Speaker 1: Look, it's a great question, and I've predicated my statements
Speaker 1: by saying this isn't a Democrat versus Republican thing. As
Speaker 1: you just pointed out on fit twenty one seventy one,
Speaker 1: Democrats voted for it. Like you know, Actually, frankly, if
Speaker 1: there's any party that philosophically should agree with like getting
Speaker 1: out crypto to the people, it's the Democrats, right. I mean,
Speaker 1: these are the people that I've always believed in pushed
Speaker 1: the power back to the people, right. They believe they're
Speaker 1: open for freedom, et cetera. Party alignment is strong.
Speaker 2: Welcome into the Thinking Crypto Podcast. I'm your host, Tony Edward,
Speaker 2: and with me today is Mike Belshie, who's the co
Speaker 2: founder and CEO of Bitgo. Mike, great to have you back.
Speaker 1: On Always good to see you, Tony. How are you great?
Speaker 2: Mike? I always love speaking to you because of your
Speaker 2: web pedigree web one point zero two point zero, and
Speaker 2: you have just a great perspective on technology in the markets.
Speaker 2: Start with bitgo. What's new any clients that you can
Speaker 2: highlight anything cool that you guys are working on.
Speaker 1: Well, thanks, Tony, it's always always a pleasure to be here.
Speaker 1: You do a great job covering the space. Look, the
Speaker 1: industry moves at a million miles an hour, and Bitco
Speaker 1: is no exception. Been really happy. We've we've been growing
Speaker 1: the team considerably this year just on all the new
Speaker 1: initiatives that we have. One of the things you might
Speaker 1: have heard about is go Network. Go Network is finally
Speaker 1: connecting the ability to post trade settlements all within qualified custody.
Speaker 1: Pretty Much every single one of our institutional customers needs this.
Speaker 1: They've been doing various forms of you know, on chain,
Speaker 1: you know, self custody. I'll call them hacks. And while
Speaker 1: that works great for individuals, when it comes to businesses,
Speaker 1: they really can't be holding their own keys. They don't
Speaker 1: want to hold their own keys. They know this. So
Speaker 1: we've spent a ton of time. We got super fast
Speaker 1: withdrawals straight out of cold custody. It's in qualified custody
Speaker 1: all the time. And the reaction that we had, you know,
Speaker 1: a couple of years ago is like, well, you know,
Speaker 1: I got other operational processes, et cetera. But this year,
Speaker 1: you know, the tune has really changed, and so people
Speaker 1: are really excited about that. Other than that, you know,
Speaker 1: the bull market carries everybody we've expanded our trading offering,
Speaker 1: we've expanded our our custody offering, and you know, pretty
Speaker 1: much kind of at all time highs I guess for
Speaker 1: the company in terms of how things are doing. Uh,
Speaker 1: the ETF markets have helped. Obviously, we're custodying a number
Speaker 1: of those, some of them we haven't heard about yet,
Speaker 1: which are coming as well, but as we're good. And
Speaker 1: then lastly we're finally getting our full network of you know,
Speaker 1: global custodians together are fully fully operationally, I should say,
Speaker 1: it takes time, you know, get the regulatory clearances for
Speaker 1: all the parts of the stack. Bicko does a tremendous
Speaker 1: amount of staking. For instance, we spend a lot of
Speaker 1: time with regulators understanding what it means to be doing
Speaker 1: staking from within uh, from within qualified because see, of
Speaker 1: course we did that in an institutional way that it
Speaker 1: never has any friction with the regulators. But there's so
Speaker 1: much confusion about how this industry works that we have
Speaker 1: to do a lot of time with it. So anyway,
Speaker 1: Tobai is very close to being up and running Singapore,
Speaker 1: very close to being up and running our Boffin license.
Speaker 1: You know, European entity is already running and that's been
Speaker 1: growing very well. It's one hundred percent MEEKER ready today.
Speaker 1: So actually, from Bicco's perspective, you know, we'd like to
Speaker 1: like to have MEEK go into effect. Effect Earlier we
Speaker 1: went with the hardest regulator we're in in Germany with
Speaker 1: Boffen that's like the New York dfs of Europe. But
Speaker 1: looking forward to you know, being ready for the next
Speaker 1: wave of institutions, and you know, the next wave brings
Speaker 1: in the more and more conservative folks, so pension funds
Speaker 1: that previously couldn't touch crypto because the infrastructure wasn't ready.
Speaker 1: We want to make sure we've got the infrastructure ready.
Speaker 1: That's what we're doing and so far it's got really
Speaker 1: good positive signals.
Speaker 2: That's amazing. Congrats on the success. Follow up question on
Speaker 2: your expansion in Dubai. Are you seeing demand from sovereign
Speaker 2: wealth funds? That's been you know, one of the areas
Speaker 2: a lot of people are interested in because they know
Speaker 2: endowments are here, they know hedge funds, family offices, high
Speaker 2: net worth individuals, but a lot of folks have been
Speaker 2: wondering where are the sovereign wealth funds.
Speaker 1: Well, look, I mean they've been in for quite some time,
Speaker 1: so this isn't this isn't new, and I don't think
Speaker 1: it's surprised obviously, you know, tremendous amount of investment from Dubai.
Speaker 1: I think the UAE in general is a super positive
Speaker 1: business climate, you know. I mean obviously that entire region
Speaker 1: is has a bit of a single point of failure
Speaker 1: within their business acumen, you know, too much on just
Speaker 1: kind of oil and energy. They're looking to diversify. They
Speaker 1: are spending in tremus amount of resources to bring technology
Speaker 1: that includes you know, obviously crypto, bitcoin, et cetera, so
Speaker 1: includes AI and things like that. So the regulators there,
Speaker 1: we find are very much trying to understand what the
Speaker 1: issues are, how they can provide great service. I think
Speaker 1: they've got a real opportunity to become like a global
Speaker 1: hub of finance over the next ten years. They're definitely
Speaker 1: they have a great attitude.
Speaker 2: For sure. And do you feel that, you know, once
Speaker 2: we figure out some of the legislation and regulations here
Speaker 2: in the US and there's clarity, some of that business
Speaker 2: in these other parts of the world will come to
Speaker 2: the United States, maybe some that have already left, and
Speaker 2: they may come back.
Speaker 1: Well, look, I mean crypto is still relatively small, so
Speaker 1: the amount that's left, I think is also relatively small.
Speaker 1: By definition, the US owns the markets, right, it is
Speaker 1: ours to lose. We have the most stable markets, we
Speaker 1: have the strongest legal system. As long as we continue
Speaker 1: to provide stable currencies like a reserve currency that everybody
Speaker 1: can trust and understand and use, as long as we
Speaker 1: continue to provide a legal backdrop that provides a fair
Speaker 1: and understandable business climate, we will win. And this is
Speaker 1: where like the current events are so troubling. I mean, obviously,
Speaker 1: on the US dollar side, sanctions controls, I understand the
Speaker 1: need for politically to have sanctions et cetera. And of
Speaker 1: course you know we fully abide by that, but the
Speaker 1: US needs to be very careful when you tell the
Speaker 1: world that you might take away their money and use
Speaker 1: it to fund their enemies. In some cases, if if
Speaker 1: you go a foul of US policy, you're telling the
Speaker 1: world like, hey, you need to be really extra careful
Speaker 1: about using US dollars as a reserve reserve currency. Further,
Speaker 1: on the law front, you know, whether it's the SEC
Speaker 1: or other, when we make it difficult for businesses to
Speaker 1: predict how they're going to operate. They won't operate. But
Speaker 1: you know, the demand is there. Crypto hits I forget,
Speaker 1: fifty million Americans today globally, it's growing on a daily basis.
Speaker 1: It's absolutely unquestionable that the people of the world, not
Speaker 1: just the US, want to have good access to crypto
Speaker 1: and the United States has a choice either a regulators,
Speaker 1: you know, get off their high horse and start working
Speaker 1: with business to figure out how to bring it here.
Speaker 1: And you know, it may have faults to do that,
Speaker 1: it may seem uncomfortable for others to do that. I
Speaker 1: tell you, you know, Bicco is here to help make it
Speaker 1: work well for regulators coinbases as well. There's a bunch
Speaker 1: of stand up companies that are really working hard to
Speaker 1: make it so that regulatory needs could be met. But
Speaker 1: if we do that, we can bring all the business here.
Speaker 1: We can do it over an interative period. You get
Speaker 1: the business here first. And there's two things. I mean
Speaker 1: people worry about, like you said, you know, us money
Speaker 1: leaving the US to go find better regulatory environments. But
Speaker 1: don't forget there's also the opportunity to have all of
Speaker 1: the world's money come to the US markets right, and
Speaker 1: as long as we don't have our act together, I
Speaker 1: get specific examples as we go deeper. I know you
Speaker 1: want to talk about SEV one twenty one and stuff
Speaker 1: like that, but if we don't get our act together,
Speaker 1: that money doesn't come to the US, which otherwise by default,
Speaker 1: we have the strongest, best, safest markets here today. It's
Speaker 1: our solution.
Speaker 2: Yeah, absolutely, And on that note, we'd slop one two one.
Speaker 2: I want to get your thoughts, And obviously your POV
Speaker 2: is very critical because you're working in the custody business.
Speaker 2: You're helping to custody institutions and many other folks. What
Speaker 2: are your thoughts in the situation? One the repeal and
Speaker 2: Biden vetoed it, and it seems to be still something
Speaker 2: that's working its way through the House that they may
Speaker 2: try to get it back up. I know there was
Speaker 2: the vote to overturn Biden's beach it didn't go through,
Speaker 2: but there are some bills that may solve it. But
Speaker 2: what are your take what's your take on this entire situation.
Speaker 1: Look, I think there's been a coordinated effort from the
Speaker 1: Biden administration to lock down crypto and SAB one twenty
Speaker 1: one has been what they've put in the front as
Speaker 1: kind of the lightning rod. Attention. Look, Gary Gensler, you know,
Speaker 1: at the SEC has been controversial in crypto, certainly struggled
Speaker 1: on a bunch of fronts. By creating SAB one twenty one,
Speaker 1: they continue to put the lightning rod on him. But
Speaker 1: SAB one twenty one at the end of the day,
Speaker 1: is a side show. It's not the real issue. Now,
Speaker 1: before I go deeper, I want to I want to
Speaker 1: make it clear. I don't think this is a political
Speaker 1: issue for Democrats versus Republicans. This is this is a
Speaker 1: political issue, but it's individuals, and there's only a few
Speaker 1: of them, you know. So Joe Biden has made it
Speaker 1: very clear he is anti crypto. You know, Elizabeth Warren
Speaker 1: obviously is on that list. We've got Brad Sherman, We've
Speaker 1: got Maxine Waters. We've got a few people here right
Speaker 1: that are bad apples. And you know, by the way,
Speaker 1: there's a there's a jeriatic problem with all of these
Speaker 1: guys not understanding technology as well, which is interesting, but
Speaker 1: we'll leave that for somebody else who's more expert on politics.
Speaker 1: When it comes to SAB one twenty one, I think
Speaker 1: they've consciously decided to make it look like it's all
Speaker 1: the SEC's fault. But actually that's not the big steal,
Speaker 1: because even if we were peeled SAP one twenty one,
Speaker 1: the traditional banks would not be coming a non crypto
Speaker 1: And that's because there's actually three agencies that matter, and
Speaker 1: the SEC is probably the bottom of the list. It's
Speaker 1: certainly the bottom of the list when it comes to
Speaker 1: supporting bitcoin as opposed to you know, other types of
Speaker 1: crypto assets. So what I mean by that is the
Speaker 1: three agencies that matter is the OCC, the FDIC, and
Speaker 1: the SEC, and I would rank them in that order.
Speaker 1: So the OCC is the Office of the Control of
Speaker 1: the Control of the Currency. And remember under the previous administration,
Speaker 1: Brian Brooks was the interim OCC Controller and under that
Speaker 1: administration they made it available that crypto could there's a
Speaker 1: path for traditional banks. This is Bank in New York Mellon,
Speaker 1: this is State Street, this is JP Morgan, etc. To
Speaker 1: be able to cuss see crypto. And of course, if
Speaker 1: you want to de risk this industry, the number one
Speaker 1: thing you should do is go and list the guys
Speaker 1: that are the experts in risk. Right, So these are
Speaker 1: the biggest institutions of America. They know how to do
Speaker 1: it well. They absolutely should be invited into the ecosystem,
Speaker 1: and Brian Brooks made that possible. Then we had a
Speaker 1: new administration under Joe Biden come in and not a
Speaker 1: single law was changed, not a single regulatory written word
Speaker 1: was changed. And yet all of a sudden, the new
Speaker 1: Comptroller of the Currency, and this is interim Comptroller, Michael
Speaker 1: schu had a night and day, black and white, completely
Speaker 1: opposite interpretation of the exact same regulatory and legal constructs. Now,
Speaker 1: if this doesn't piss off Congress, I don't know what should,
Speaker 1: because they have been made completely impotent by the administration.
Speaker 1: And I don't believe that this makes good business. What
Speaker 1: do we want in America? We want to have businesses
Speaker 1: have a set of rules to comply with. You can
Speaker 1: agree or disagree with them, but they shouldn't change just
Speaker 1: because the President switches seats. Right, something written should have happened,
Speaker 1: and yet nothing was written, and yet the policy went
Speaker 1: completely in a different direction. This is a real problem
Speaker 1: in the United States. This indicates that the US may
Speaker 1: not be the bedrock of stability that it once was
Speaker 1: when it comes to law. All right. So anyway, Office
Speaker 1: of the cum Ful of the Country, Currency absolutely is
Speaker 1: the gateway. They claim safety and soundness issues with regard
Speaker 1: to bitcoin and digital assets, and they will not allow
Speaker 1: any federal chartered bank today to touch crypto. So that's
Speaker 1: a problem. Now. Even if you get past there, and
Speaker 1: there's some good news, we've got a federal federal powers
Speaker 1: versus state powers, there's a whole bunch of state powered
Speaker 1: banks that are not governed by the occ they are
Speaker 1: not regulated there. So look, a bunch of state chartered
Speaker 1: banks are absolutely in on crypto. And for the most part,
Speaker 1: you know, that does give us still some avenues into
Speaker 1: the banking system, which is critical for building a great
Speaker 1: ecosystem for the new wave of finance. But introduce the
Speaker 1: FDIC also a federal agency. So obviously pretty much every
Speaker 1: bank in America wants to be FDIC insured, and that
Speaker 1: means they are subject to the scrutiny of the FDIC regulator.
Speaker 1: FDIC regulator I Guy was his name, sort of the
Speaker 1: g He might be retiring, he's pseudo retiring anyway, he's
Speaker 1: been absolutely negative on crypto for quite some time. In
Speaker 1: April twenty twenty two, he came out and said Gruenberg. Sorry, yeah,
Speaker 1: that's his name. He came out in April twenty two
Speaker 1: and said, if you guys are touching crypto any of
Speaker 1: my regulated entities, If you're touching crypto, I'm going to
Speaker 1: put you on extra scrutiny. I need more documentation. I
Speaker 1: need to know exactly what you're doing. And basically what
Speaker 1: he did is setting said, if you get into this
Speaker 1: part of the business, your life is going to get harder.
Speaker 1: And every bank had to make a choice. And look,
Speaker 1: they're trying to businesses just like everybody else, and they
Speaker 1: want to participate in the future and what's up and coming.
Speaker 1: Of course they do, but they've also got their mainline
Speaker 1: business in traditional finance, and do they want to take
Speaker 1: on that battle. So a number of state chartered banks
Speaker 1: have dropped out as a result of the FDIC. And
Speaker 1: then the guy at ranked third is actually the SEC. Now,
Speaker 1: the SEC is critical if you're launching something that somebody
Speaker 1: might determine as a commodity, I'm sorry, a security. Bitcoin.
Speaker 1: You know, it's pretty much already been declared a commodity.
Speaker 1: I think eth has now gotten the past as well.
Speaker 1: I think it's now officially a commodity, even though it
Speaker 1: kind of went up and down for a little while.
Speaker 1: So the SEC is important for information disclosures, et cetera.
Speaker 1: If you're building securities that one's still getting sorted out.
Speaker 1: It looks like increasingly tokens sold as tokens are not securities.
Speaker 1: It doesn't mean that they couldn't be sold or packaged
Speaker 1: into security type products, which the CEC absolutely has purview over,
Speaker 1: but in general, you know, anyway, they'll sort out. So
Speaker 1: SAB one twenty one is down there. As you know,
Speaker 1: the FIT twenty one bill, which starts to do much
Speaker 1: more interesting things for crypto, which is introduce regulatory market structure,
Speaker 1: which would actually greatly expand the safety and stability of
Speaker 1: our markets that we trade on for crypto. It also
Speaker 1: effectively neutralizes SAB one twenty one. So anyway, sorry that
Speaker 1: was so long winded, but I think it's really important
Speaker 1: for people to understand, like who are the federal agencies
Speaker 1: that matter? And it's interesting to note that when a
Speaker 1: new administration comes into power in the United States, he
Speaker 1: pretty much immediately puts new people in charge of all
Speaker 1: of those, right, So really what it comes down to
Speaker 1: is whatever the president says goes. And this is why
Speaker 1: in this electrical cycle it's so important to think if
Speaker 1: you are a crypto voter, you have to be voting
Speaker 1: for a president that's going to support crypto, and you know,
Speaker 1: unfortunately the current administration just isn't it.
Speaker 2: Mike, That's great inside because I didn't think about the
Speaker 2: OCC and FDIIC. Everyone had their targets set on the SEC.
Speaker 2: But it's a great context that even if this was
Speaker 2: a result from an SEC standpoint, you still have these
Speaker 2: other two hurdles. A quick follow up question though, on
Speaker 2: the handful of people, and aside from the geriatric layer,
Speaker 2: why do you think they are so anti crypto? Because
Speaker 2: even the younger Democrats in the House and some in
Speaker 2: the Senate were you know, joined with the Republican colleagues
Speaker 2: to repealself one to one to pass the FIT twenty
Speaker 2: one bill out of the House. But you have this,
Speaker 2: these handful of folks, and I'm scratching my head trying
Speaker 2: to figure out, you know, is this a currency control issue?
Speaker 2: Is it we can't properly understand or tax this, or
Speaker 2: we don't control it, and that's why there's this Okay,
Speaker 2: we're not going to allow you know, following Biden, Elizabeth Warren,
Speaker 2: Brad Sherman, what do you think that is?
Speaker 1: Look, it's a great question, and I predicated my statements
Speaker 1: by saying this isn't a Democrat versus Republican thing. As
Speaker 1: you just pointed out on fit twenty one, seventy one
Speaker 1: Democrats voted for it. Like Actually, frankly, if there's any
Speaker 1: party that philosophically should agree with like getting out crypto
Speaker 1: to the people, it's the Democrats, right. I mean, these
Speaker 1: are the people that I've always believed in pushed the
Speaker 1: power back to the people, right, they believe they're open
Speaker 1: for freedom, et cetera. Party alignment is strong. So the
Speaker 1: fact that there's a few you know that don't like
Speaker 1: crypto in Congress or in the White House shouldn't be surprising.
Speaker 1: I mean, of course there's different points of view out
Speaker 1: there now the individuals involved. Look, I do think that
Speaker 1: age is a problem. I think they really have a
Speaker 1: hard time understanding how new technology is going to fit
Speaker 1: affect the world, and they're just afraid of it. And
Speaker 1: I think this is something that you know, is not
Speaker 1: specific to these individuals. I think it's it's a human
Speaker 1: nature thing. You and I are going to go through
Speaker 1: it as well. As we get older and older, we
Speaker 1: will also become a little bit you know, grumpy and
Speaker 1: be fuddled about whatever it is that's coming next. It's
Speaker 1: kind of our destiny, all right, unless we live forever,
Speaker 1: I guess, and then maybe maybe we forget that technology
Speaker 1: will be okay. But you know, these individuals also happen
Speaker 1: to be a little bit farther on the statist curve.
Speaker 1: So there is a group of people that believe in
Speaker 1: the absolute power of the centralized government, and they think
Speaker 1: that what's best for the people is for the centralized
Speaker 1: government to have control of all things. And it's very
Speaker 1: interesting that, you know, when it comes to money, that
Speaker 1: is the number one way that you can control people politically.
Speaker 1: One great example we saw was with COVID nineteen. We
Speaker 1: had the truckers protest, right, and this of course was
Speaker 1: in Canada, but Canada and the US are very similar here,
Speaker 1: and Canada came out and said, we're going to freeze
Speaker 1: the bank accounts of the truckers that are protesting. I mean,
Speaker 1: this is an incredible thing to do, right, You're going
Speaker 1: to attack somebody's finance the livelihood of not just them,
Speaker 1: but they're family based on their political viewpoints and their
Speaker 1: desire to protest against the government that they disagree with.
Speaker 1: I mean, certainly good news is that was in Canada,
Speaker 1: not the United States. But it's absolutely antithetical to you
Speaker 1: know what I believe every American, every American patriot believes in. So,
Speaker 1: like some of these folks that are status level people,
Speaker 1: they very much want to have the dollar continue to dominate.
Speaker 1: These are not financial experts. They do not understand free
Speaker 1: markets per se. They do understand control, and they're afraid that,
Speaker 1: you know, bitcoin will take away some of the control
Speaker 1: that they have today with the dollar. It's true bitcoin will,
Speaker 1: So they should be afraid of that if that's what
Speaker 1: you're really afraid of. But if you are actually for
Speaker 1: the people, if you actually want the people to have
Speaker 1: power and so that the banks to have power, then
Speaker 1: of course you should believe that people should have the
Speaker 1: right to access to money. They should have private access
Speaker 1: to money. You shouldn't be judged based on your trans actions.
Speaker 1: The government shouldn't be able to supervise all of it
Speaker 1: through a CBDC. These are just very basic things. If
Speaker 1: you want to really give power to the people, So
Speaker 1: all right, Anyway, we've got at least three different factions
Speaker 1: we've talked about right here. Right We've got some at
Speaker 1: the federal level that want to increase federal level federal
Speaker 1: powers all the way up to centralization and statism. We've
Speaker 1: got those that believe in strong federal powers, maybe not
Speaker 1: quite as extreme. And then the third, you know, where
Speaker 1: should the state powers be with regards to banking. You know,
Speaker 1: should the FDI see really have this ability to overlay
Speaker 1: and influence all of the state banks, preventing them from
Speaker 1: being able to compete in business, whether that's crypto, whether
Speaker 1: that's gambling, whether that's you know, whatever your other unsavory
Speaker 1: political topic may be.
Speaker 2: You know, Mike, as crypto continues to get adoption and
Speaker 2: we're seeing it become ubiquitous in politics and tradify, it's everywhere. Now,
Speaker 2: I think, I zoom out, and I think, are we
Speaker 2: in one of the these major inflection points in history,
Speaker 2: kind of like the printing press right where it kicked off?
Speaker 2: Just this whole new world and democratize things, And you know,
Speaker 2: obviously with money and the movement of value with crypto,
Speaker 2: and I'm like, I wonder what the world's going to
Speaker 2: look like in a hundred years that these people are
Speaker 2: fighting so hard, but we know disruptive technology always wins.
Speaker 2: They may put up hurdles right and it slow us down,
Speaker 2: but throughout history and civilization, disruptive tech always wins. It's
Speaker 2: just fascinating. I feel like I want to write a book,
Speaker 2: another book about it.
Speaker 1: Look, technology has a way of just just winning, right.
Speaker 1: I mean, it makes things more efficient for us, it
Speaker 1: makes our lives better, and if the technology has value,
Speaker 1: it will win. You know, when I was creating a
Speaker 1: protocol called Speedy, which is what eventually became HTDB two
Speaker 1: point zero. In the early days of starting to deploy
Speaker 1: that out and garner support to make it an actual stand,
Speaker 1: there are a lot of naysayers and people are like, ah, Mike,
Speaker 1: you know Microsoft's never going to do this because I
Speaker 1: was at Google and I did that, and you know
Speaker 1: there's too much infrastructure that has to be replaced, et
Speaker 1: cetera now. And what I always said in response is
Speaker 1: I said, look, if we don't make the new version
Speaker 1: so much better than the old version that people aren't
Speaker 1: willing to take those costs to do the upgrade, then
Speaker 1: we don't deserve to be the two point zero version,
Speaker 1: it's not worthwhile. So actually, some of this I would
Speaker 1: throw back to the bitcoin and digital asset ecosystem. We
Speaker 1: still have a boatload of work to do. I know,
Speaker 1: there's a lot of people that are you know, making
Speaker 1: a lot of money on early tokens, on early projects.
Speaker 1: There's a lot of exploration. It's global. It's definitely changing
Speaker 1: the way people think about money for those that are involved.
Speaker 1: But we have to make it even easier to use,
Speaker 1: We have to make it even easier to keep secure.
Speaker 1: We have to make it more private. I mean, you know,
Speaker 1: for most kind of non technical normal people out there,
Speaker 1: this idea that you put your transactions on the blockchain
Speaker 1: and then they can be traced by almost anybody. Look,
Speaker 1: I think this is a real problem. And you know,
Speaker 1: part of this gets back to regulatory Like the regulators
Speaker 1: have told you know, Bicco and other companies that they
Speaker 1: don't like privacy coins. They think that they are solely
Speaker 1: for the purpose of you know, defrauding the government or
Speaker 1: drugs or whatever. Look, that's not true. People have the
Speaker 1: right to the freedom of money, and we have seen
Speaker 1: persecutions that happen when people are able to trace and
Speaker 1: infer often wrongly ideas about other people's transactions. So all right, anyway,
Speaker 1: there's no stopping this technology so long as we continue
Speaker 1: to provide enough value that this is so obviously better
Speaker 1: than the system that came before it that people will
Speaker 1: move to it. And we're not done. We got a
Speaker 1: lot of work. I would like to rally, you know,
Speaker 1: another million developers to come into the crypto space to
Speaker 1: really work on these problems. And I don't mean just
Speaker 1: issue new coins that are going to be a token,
Speaker 1: et cetera, like, really solve the problems that matter for
Speaker 1: people with money. And if we do that, of course
Speaker 1: it's unstoppable. I think it's unstoppable anyway. Maybe I'm just
Speaker 1: asking I want the pace to go a little faster.
Speaker 2: Yeah. No, that's a great point, and I've been talking
Speaker 2: a lot about that. You know, how you bring in
Speaker 2: the next billion people and you've got to eliminate as
Speaker 2: much of the friction as possible, make it feel like
Speaker 2: Web two, but it's using Web three technology where it
Speaker 2: has to be simple enough where my mom and dad
Speaker 2: can do it. But I don't think it's there yet,
Speaker 2: you know, But like you said, we need more developers
Speaker 2: to come in more people to bring their ideas at
Speaker 2: a table and start building.
Speaker 1: And you know, frankly, we do need you know, traditional
Speaker 1: firms that have not been particularly innovative, but we need
Speaker 1: them to be able to participate as well. Obviously they
Speaker 1: aren't going to be on the cutting edge, but they
Speaker 1: will be adopters that take the piece says they're already
Speaker 1: working and turn it into real products. The ETF, the
Speaker 1: Bitcoin ETF isn't an example of that. Derivatives markets clearly
Speaker 1: an example of that. Can these guys come in and
Speaker 1: start to help with custody and basic banking on ramps
Speaker 1: and off ramps, of course they can do all those things,
Speaker 1: and then we can start to really focus on how
Speaker 1: do you have a world that's got a combination of
Speaker 1: You can have your assets custied at a single bank.
Speaker 1: You can have the custody that multiple banks at the
Speaker 1: same time, like multiple banks are required in order to
Speaker 1: authorize certain transactions, we can have self custody side by side,
Speaker 1: you know, I mean, the options and potential is limitless,
Speaker 1: but yeah, we need everybody to be able to participate.
Speaker 2: That's you know what you just mentioned there with multiple
Speaker 2: banks custodying your assets. So it would be kind of
Speaker 2: the splitting up the private keys maybe into three four parts.
Speaker 1: Well, as you know, I mean Bitco pioneered multi signature
Speaker 1: technology back in twenty thirteen. Like we didn't invent it.
Speaker 1: I don't mean to overtake over credit, but we were
Speaker 1: the first to really deploy a solid two out of
Speaker 1: three multi six system. And the whole idea is that
Speaker 1: there's no single key that can get compromised and you
Speaker 1: lose all the money. You know, as of today, we
Speaker 1: do multi say, we do multi sake and smart contracts,
Speaker 1: we do threshold signature MPC, we do a whole bunch
Speaker 1: of technologies on different blockchains, and absolutely that should be used.
Speaker 1: And once that's used, and then you standardize the format
Speaker 1: for how each of the key shares or the key
Speaker 1: parts are accessed, then you can start to distribute them.
Speaker 1: So today, you know, people are used to this idea.
Speaker 1: I bank at Wells Fargo or I bank at Bank
Speaker 1: of America. Now imagine you're banking at Wells Fargo and
Speaker 1: Bank of America. And for a lot of purposes that
Speaker 1: might be overkill, Like you know, for your regular checking
Speaker 1: account which has got a small amount of your your
Speaker 1: funds that you're kind of using for your day to
Speaker 1: day bills. You probably don't need something so crazy, but
Speaker 1: for large amounts of money, for sovereign wealth funds that
Speaker 1: you mentioned earlier, for the reserves of the governments of
Speaker 1: the world, which is coming right. We already have an
Speaker 1: El Salvador. Some presidential candidates are saying they might put
Speaker 1: bitcoin on the US balance sheet. Those are going to
Speaker 1: be large sums of money, and then you're going to
Speaker 1: want to, of course, be able to do that. By
Speaker 1: the way, this is what bic Go's doing. It's part
Speaker 1: of why we have seven licensed custodians around the world.
Speaker 1: Imagine a world where you come to bicco, you sign
Speaker 1: up for your wallet, You're like, I want a key
Speaker 1: in Switzerland, I want a key in Germany, and I
Speaker 1: want a key in Dubai. Oh and by the way,
Speaker 1: I want to have the administration of that cussy, the
Speaker 1: qualified cussy, out of the United States, so we can
Speaker 1: actually build these things. And that is what we're building U.
Speaker 1: So it's incredibly powerful. All of a sudden, the ownership
Speaker 1: of money is no longer subject to the failure of
Speaker 1: a single entity, and it's no longer subject to the
Speaker 1: failure of a single government. Now, by the way, one
Speaker 1: last I often get a question about that, like, well, Mike,
Speaker 1: but don't you contry all of those trust coming is
Speaker 1: a fair question. Look, over time it will open up
Speaker 1: across multiple custodians. But even now, the thing that people
Speaker 1: need to know when we open up a licensed regulated
Speaker 1: entity in Dubai or Singapore or whatnot, the regulators there
Speaker 1: absolutely care about the autonomy and so sovereignty of that
Speaker 1: entity away from Bitco, you know, the United States. And
Speaker 1: so while it's true I am the CEO of the
Speaker 1: the overarching set of companies, each one of those I
Speaker 1: have zero access to. Keys is through a number of
Speaker 1: independent controls teams on the ground in those regions that
Speaker 1: absolutely have a regulator that they report to as well.
Speaker 1: So no, it is not possible for Bitco to just say, hey,
Speaker 1: we're going to take across all those Anyway, I think
Speaker 1: it's a huge innovation. I think we're the first to
Speaker 1: do it. It's coming, and this is going to be good
Speaker 1: for everybody.
Speaker 2: Yeah, absolutely, and I love it. I you know, as
Speaker 2: you're saying saying that the smoke the engines are turning
Speaker 2: in my head, like what that would look like. So
Speaker 2: that's that's pretty incredible.
Speaker 1: Question.
Speaker 2: On the Etheroremist Body TFS. There is news yesterday that
Speaker 2: broke that we're going to see the approval next tuesday.
Speaker 2: Are you working with any of the issuers? Will you
Speaker 2: be cussinging Ether for any of them?
Speaker 1: Yes, we will.
Speaker 2: Are you able to name drop?
Speaker 1: No, I don't I want to name job. Look, I
Speaker 1: mean these guys are all going through their own regulatory components,
Speaker 1: you know, getting the SEC to approve. Uh, They're very
Speaker 1: careful with their words. Bicco is an approved you know,
Speaker 1: custodian for a number of of the bitcoin ETFs already,
Speaker 1: and this is this is an obvious easy one. I
Speaker 1: think the next step, which is interesting, will be when
Speaker 1: we get to the ability to have ETFs that can
Speaker 1: do staking of the ether.
Speaker 2: Uh.
Speaker 1: I think that's out for this first round. By the way,
Speaker 1: we also had kind of a similar concern about the
Speaker 1: bitcoin ETFs. Right the bitcoin ETFs don't take in kind
Speaker 1: deposits and withdrawals. That is a feature that should come.
Speaker 1: It makes a better market because all of a sudden,
Speaker 1: the market makers in the industry can really keep that
Speaker 1: price totally lockstep with the actual market price. Globally. Without
Speaker 1: that feature, there's an inherent inefficiency in terms of the
Speaker 1: arbitrage between the ETF pricing and other pricing. So there's
Speaker 1: more work to do on the ETFs. I don't know
Speaker 1: the timeline for these things to happen. I fear that
Speaker 1: the regulators move probably in intervals of years, whereas companies
Speaker 1: move in intervals of days and weeks. That's a big spread.
Speaker 1: We got to fix that, I think at the regulatory
Speaker 1: level for the next wave of money to come, regardless
Speaker 1: of that is in digital form.
Speaker 2: Well, question on staking. Obviously you provide staking for your
Speaker 2: institutional clients. The SEC they said, hey, no staking in
Speaker 2: these ets. They've also been suing different exchanges regarding staking,
Speaker 2: saying it's a security offering. How are you navigating those
Speaker 2: waters as a business as the SEC approach you, guys,
Speaker 2: or are you in a separate category from exchanges?
Speaker 1: Yeah, we do things very differently. We have not had
Speaker 1: any approach from the SEC, and I think it's because
Speaker 1: what we do is so clean and differentiated. There's a
Speaker 1: couple of areas where the SEC gets concerned, right, so
Speaker 1: it's very easy to create a securitized product. You know.
Speaker 1: The third prong is a return derived from the efforts
Speaker 1: of others. Right, So if you're managing someone's ethereum and
Speaker 1: you're saying, hey, i'm going to keep twenty percent of
Speaker 1: it in a liquid pool, and I'm going to stick
Speaker 1: the rest on this interval, and I'm going to give
Speaker 1: you a net yield of that amount, that starts a
Speaker 1: look a lot like a security I mean, you know,
Speaker 1: as much as like the crypto industry wants to say
Speaker 1: nothing's of security, I mean, yes, some things are securities
Speaker 1: in some of the some of the exchanges have embarked
Speaker 1: upon that, and I think they actually did create securities. Now,
Speaker 1: whether that should be regulated by the SEC or not,
Speaker 1: I think it's a different question, and probably more likely
Speaker 1: to say I don't think the SEC sh to worry
Speaker 1: about that. But that's the way the law is today.
Speaker 1: Another example is reward systems. May know this, Some are
Speaker 1: creating this clever idea where like, hey, we're not gonna
Speaker 1: we're not going to give you a return on this,
Speaker 1: but if you deposit it with us, we will give
Speaker 1: you a reward which allegedly comes from our balance sheet
Speaker 1: but happens to be very coincidentally close to like the
Speaker 1: on chain staking yield, or if it's a stable coin,
Speaker 1: the bond rate that they get behind it. Okay, I
Speaker 1: think those are thinly veiled wrappers around securities or potentially
Speaker 1: are all right, Well, BICCO does though, like, look, we
Speaker 1: don't pool funds, so we don't take an each clients
Speaker 1: and put them together. So there's no question about that.
Speaker 1: And by the way, I think staking pooling is different
Speaker 1: from the concept of pooling that the sec is traditionally
Speaker 1: dealt with. Traditionally, that's about like, hey, two people coming
Speaker 1: together to buy a particular product or to enable something.
Speaker 1: I think putting it into a common wallet, you know
Speaker 1: omnibus walllets banks use them all the time. It's not
Speaker 1: really pooling. It's a it's a method of efficiency for
Speaker 1: the storage of the asset. But nonetheless that the sec
Speaker 1: and the securities world is not clear on this point yet,
Speaker 1: So Biicco doesn't do it. We never pool assets together,
Speaker 1: and the yield we get is not derived by bico.
Speaker 1: It's whatever's on chain and that's what you get, so
Speaker 1: we don't have any control over it. Oh. One last
Speaker 1: thing that's really important. When you deposit a bicho, we
Speaker 1: don't stake it by default. You know, you have to say, hey,
Speaker 1: I want to stake it. You know, we work at
Speaker 1: the client's direction, so as an investor, you tell us
Speaker 1: what you want to do. If you want to move
Speaker 1: it from your account here to your account there, we
Speaker 1: would do that. Of course, we're acting as as your
Speaker 1: agent to do it, but we are not creating a
Speaker 1: security anyway. So anyway, what we do is a little
Speaker 1: bit different, and I think it's important to navigate those
Speaker 1: waters for now. I do think we'll get clarity from
Speaker 1: the SEC at some point on you know, how to
Speaker 1: handle staking in a really clean way. But again, like
Speaker 1: I do, think there's so much change happening so quickly
Speaker 1: in digital assets that, yeah, the regulators are having a
Speaker 1: tough time keeping up. I don't think we should be
Speaker 1: mad at them about that part. I think that part's
Speaker 1: actually okay and natural. And you know, Go and other
Speaker 1: companies are here to step up and help educate and
Speaker 1: provide backstops and make sure it's get done in a
Speaker 1: very safe way.
Speaker 2: Yeah, for sure. And I'm empathetic. I've spoken to like
Speaker 2: hester peers and some of these SEC folks. I can't
Speaker 2: imagine what their job is like with all the things
Speaker 2: that they have to deal with. But I guess, going
Speaker 2: back to earlier in our conversation, the politics of it right,
Speaker 2: and we don't want that to be part of it.
Speaker 2: But at the same time they have they have to
Speaker 2: go through the journey of learning about this and understanding
Speaker 2: it and working with the industry to provide proper legislation
Speaker 2: and guidelines. So hopefully we get there soon. Hopefully twenty
Speaker 2: twenty five is a year.
Speaker 1: And again I don't actually think it's as much politics
Speaker 1: as people want to lean that way. But I think
Speaker 1: what we have gotten to is a world where the
Speaker 1: president has a lot of power that people don't see
Speaker 1: from a regulatory perspective. And this is because there's a
Speaker 1: lot of regulation out there and it locks down a
Speaker 1: lot of business. And as I mentioned before, with just
Speaker 1: those three agencies, and by the way, I didn't mention
Speaker 1: the CFTC, I didn't mention the IRS, I didn't mention
Speaker 1: the FTC. Like the list goes on. It's just that
Speaker 1: the ones that we're dealing with today is just the
Speaker 1: first tip of the iceberg part and then there's a
Speaker 1: whole bunch more that still coming. So having all this
Speaker 1: regulation does give the president an undue amount of power
Speaker 1: in my opinion in the United States, And obviously that
Speaker 1: I guess is a bit of a political thing. But
Speaker 1: the actual act of like who's in president, whoever's in
Speaker 1: the president gets the control and decide whether these things
Speaker 1: are turned on or off. And that's why I think
Speaker 1: it's the individual in that office, not the party.
Speaker 2: Yeah. So, speaking of that, Donald Trump will be speaking
Speaker 2: at the Bitcoin conference in Nashville next week. He selected
Speaker 2: his vice president and it's JD. Vans, who's actually very
Speaker 2: pro crypto, has spoken out against Cherry Genser at the
Speaker 2: SEC and much more. What are your thoughts on that?
Speaker 1: Look, I think it's a logical candidate for him. I'm
Speaker 1: a I'm in business right and I'm a single issue voter.
Speaker 1: I have had a little bit of people, you know,
Speaker 1: as my my political choices this round have become more public.
Speaker 1: People are asking me, I mean that you're you know,
Speaker 1: big go is. Look, everybody, everybody that wants to be
Speaker 1: a client a BICCO should know that myself and BICCO
Speaker 1: are one hundred percent in politicians that are going to
Speaker 1: make digital assets safer and more accessible. And I think
Speaker 1: that's why people pick BICCO. So I don't want to
Speaker 1: be in politics. In my thirty year career, I've never
Speaker 1: had to voice political opinions. I do not want to
Speaker 1: disenfranchise anybody that you might be from the other side
Speaker 1: on other issues unrelated to crypto. But I also want
Speaker 1: to make it very clear that I am a single
Speaker 1: issue voter. So look, I like that jd Vance was
Speaker 1: put in with Trump. I think Trump is looking very
Speaker 1: strong by the way. I also like RFK Junior. He's
Speaker 1: also been very positive on bitcoin, and then you can debate.
Speaker 1: Your audience can debate whether they like RFK Junior better
Speaker 1: or Trump better on the other non crypto issues. Bicco's
Speaker 1: happy to and I am happy to support both of them.
Speaker 1: But then President Biden has made it very clear that
Speaker 1: he is anti everything we're doing, and so of course
Speaker 1: I have to be anti anti that, but it's it's
Speaker 1: not a broader thing other than what we get high for,
Speaker 1: which is to make digital assets great. Mm hmm, that's
Speaker 1: great again. Oh, better not say.
Speaker 2: That that's actually a good slogan. I did want to
Speaker 2: ask you about stable coins. Stable coin market is heating up.
Speaker 2: We're seeing us d C on the rise, Ripple's gonna
Speaker 2: launch a stable coin to folks that van acktter A
Speaker 2: gonna just stable coins soon. I was curious, is bitco
Speaker 2: gonna do anything on that front? And are you custoding
Speaker 2: reserves for any of these players.
Speaker 1: Well, let's see, I'm not announcing any any products, so
Speaker 1: I guess I won't. I won't answer that part of
Speaker 1: the question. But remember, actually, the the repertoire of stable
Speaker 1: coins is bigger than that. We got the black Rock coin,
Speaker 1: which is out there. We got Mountain Protocol, which is
Speaker 1: out there. We got h hash knows us d y
Speaker 1: Paxos just launched lift Dollar out of Dubai. So I
Speaker 1: think there's probably ten more that are en route to
Speaker 1: the markets. Look, it's interesting like if you go back
Speaker 1: to twenty seventeen when bicco was getting ready to launch
Speaker 1: wrap Bitcoin and kind of you know, Tether was out there,
Speaker 1: but other stable coins weren't around. I don't know when
Speaker 1: USDC came around, but it is about that time. You know,
Speaker 1: people were kind of afraid to launch stable coins because
Speaker 1: the interest rates were at zero. They were going negative
Speaker 1: in Europe if you recall that. Yeah, and people were afraid,
Speaker 1: like geez, well what happens if interest rates go negative
Speaker 1: in the United States? How that stable coin even work?
Speaker 1: Which is a great question, But that didn't happen. Now
Speaker 1: interest rates are high, and everybody wants to capture the
Speaker 1: interest rates bought backing the USD stable coin. So look,
Speaker 1: I think there's a bunch of these, but most of
Speaker 1: them are going to fail that we just don't need
Speaker 1: twenty different types, and in fact, it's painful to convert.
Speaker 1: So what it's really going to come down to is
Speaker 1: which one's the best. And like a lot of things
Speaker 1: with technology, you know, it's going to be probably more
Speaker 1: about the ecosystem than it is about the features of
Speaker 1: the coin. And you know, in an analogy you can
Speaker 1: make with technologies like programming languages. So for those on
Speaker 1: your show that are not programmers, you've probably heard of
Speaker 1: things like JavaScript. You've probably heard of things like Python.
Speaker 1: You've probably heard of PHP, maybe Perl if you go
Speaker 1: farther back, look, the winners in programming languages in terms
Speaker 1: of which ones get used, is not always the best technology.
Speaker 1: There's something about the ecosystem, Like Perl has been pretty
Speaker 1: much a despised programming language. I guess it's kind of
Speaker 1: dead now, So I'm dating myself, but it's not dead.
Speaker 1: It's used. You've probably a lot of places, but javascripts
Speaker 1: used everywhere, and I don't think there's very many people
Speaker 1: that would argue that JavaScript is the greatest language ever.
Speaker 1: So the same thing is going to come with stable coins.
Speaker 1: It's going to be about how do you make it
Speaker 1: so that the ecosystem can use it? And each one
Speaker 1: of these guys taking a very different approach. You know,
Speaker 1: those that are going out securities like the black Rock
Speaker 1: type product. The only people that can touch it are
Speaker 1: people that already have access to US markets and securities, right,
Speaker 1: so it's not going to really penetrate, you know, much
Speaker 1: of the crypto industry as we know it. It's going
Speaker 1: to have a real tough time going across borders. Another
Speaker 1: approach is like what Mountain Protocol did. So they're like
Speaker 1: they're going to return all the interests down to the holder,
Speaker 1: which sounds great, and then they're just going to lock
Speaker 1: out the US markets. So they're going to whitelist and
Speaker 1: blacklist and if you touch the US markets, they're going
Speaker 1: to kind of kick you out. I think lopping off
Speaker 1: forty percent of the global market is a tough place
Speaker 1: to start, but you know, Americans often underestimate what can
Speaker 1: happen in emergence emerging economies, and frankly, you know a
Speaker 1: lot of those countries probably need it more than Americans to,
Speaker 1: so that could be a winning approach. And then you've
Speaker 1: got like the packs of this approach out of Dubai again,
Speaker 1: trying to make a regular distable point there that returns
Speaker 1: interest back. So look, and there's gonna be many more.
Speaker 1: I do think that we're going to see change where
Speaker 1: the idea that circle can collect all the interest and
Speaker 1: give half the money to Coinbase, who turns around and
Speaker 1: competes with the entire industry, is not going to last.
Speaker 1: It just has to change. It's simply uh, you know,
Speaker 1: know none of us want to use it. I mean,
Speaker 1: I do think Coinbase is a good company. I'm really
Speaker 1: glad that they're in the ecosystem. But the idea of
Speaker 1: supporting a token that funds my competitor, and I'm not
Speaker 1: really the biggest competitor, Like all the exchanges of course,
Speaker 1: are far more directly in line here, and you know,
Speaker 1: Coinbase competes everywhere there. They provide staking, they provide base layer,
Speaker 1: they provide wallets, they provide exchanges, they provide cussy. Okay, look,
Speaker 1: it's just a tough place to be so but lastly,
Speaker 1: I think it's really important that you know some of
Speaker 1: that interest goes back to the rightful holder, and it will.
Speaker 1: So I'm probably rambled a lot on different stable coin options,
Speaker 1: but there's a lot going on. And this is what happens,
Speaker 1: by the way, when you open up innovation. Right the
Speaker 1: banking system has no innovation because it's so locked down
Speaker 1: on the regulatory front. And here we've got a great
Speaker 1: We just listed six different models, and at the end
Speaker 1: of the day, the consumer is going to decide what
Speaker 1: they like, and that's going to dictate to business which
Speaker 1: way to go. And the ones that predict it right
Speaker 1: will win, and the ones that predicted wrong will lose,
Speaker 1: maybe go out of business. But that's life business. You've
Speaker 1: got to make it right for your customers or you lose.
Speaker 2: Mike, given your pedigree and Web one point zero and
Speaker 2: two point zero, and let's do the analogy with search.
Speaker 1: Here, you had.
Speaker 2: Google, I mean you had AOL and Yahoo and Google
Speaker 2: and so forth in the early and the mid nineties.
Speaker 2: Then you saw a consolidation of that, right, the ones
Speaker 2: that went out of business, some God acquired and so forth,
Speaker 2: and then Google became the clear leader. Do you think
Speaker 2: the same thing happens in the staple coin market? And
Speaker 2: or and let me make sure I phrased this right.
Speaker 2: There's there's the Google, the clear leader with the giant
Speaker 2: share of the market, right, and then you still have
Speaker 2: being and you still have y'allhoo hanging around as far
Speaker 2: as search engines, is it like that there's going to
Speaker 2: be three, but one is a clear leader.
Speaker 1: Like I don't know whether it's account of three or
Speaker 1: account of five or what, but yes, of course, And
Speaker 1: just remember that at the end of the day, computers
Speaker 1: are tools for humans to communicate. And this is why
Speaker 1: we have naturally seen monopolies form decade after decade in
Speaker 1: our space. Going back to the seventies, you know IBM
Speaker 1: was dominant. Everybody's using IBM technology. Why because everybody speaking
Speaker 1: the same language. Right at that point, we didn't have
Speaker 1: any interop protocols. So if you wanted software to work
Speaker 1: between two companies you want to sell it, you wrote
Speaker 1: for the IBM mainframes right come into the PC era.
Speaker 1: I don't know if you recall but there used to
Speaker 1: be more word processors than just Microsoft Word. There was
Speaker 1: Word Perfect and a whole bunch of others. But you know,
Speaker 1: the center of gravity converged around eventually Microsoft Word. Which
Speaker 1: one why because when people exchanged documents they had to
Speaker 1: convert them from format A to format B, which always
Speaker 1: had some lack of fidelity. It's a communication tool that
Speaker 1: people use, so it kind of centralizes on a sing
Speaker 1: a single winner. The same thing has happened with PCs
Speaker 1: as a usage, just easier to interoperate and communicate both
Speaker 1: inside a company and out. These days we have more abstractions,
Speaker 1: so now you can start to see some cross platform
Speaker 1: stuff works pretty well. At this point we added in
Speaker 1: mobile phones. But in each one of these arenas, I
Speaker 1: think when you really break it down, it comes down
Speaker 1: to people talking to people, and so with stable coins. Look,
Speaker 1: here's the analogy. I imagine you walked into you know,
Speaker 1: you're in New York City and and you walked into
Speaker 1: McDonald's and they said, that'll be six year olds, and
Speaker 1: you'd be like, I don't have any euros and they'd
Speaker 1: be like, well, that's all we take, and you'd be like, okay,
Speaker 1: I gotta take me, missus elsewhere the same thing to
Speaker 1: happen with stable cooin. Do you walk in with seventeen
Speaker 1: USDC and if they say they only take tether, you
Speaker 1: know you're gonna have to convert it and that's painful.
Speaker 1: So digital will make it easier to convert these things,
Speaker 1: but there will always be fees. So yes, I think
Speaker 1: in general we will continue to see things converge on
Speaker 1: just a couple of solutions, and then where there's real
Speaker 1: value differences, like it could be the US markets differentiate
Speaker 1: from non US markets. That's definitely happening today. You see
Speaker 1: that with tether and USCC in particular. You know, maybe
Speaker 1: we'll see some pockets where like there's certain regions that
Speaker 1: have big winners that are different than other regions.
Speaker 2: Myke, tough question for you. Given the Internet adoption curve
Speaker 2: and timeline, what do you think crypto web three is
Speaker 2: right now? Are we in nineteen ninety nine, are we
Speaker 2: in two thousand and four? Where do you think we're at? Well?
Speaker 1: I think probably you got to normalize the timeline at all.
Speaker 1: You know, what is the Internet timeline and what is
Speaker 1: the movement of money onto the Internet timeline? Look, I
Speaker 1: think overall they are similar timelines. The way I would
Speaker 1: count the Internet timeline would start all the way back
Speaker 1: around nineteen seventy nineteen seventy one. This is when the
Speaker 1: first early origins of what became TCPIP started to emerge,
Speaker 1: email protocols kind of through the seventies you started to
Speaker 1: see those kind of come to life a little bit.
Speaker 1: Today these are all old hat, but you know, that's
Speaker 1: a full fifty years ago to get from there to
Speaker 1: where we are today. So if you consider the origin
Speaker 1: of crypto to be somewhere around you know, twenty ten,
Speaker 1: maybe a little bit earlier. If you want to credit
Speaker 1: the very beginning of bitcoin fifty year timeframe, it's probably,
Speaker 1: you know, twenty sixty. I'd like to think, I guess
Speaker 1: says I say that out loud. I'd like to think
Speaker 1: that things are a little bit faster do to the
Speaker 1: technology that we have. But I think we're going to
Speaker 1: be gated mostly by humans and not the technology. I
Speaker 1: think that's what we're seeing right now here in the
Speaker 1: United States. It's really about human ability to adapt to
Speaker 1: these new technologies, both from an individual perspective in terms
Speaker 1: of usability in terms of security, and then also from
Speaker 1: a government and regulatory perspective, And remember the Internet did
Speaker 1: not have nearly the right regulatory hurdles that money does.
Speaker 1: Money is very established businesses, whereas the Internet was kind
Speaker 1: of just new business. So we're also competing with incumbent
Speaker 1: players that are not certain about how they will win.
Speaker 1: They are running into the innovator's dilemma. I think I
Speaker 1: mentioned that on your show a couple of years ago.
Speaker 1: But they're going to have a hard time figuring out
Speaker 1: how do they adopt the new technology without uncomfortably cannibalizing
Speaker 1: their old business and yet still becoming and still maintaining
Speaker 1: the size of their business. So, but I don't know,
Speaker 1: I think fifty years is not that bad of a
Speaker 1: range for like how long it's going to take, which
Speaker 1: I guess means that we're still in the you know,
Speaker 1: first twenty five percent ish, maybe maybe the first thirty percent.
Speaker 2: Yeah, it's a great take, And I'm thinking, you know,
Speaker 2: as you said, because we're running on faster infrastructure and
Speaker 2: everybody is pretty much on the web, maybe it's cut
Speaker 2: in half, right, Maybe it's twenty five to thirty versus fifty,
Speaker 2: but you never know, it's it's well half the way, Yeah, Look,
Speaker 2: I think.
Speaker 1: The technology part is definitely changing much faster, and you know,
Speaker 1: we've got way more developers, way more power or more
Speaker 1: efficient and you can see this by the plethora of
Speaker 1: you know, layer one blockchains that you know, are some
Speaker 1: of them very indistinguishable from others. However, the regulatory side
Speaker 1: is going to move very slow and certainly has been.
Speaker 1: And then we've also seen great innovations as we go.
Speaker 1: But the Internet did this too, right, So actually was
Speaker 1: the protocol for how do you communicate? And there was
Speaker 1: like some chat stuff, and then it was like some
Speaker 1: news group stuff, and then it was some email stuff.
Speaker 1: On the blockchain side, and we started out with you know,
Speaker 1: store value, maybe some payments stuff. We got the smart
Speaker 1: contract stuff that led to stable coins stuff, and then
Speaker 1: you know, DeFi so we see innovations as we go.
Speaker 1: The time for all of this to disrupt the existing
Speaker 1: financial system, yeah, it's gonna take some time.
Speaker 2: Yeah, Mike always great man. I appreciate your insights, your knowledge,
Speaker 2: and I'm excited to see what's next for bitgo. Thank
Speaker 2: you so much for joining me.
Speaker 1: Thanks for all you do. It's great to have you
Speaker 1: out there, you know, championing all this stuff. I see
Speaker 1: your videos on YouTube all time, and keep it the
Speaker 1: great work. Two two two