets are ripping. So
Speaker 2: do you think the top is going to be Q
Speaker 2: four or Q one twenty six non Financial Advice.
Speaker 1: Yeah, it's hard to call the top. What gets me
Speaker 1: excited is the fact that you have real regulatory de risking, right.
Speaker 1: Everything is becoming normalized. You have the three trillion dollars
Speaker 1: in stable coins coming in, you have four toh one
Speaker 1: K money coming in, you have that buying coming in.
Speaker 1: And that's even before the normal sources of the capital
Speaker 1: like private markets, all those allocators. You know, in the
Speaker 1: last cycle, people were trying to figure it out. Some
Speaker 1: of them made it, some of them got burned. But
Speaker 1: now as it's normalizing, So it used to be people
Speaker 1: would have a lot of reputational risk for being in
Speaker 1: the space. Industors are always comfortable taking market risk. That's
Speaker 1: what they get paid to do. They do incredible analysis.
Speaker 1: Sometimes they get it right. Sometimes they get it wrong,
Speaker 1: but that's their expertise. They don't get paid for reputational risk.
Speaker 1: And that reputational risk manifested itself in reglatory risk class cycle.
Speaker 1: Now that regulatory risk is gone, there's still some elements
Speaker 1: of reputational risk. I would argue maybe around security, like
Speaker 1: you do this amazing investment, you get hacked, but by
Speaker 1: and large the reputational risk. Now, there's reputational risk if
Speaker 1: you don't have a crypto strategy. So you see all
Speaker 1: that structural buying coming in as well. So I've remained bullish.
Speaker 1: And then of course we're seeing the FED now you know,
Speaker 1: projected to lower rates, so so macro seems to be
Speaker 1: lining up. Then you have then you have that that
Speaker 1: the normalization and the buying. Like I'm pretty bullish, and
Speaker 1: I think it's hard not to be.
Speaker 2: Yeah, I think all the signs that the stars are
Speaker 2: lining up here for us, the four one k item.
Speaker 2: I don't know if you can give insight into this,
Speaker 2: but I know Trump signed the executive order. Do you
Speaker 2: think there's some sort of lag? What do you think
Speaker 2: the lead time?
Speaker 1: There's always a lag, So you know, again you're seeing
Speaker 1: the d risking happen. Trump hasn't been in office that
Speaker 1: long this time. Institutions like they move like aircraft carriers, right,
Speaker 1: So they were like going away from crypto. Now like okay,
Speaker 1: it's back. So it just takes time to pivot and
Speaker 1: they have to go through all different types of governance
Speaker 1: processes where they you know, they have regulators. So you're
Speaker 1: going to see a ton of latency. And that's why
Speaker 1: that that that the structural buying and the moving into
Speaker 1: our space is still still building because they have to
Speaker 1: put you know, let alone just wanting to do it,
Speaker 1: the infrastructure. They have to find custodia relationships, they have
Speaker 1: to find middleware reporting to their end users they have
Speaker 1: there's then they have to do all that within the
Speaker 1: context of whatever regultory, RAPPID, then their r A whatever.
Speaker 1: This stuff does not happen overnight. It takes months, maybe
Speaker 1: a couple of years to be fully loaded. So we're
Speaker 1: still building. They're not here. There's there's a lot more
Speaker 1: to h it's not mature yet.
Speaker 2: Coin fun what's the latest and that you can share
Speaker 2: as far as investments companies coins projects, you're investing for sure.
Speaker 1: So we have three major stream rategies. We have a
Speaker 1: pre seed seed strategy where we're looking for early stage founders.
Speaker 1: We have a Series A and B strategy where we're
Speaker 1: looking here, these companies have mature beyond seed stage. They
Speaker 1: have business models, teams, a little bit of product market fit.
Speaker 1: So we invest in the most exciting companies at that level,
Speaker 1: all across crypto of course. And then we have a
Speaker 1: liquid strategy that is looking to take advantage of looking
Speaker 1: to invest in the most exciting token projects and the
Speaker 1: most exciting now equity projects, you know, as as you
Speaker 1: look at debts and everything else. So what excites us, man,
Speaker 1: There's there's a million different themes. We've been very very active.
Speaker 1: My partner Jake is very early on the intersection of
Speaker 1: AI and crypto. That's been something that's been been core
Speaker 1: to our thesis since twenty one. Like we're really early there.
Speaker 1: But look, we get excited across the board. Every lately,
Speaker 1: we've been doing deals in the consumer space, We'll do DeFi,
Speaker 1: c FI infrastructure. Still gets as excited as we're starting
Speaker 1: to create that foundation, you know, and then I think
Speaker 1: there's other big themes that I get excited about. I
Speaker 1: like to you know, kind of operate on the intersection,
Speaker 1: always looking for projects that are you know, I think,
Speaker 1: I think fixed income has a long way to go.
Speaker 1: Derivatives markets. One of the biggest gaps in our in
Speaker 1: our in crypto markets right now are derivatives. Like, yes,
Speaker 1: we have purps, but we're lacking like listed derivatives. So
Speaker 1: I think that's an interesting space to be as fixed
Speaker 1: income starts crystallizing. Because institutions love fixed income, we don't
Speaker 1: really have like massive fixed income markets and crypto we
Speaker 1: have purps, but there's a lot of other fixed income
Speaker 1: elements that I think. Look, I talked about this often.
Speaker 1: Staking is a rate, and so we're going to start
Speaker 1: seeing more structured products around those rates. Really exciting for me.
Speaker 1: But yeah, we're we're super active. We're out there meeting
Speaker 1: founders every single day looking for the best projects across payments,
Speaker 1: you name it. And here's another thing people don't realize.
Speaker 1: So if you look at the world, I think there's
Speaker 1: like thirty million developers in space. I talked about the
Speaker 1: capital that's now coming back into the system, but when
Speaker 1: you think about it from a founder's perspective, we think
Speaker 1: there's like thirty million or so developers a lot of
Speaker 1: them stayed out of crypto because it was scary. They
Speaker 1: don't want to go to jail if you develop or whatever.
Speaker 1: Now that regulatory de risking is happening and the markets
Speaker 1: are coming back, they're like, wait a second, maybe I
Speaker 1: can join this crypto space as well. So you're gonna
Speaker 1: see talent coming back, big deal. And you know, don't
Speaker 1: hold me to it. But I think there's only like
Speaker 1: ten thousand full time developers in crypto right now against
Speaker 1: thirty million in the world. So let's say I'm off
Speaker 1: by a factor of whatever. There's so much opportunity for
Speaker 1: these new developers to come into our space and then
Speaker 1: the magic happens. Capital new founders like innovation.
Speaker 2: Absolutely well said yeah, and now to your point of
Speaker 2: to do risking, they don't have to look over your shoulder.
Speaker 2: You're gonna get a wells noticed or sued by the SEC.
Speaker 1: Get Thorne in jail. Yeah seriously, yah, Storm.
Speaker 2: Yeah, just crazy that situation. Chris, This is a hard question,
Speaker 2: but I want to get your thoughts on it because
Speaker 2: I've heard some other people talk about this. With the
Speaker 2: emergence of AI and it's just getting even more smarter
Speaker 2: and smarter and things are going to get automated with
Speaker 2: AI agents and much more. Will funds exist in ten
Speaker 2: to fifteen years one hundred percent.
Speaker 1: So I think agents are going to have a huge role.
Speaker 1: I think AI is going to have a material role.
Speaker 1: But you're still, like I said earlier, stable coins to
Speaker 1: defy to agents. Agents are amazing and optimizing, they're so good,
Speaker 1: but we also have to make sure that we work
Speaker 1: closely with those agents. And I think at the end
Speaker 1: of the day, well, there be certain eugenic strategies for sure,
Speaker 1: but I still think there's a role for humans and
Speaker 1: how to correctly deploy those agents for the right outcomes
Speaker 1: that we're seeking. And so, yeah, is are there going
Speaker 1: to be Are people still going to be in the space.
Speaker 1: For sure, They're gonna be working a lot closer with
Speaker 1: these agents for the right outcomes, maybe toggling their waitings
Speaker 1: or you know changing, you know, toggling and tweaking them,
Speaker 1: pointing them in different directions optimize, like helping them to
Speaker 1: optimize even further.
Speaker 2: It's funny I heard someone the other day talk about
Speaker 2: in the world of AI agents, we're going to be
Speaker 2: more directors where we're directing all these agents who do
Speaker 2: different things, almost like people management a bit, you're running
Speaker 2: a division, but it's instead it's AI agents running twenty
Speaker 2: four to seven.
Speaker 1: Yeah, maybe maybe that's the case. Yeah, you're orchestrating them
Speaker 1: finding out, you know. But man, they're amazing in optimization,
Speaker 1: almost too good.
Speaker 2: I can't wait to today. I'm exploring this to build
Speaker 2: my own AI agent where I can even sell it,
Speaker 2: where they can help you navigate the market in certain ways.
Speaker 2: And you know, it's going to be a bit tailored
Speaker 2: and customized to my thesis and point of view. But
Speaker 2: that is something I'm exploring. I should pus shouldn't say
Speaker 2: it's going to steal my idea, but yeah, and then
Speaker 2: you know, on the other side in token you have robots.
Speaker 2: And I've been talking to a lot of robot developers
Speaker 2: and people who are in this industry. And guess what
Speaker 2: they're talking about. Robots are gonna use stable coins and
Speaker 2: blockchain because they're not gonna use cash.
Speaker 1: Yeah. We're close with a company it's called geodet, and
Speaker 1: what they do is they provide hyper accurate location. Because
Speaker 1: that's the other leg at the stool when you're thinking
Speaker 1: about robotics. These robots have to know exactly where they
Speaker 1: are in a hyper precise way. And so yeah, state
Speaker 1: they're going to use that for directional control, they'll use
Speaker 1: stable coins to pay, and yeah, it's going to be
Speaker 1: a really fascinating, fascinating world.
Speaker 2: The company's open mind. Not not to promote them or anything,
Speaker 2: but what really blew my mind the founder was telling
Speaker 2: me that each morning the robot, when it goes up
Speaker 2: and running, it downloads its constitution from any theorem smart
Speaker 2: contract to abide by the rules that is set. And
Speaker 2: it's I think a Dow is setting the rules or
Speaker 2: something which is insane. That's man, the future is gonna
Speaker 2: be wild.
Speaker 1: Yeah. We didn't even get the quantum yet. Yeah. So
Speaker 1: do you think quantum is a threat? I think it's
Speaker 1: I think it's an opportunity, to be honest with you. Yeah,
Speaker 1: so you'll see next level cryptography use quantum. Yeah, one
Speaker 1: hundred percent. Yeah. I'm not an expert in the field,
Speaker 1: but it's it's definitely. I mean, I follow it. We're
Speaker 1: seeing more and more progress, more patents every single day.
Speaker 1: It's something that that's moving quicker than I think some
Speaker 1: people realize.
Speaker 2: What are your thoughts on the potential approval of other
Speaker 2: all coin et aps like Solana XRP and all the
Speaker 2: h bar and staking in.
Speaker 1: I think Gito was just Judo Soul just came out
Speaker 1: from Vanek today. I don't know if that was approved
Speaker 1: or not. Look, it's gonna be so fascinating with ETFs
Speaker 1: ETFs that m NAV is essentially one, and so you're
Speaker 1: gonna see ETFs play a role, but dat's play another role,
Speaker 1: and they're not Oh they're competing with each other, well
Speaker 1: kind of sort of, but they're kind of different products.
Speaker 1: So if you look at eth as an example, it's
Speaker 1: been really hard to figure out a steak to ETHTF.
Speaker 1: The reason why is because ETFs, by the way they're constructed,
Speaker 1: is they have daily liquidity, right, and so the problem
Speaker 1: that you have if you take a bunch of ETH
Speaker 1: and you stake it and then you have people redeem,
Speaker 1: they have to wait for the unbonding window to occur. Okay,
Speaker 1: so it's hard to redeem if you're bonded up. And
Speaker 1: we've seen ethereum like today, the unbonding windows is extended
Speaker 1: pretty materially, right, So if you have to wait thirteen
Speaker 1: days to get your eth out and you have daily liquidity,
Speaker 1: that's a real problem, right, and so the solution to
Speaker 1: that would be you have to hold reserves, but are
Speaker 1: those reserves yielding? You know, can you hold them in
Speaker 1: a liquid staking token where you're still getting that yield
Speaker 1: or not. It's just complex. I think it will be
Speaker 1: solved for but it's just going to take time to
Speaker 1: figure out. Or you have to when you reserve liquidity,
Speaker 1: then you have to bring your yield down from total
Speaker 1: return to partial return because it costs money to reserve
Speaker 1: that liquidity. So again, I'm pretty sure it's going to
Speaker 1: get sorted. There's some really smart people working on the challenge.
Speaker 1: But the Canadians at first like, yeah, you can stake it,
Speaker 1: but fifty percent is that the right number? Is it
Speaker 1: the wrong number? I got no idea because I don't.
Speaker 1: It's also kind of wrong way risk because if something
Speaker 1: bad happens and everyone's trying to pull it out, the
Speaker 1: window extends. So anyway, that's a You're going to see
Speaker 1: more and more ETFs. Why because we're going to know
Speaker 1: what's a commodity and what's not. And that's one of
Speaker 1: the things that the SEC wants to deliver us. So
Speaker 1: very excited about that. On the ETF front. You're also
Speaker 1: going to see that on futures. People ignore the futures market.
Speaker 1: The futures market bring it all together, super important. Why
Speaker 1: futures are regulated by the CFTC. So if you know
Speaker 1: something's not a security, you can launch a future. Genzo
Speaker 1: suppressed that because if an exchange tried to launch a future,
Speaker 1: they'd be like, not so fast, that's a security, stop it, right,
Speaker 1: So that's why we could. We couldn't even launch like
Speaker 1: Slana under his reign, right, okay, So why are future
Speaker 1: is so important? If you look at ETFs, why didn't
Speaker 1: we launch did? What did he require before we launched
Speaker 1: the BITCOINYTF He required futures because he wanted that surveillance, right,
Speaker 1: So futures help liquid futures market help with that type
Speaker 1: of surveillance. What else did they do?
Speaker 2: Well?
Speaker 1: Risk management? They help you hedge. For a lot of people,
Speaker 1: what they want to do is it's the carry trade.
Speaker 1: They buy the spot and they sell the future, okay,
Speaker 1: And what that allows you to do is crystallize yield.
Speaker 1: And that yield if you're in what we call contango,
Speaker 1: where the futures price is higher than the spot price,
Speaker 1: you can sell the future you buy Spot, you buy
Speaker 1: a Spot Spot price goes up. Guess who likes these trades?
Speaker 1: Every single foundation all of crypto futures bring it all together.
Speaker 1: And what I'm mostly said, one of the things in
Speaker 1: addition to watching ETFs grow is having the futures industry
Speaker 1: grow with it. This is the most exciting part of
Speaker 1: our growth. And I talk about having some issues and
Speaker 1: derivatives because you can hedge, you can drive yield strategies,
Speaker 1: and you can get that surveillance for even more ETFs.
Speaker 1: So it's an area. You know, we have a company
Speaker 1: that's like literally focusing on that NonStop and helping drive
Speaker 1: more futures products.
Speaker 2: That's great insight. And I just spoke this week to
Speaker 2: one of the folks at Laido and they're trying to
Speaker 2: work with the ETF for your sures to solve exactly
Speaker 2: what you're.
Speaker 1: Talking hundred percent. Yeah. I had brunch with them as
Speaker 1: well recently, a great, great, great meeting, and yeah, how
Speaker 1: do they And what they're trying to do is make
Speaker 1: sure that they have enough modularity to make sure that
Speaker 1: steaked eth is accessible to institutions, and that's one of
Speaker 1: the things that they're working on as well.
Speaker 2: Dumb question. Does it make sense to have specifically a
Speaker 2: ETH ETF and then eat staking ETF where you can
Speaker 2: stake one DC disclosure is hey, man, you want your ETH,
Speaker 2: you gotta wait.
Speaker 1: You can't do that for an ETF is you have
Speaker 1: to have deab liquidity. But will you have spot in
Speaker 1: total return? I think so, and you can trade the
Speaker 1: two against each other. But I think all things being equal,
Speaker 1: and most people want total return. By the way, same
Speaker 1: thing for like, why do we have eight futures? Why
Speaker 1: don't we have eight total return futures? So watch that
Speaker 1: space because I think it's coming interesting.
Speaker 2: So you think there's gonna be a lot of innovation
Speaker 2: on the ETF front for these assets.
Speaker 1: One hundred percent. Yeah, you're gonna see. Yeah, because now
Speaker 1: we're allowing innovation. We're leading with innovation, which again starting
Speaker 1: in the beginning, that's the way it should be normally.
Speaker 1: Will things break, Yeah, they're gonna break, and that's okay.
Speaker 1: Like we just have to be principles based in our
Speaker 1: customer protections. We need to let people fail. And if
Speaker 1: the price goes down, it's not illegal. It happens sometimes
Speaker 1: to your own research underwrite it.
Speaker 2: So on that note, you mentioned earlier. Markets are cyclical, right,
Speaker 2: and then obviously we're talking about the FED, their macro
Speaker 2: impacts and so forth. Do you envision there's going to
Speaker 2: be a deep bear market like we've seen in the
Speaker 2: past seventy eighty percent or maybe less because you have
Speaker 2: the et aps, you have digital acid treasury companies, so
Speaker 2: more liquidity holding the base up, so to speak.
Speaker 1: Yeah, look, you're good. You always have cycles. I think
Speaker 1: more liquid markets tend to weather those cycles better. But
Speaker 1: you know, like I said earlier, my whole career, I
Speaker 1: always end up in the tail somehow. I was a
Speaker 1: Lehman Brothers man. Yeah, Like, there's no way in hell
Speaker 1: I thought that that, you know, one of the titans
Speaker 1: of Wall Street, Levan Brothers, was going to go down,
Speaker 1: and then like eighteen months later, there I was carrying
Speaker 1: out my box. So you know, I'm never going to
Speaker 1: make any prediction to say, you know, it's not going
Speaker 1: down X or y, because I've been there and done
Speaker 1: that over and over again. So markets are cyclical, But
Speaker 1: I think when you step back, it's hard not to
Speaker 1: be bullish about the crypto space. Like I'm super bullish.
Speaker 2: Yeah, look, I've been talking about it I hope it
Speaker 2: doesn't happen, but I'm I was thinking, look, has crypto
Speaker 2: experienced its dot com bubble burst yet? And I don't
Speaker 2: know if it has. Even though we've had beer markets,
Speaker 2: we had FTX, but we haven't had legislation that gave
Speaker 2: clarity to allow more to come in. And again it's cyclical.
Speaker 2: It's not an indictment of crypto. I'm bullish on crypto blockchain,
Speaker 2: but just humans are respeculat different. We're crazy sometimes and
Speaker 2: we do dumb shit.
Speaker 1: There's always exuberants, always enters the market at some point,
Speaker 1: and I think the smart, smart folks will recognize that
Speaker 1: know where to take profits.
Speaker 2: Another macro related question is would be the last one here?
Speaker 2: It's twenty forty are we not using cash and we're
Speaker 2: using our payments our power by stable coins, we're able
Speaker 2: to tokenize our artwork in our house and do a
Speaker 2: lot more with DeFi and create new revenue earning options
Speaker 2: and things like that.
Speaker 1: I mean, I think it's going to be a relatively
Speaker 1: similar experience to today in a way where you know,
Speaker 1: you don't think about the back end. You know, you
Speaker 1: just pay via whatever way is easiest, like you know,
Speaker 1: do you tap your phone at that point or do
Speaker 1: you just look at it and here and your neural
Speaker 1: you know whatever. But but but the point is is
Speaker 1: that a lot of this we get so focused on,
Speaker 1: like the in the back end, and we get tribal
Speaker 1: around Solana versus ethereum versus suy an avalanche. No, it's
Speaker 1: gonna care right, You're just gonna pay. It's gonna be
Speaker 1: powered by by crypto rails in the background. It's gonna
Speaker 1: be cheap, fast and easy, easier than ever because you know,
Speaker 1: we see a million payments company. They're always improving on something,
Speaker 1: something something. But yeah, it's just gonna be seamless and easier.
Speaker 2: To your point, we in the crypto space, we get
Speaker 2: caught in our own bubble, in our own world. But
Speaker 2: you go out talk to the average Joe and Jane.
Speaker 2: It just needs to work.
Speaker 1: Just give him a cup of coffee and let me
Speaker 1: tap my phone.
Speaker 2: Yeah yeah, nah, yeah, we overthink it sometimes, but I
Speaker 2: guess we're on the we're the early adopters. We're looking
Speaker 2: for new innovations and things. So it makes sense. So Chris,
Speaker 2: yesterday I saw a X you and Chris John Carlo
Speaker 2: endorse a bill that was issued to fight cybersecurity threats
Speaker 2: along with crypto. Tell us about that what that bill
Speaker 2: is about.
Speaker 1: Yeah, so the bill just came out. I'm still going
Speaker 1: through it, but I've been Chris and I have been
Speaker 1: pushing for this for so long. So we have this
Speaker 1: incredible period of innovation and it's exciting. We have about
Speaker 1: three trillion, like I said, coming into the system via
Speaker 1: stable coins, We have things being tokenized. The current crypto
Speaker 1: market caps around four trillion dollars. That's going north. I
Speaker 1: don't know where it's going to settle, but we have
Speaker 1: a problem, and one of the problems that I think
Speaker 1: in our industry right now is that of security. We
Speaker 1: have certain state sponsored actors that have been ravaging and
Speaker 1: hacking like the bibit hack. You know, we've had billions
Speaker 1: being hacked. And if there's one thing that's going to
Speaker 1: derail or momentum, it's that security threat. Like people don't
Speaker 1: get people get paid to invest, they don't get paid
Speaker 1: to have their assets hacked after they made a great investment.
Speaker 1: Right So to me, this is one of the biggest
Speaker 1: threats facing our industry. It keeps me awake at night
Speaker 1: and it's a tough problem. Now, look at stable coins
Speaker 1: for example, they have this capability we need to call freezencies. Right.
Speaker 1: A lot of crypto libertarians hate it, but it's the
Speaker 1: fact of life where you're holding these assets if they
Speaker 1: get into a bad guy's hands. And I always say
Speaker 1: bad guy, not bad girl, because there's some both, but
Speaker 1: like you know what I mean, what you can do
Speaker 1: is you can take those assets and seize them, provided
Speaker 1: you go through due diligence and you go through a
Speaker 1: judge or whatever else. It works, but it takes a
Speaker 1: long time. The problem with the environment that we exist
Speaker 1: in today is everything is moving fast. By the way,
Speaker 1: this threat is going to get worse as well, because
Speaker 1: we talk about AI and and agents and deep fakes
Speaker 1: hacking is going to get worse. Their ability to get
Speaker 1: out of dodge and turn it into bitcoin and disappear
Speaker 1: is going to get better. So it's a pretty dangerous
Speaker 1: place out there. And I don't want to like frighten
Speaker 1: away users because like this is there's also opportunity. But
Speaker 1: what makes me excited about this bill, and we've been
Speaker 1: pushing about this for a long time, we think the
Speaker 1: solution to this current real urgent problem actually lies in
Speaker 1: the past, and if you look at our history during
Speaker 1: the Revolutionary War, we had no money and we ended
Speaker 1: up winning the Revolutionary or that the textbooks will sow
Speaker 1: we want them in the Battle of Yorktown. But one
Speaker 1: of the driving true drive factors is that we ravaged
Speaker 1: the British economy because what we did was we said, hey,
Speaker 1: we're going to authorize these private citizens, we call them privateers,
Speaker 1: take your ship out in Massachusetts and go ravage the
Speaker 1: British economy. And we did, and it hurt them badly,
Speaker 1: and that's one of the reasons why the war ended.
Speaker 1: They came back in eighteen twelve for the War of
Speaker 1: eighteen twelve. Madison commissioned five hundred privateers to go after
Speaker 1: the British and I think that helped nd hostilities as well.
Speaker 1: Our founding fathers loved this concept so much, and it's
Speaker 1: called the letter of mark, where you issue this letter
Speaker 1: to an institution or an individual. They actually put it
Speaker 1: in our Constitution. It's in Article one and it gives
Speaker 1: the Congress authorization to issue letters of mark and reprisal.
Speaker 1: So the point here is that and by the way,
Speaker 1: the Europeans thought it was a dirty business. They got
Speaker 1: out of it in the nineteenth century, but we love
Speaker 1: it so much. It's in our constitution. It's not going anywhere,
Speaker 1: just like our guns, I guess, but we think it's
Speaker 1: time to resurrect this practice. What better way to fight
Speaker 1: back against hackers and state actors who are maneuvering against
Speaker 1: our companies or startups than to commission private citizens and say, hey, listen,
Speaker 1: here's your letter, go for it. Now here's the killer
Speaker 1: policy use case. Back in history, they would have these
Speaker 1: things called prize courts, and oftentimes the people with those
Speaker 1: letters would have to post bond. Today we call that
Speaker 1: staking where if you misbehave you get slashed. But once
Speaker 1: you seize those assets back, the private tier gets to
Speaker 1: keep a lot of them. You give some back to
Speaker 1: the victim, and you give some to the house. Guess what,
Speaker 1: that's your way to fund the strategic Bitcoin Reserve or
Speaker 1: the strategic Crypto arsenal at no cost to the taxpayer.
Speaker 1: So that's the vision. This bill contemplates a version of
Speaker 1: that that thinks about, hey, how do we leverage letters
Speaker 1: of mark based on our history to go after cyber criminals.
Speaker 1: But I do think that the private sector are the
Speaker 1: only folks who are sophisticated enough to be out there
Speaker 1: on front, to move fast enough to stop these hacks.
Speaker 1: You know, even before the care here's the last killer thing.
Speaker 1: During the terrible regulatory climate and law fair the last
Speaker 1: four years, we lost many founders overseas. But what if
Speaker 1: if we had these rules in place and this incredible
Speaker 1: security apparatus in place. I think it would attract them
Speaker 1: back because people will know, do not mess with Americans,
Speaker 1: you know, or we're going to let or we're going
Speaker 1: to set loose our privateers. So are they like go
Speaker 1: hack somebody.
Speaker 2: Else cyber bounty hunters kind of.
Speaker 1: Not really bounty hunters per se, but they're they're privateers.
Speaker 1: They're they're able to violate certain laws. So like I
Speaker 1: published a paper on this, and people, I want to
Speaker 1: do this, but you can't. I can't trade with you
Speaker 1: if you're in North Korean, right, I violate at Oh fact,
Speaker 1: we need to be able to commission these people to
Speaker 1: go interface with our adversaries, you know, and to use
Speaker 1: various techniques and procedures to get that money back without
Speaker 1: violating legacy sanctions or all fat laws.
Speaker 2: I think that that is very much needed.
Speaker 1: I think so I can't think of anything else that's
Speaker 1: tax payer neutral helps fund the reserve. So I hope
Speaker 1: that something happens here. I think it's a really exciting
Speaker 1: way to solve for a big challenge. Like I said,
Speaker 1: like you know, when you sit down with policymakers, you
Speaker 1: try to really solve really difficult problems. I think this
Speaker 1: is one of the ways you can do it. And yeah,
Speaker 1: are there risks, for sure, other ways to mitigate those
Speaker 1: risks through bonds and things of that sort. Yeah, so
Speaker 1: let's let's let's get it done.
Speaker 2: And it absolutely makes sense. I've been thinking about this,
Speaker 2: noodling on it like China did just announced you're going
Speaker 2: to push their digital you want a stable coin, I
Speaker 2: should say, I can't imagine that they don't have people
Speaker 2: looking to take down any US stable coin and mess
Speaker 2: up through a monkey wrench into whole system stuff like that.
Speaker 1: Yeah. So you know, if a state actor or whoever
Speaker 1: that may be, you know, decides to attack you know,
Speaker 1: our interests, then we'll have you know, our very sophisticated
Speaker 1: private sector financially incentivized to help enhance our our defenses
Speaker 1: and those of our private companies.
Speaker 2: Wow, well, folks, check out that bill and call up
Speaker 2: your representative. I love that idea because that is a
Speaker 2: big thread and then just seems like a solution. All right, Chris,
Speaker 2: wrap up questions. If you weren't part of coin Fun
Speaker 2: and dealing with crypto, what would you be doing?
Speaker 1: Oh goodness, I'd probably be dealing probably dealing with crypto somehow,
Speaker 1: or in a tech space or finance something. Yeah. I
Speaker 1: don't think I'm going back to traditional finance, but I
Speaker 1: kind of m because that's where I was spending my time.
Speaker 1: Everything is converging, right, Yeah, it's probably playing with my dogs.
Speaker 2: Yeah, Chris, pleasure, and you're up in Brian Park. You're close.
Speaker 2: If we're gonna have to do more.
Speaker 1: Of these anytime, Bro, it's good to see you.
Speaker 2: Yeah. I would love to have you as a return
Speaker 2: guests and get your insights because I absolutely appreciate it.
Speaker 2: But thank you so much for joining me, Pleasure sir.
Speaker 1: Thanks Tony,