Speaker 1: Yeah, So this is something that Franklin Templeton has been
Speaker 1: building Tony since twenty seventeen, so we really believed very
Speaker 1: early in the potential of this space, and we've built
Speaker 1: a stack that is capable of issuing and managing a token.
Speaker 1: We've built a wallet system within that stack that is
Speaker 1: KYCAML compliant, so a regulated wallet system.
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Speaker 2: please visit the link in the description. Welcome into the
Speaker 2: Thinking Crypto Podcast. I'm your host, Tony Edward, and my
Speaker 2: guest today is Sandy Call who's the head of Innovation
Speaker 2: Strategies at Franklin Templeton. Sandy, great to have you back on.
Speaker 1: Thank you, Tony. It's so good to be here with you.
Speaker 2: Sandy. We spoke earlier in the year, and you know,
Speaker 2: Franklin Templeton continues to develop a lot of great crypto products,
Speaker 2: a lot of things around ETFs in tokenization, and of
Speaker 2: course I have a lot of questions for you about
Speaker 2: these latest developments. Let's start with a recent report you
Speaker 2: put out, which was the Future of Investment for Investing
Speaker 2: twenty twenty four slash twenty five edition.
Speaker 1: Yeah. So we do an annual survey, Tony, where we
Speaker 1: talk to people engaged in the broad investment industry, all
Speaker 1: over the world, So we talked to asset owners like
Speaker 1: pensions and sovereign wealth funds and family offices and endowments.
Speaker 1: We talked to intermediaries like private banks, wealth advisors, industry consultants.
Speaker 1: We talked to a lot of asset managers, crypto asset managers,
Speaker 1: traditional asset managers, alternative asset managers, and we talked to
Speaker 1: a lot of fintech and academics. This year in our
Speaker 1: survey we covered our interviewees represented more than fifty trillion
Speaker 1: assets under management, so it's a pretty comprehensive survey we
Speaker 1: come out with each year, and in this year's survey,
Speaker 1: the big story is really about how we are starting
Speaker 1: to see an acceleration of the adoption of crypto rails
Speaker 1: into the traditional financial and capital markets ecosystem, and that
Speaker 1: this is really upgrading the fifty year old infrastructure that
Speaker 1: we've been working on, and it really talks about the
Speaker 1: implications of us moving away from an account based system
Speaker 1: where I might have a portfolio, and in essence it
Speaker 1: might sound like a portfolio, but I might have five
Speaker 1: or six or seven different funds that sit under that portfolio,
Speaker 1: and each fund is in its own account and each
Speaker 1: fund has its own accounting, Right, I'm going to move
Speaker 1: away from that to a world where I have one
Speaker 1: wallet and everything is going to be in my wallet,
Speaker 1: and everything in that wallet becomes interoperable and leverageable, and
Speaker 1: that is just going to mark a huge change in
Speaker 1: how the system works and open up huge opportunities for investing.
Speaker 2: So do you think we're at that tipping point of
Speaker 2: It's kind of what you mentioned earlier. Folks are recognizing
Speaker 2: this is the future. We need to get on board.
Speaker 2: It's no longer a fad or stigma. There's not a
Speaker 2: stigma around it. But how do we integrate blockchain into
Speaker 2: our ecosystem, the way we do things and so forth?
Speaker 1: Yeah, I think it's I think what's really coming about
Speaker 1: is a few things happening at once, right. I think that,
Speaker 1: you know, the need to start thinking more seriously about
Speaker 1: digital currencies, given the successive stable coins, the need to
Speaker 1: really start to bring in some of the real innovations
Speaker 1: that the crypto ecosystem introduced in terms of twenty four
Speaker 1: to seven, trading, atomic settlement, programmable assets. These are things
Speaker 1: that are really needed to take huge costs of the industry.
Speaker 1: And then I think it's also this idea that we're
Speaker 1: hitting the right regulatory moment. You know, we've seen sandboxes
Speaker 1: launched in Hong Kong, in Dubai, in Singapore, in Europe,
Speaker 1: in the UK. Now we are hearing that the DTCC
Speaker 1: in the US is announcing a sandbox. We have this
Speaker 1: change in administration coming in that's going to be more
Speaker 1: crypto friendly. So I think it's the combination. It's the
Speaker 1: combination of more digital money, the improvements and efficiencies and
Speaker 1: cost savings that we can take in the industry because
Speaker 1: of the new rails and the right regulatory environment, and
Speaker 1: I think it's all coming together to create this acceleration
Speaker 1: that we're going to see in this thinking and in
Speaker 1: this rebuilding of the financial market infrastructure.
Speaker 2: Yeah, to your point, it seems like a perfect storm
Speaker 2: that took place this year. If you told me maybe
Speaker 2: back in October of last year, I wouldn't believe you
Speaker 2: that any of these things would have happened. That we'd
Speaker 2: have had the ETFs launch, Frankel, Templeton and other firms,
Speaker 2: pro crypto President, pro Crypto Congress coming in. Crypto being
Speaker 2: a ballid issue, maybe not the number one, but certainly
Speaker 2: a valid issue I mean a complete one to eighty
Speaker 2: from how things were last year.
Speaker 1: It's incredible. I wrote a paper on bitcoin back in
Speaker 1: twenty twenty one, and one of the things we talked
Speaker 1: about it is that one day we might hit a
Speaker 1: point where people might consider bitcoin, you know, part of
Speaker 1: a strategic reserve, right, And oh my goodness, some people
Speaker 1: went crazy when we said that. It said never in
Speaker 1: our lifetime, and here it is three years later, right,
Speaker 1: And so it's kind of crazy when you think about
Speaker 1: it that way.
Speaker 2: Yes, Andy, I mean that must be amazing to be
Speaker 2: validated in that way. You were ahead of the curve.
Speaker 2: We have a bigcoin strategic reserve bill on the table,
Speaker 2: a president who's ready to push it. You had states,
Speaker 2: I mean, just this morning was announced Texas wants to
Speaker 2: do this, Alabama, a bunch of other states. I was
Speaker 2: actually talking to Dennis Porter, the SATOCI Action Fund. He's
Speaker 2: been leading this charge. It's amazing what's taking place.
Speaker 1: Amazing. Yeah, it's so exciting too, because you know, you
Speaker 1: don't often get to see innovation in action, Tony, So
Speaker 1: this is awesome. I love it.
Speaker 2: Do you think with the United States taking this position
Speaker 2: and saying, hey, we want this big cooin strategic reserve.
Speaker 2: It's going to be a bit of game theory where
Speaker 2: other countries are going to be paying attention. Okay, we
Speaker 2: need to beat the US to this. Let's let's get going.
Speaker 1: Well, there was already that leak that Russia's thinking about it, right,
Speaker 1: you know, I would not be surprised to see more
Speaker 1: and more headlines right, Like, we could even start to
Speaker 1: see central banks announcing that they're going to hold bitcoin
Speaker 1: as part of the reserve. So I don't know, it's
Speaker 1: going to be very interesting.
Speaker 2: Yeah, twenty twenty five, very very interesting, and your report
Speaker 2: very timely. I was reading through it, really great stuff.
Speaker 2: I did want to ask you about Inkland Templeton's Benji
Speaker 2: tokenization platform. Now, you guys launch on the edetherom network,
Speaker 2: but maybe you start us off by telling us about
Speaker 2: this platform and what's the mission there.
Speaker 1: Yeah, So this is something that Franklin Templeton has been
Speaker 1: building Tony since twenty seventeen. So we really believed very
Speaker 1: early in the potential of this space, and we've built
Speaker 1: a stack that is capable of issuing and managing a token.
Speaker 1: We've built a wallet system within that stack that is
Speaker 1: KYCAML compliant. So a regulated wallet system, we manage the
Speaker 1: keys in a secure location, a cold storage secure location
Speaker 1: for all of those wallets, and then we are able
Speaker 1: to do the transfer agency work so that you can
Speaker 1: issue regulated funds via this network. So we're able to
Speaker 1: do the subscriptions and the redemptions to the fund. We're
Speaker 1: able to track the changes and shareholders. We're able to
Speaker 1: apply and issue out yield and interest payments and corporate
Speaker 1: actions all via this odd chain stack that we built,
Speaker 1: and we're able to issue all of the regulatory reporting
Speaker 1: that we need, and we're able to exchange within our
Speaker 1: network any stable coin or really any digital asset and
Speaker 1: move it directly into our tokenized money market funds that
Speaker 1: provide yield. So this is a really comprehensive set of
Speaker 1: technologies that we built, and now we have the right
Speaker 1: regulatory permissions, you can transfer peer to peer within the network,
Speaker 1: and we're really now starting to find lots of demand
Speaker 1: and ways to deploy this, which is giving us an
Speaker 1: opportunity to really manage the assets that back A lot
Speaker 1: of these stable coins or back are looking for the
Speaker 1: yield potential in our tokenized money market fund product. So
Speaker 1: it's a very exciting time for us, because we've been
Speaker 1: working for a long time in this system is now
Speaker 1: fully deployed, and we're really the only asset manager who
Speaker 1: is actually providing true exposure to our money market fund
Speaker 1: in a wallet. In your own wallet, you hold that token, right,
Speaker 1: And this is not something that you know. There's other
Speaker 1: tokenized money market funds out there being offered, but they're
Speaker 1: not registered funds that can be held in your wallet, right,
Speaker 1: They're more kind of shareholder records.
Speaker 2: That's amazing. And I noticed that you're chain agnostics. So
Speaker 2: you started with Stellared and Polygon, I believe, app doos, Avalanche,
Speaker 2: Arbitrum and now etherorem Base as well, and which one
Speaker 2: I'm sorry, Base as well? Oh Base, that's Ray. So
Speaker 2: welcomes through a bit of the process. Let's say I'm
Speaker 2: an institution. I want to leverage your tokenization platform. Can
Speaker 2: I choose which chains or select a few or on
Speaker 2: all of them? Because I want to have interoperability.
Speaker 1: So when you're set up in our system, Tonny, you
Speaker 1: have a wallet on every one of those chains. So
Speaker 1: if you want to transfer your holdings from you know,
Speaker 1: the Ethereum chain to you know, the Stellar chain, you
Speaker 1: can simply instruct that in our app, and you could
Speaker 1: move those assets within our secure environment. They're never exposed,
Speaker 1: you know, to any type of bridge or cross chain transfer.
Speaker 1: It's all happening within our system. You're just basically moving
Speaker 1: it from one of your wallets to another.
Speaker 2: So it's permission and you have pretty much full control.
Speaker 2: It's not open to you know, general public, so to speak. Yeah. Now,
Speaker 2: I don't want to sound bearish or anything I get,
Speaker 2: but let's say one of these blockchains fails, you know,
Speaker 2: because not every blockchain will be a winner. What happens
Speaker 2: in that case are the respective token I shares burned.
Speaker 1: So we have the record of every share we issue
Speaker 1: and every owner of that share. And so one of
Speaker 1: the requirements that we built into the system to satisfy
Speaker 1: the sec was that we could reconstruct the the exposure,
Speaker 1: so we would burn tokens that we're on that chain
Speaker 1: and reissue you that equivalent amount of tokens on another
Speaker 1: chain of your choice.
Speaker 2: And are these tokenized shares, are they available globally or
Speaker 2: is it restricted to certain markets.
Speaker 1: It's a great question. So you know, right now with
Speaker 1: the FOBXX tokenized US Government Money Market Fund, that's a
Speaker 1: forty fund, so that has only been available to US investors.
Speaker 1: We are soon going to be launching and we've announced
Speaker 1: this already a Luxembourg based use It's fund SEECAB fund
Speaker 1: that is therefore going to open that up investors from
Speaker 1: I believe it's twenty additional countries are now going to
Speaker 1: be able to purchase and utilize those tokens because it's
Speaker 1: in the next rapper. Its same product, just a different
Speaker 1: product rapper, and we will soon be at a point
Speaker 1: where we can have anyone in the globe able to
Speaker 1: purchase the money market fund that aligns to what they
Speaker 1: need to subscribe to from their regulatory jurisdiction.
Speaker 2: Wow. I want to explore that a bit because I've
Speaker 2: been thinking a lot about these things. In a traditional sense,
Speaker 2: let's say you have a money market fund. It's not
Speaker 2: accessible to everybody in the world, and there's certain restrictions
Speaker 2: and every country almost has its own SEC and so forth.
Speaker 2: But in a tokenized format, it's twenty four to seven
Speaker 2: and opens it up to everybody.
Speaker 1: Well, we had to do a lot of engineering to
Speaker 1: open it up to everybody, right, So we've had to
Speaker 1: launch all these versions of the fund so that you
Speaker 1: can get that exposure anywhere in the world. We're working
Speaker 1: on making and we have in some instances, made that
Speaker 1: accessible twenty four to seven. We're working on making that
Speaker 1: a universal set of functionality, but you know, it hasn't existed,
Speaker 1: so we're having to build it. And you know, when
Speaker 1: you start working with an entire set of global regulators,
Speaker 1: things don't always move as quickly as you hope, but
Speaker 1: they are moving. And you know, our years and years
Speaker 1: of effort here are really starting to pay off now.
Speaker 2: And how does that change your business management in the
Speaker 2: sense of the twenty four to seven aspect, because well,
Speaker 2: you're sleeping someone else is treating it right unlike anything
Speaker 2: we've seen before. Because the stock market has an opening
Speaker 2: and closing a close belt, you have weekends, you have
Speaker 2: holidays and so forth. How does this change your business model?
Speaker 1: Yeah, well, so this is where we're really fortunate in
Speaker 1: doing this. As a global firm. We already run operations.
Speaker 1: We have a follow the Sun model, so there is
Speaker 1: always an operations team available from our Broad Franklin Templeton franchise.
Speaker 1: So this is where we're able to use the innovation
Speaker 1: of our digital asset unit and begin to really leverage
Speaker 1: off of the really expansive capabilities that we've built as
Speaker 1: a one point six trillion dollar asset manager.
Speaker 2: Now, going back to the fob xx, that's the on
Speaker 2: chain US Government money market fund, it's on base. What's
Speaker 2: the current AUM and also tell us about the USDC
Speaker 2: stable coin being being able to use that as an
Speaker 2: on and off ramp.
Speaker 1: Yeah, so we're just at about I think the last
Speaker 1: time I saw, we were about four hundred and fifty
Speaker 1: million AUM in our tokenized fobxx product. And we have
Speaker 1: built this exchange, this cash exchange facility within our Benji stack.
Speaker 1: So if you had stable coins, if you had USDC,
Speaker 1: you had another stable coin that you wanted to exchange
Speaker 1: and get that swept into our Benji product, we have
Speaker 1: that facility built in. Now there is a tiny leg
Speaker 1: of custody that happens in the middle of that transaction,
Speaker 1: and we work with a digital custodian to make that happen.
Speaker 1: But it's seconds right. It feels to you as the
Speaker 1: end user that is happening seamlessly. If you really look
Speaker 1: at the mechanics of how it's happening. The stable coin
Speaker 1: is being redeemed, the cash is being reinvested and it's
Speaker 1: being put into the money market fund. But that happens
Speaker 1: in such a short window that it feels like a
Speaker 1: seamless transaction.
Speaker 2: Oh for sure, Now city the stable coined wars are happening.
Speaker 2: There's so many issues. Yeah, like Ripple's going to launch
Speaker 2: earl USD, PayPal has p y USC. Of course, Tether
Speaker 2: the world's largest stable coin, is sure. And then I
Speaker 2: was talking to the folks at Agra Benek and they
Speaker 2: launch AUSD. Are you playing to open up support for
Speaker 2: all these other stable coins or are you going to
Speaker 2: be kind of selective like USDC and maybe some of
Speaker 2: the others.
Speaker 1: Yeah, Well, the facility we built can take any digital asset,
Speaker 1: including a crypto asset, right, so you know, the it
Speaker 1: really is going to come down to a manner of demand.
Speaker 1: Right when we start to see demand emerge to move
Speaker 1: from a stable coin into our tokenized money market fund,
Speaker 1: will activate that. We'll get the right arrangements set up
Speaker 1: and we'll be able to do that. So we built
Speaker 1: a coin agnostic exchange facility, and I think that's what's
Speaker 1: going to really be helping us in being able to
Speaker 1: be you know, just like we're doing across blockchains. We
Speaker 1: don't want to have to have only one or two
Speaker 1: preferred stable coin providers. We think that stable coins are
Speaker 1: going to explode, that many organizations are going to issue them,
Speaker 1: so we want to be interoperable with all of that.
Speaker 2: Wow, I love that. I love that you guys are
Speaker 2: chaining agnostic, asset agnostic. That's really incredible. Tell us a
Speaker 2: bit about the institutions who are using your tokenization platform.
Speaker 2: I'm sure folks want to know who's doing this, who's
Speaker 2: who's looking to tokenize, and so forth.
Speaker 1: Yeah, so there's a whole mix of folks, and it's
Speaker 1: it's really interesting. Right. So we've got, you know, we've
Speaker 1: got a number of you know, venture capital funds that
Speaker 1: have basically portfolio companies that they need to fund over time. Right,
Speaker 1: So they don't release all that funding in one go
Speaker 1: to their portfolio companies. They release that in stages, and
Speaker 1: so they're managing that pool of capital and the managing
Speaker 1: the distribution of funds of that capital to their portfolio company.
Speaker 1: So that's one type of institution. Similarly, we're starting to
Speaker 1: see interest from treasuries, right, corporate treasuries, institutional treasuries, crypto
Speaker 1: treasuries where they might have multiple jurisdictional legal entities that
Speaker 1: they need to move cash between. We're seeing that emerge
Speaker 1: as a really interesting use case as well. We're really
Speaker 1: starting to see interest from many hedge funds and interests,
Speaker 1: you know, from many trading counterparties who want yield from
Speaker 1: you know, the overnight reserves they're holding, or want yield
Speaker 1: from the collateral they're posting. Right. This is another big
Speaker 1: use case that we've been seeing, and people who are
Speaker 1: doing lending are looking for opportunities to have a collateral
Speaker 1: backing that also pays yield rather than just holding a
Speaker 1: stable point that doesn't pay any yield. So you're starting
Speaker 1: to see a bunch of different use cases emerging that
Speaker 1: all really represent new ways of engaging in business that
Speaker 1: provide real edges in terms of either cutting time to
Speaker 1: get payments distributed, cutting costs, making it more efficient from
Speaker 1: a collateral perspective, bringing in some of the real positive
Speaker 1: things from traditional finance into the new crypto ecosystem in
Speaker 1: terms of being able to apply yield on collateral. So
Speaker 1: these are all I think great use cases that we've
Speaker 1: been really uncovering and working with our clients on.
Speaker 2: And as we head into twenty twenty five, do you
Speaker 2: expect these activities to increase, that more firms will come
Speaker 2: into place? And it's made I don't know if this
Speaker 2: question makes since with the push towards tokenization, is there
Speaker 2: any middleman being cut out here? Is there any disruption
Speaker 2: of any entities who may have been part of the
Speaker 2: whole system before.
Speaker 1: Well, I think that, you know, let me answer that
Speaker 1: in two ways. I think that twenty twenty four has
Speaker 1: been a real year of building for us because, as
Speaker 1: you mentioned, we've been expanding across multiple geography, so we've
Speaker 1: needed to work with many sets of regulators. We've been
Speaker 1: launching new products, we've been building out across many chains, right,
Speaker 1: so we've been really spending a bulk of our twenty
Speaker 1: twenty four getting the base in place for what we
Speaker 1: expect to be a very very active and twenty twenty
Speaker 1: five where we really see utilization of all these capabilities surge.
Speaker 1: And so I think that, you know, we've been really
Speaker 1: prepping and getting everything in place for this now not
Speaker 1: to be a novelty off to the side, but to
Speaker 1: become a core business of what we do. I think
Speaker 1: at the same time, you know, there's many intermediaries that
Speaker 1: see potential issues with this new set of rails threatening
Speaker 1: their core business model. And you know, the more innovative
Speaker 1: and creative of those entities have been very engaged in
Speaker 1: thinking about how can they too evolve with the evolving ecosystem.
Speaker 1: And so I think there will be a set of
Speaker 1: them that are able to you know, adapt their business
Speaker 1: model become really successful in the new world. But there's
Speaker 1: probably also going to be a set that wait too long,
Speaker 1: or don't act fast, or don't act creatively enough or
Speaker 1: fast enough, and they may find that their business model
Speaker 1: is under threat. So as this whole kind of new
Speaker 1: set of engagement and trading and collateral opportunities open up, right,
Speaker 1: I think that, you know, you're going to really start
Speaker 1: to see who are the winners and who are the losers.
Speaker 2: It's fascinating to watch that play out. I'm a I'm
Speaker 2: big into history and a study technology, and I've watched
Speaker 2: disruption happen through the internet, the growth of the Internet,
Speaker 2: and it's fascinating. I think the same thing is happening here.
Speaker 2: Of course, a blockchain.
Speaker 1: The history major myself, Tony history major myself.
Speaker 2: Yeah, I know, because there's a good and a bad
Speaker 2: to that, you know, because you know, you see companies
Speaker 2: go out of business. But that's just the nature of
Speaker 2: the business cycle and technology and the history of how
Speaker 2: we progress as humans civilization. So it's interesting.
Speaker 1: It's unless you have to have that as the threat,
Speaker 1: because otherwise, you know, there's not that incentive to innovate, right,
Speaker 1: So you need that incentive to innovate.
Speaker 2: That's true. Let's talk about the ETFs. So Franklin Templeton
Speaker 2: of course has a big one in ethere and metfs.
Speaker 2: What we've seen though, overall, for all the ETFs out there,
Speaker 2: incredible inflows. I mean, Sandy, I'm blown away, and I'm
Speaker 2: like where this thing is going really fast, is really rapid,
Speaker 2: and i know, like collectively all the ETFs are going
Speaker 2: to surpass Stoshi if they haven't already. What are your
Speaker 2: thoughts on the success of the et aps.
Speaker 1: Well, I think it's just showing that there's huge demand
Speaker 1: to be able to participate in these new marketplaces. And
Speaker 1: you know, because it's been such a different way of
Speaker 1: obtaining exposure, a lot of people who don't have confidence
Speaker 1: in their ability to use these new technologies have had
Speaker 1: a hunger to invest but haven't really understood or gotten
Speaker 1: themselves comfortable with investing in the options that had been available.
Speaker 1: And now that this isn't a familiar ETF wrapper, I
Speaker 1: can go into it via my brokerage account, I can
Speaker 1: put it in an order for it, I can ask
Speaker 1: my advisor to buy it for me. Right. I think
Speaker 1: that this is really showing how much untapped demand there
Speaker 1: has been. And I still think we're really just at
Speaker 1: the very very beginning stages of it, right, And I
Speaker 1: think that we have I hate to say this with
Speaker 1: the success that we've already had, but I can honestly say,
Speaker 1: I don't think you've seen anything yet, right, Like, this
Speaker 1: is really probably going to be just the beginning, and
Speaker 1: I think it's going to really progress very quickly and
Speaker 1: become an absolutely standard part of everyone's portfolio. Probably within
Speaker 1: five years, we'll kind of look back and say, Wow,
Speaker 1: was it ever controversial that you held crypto in your portfolio?
Speaker 1: When was that? Right? I do think we're moving towards
Speaker 1: that day, and I think these ETFs are really helping
Speaker 1: pave the way for that, because it's allowing the public
Speaker 1: at large who don't feel comfortable getting into crypto technologies
Speaker 1: to participate, right. You know, there's a lot of people
Speaker 1: my age and older that like never quite got super
Speaker 1: comfortable with social media, yet we still participate in the
Speaker 1: online world. This is the way I think that you're
Speaker 1: seeing a broader and broader part of the population really
Speaker 1: be brought into the innovation that's happening in the crypto ecosystem.
Speaker 2: Yeah. Well, put and I know a lot of people
Speaker 2: are intimidated by private keys and storage of that, and
Speaker 2: if I lose it, I lose my crypto. So ETFs
Speaker 2: put all those worries to bed, and it just makes.
Speaker 1: It exactly yep.
Speaker 2: What do you think is driving the appetite for this
Speaker 2: acid class? And one of the things I keep thinking
Speaker 2: about is like what Paul Tudor Jones said, I think
Speaker 2: back in twenty twenty where you said bitcoin and crypto
Speaker 2: is the fastest horse in the race. Yes, you can
Speaker 2: invest in real estate in the stock market, but nothing
Speaker 2: moves like crypto. And maybe it's the global reach, the
Speaker 2: hardcap supply on many of these tokens, and that it is.
Speaker 2: You know, we've seen tech eat a lot of industries
Speaker 2: and suck them in. So maybe bitcoin in the etherorem
Speaker 2: and so forth because of tokenization all these things is
Speaker 2: sucking in the traditional assets on top of it. I
Speaker 2: don't know, do you think it's a combination all these things.
Speaker 1: I think it's all those things. And I think, honestly,
Speaker 1: you know, there's a growing frustration, particularly here, I think
Speaker 1: in the US and in many of the big developed
Speaker 1: nations about the opportunities that are available in the traditional markets. Right.
Speaker 1: If you look in the US, we have seen the
Speaker 1: number of publicly listed companies confect by almost seventy five
Speaker 1: percent since the nineteen nineties. Right, There's simply not as
Speaker 1: many public companies out there. A lot of that growth
Speaker 1: opportunity has moved into the private equity markets, and most
Speaker 1: individuals are excluded from the private equity markets. And so
Speaker 1: you know, where is the small cap stock that you
Speaker 1: could buy twenty five years ago and own until it
Speaker 1: became a megacap and make a fortune owning that security.
Speaker 1: There's not as many of those opportunities out there for
Speaker 1: today's investors, particularly young investors that don't have a lot
Speaker 1: of money to invest. And so I think that these
Speaker 1: crypto tokens and this new crypt dough ecosystem, it's almost
Speaker 1: like a twenty first century investment option. And I think
Speaker 1: that we've seen the world change so much. There's many
Speaker 1: I think who have a sentiment of I don't see
Speaker 1: as many opportunities in the equity markets, and I kind
Speaker 1: of think of that as like the baby boomers investments,
Speaker 1: and I want an investment to feel more in tune
Speaker 1: with the world where it's heading today and where it's going.
Speaker 1: So I think that there's also this appetite for something
Speaker 1: that again democratizes and brings a broader set of the
Speaker 1: population into this ability to really invest money and potentially
Speaker 1: get rich. And you know, I think that that's kind
Speaker 1: of I think what Paul Tudor Jones got to in
Speaker 1: that statement, But I think it's more foundational than that.
Speaker 1: It's about this democratization and it's about kind of taking
Speaker 1: back I think some of this potential that has gone
Speaker 1: to the institutions and to the ultra wealthy and has
Speaker 1: kindind of moved away in many instances from the average individual.
Speaker 2: I think you hit the nail on the head there,
Speaker 2: because it's also in line with the sentiment that many
Speaker 2: people are feeling about I can't afford a home. It's
Speaker 2: the American dream that seems so far from me, I
Speaker 2: don't care about bonds, and the bonds have not performed
Speaker 2: that well gold, like you said, it seems like a
Speaker 2: boomer asset. And then the stock market, well, yeah, I
Speaker 2: get some tesla, I get a little bit of a video,
Speaker 2: whatever it may be. They're just there's not that broader
Speaker 2: appeal and like the smaller companies where it seems affordable.
Speaker 2: But I can put it a fraction into ethereum or
Speaker 2: bigcoin or some other all coin and do better based
Speaker 2: on and.
Speaker 1: I could do it myself. Right, So I think there's
Speaker 1: a real appeal in that too, is that I'm not
Speaker 1: being forced to go and open these accounts and talk
Speaker 1: to these intermediaries and right, I mean I think that,
Speaker 1: you know, people are so independent in today's world and
Speaker 1: so enabled by technology, and I feel like these investments
Speaker 1: really fit with the life that people live today.
Speaker 2: Yeah, and I'll give it an anecdotal evidence of from
Speaker 2: from my personal experience. You know, I think before the Internet,
Speaker 2: I would not have understand investing. There was no trading
Speaker 2: view where I can go look at charts and understand
Speaker 2: what's happening and even get financial data. I can go
Speaker 2: to the Fed's website CEE to M two money supply.
Speaker 2: You can see a lot of things now and it's
Speaker 2: available to everybody, so we have more education. To your point,
Speaker 2: I can watch someone like you, Sandy on YouTube, where
Speaker 2: before I could or listen to you on that because
Speaker 2: I couldn't get access to you before. It was gatekeepers right,
Speaker 2: and I couldn't walk into Franklin Temple and say, hey,
Speaker 2: I want to spend an hour with Sandy and have
Speaker 2: her teach me about these things. So it's a very
Speaker 2: different world.
Speaker 1: It's a different world, and I think that you know,
Speaker 1: it's a world where people want to feel they have
Speaker 1: knowledge and control and an ability to take a hand
Speaker 1: and shape their own fate. And I think that's what
Speaker 1: this new ecosystem is really well suited to do. It's
Speaker 1: capturing I think a populism in how you act and
Speaker 1: how you behave that's just not available in a lot
Speaker 1: of aspects of people's lives.
Speaker 2: I want to ask you about the Crypto Index ETF.
Speaker 2: So you guys filed for that bigcoin and e theorem.
Speaker 2: I think the SEC pushed it back to January. We
Speaker 2: know there's a regime change taking place. We got Paul
Speaker 2: Atkins coming in. We know has been pro crypto, pro crypto,
Speaker 2: new government coming in. What do you expect that ETF
Speaker 2: to get approved and other all coin ETFs to get
Speaker 2: approved next year?
Speaker 1: Yeah? Well, so you know, I'm not allowed to speak
Speaker 1: directly about anything we have a filing on, but let
Speaker 1: me make the case for why I think a multi
Speaker 1: coin ETF is so important. You know, we have seen
Speaker 1: so you just because we're creating this exciting new world
Speaker 1: doesn't mean we could throw out all the lessons that
Speaker 1: we have learned through one hundred two hundred years of
Speaker 1: financial history. And I think one of the most important
Speaker 1: things we've learned is you don't want single asset exposure, right.
Speaker 1: You know, you don't go and you're not having you know,
Speaker 1: a Navidia ETF. You have QQQ, right, So you want
Speaker 1: this diversification that comes by spreading your investment across multiple
Speaker 1: assets and the registration that we're looking to get. You know,
Speaker 1: it would start out with ethereum and bitcoin, but it
Speaker 1: would be an index product that would grow based on
Speaker 1: the market capitalization of the underlying token, so that you
Speaker 1: get as the end, as the ecosystem itself gets diversified,
Speaker 1: your exposure gets diversified, and that's the flexibility that I
Speaker 1: think we're going to start to see. There's always a
Speaker 1: lot of enthusiasm when someone says, oh, I'm filing for
Speaker 1: this ETF or that ETF, but they've all been single
Speaker 1: asset ETFs, and we still feel like the need is
Speaker 1: to go towards diversified portfolio exposure. It's safer for the investor,
Speaker 1: it's better in the long run from performance perspective, it
Speaker 1: gives you more protection against unexpected news or problems. So
Speaker 1: you know, that's our thinking there is we want to
Speaker 1: take our learnings by being one of the most successful
Speaker 1: traditional financial market asset managers and bring that into this
Speaker 1: new ecosystem by starting to create this and we have
Speaker 1: been running model portfolios for over three years multi coin portfolios.
Speaker 1: In fact, our first multi coin portfolio just passed its
Speaker 1: three year anniversary and the average churn has been over
Speaker 1: sixty five percent, So that's a pretty good return when
Speaker 1: you're talking a multi coin portfolios. So we want to
Speaker 1: be able to really think about bringing that x bertise
Speaker 1: into the ETF wrapper over time.
Speaker 2: And do you anticipate that once there's more clarity, you
Speaker 2: may add other coins in the top ten like your XRP,
Speaker 2: Soalonas and so forth.
Speaker 1: Exactly.
Speaker 2: It's interesting. You know, I agree with the your thoughts
Speaker 2: on the index ETF because I'm thinking about not myself
Speaker 2: because I'm fully in the crypto, but the average Joe
Speaker 2: and Jane. Yeah, just give me the top five or
Speaker 2: a top ten, right, makes it?
Speaker 1: Yea, Just let me have exposure. I don't I don't
Speaker 1: really know much about it. I don't want to have
Speaker 1: to pick. Just let me have what is a good exposure,
Speaker 1: right m.
Speaker 2: M yeah, yeah, that definitely makes sense. I think that
Speaker 2: will help usher in a lot more investors that they
Speaker 2: don't have to pick or choose. Just hey, just give
Speaker 2: me exposure.
Speaker 1: Yeah.
Speaker 2: Yeah, I would love to get your thoughts on if
Speaker 2: you're able to talk about it. But like the upcoming
Speaker 2: government and you know, could we see crypto legislation push
Speaker 2: to send it like we mentioned earlier, Paul Atkins coming
Speaker 2: in at the SEC. You got a Treasury Secretary's going
Speaker 2: to be pro crypto and so forth.
Speaker 1: Yeah, I think you know, look, it's been one hundred
Speaker 1: signal so you know, if we take the signals at
Speaker 1: their phase value, which I think we should, right that
Speaker 1: this is going to be a very pro crypto administration
Speaker 1: in the US, and you know how quickly they can act. Well,
Speaker 1: you know, we see how quickly bills get passed in Congress,
Speaker 1: So you know, I think some of our enthusiasm has
Speaker 1: to be tempered by the sausage making, as they call it.
Speaker 1: But I think that the tent is there, and I
Speaker 1: think that you know, there will be a lot of
Speaker 1: openness to the right messages, right like when we talk
Speaker 1: about the opportunities for individuals, the ability to provide more
Speaker 1: you know, democratized access, the ability to do this in
Speaker 1: a way and help regulators understand that, you know, tracking
Speaker 1: assets on blockchain is actually more effective than the way
Speaker 1: that they've been tracking traditional security. So a lot of
Speaker 1: arguments that people have been making that are very true
Speaker 1: and very important, arguments that have had trouble breaking through,
Speaker 1: I think will now have a much warmer reception and
Speaker 1: that will help, I think, open up a lot of doors,
Speaker 1: and I think you'll see rapid progress. And you know,
Speaker 1: once the US starts moving quickly, you know the rest
Speaker 1: of the world will accelerate as well, because no one
Speaker 1: wants to lose the edge that they've been trying to build.
Speaker 1: While the US has been slow, so it feels like
Speaker 1: we're just really getting ready for takeoff. That's kind of
Speaker 1: what I think the sentiment feels right now. And you know,
Speaker 1: it may take a few more months than people think
Speaker 1: it's going to take, but I see it as a
Speaker 1: very positive direction. And I think twenty twenty five will
Speaker 1: be remembered as the year of crypto, to be honest
Speaker 1: with you, Wow.
Speaker 2: Yeah, well uh. And I think even just the the
Speaker 2: end of regulation by enforcement and that fear environment, even
Speaker 2: if they, like you said, Congress doesn't even get to
Speaker 2: push the bill through, just the end of that and more,
Speaker 2: even if they're neutral, like we're not we're not trying
Speaker 2: to kill you or stop you, right, We're just gonna okay,
Speaker 2: come in and talk to us. Let's let's get things going.
Speaker 2: It may move slower because the government, but just that environment,
Speaker 2: we so much better.
Speaker 1: Yeah. And I think it's also it's it's the underlying message.
Speaker 1: Right when when it was enforcement by you know, registrate,
Speaker 1: regulation by enforcement, the message was you're doing something bad
Speaker 1: and we're going to catch you. And now I'm hoping
Speaker 1: and I think that we will see the message turn
Speaker 1: into we're excited about what you're doing, let's do it
Speaker 1: in a responsible way.
Speaker 2: Mm hmm. Yeah, it's twenty twenty five. I'm excited. It's good,
Speaker 2: fascinating to watch it unfold because it's so funny. You see,
Speaker 2: President Electron I'm constantly talking about Crypto now, and I
Speaker 2: think just this morning he was at the New York
Speaker 2: Stock Exchange. I don't remember. I think he was ringing
Speaker 2: the bell and then he was asked by Jim Kramer
Speaker 2: by Crypto and it's it's amazing. Like I said, if
Speaker 2: you told me this a year ago, in twenty twenty three,
Speaker 2: I would not have believed you.
Speaker 1: Oh yeah, never underestigate how bizarre reality could become donated.
Speaker 2: Yeah, you know, you mentioned something and it's something I've
Speaker 2: been talking to people about. You know, if the government
Speaker 2: was running on blockchain, how much more efficient it could
Speaker 2: be and accountability, where's our funds going, where's this spending?
Speaker 2: Putting voting system with blockchain in place? Do you think
Speaker 2: we will eventually get there? I know it probably won't
Speaker 2: happen anytime soon, but maybe in ten years we see
Speaker 2: all this stuff running on blockchain.
Speaker 1: I mean, you know, just take voting as the simplest
Speaker 1: thing of all, like everybody is so freaked out that
Speaker 1: there's gonna be all this fraud in voting and who's
Speaker 1: a registered voter and who's not, and who's a legal
Speaker 1: voter and who's not just voting a loan. Could you
Speaker 1: imagine if the voting records were on Boxedin, it would
Speaker 1: become completely clear you're either registered or you're not right.
Speaker 1: And I think that you know, or you think about
Speaker 1: your tax returns and how many pieces of paper really
Speaker 1: have to get printed out to file a tax return.
Speaker 1: You know, these are things that I think just beg
Speaker 1: for improved efficiency. So you know, I do think that
Speaker 1: you will see all of that start to happen over
Speaker 1: the coming years.
Speaker 2: That would be so great to have to have that done.
Speaker 2: I think regardless of what political party is stand, I
Speaker 2: think people agree we want our government to work better
Speaker 2: for us. We want more transparency, we don't want money
Speaker 2: getting lost, and we want we don't want all these things.
Speaker 2: Maybe this is the this will event, These problems will
Speaker 2: be legacy problems and we'll have you know better.
Speaker 1: Innovation isn't you know, Innovation isn't limited to a political party, right.
Speaker 1: Innovation is about the entire populace being able to benefit
Speaker 1: and so, you know, I think that, you know, you've
Speaker 1: got to kind of separate how you feel about, you know,
Speaker 1: what's happening from a political standpoint, from understanding that you know,
Speaker 1: there are times when new technologies come in and change everything,
Speaker 1: and we're entering one of those times now.
Speaker 2: Sandy, amazing, always great insights. Thank you so much for
Speaker 2: joining me. I'm really excited for the future updates around
Speaker 2: Franklin Templeton. We'll have to have you back on next
Speaker 2: year because you guys are doing a lot of great things.
Speaker 1: Thank you so much, Thank you so much, with a
Speaker 1: great conversation. I really enjoyed being on the show.