Speaker 1: Flip side.
Speaker 2: When they start those distributions, you're going to be putting
Speaker 2: billions of dollars back into the hands of a lot
Speaker 2: of you know, individuals and institutions that still want to
Speaker 2: own crypto. So the reverse side of this could be
Speaker 2: quite interesting where we have a lot of that flow
Speaker 2: come back. But I think it's just great that we're
Speaker 2: kind of moving past like what happened with Voyager and
Speaker 2: you know, Celsius and FTX, and you know, we don't
Speaker 2: really see that type of you know, bankruptcy risk right now.
Speaker 2: I mean, if these companies have survived this long, the most.
Speaker 1: Likely are going to make it.
Speaker 3: This content is brought to you by Uphold, which is
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Speaker 3: about Uphold, please visit the link in the description. Welcome
Speaker 3: into the Thinking Crypto Podcast. I'm your host, Tony Edward
Speaker 3: and with me is Chris Ryan, who's the head of
Speaker 3: Liquid Active Strategies at Galaxy. Chris, great to have you on.
Speaker 1: Thanks for having me, Chris, excited.
Speaker 3: To speak with you. Galaxy is doing some great things
Speaker 3: as it relates to crypto investment products and working with
Speaker 3: institutions and much more. And plus you have a plethora
Speaker 3: of experience in trad FI, so lots of questions for you.
Speaker 3: Let's start with your background, where you're from and what's
Speaker 3: your professional background as well.
Speaker 1: Yeah, sure, so, I guess I'm from Central PA.
Speaker 2: From where I grew up a small town in the
Speaker 2: middle of no but made my way to the big
Speaker 2: city for school. Right out of university, I joined Blackrock,
Speaker 2: which back then in the late nineties might have had
Speaker 2: seven hundred employees, much larger today. There I spent twelve
Speaker 2: years really as an analyst and then portfolio manager. In
Speaker 2: twenty twelve, I left Blackrock and went to a niche
Speaker 2: asset manager called Conan Steers real asset manager and there
Speaker 2: I headed up the global natural Resources strategy, the strategic
Speaker 2: Equities strategies, and was a CopM of.
Speaker 1: The listed Infrastructure strategies.
Speaker 2: And then I finally made the jump professionally over to
Speaker 2: crypto when I joined Galaxy in early twenty twenty two
Speaker 2: to start launching a suite of actively managed products, the
Speaker 2: first one being our liquid Crypto strategy, which we launched
Speaker 2: in the frightful time of May twenty twenty too, right
Speaker 2: when Tara was having its you know, dominance.
Speaker 1: Over the market at that point.
Speaker 2: But we now have just over a two year track
Speaker 2: record and have built it to over one hundred million
Speaker 2: in assets.
Speaker 3: Wow. So I'd love to talk a bit about your
Speaker 3: transition from tradfi to crypto. You know, what was your
Speaker 3: first encounter with bitcoin and how did that eventually lead
Speaker 3: to you saying, you know what, I'm going to leave tradfi.
Speaker 3: I'm going to go work in crypto and blockchain. Yeah.
Speaker 2: Great question, and probably not the same as many others.
Speaker 2: I was actually looking at Nvidia in twenty fourteen, investing
Speaker 2: in Nvidia in our funds, and at that point in
Speaker 2: time on the calls, Jensen was talking about bitcoin mining
Speaker 2: as being a source of demand for GPUs, So the
Speaker 2: more work I did, and I was had a bit
Speaker 2: of a techy background, I decided to just spin up
Speaker 2: a bitcoin mining rig.
Speaker 1: And see what it was all about.
Speaker 2: And then that ended up leading to a number of
Speaker 2: them being spun up until my wife got very angry
Speaker 2: at how many were in our nursery. So I actually
Speaker 2: mined bitcoin with GPUs for a few years until the
Speaker 2: having actually in twenty sixteen, and then ended up shutting
Speaker 2: that down just because you know, at you know, I
Speaker 2: think it was around a nine hundred dollars price at
Speaker 2: that point. It was not necessarily economical, classic mistake, and really,
Speaker 2: you know, I kept some bitcoin in a wallet, was
Speaker 2: really excited when I sold it in November of twenty
Speaker 2: seventeen for seventy five hundred dollars. Was very angry in
Speaker 2: December when it was over seventeen thousand, five hundred dollars.
Speaker 2: But then of course we had the correction, and for me,
Speaker 2: you know, as kind of I dealt further into crypto.
Speaker 2: Then I had a good friend and he I would
Speaker 2: still call himn Ethereum MAXI was telling me about Ethereum.
Speaker 2: I spent a lot of time looking into it, and
Speaker 2: then seeing all of these other applications and protocols that
Speaker 2: were building on top of it, and it just started
Speaker 2: spreading from there. It's probably a similar story with many others,
Speaker 2: and starting investing in it personally, and then was thinking through,
Speaker 2: you know, there's going to be a market where at
Speaker 2: some point investors, institutional investors, family offices, they want to
Speaker 2: get exposure to this, and I don't feel like there
Speaker 2: are a lot of qualified managers who have run institutional
Speaker 2: capital before, who know how to manage risk, who know
Speaker 2: how to deal with clients and deal with client reporting.
Speaker 2: And that's kind of what drew me to Galaxy and
Speaker 2: the platform they have with the Asset Management Group here
Speaker 2: to really try and start that business from the ground
Speaker 2: up and provide a product like that, kind of top
Speaker 2: tier product with the risk management you would expect for
Speaker 2: institutional clients.
Speaker 3: I hope you don't mind me asking this question, but
Speaker 3: I'm curious, you know, you, being an analyst working at
Speaker 3: these different firms and so forth, were you looking at
Speaker 3: crypto from a technical analysis standpoint back in twenty sixteen,
Speaker 3: twenty seventeen, or you were like, you know, I don't
Speaker 3: know what to make of this obviously it wasn't as
Speaker 3: mature of a market as it is now with ETFs
Speaker 3: and so forth. But you know, were you looking at
Speaker 3: Elliott wave fib and Nazi models, all the the metrics
Speaker 3: of on chain supply and so forth.
Speaker 1: You know, I was looking at everything through the lens
Speaker 1: of macro at that point. And I remember, you know, in.
Speaker 2: Our National Resources Fund, we invested in a lot of miners,
Speaker 2: and I used to go to this quarterly mining dinner
Speaker 2: with McCrory and at one of the dinners, there's a
Speaker 2: gentleman and he's like, what the hell is bitcoin and
Speaker 2: why does it keep going up? And we started having
Speaker 2: this conversation about it, and you know, I think the
Speaker 2: way I was looking at it, and I had charted
Speaker 2: kind of this whole like Chinese currency relative to bitcoin,
Speaker 2: and the moves were similar back in the time, and
Speaker 2: then that relationship broke down. And then it seemed like
Speaker 2: every piece of data you could find that mapped out
Speaker 2: in a short period of time, then it would break
Speaker 2: down as well. So I think that's kind of the
Speaker 2: story of what we continue to do with bitcoin. You know,
Speaker 2: it was supposed to be an inflation hedge, and then
Speaker 2: in twenty two, it.
Speaker 1: Wasn't necessarily an inflation hedge.
Speaker 2: We're constantly trying to find these you know, these drivers,
Speaker 2: these macro drivers, which are really kind of influencing the price,
Speaker 2: and we found in short periods of time they do,
Speaker 2: but the persistence hasn't necessarily been there. And I think
Speaker 2: the issue with bitcoin is we just have a lack
Speaker 2: of history. You know, every other asset class, be it
Speaker 2: equities or fixed income, you know, you know, decades and
Speaker 2: decades of data to kind of scrape and go back
Speaker 2: on and look for these relationships, because, as you know,
Speaker 2: correlations can come and go, but you know, they could
Speaker 2: be higher for a longer period of time than lower.
Speaker 2: And I think as we continue to get more data
Speaker 2: and crypto, we're going to continue to look at kind
Speaker 2: of where those correlations tend to be the highest relative
Speaker 2: to those that tend to be the lowest, and use
Speaker 2: that to try and base our thought process off, at
Speaker 2: least from kind of a fundamental basis.
Speaker 1: Not luckily for me.
Speaker 2: When I started at black Rock, my mentor, my portfolio manager,
Speaker 2: was a statistician and he loved technical analysis, so I
Speaker 2: did use a bit of technical analysis as well to
Speaker 2: kind of help dictate, you know, where you know things
Speaker 2: look like opportunities. But I'm definitely of the camp where
Speaker 2: I don't use technical analysis in days and weeks, but
Speaker 2: I look at very long term trends and I look
Speaker 2: for long term.
Speaker 1: Breakouts and long term support levels.
Speaker 2: I think using technical analysis in short periods of time
Speaker 2: is really just.
Speaker 1: A lot of noise.
Speaker 3: Yeah, I definitely agree with you there, And you brought
Speaker 3: up such a great point that we don't have as
Speaker 3: much history. We're still trying to figure out all the
Speaker 3: use cases for bitcoin. I think the strongest is probably
Speaker 3: digital goal, even though it was initially started to be
Speaker 3: or created as a digital currency, and don't get me wrong,
Speaker 3: it is that. But from a day to day use,
Speaker 3: you know, the fees and the speed and so forth,
Speaker 3: it's not ideal, but we can still use it that way,
Speaker 3: depending on which part of the world we're in. But
Speaker 3: I guess maybe the strongest use case is digital goal.
Speaker 3: And what I found is it's the entire asset class
Speaker 3: is still correlated to global liquidity. And maybe that's part
Speaker 3: of the ethos, right, a hedge against the money printing,
Speaker 3: so it will rise with global money printing, and you know,
Speaker 3: the basement of fiah.
Speaker 2: Absolutely, and you know, I think that's true not just
Speaker 2: with US central banks, but you know, if you're a
Speaker 2: citizen living in Argentina and they're debasing the currency, if
Speaker 2: you buy bitcoin, the benefit of that is is you're
Speaker 2: now an asset that's priced in dollars. So you actually
Speaker 2: can get away from that debasement using bitcoin because it's
Speaker 2: priced in dollars. So if you think that your central
Speaker 2: bank is going to completely, you know, erode the value
Speaker 2: of the currency, Historically you had to buy hard assets,
Speaker 2: you had to buy real estate. You know, it's very
Speaker 2: difficult for a citizen in Argentina to buy Nvidia.
Speaker 1: Or US equity.
Speaker 2: It's much easier for them to get access to something
Speaker 2: like bitcoin, which can actually preserve their wealth.
Speaker 3: I did want to ask you, what is it like
Speaker 3: to see your old firm, Black Rock and the other
Speaker 3: Wall Street giants now going all in on crypto. At
Speaker 3: one point they were skeptics, they were bad talk shit,
Speaker 3: right Larry Fink, back in twenty eighteen. Now they're all
Speaker 3: in there. They're building investment products, they're building with the technology,
Speaker 3: tokenizing and much more.
Speaker 2: I absolutely love it, you know, I think it's really
Speaker 2: helping to almost certify or clarify digital assets as an
Speaker 2: investment class. And I think it's really helping to help
Speaker 2: drive the regulatory and political side of things into a
Speaker 2: less hostile kind of playground, into something where they're like, Okay,
Speaker 2: we now have many, many, many smart individuals who are
Speaker 2: talking about bitcoin and crypto as a real asset and
Speaker 2: there's real value there. Maybe we should soften our stance
Speaker 2: a little bit and start to really proactively, not proactively,
Speaker 2: but more productively work with crypto companies and hopefully drop
Speaker 2: some of these you know, lawsuits and things like that.
Speaker 1: You know.
Speaker 2: And for Blackrock, I'd say their solutions business, their technology
Speaker 2: platform is top notch, and they've got a lot of
Speaker 2: great engineers there. I would love to see them build out,
Speaker 2: you know, risk management platforms like things that are just
Speaker 2: missing from kind of crypto portfolio management that I'm certain
Speaker 2: that they could really make a part of their broader platform.
Speaker 3: Now with black Rock and these firms getting involved on
Speaker 3: launching ETFs and so forth, what type of impact has
Speaker 3: that had on galaxies big business? Have you seen an
Speaker 3: influx of demand from institutions for crypto products?
Speaker 2: Yes, so, I guess the kneejer response is that before ETFs,
Speaker 2: the only way for investors to get access was through
Speaker 2: private fund vehicles, and what we've definitely seen is a
Speaker 2: reduction in the holdings in private funds that have rotated
Speaker 2: into ETFs.
Speaker 1: Now, luckily, we're partnered.
Speaker 2: With Investo on both the Bitcoin and the Ethereum ETF,
Speaker 2: and we've kind of been able to kind of route
Speaker 2: that flow back into those products. So there's been a
Speaker 2: little bit of you know, products switching going on. You know,
Speaker 2: in terms of what it's done for investors, it is
Speaker 2: only been positive. And I can say with complete certainty
Speaker 2: that if we didn't have those ETFs this year, we
Speaker 2: would not have the same type of.
Speaker 1: Conversations we're having today.
Speaker 2: And you know, FTX was a huge, you know impact
Speaker 2: to the credibility of crypto, and you know, the discussions
Speaker 2: with institutions just kept falling and falling and falling even
Speaker 2: through twenty twenty three. But now that we have these ETFs,
Speaker 2: those discussions are starting to pick back up again, and
Speaker 2: we're hearing more that we have to do our homework
Speaker 2: because they're starting to realize that, hey, this might be
Speaker 2: a very legitimate asset class in the not too distant
Speaker 2: future and we don't want to be left behind.
Speaker 3: And to your point of the FTX situation, it feels
Speaker 3: the dark clouds of those days have been pushed away.
Speaker 3: There's a bit of sunshine and I don't know, it's
Speaker 3: like we've turned a new leaf because folks that have
Speaker 3: completely forgotten about that, and you know, like you said,
Speaker 3: there's a legitimacy. Now the stigma is gone and more
Speaker 3: people want to learn about it, want to put it
Speaker 3: into their portfolios. And it's almost like you have a
Speaker 3: fuduciary duty to do that now because other products like
Speaker 3: bonds and so forth are not are not performing as well.
Speaker 1: Yeah, it's true.
Speaker 2: You know many people might know this. So we've actually
Speaker 2: worked very closely with the FTX estate and winding down
Speaker 2: a lot of their exposure because the bankruptcy port told
Speaker 2: them that they have to make returns to creditors as cash.
Speaker 2: So when we think about just the rally that markets
Speaker 2: have had since you know, September, and that was in
Speaker 2: the face of US selling billions of dollars of crypto,
Speaker 2: it's pretty impressive. Flip side, when they start those distributions,
Speaker 2: you're going to be putting billions of dollars back into
Speaker 2: the hands of a lot of you know, individuals and
Speaker 2: institutions that still want to own crypto. The reverse side
Speaker 2: of this could be quite interesting, where we have a
Speaker 2: lot of that flow come back. But I think it's
Speaker 2: just great that we're kind of moving past like what
Speaker 2: happened with Voyager and you know, Celsius and FTX, and
Speaker 2: you know, we don't really see that type of you know,
Speaker 2: bankruptcy risk right now. I mean, if these companies have
Speaker 2: survived this long, the most.
Speaker 1: Likely are going to make it.
Speaker 2: And the levels of leverage in the market are just
Speaker 2: way down. The levels of speculation on you know, a
Speaker 2: product that constantly returns twenty percent is not there. So
Speaker 2: I feel like the environment has has kind of been
Speaker 2: cleaned up, and it's definitely more amenable for investment than
Speaker 2: it had been back in kind of that.
Speaker 1: You know twenty one twenty two where things definitely got pretty.
Speaker 3: Fraud Yeah, And to your point of, you know, cleaning
Speaker 3: up of the environment, I noticed that the stand have
Speaker 3: been raised significantly with many exchanges, with proof of reserves
Speaker 3: and transparency reports, and you know, you look back and
Speaker 3: you're like, why weren't these things in place in the
Speaker 3: you know, but I guess you live and you learn,
Speaker 3: and hopefully we can put those type of issues and
Speaker 3: collapses behind us. And I've been, you know, saying, to
Speaker 3: some people it almost feels like the kids have been
Speaker 3: put to bed and the adults are in the room now.
Speaker 3: And some of the adults are from Wall Street, right, Galaxy,
Speaker 3: Black Rock and so on and so forth. And where
Speaker 3: you have trust in these brands and institutions and proper
Speaker 3: custody and all all those things.
Speaker 2: Yeah, I mean, we had the financial crisis of crypto,
Speaker 2: you know, back in the mid two thousands.
Speaker 1: It was the banks that were really you know, taking.
Speaker 2: Obscene leverage and putting together products that made no sense,
Speaker 2: and that led to a lot of regulation changes, you know,
Speaker 2: Dot Frank and numerous other regulatory acts that were put
Speaker 2: into place. And I think kind of the cleanup process
Speaker 2: is happening right now as well. And this goes back
Speaker 2: to what you say, like people are demanding more information,
Speaker 2: they want to make sure that their assets are safe.
Speaker 2: But what we really need is that regulatory side to
Speaker 2: shape up a bit so that we can get those
Speaker 2: same type of protections that make sense in place.
Speaker 3: Now, there was some big news issue today around Galaxy
Speaker 3: and that is a one hundred and thirteen million dollar
Speaker 3: initial close of the Galaxy Ventures Fund. One tell us
Speaker 3: about that.
Speaker 2: Yes, So this is the team that's been working at
Speaker 2: Galaxy investing in.
Speaker 1: Our balance sheet for the past five years and.
Speaker 2: We probably we definitely have over one hundred different investments
Speaker 2: of you know, venture based companies on balance sheet. We
Speaker 2: made a decision that it would make more sense if
Speaker 2: we move that team over to the asset management group.
Speaker 2: And you know, Galaxy parent co can still invest capital
Speaker 2: into the fund if they want and participate, but now
Speaker 2: we can also take outside capital as well. So the
Speaker 2: team's really excited. You know, it's going to focus on
Speaker 2: early stage investments and it's more focused on kind of
Speaker 2: the infrastructure layers of crypto, the payments type of companies
Speaker 2: in crypto, and you know, we're I'm on the investment
Speaker 2: committee as well. We're looking at a range of different
Speaker 2: companies there that are really interesting.
Speaker 1: Really unique, and are finding.
Speaker 2: These niche opportunities and opportunities that could grow quite significantly
Speaker 2: in the marketplace.
Speaker 3: And are there plans to do all the rounds of
Speaker 3: funding this year or into next year.
Speaker 2: Yeah, So we will probably have a second close in
Speaker 2: the fall, and I have to give props to kind
Speaker 2: of our team for putting together the first clothes as
Speaker 2: quickly as they did. I feel like they only spent
Speaker 2: maybe two months on it, and it was just too
Speaker 2: fast for a number of investors, where the IC takes
Speaker 2: a little bit more time.
Speaker 1: So we're expecting second.
Speaker 2: Closing Q four and feel quite confident that that's going
Speaker 2: to push the fund up to about one hundred and
Speaker 2: fifty million, and the team's comfortable with that level of
Speaker 2: capital going into these early stage companies because in early stage,
Speaker 2: you know, you're not investing significant chunks of money. We're
Speaker 2: typically doing maybe three million, five million if you're lucky
Speaker 2: type tickets. And the team wants to have, you know,
Speaker 2: a portfolio maybe thirty to thirty five different.
Speaker 3: Names, and I don't know if you're able to tell
Speaker 3: us names or maybe the types of institutions you're raising from.
Speaker 3: Is it in Dowman's family offices and so forth?
Speaker 2: So I would say there were a number of family offices.
Speaker 2: There was a very well known fund of fund. You
Speaker 2: know those right now are tend to be the biggest investors.
Speaker 2: There's still a lot of high net worth individuals that
Speaker 2: invest as well, and we actually enabled employees to invest
Speaker 2: into the strategy as well.
Speaker 3: Awesome. Now, the Etherorem's bodytfs launched this week, and of
Speaker 3: course Galaxy, as you mentioned, Galaxy Invesco have the q
Speaker 3: eth ETF, and I would love to get your thoughts
Speaker 3: on how that launch went and what's your outlook for
Speaker 3: these ETFs. Obviously I don't think there's going to be
Speaker 3: as much demand as there was for bitcoin, but certainly
Speaker 3: significant and we're seeing good performance so far.
Speaker 1: Yeah.
Speaker 2: So the launch, of course, I think with all of
Speaker 2: the issuers was very much a surprise. On the nineteen
Speaker 2: be fours, Nobody had marketing plans in place, nobody really
Speaker 2: was prepared for it. So we had a very fast
Speaker 2: sprint in the month or so between the nineteen B
Speaker 2: four's and the s ones being approved. But you know,
Speaker 2: all of the issuers got the docs in the SEC
Speaker 2: approved and we're up into the races. So I agree
Speaker 2: with your assessment that I think there's a good long
Speaker 2: term opportunity tactically. I'm just you know, seeing what happened
Speaker 2: with GBTC and knowing that we have a lot of
Speaker 2: arms still in the ETag product. We actually reduced our
Speaker 2: eth exposure just two days ago. Just thinking through the
Speaker 2: fact that I think flows are just going to really
Speaker 2: struggle in the near term, and it's really going to
Speaker 2: be due to the EB outflows.
Speaker 1: And I think similar to what would happened with Bitcoin.
Speaker 2: Where we had a bit of a pullback, we might
Speaker 2: see that with ethereum, and we're going to use that
Speaker 2: opportunity to step back in and as those you know,
Speaker 2: reductions from EB kind of start trickling down, then those
Speaker 2: positive flows are going to overwhelm that.
Speaker 1: I think it's going to be a better market sentiment afterwards.
Speaker 3: Yeah. Point, we saw a bit like you said of
Speaker 3: that with the bigcoin ETF situation, and it's just you know, uh,
Speaker 3: it'll resolve itself and then eventually we'll be on good
Speaker 3: ground there. I know. One of the things that people
Speaker 3: are really bullish on with etherorem is staking right the
Speaker 3: ability to earn yield and the passive rewards, but those
Speaker 3: are not available in the Etherorem ETFs is yet. Are
Speaker 3: you guys engaged with the SEC asking them about this.
Speaker 3: I saw Hesler Purse, Commissioner of the SEC, spoke about
Speaker 3: it recently, and do you think once that's at it,
Speaker 3: that will have a surge and demand for eth.
Speaker 2: So I think it's going to take a little time,
Speaker 2: uh for the SEC to to come around to that.
Speaker 2: You know, Gensler has already publicly stated that, you know,
Speaker 2: a state is a security, but he is not. So
Speaker 2: we kind of have to really work with the SEC
Speaker 2: to make sure that they realize what's staking is why
Speaker 2: it's done, instituted being a security, but just knowing you know,
Speaker 2: how things work with the SEC. I don't think that
Speaker 2: that's going to be something that's completed this year. I
Speaker 2: do think to your point, if staking is introduced into
Speaker 2: the ETFs, it's a huge positive and I think a
Speaker 2: lot of individuals. You know, I have a very close
Speaker 2: friend he's like, why would I ever move my point
Speaker 2: to an ETF when I can stake it and generate yield?
Speaker 1: He said, if it would stake it in the ETF.
Speaker 2: Easy because you know, I want all of my assets
Speaker 2: to be in one tidy place where.
Speaker 1: I can manage them.
Speaker 2: So I do think we would see a bit of
Speaker 2: a pickup and flows from people who had been staking
Speaker 2: on their own and moving those into the ETFs. And
Speaker 2: part of that is you know, when a retail user stakes,
Speaker 2: the take rate from whoever is staking.
Speaker 1: That tends to be higher.
Speaker 2: And when you negotiate with these big issues, because there's
Speaker 2: going to be so much volume, we can kind of
Speaker 2: negotiate that take rate down to the end point coming.
Speaker 1: To the staker or to the ETF could be much higher.
Speaker 3: Yeah, I'm like your friend, I'm of the same mindset.
Speaker 3: I stake eth I self custody for the most part,
Speaker 3: and I don't want to, you know, go through the
Speaker 3: ETF because I won't be earning a reward. So hopefully,
Speaker 3: you know, the SEC can come around soon. I think
Speaker 3: that would be really great for the ETFs and for
Speaker 3: the market at large, and giving retail the general public
Speaker 3: who may not be you know, crypto enthusiasts and techies
Speaker 3: and so forth, they can at least get some of
Speaker 3: those rewards. So hopefully you can get it soon. Now
Speaker 3: Solana has been on the rise significantly, getting adoption and
Speaker 3: so forth. It's now within the top five of the
Speaker 3: crypto market cap. Some folks have filed for a Solana ETF.
Speaker 3: Are you guys playing to do that? And do you
Speaker 3: think we see that in twenty twenty five?
Speaker 2: I would give twenty twenty five kind of a forty
Speaker 2: sixty forty sixty zero twenty twenty six, I'd probably say
Speaker 2: the odds are much higher.
Speaker 1: You know, Solana is.
Speaker 2: In the same boat that it was named as a
Speaker 2: security in one of the sec lawsuits against coinbase, so
Speaker 2: we kind of have to first, you know, backtrack on that.
Speaker 2: I think it would be fantastic and to be fair,
Speaker 2: if we can get the staking in eth we would
Speaker 2: definitely want the staking in Solana as well because the
Speaker 2: reward is actually quite a bit higher with Salon right now.
Speaker 2: But you know, actively in Solana ecosystem has picked up significantly,
Speaker 2: and it was left for dead after the FTX collapse,
Speaker 2: but more recently we even see D five volumes exceeding
Speaker 2: that of Ethereum now, so the ecosystem continues to grow.
Speaker 2: I think people are catching on to what's going on there,
Speaker 2: and I think, you know, the prospects for Solana look
Speaker 2: quite well. I would love to see an ETF but
Speaker 2: I just think it's going to take a little bit
Speaker 2: more time until we can get there.
Speaker 3: Yeah, there's to your point of complications of those lawsuits
Speaker 3: against exchanges or Slona is named, but possibly Chris you know,
Speaker 3: Congress is able to get something like the fit twenty
Speaker 3: one bill to go through the Senate, and then whoever
Speaker 3: it becomes president, you know, they sign into law by
Speaker 3: twenty twenty five. That could you know, escalate things incredibly fast,
Speaker 3: and maybe we see it. But until then, you know,
Speaker 3: we'll have to wait and see.
Speaker 2: Yeah, and you know, I think the Senate is going
Speaker 2: to have their hands tied into the election.
Speaker 1: So you know, whether they you know, put.
Speaker 2: Their fingers on it and make some edits and send
Speaker 2: it back to the House this year, if it gets
Speaker 2: pushed it early next year, it remains to be seen.
Speaker 2: But you know, I'm kind of encouraged by what I
Speaker 2: hear about the Harris camp and kind of what their
Speaker 2: view is on crypto, And you know, it feels like,
Speaker 2: you know, it feels like crypto has kind of checkmated
Speaker 2: the politics a bit, where there's a lot of voters
Speaker 2: that phone crypto and like crypto, and this is going
Speaker 2: to be a very very close presidential race, and the
Speaker 2: crypto voter could really sway which direction that goes, particularly
Speaker 2: in some of these swing states. So I wouldn't be
Speaker 2: surprised if the Harris camp comes out and takes a
Speaker 2: different approach to crypto than the you know, Biden's administration.
Speaker 3: I certainly hope so. And i'm i'm I spoke to
Speaker 3: a Congressman Roe Conna just yesterday and he's talking about
Speaker 3: he's loving to her camp and so forth. And it
Speaker 3: would be great to not have crypto be a partisan issue.
Speaker 3: But it shouldn't even be an election issue. But it
Speaker 3: is because of Elizabeth Warren. I think there's a culprit
Speaker 3: behind that. But what are your thoughts on? Man? It
Speaker 3: just seemed like a switch flip earlier this year, and
Speaker 3: you know Donald Trump certainly took advantage of it where
Speaker 3: he saw his opponents on the Democrat side, we're trashing
Speaker 3: this technology and you know, doing all kinds of things
Speaker 3: with regulation by enforcement, and you know, look, as a politician,
Speaker 3: that's a smart move. It's the art of war, right,
Speaker 3: you expose your enemy's weakness and so forth. But it's
Speaker 3: incredible he's going to be speaking at the Bitcoin conference,
Speaker 3: you know, on Saturday and possibly announcing a plan to
Speaker 3: have bigcoin be used as a treasury reserve asset. It's
Speaker 3: it's pretty incredible.
Speaker 2: Yeah, if he says it, well, he says whatever hits
Speaker 2: him on the top of the mind, so.
Speaker 1: You know, most of his advisors would probably.
Speaker 2: Tell him not to say that, but it doesn't mean
Speaker 2: that it will stop him from saying that. But I
Speaker 2: think it's you know, it's a really good signal to
Speaker 2: the crypto community that you know, he's going to take
Speaker 2: crypto seriously. And from what I heard Harris's camp, they
Speaker 2: were actually seriously considering going and they decided not to
Speaker 2: at the end of the day, which is probably the
Speaker 2: right decision for her too, because.
Speaker 1: I don't know if the bitcoin crowd would have been.
Speaker 2: Nearly as as kind to her as I think they
Speaker 2: will be to Trump.
Speaker 3: M hmm. Yeah, it's fascinating. And I read the other
Speaker 3: day that Fairshake has the largest super pack within this election,
Speaker 3: and it's of course crypto funded right from Ripple, a
Speaker 3: sixteen z coinbase and so forth. What are your thoughts
Speaker 3: on that it's crypto has become like this political force now.
Speaker 2: Yeah, And I think it's because we've been asking for,
Speaker 2: you know, changes to regulations, We've been asking for you know,
Speaker 2: politicians to really force the SEC in a certain direction,
Speaker 2: to set the rules, and really there's only been one
Speaker 2: candidate who's really talked about that, and if this is
Speaker 2: the only way that we can get traction on the
Speaker 2: things we've been asking for for years, then we're going
Speaker 2: to put capital behind that and make sure that those
Speaker 2: types of initiatives finally get played out, because it has
Speaker 2: been such a barrier to you know, crypto employment in
Speaker 2: the US, crypto companies in the US, using crypto protocols
Speaker 2: in the US, and it's frustrating. So would love to
Speaker 2: see you know, either camp take a you know, a
Speaker 2: better view to really you know, embracing crypto and creating
Speaker 2: sensible regulations that make sense, and it creates a little
Speaker 2: bit more comfort from institutional investors to finally commit some
Speaker 2: capital to the space.
Speaker 3: I wanted to go back to the bigcoin ets because
Speaker 3: obviously we saw record breaking performance and inflows for the ets,
Speaker 3: and part of the process right now is folks are
Speaker 3: going out educating rias and wealth managers and so forth.
Speaker 3: So it's only been what say, seven months since the launch,
Speaker 3: so I think we need like a year to kind
Speaker 3: of judge the performance overall. But what is your outlook?
Speaker 3: Do you expect inflows to come in waves and to
Speaker 3: increase as well?
Speaker 2: Yeah, I think it's the most successful ETF launch in
Speaker 2: the history of ETFs.
Speaker 1: I mean, you have seen just tens of.
Speaker 2: Billions of dollars flow into these products, and it's been
Speaker 2: just incredible to watch.
Speaker 1: You know.
Speaker 2: I think in many of the big wirehouses and platforms,
Speaker 2: Bitcoin still hasn't even been approved, and in many cases
Speaker 2: financial advisors still have to wait for reverse inquiry to
Speaker 2: be able to offer them to clients. So there is
Speaker 2: still a huge pool of untapped investors that have yet
Speaker 2: to invest. And I think there is just going to
Speaker 2: be this steady inflow into the ETFs over time as
Speaker 2: you finally get more of these platforms onboarding, as you
Speaker 2: anniversary you know, kind of a one year probation period.
Speaker 2: There's there's so many weird things that go on in
Speaker 2: the RIA landscape that have to kind of play out.
Speaker 2: But each RIA is different. You know, you've got smaller ones,
Speaker 2: you've got big public ones. But all of that is
Speaker 2: going to lead to just this steady flow into the
Speaker 2: Bitcoin ETFs over time, and you know, I think that's
Speaker 2: going to continue to paint a very solid picture for
Speaker 2: the opportunities.
Speaker 1: For bitcoin going forward.
Speaker 2: And I would really I'm really excited to see an
Speaker 2: options market developed on these bitcoin ets as well, so
Speaker 2: you know, hopefully we can we can get some traction.
Speaker 1: On that and maybe have that in place by Q four.
Speaker 2: I think that's going to improve a lot of liquidity.
Speaker 2: I think it's going to increase interest in the ETFs.
Speaker 2: So that would be a huge catalyst for me as well.
Speaker 3: So, Chris, not financial advice, but what is your expectation
Speaker 3: for this bull get given that right now we're cooling
Speaker 3: down a bit. Maybe the stock market's been a bit overbought.
Speaker 3: You know, there's some correlation there. The DXY is finding
Speaker 3: some strength on the daily chart. Maybe the market's waiting
Speaker 3: to see what the raffetti is going to do with
Speaker 3: Ray cuts. You are you seeing higher highs into twenty
Speaker 3: twenty five or you know, are we going to be
Speaker 3: kind of any sideways movement for a while.
Speaker 2: I think everyone is going to be surprised by what
Speaker 2: happens on the political side, and I think, you know,
Speaker 2: whether it's Trump or Harris, there's gonna be progress and
Speaker 2: that's not expected.
Speaker 1: And then you know, I.
Speaker 2: Think of the FTX stimulus when you're putting you know,
Speaker 2: the retail crowd, and then some of the institutions that
Speaker 2: were crypto funds. Even if you call it only six
Speaker 2: billion of the sixteen billion, that's six billion dollars that
Speaker 2: could flow back into crypto. Know, everyone's focused on German
Speaker 2: government selling and you know.
Speaker 1: Mountain Dox returns.
Speaker 2: I'm less focused on that in the near term, and
Speaker 2: I'm thinking, you know, six to twelve months out, there
Speaker 2: are some massive catalysts that are kind of on my radar,
Speaker 2: and I think that's really going to help propel you know,
Speaker 2: bitcoin higher, and smart investors would be looking at that
Speaker 2: and kind of taking advantage of weakness.
Speaker 1: I think in the market.
Speaker 3: Today, what are your thoughts on companies adding bitcoin as
Speaker 3: a treasure reserve asset on their balance sheet? Just this morning,
Speaker 3: I think Marathon Digital Holdings. They're a minor, but they
Speaker 3: bought one hundred million dollars in bitcoin, you know, Tesla
Speaker 3: SpaceX micro strategy. I'm watching Michael Dell closely. He's been
Speaker 3: tweeting a lot about bitcoin. You know, could Dell announce
Speaker 3: something soon as possible? But what are your thoughts on
Speaker 3: that trend?
Speaker 2: Yeah, and the best one is Meta Planet, which went
Speaker 2: from twenty end to two hundred and twenty end. I
Speaker 2: think today ten xt On just on adding bitcoin to
Speaker 2: their to the treasury. And this company that generates like
Speaker 2: two million dollars of revenue per year and it's probably
Speaker 2: valued it like a quarter billion dollars now, you know,
Speaker 2: I think it's evidence that more and more, you know,
Speaker 2: senior individuals and companies are recognizing the value of keeping it.
Speaker 1: In the treasury. Now, Marathon, and clearly this is their business.
Speaker 2: They're they're a bitcoin minor, and you know they have
Speaker 2: historically they have held a lot of bitcoin and saved
Speaker 2: a lot of bitcoin on their balance sheet, and they've
Speaker 2: got a substantial amount of bitcoins. So I don't find
Speaker 2: it surprising that they're taking that route. I think the
Speaker 2: micro strategy kind of case study has been a bit
Speaker 2: of a success. A lot of us thought that once
Speaker 2: the ETFs came micro strategy stock was just going to
Speaker 2: collapse because why would you for a premium for that
Speaker 2: bitcoin when you can get the ETF. But you know,
Speaker 2: it's a bit of a system that works because if
Speaker 2: you can issue equity or some type of finance based
Speaker 2: on a valuation that's two x bitcoin, and then you
Speaker 2: can buy the underlying asset for half the value of
Speaker 2: what your company is worth.
Speaker 1: Well, that's creating value on its own.
Speaker 2: So doesn't surprise me that other companies are taking a
Speaker 2: look at that and really diversifying some of the treasure.
Speaker 3: Is the question follow question on that. I don't know
Speaker 3: if I'm off base here, but is it also kind
Speaker 3: of a dual benefit in that stocks rise with the
Speaker 3: depreciation excuse me, the the basement of fiat right and
Speaker 3: global liquidity where if you're in the Nasdaq, I mean,
Speaker 3: you know, NASAC is a top performing index, of course,
Speaker 3: and you have bitcoin. Is it the best of both worlds?
Speaker 3: Is it a way to kind of diversify, Like I
Speaker 3: can hold bitcoin, but you know what, I can grab
Speaker 3: some micro strategy stuck because it's getting the overall stock
Speaker 3: market benefit.
Speaker 1: Yeah, I mean that's a really good point. It could be.
Speaker 2: You know, I think I think time will tell. Uh,
Speaker 2: We're still in a very narrow period of time on
Speaker 2: which this has been going on. Yeah, you know, clearly
Speaker 2: it was disappointing when you know, Tesla made a change
Speaker 2: to kind of how they were approaching bitcoin.
Speaker 1: Would be lovely to see them readopt it.
Speaker 2: You know, I think there's a lot of people that
Speaker 2: look to certain individuals is very smart individuals.
Speaker 1: You know, Elon Musk being one of them. I love,
Speaker 1: you know, seeing Mark Cuban.
Speaker 2: He's always supporting kind of crypto and he's really, you know,
Speaker 2: kind of immersed himself in crypto as well.
Speaker 1: And these are people that have made billions.
Speaker 2: Of dollars, So why would you not want to trust
Speaker 2: somebody who actually is done really well in their life
Speaker 2: and probably knows how to make a calculated investment much
Speaker 2: better than the average person. So I think it's great
Speaker 2: to see, you know, in the next kind of bitcoin downturn,
Speaker 2: let's see how steady those hands are, of course, but
Speaker 2: for now, I think it's a it's a really smart decision.
Speaker 3: What's on galaxies roadmap for the remainder of twenty twenty four?
Speaker 3: Are you playing to launching a new products? And what
Speaker 3: can you share?
Speaker 2: I mean, I think everyone in this company hasn't been busier.
Speaker 2: It feels like every division there's something going on, you know.
Speaker 2: In asset management, we just launched the theory of METF.
Speaker 2: We just you know, closed on the first first close
Speaker 2: for Venture. We announced a partnership with State Street to
Speaker 2: run some actively managed ETFs, which we'll probably launch in
Speaker 2: late Q three. And then my team is going to
Speaker 2: be launching a multi asset crypto themed absolute term product.
Speaker 2: So we've got our hands full here and we're still
Speaker 2: working with the FTX estate on what I would consider
Speaker 2: more difficult type tokens.
Speaker 1: At this point.
Speaker 2: In our trading business, we got our swap dealer license.
Speaker 1: I think we're the.
Speaker 2: Only crypto company that has a swap dealer license at
Speaker 2: this point, and that really just expands our opportunities in
Speaker 2: the size of the book we can have the customers
Speaker 2: that we work with. You know, we continue to see
Speaker 2: a lot of activity on the trading side, they're constantly
Speaker 2: looking at opportunities, and then on our advisory side.
Speaker 1: You know, things are starting to pick up again.
Speaker 2: You know, they're they're seeing more activity, they're engaged in
Speaker 2: more of the deals out there. So you know, between
Speaker 2: and then I should also mention our mining side. You know,
Speaker 2: we've publicly said we're looking at our Helios data center
Speaker 2: down in Texas, which can scale the eight hundred megawatts,
Speaker 2: to see if there are other you know, practical applications
Speaker 2: for that.
Speaker 1: You know, many of these.
Speaker 2: Mining companies have been looking at AI high performance compute,
Speaker 2: and our facility is just situated exceptionally well, if it
Speaker 2: would make sense to do that, We've.
Speaker 1: Already got you know, water.
Speaker 2: Cooling infrastructure, We've already got the freshwater pond there, we're
Speaker 2: right next to the grid. There's just so many aspects
Speaker 2: where it gives us a lot of optionality, and of
Speaker 2: course we're going.
Speaker 1: To take the route where we think would deliver the
Speaker 1: best value.
Speaker 3: I mean, that's a ton of stuff, Chris, you guys
Speaker 3: are doing a lot, and it's pretty exciting news. And
Speaker 3: I wanted to ask a followed question on the State
Speaker 3: Street partnership. Can you elaborate a bit on that? Are
Speaker 3: they Are you planning to launch different ETFs or doing
Speaker 3: additional ETF products or financial instruments.
Speaker 2: Yeah, so we are in a blackout period right now,
Speaker 2: so fortunately I can't really discuss much more than what
Speaker 2: was disclosed in the press release that there's, uh, you know,
Speaker 2: I think three different products that we plan to launch
Speaker 2: probably at the end of Q three.
Speaker 3: That's exciting a sup tookenization because we're seeing from like
Speaker 3: your old firm, black Rock tokenizing and many others. Is
Speaker 3: Galaxy playing to do anything around that? Or even if
Speaker 3: you're not specifically tokenizing funds, are you able to trade
Speaker 3: with them and do different maybe add supplementary financial services
Speaker 3: and so forth.
Speaker 1: Yeah, it's something we've been looking at closely.
Speaker 2: I mean we've been talking about tokenization ever since last year.
Speaker 2: We have a tokenization team. We bought GK eight out
Speaker 2: of the Celsius bankruptcy which does a lot of the
Speaker 2: custody as well, and there have been a number of
Speaker 2: institutions which have approached us about tokenization.
Speaker 1: We have publicly said that we're.
Speaker 2: Going to be working with DWS in Germany to do
Speaker 2: a stable coin at euro based stable coin, so we'll
Speaker 2: be doing tokenization in that rounde in terms of fund
Speaker 2: products and things like that.
Speaker 3: You know.
Speaker 2: Coinbase actually just announced the other day that they're doing
Speaker 2: a token ises money market. Franklin already had one. You've
Speaker 2: got black Rock with theirs, so you're seeing a lot
Speaker 2: more interest there. And I look at these as test cases.
Speaker 2: They were a little bit easier to do and we're
Speaker 2: seeing how they work. But ultimately, what you'd love to
Speaker 2: do is to be able to use those assets as
Speaker 2: collateral on chain. And once we start being able to
Speaker 2: use those type of assets on chain and the use
Speaker 2: cases start to really explode from there. I think that's
Speaker 2: going to start opening the door for other asset classes
Speaker 2: to be tokenized as well.
Speaker 3: Yeah, let's follow a question on the stable coin that
Speaker 3: you and the folks there are going to help to launch.
Speaker 3: Tell us a bit about that, which markets is going
Speaker 3: to be available in and in addition, what do you
Speaker 3: think about this kind of what I would call the
Speaker 3: stable coin wars. It seems like everybody's launching one now,
Speaker 3: Ripple the folks at vanak just launch one. What are
Speaker 3: your thoughts on everything there?
Speaker 1: So I don't think we've actually disclosed the markets that
Speaker 1: will be available.
Speaker 2: In, but a euro based stable coin, you know, probably
Speaker 2: has a decent amount of use cases and practicality, particularly
Speaker 2: in the European market. If that's your base currency and
Speaker 2: the stable coin wars is going to continue. You know,
Speaker 2: it's a great product for the issuer right now because
Speaker 2: they're retaining all of the interest and it's been just
Speaker 2: a phenomenal money maker for Tether for Circle. So I
Speaker 2: think a lot of other institutions are looking at.
Speaker 1: That as an opportunity. And you know, when when.
Speaker 2: You have institutional investors stepping into the space, finally they
Speaker 2: don't know Tether, they do know van K and I
Speaker 2: think brand has a big draw there.
Speaker 1: You know, I wouldn't be surprised if you see other, you.
Speaker 2: Know, brand name institutions look at launching stable points, trying
Speaker 2: to sniff out if there's an opportunity to really scale
Speaker 2: that up and build it out.
Speaker 3: Do you think there's and this may be an obvious question,
Speaker 3: but or answered to it, but do you think there
Speaker 3: will be eventually be a point where it becomes too
Speaker 3: saturated and some folks are going to go out of business,
Speaker 3: some consolidation and you know, some of the big whales
Speaker 3: buying up the small sharks or things like that.
Speaker 2: Yeah, that's what always happened. So that's exactly what my
Speaker 2: expectation would be. You know, you really want to scale
Speaker 2: that up. It's very much like the asset gathering business,
Speaker 2: and when you're sub scale it really just it doesn't
Speaker 2: make much sense. So, you know, users don't want to
Speaker 2: use a stable coin that doesn't have a lot of volume,
Speaker 2: that doesn't have a lot of activity. They tend to
Speaker 2: gravitate to the most used stable coins, and I think
Speaker 2: that's one of the reasons that USDT has been so successful,
Speaker 2: and even USDC to a certain extent, Although the regional
Speaker 2: banking crisis was a bit of a blow there. But
Speaker 2: you know, people who are trading on chain, the pairs
Speaker 2: that they're trading.
Speaker 1: With are U, S, D T or USDC.
Speaker 2: You can still find some pairs in some of the
Speaker 2: other stable coins, but you know, the liquidity pairs the
Speaker 2: LPs that you see in some of the trading protocols,
Speaker 2: it's just it's much different than the liquidity you can
Speaker 2: find with those other two stables.
Speaker 3: Mm hmm, Chris. I got some wrap up questions here
Speaker 3: for you. First, if you could create your own metaverse,
Speaker 3: what would the theme be.
Speaker 1: My own metaverse?
Speaker 3: Where would you put your opals on and go to goodness?
Speaker 1: Gracious, I don't know. I'm gonna have to think on
Speaker 1: this one.
Speaker 2: I you know, I like horror movies, so I could
Speaker 2: think of something funny as as like, you know, Friday
Speaker 2: the thirteen metaverse where you're constantly trying to avoid Jason.
Speaker 3: Jason. You know, I'm a horror movie fan too, and
Speaker 3: it would actually be pretty interesting and you have maybe
Speaker 3: the uh, even though it's kind of corny, you kind
Speaker 3: of maybe have the Jason the theme. Scary music, okay,
Speaker 3: rapid fire? Question, favorite food.
Speaker 1: French fries.
Speaker 3: A favorite musician or band.
Speaker 2: It changes right now. I listen to a lot of
Speaker 2: rufus to soul.
Speaker 1: Favorite movie, Oh, I have like a top five list there.
Speaker 3: Probably Jaws, M classic favorite book.
Speaker 1: The entire Game of Thrones series, love them. M.
Speaker 3: And when you're not working at Galaxy, what are you
Speaker 3: doing for fun?
Speaker 1: I spent a lot of time with my family. I
Speaker 1: have two girls and a wife, and I have a
Speaker 1: lot of fun with them.
Speaker 3: Chris Pleasure chatting with you. You guys said Galaxy, you're
Speaker 3: doing some amazing things and looking forward to you know,
Speaker 3: the releases are on State Street and all these different things.
Speaker 3: But thank you so much for joining me.
Speaker 1: Yeah, I appreciate you having it.
Speaker 2: Pak Past Tak