Crypto is Making TradFi Markets Better! with Mike Belshe
Mike Belshe, Co-Founder and CEO of BitGo, joined me to discuss the current state of the crypto market and the TradFi tokenization race.
Topics:
- BitGo IPO on the NYSE
- Tokenization market
- BitGo Selected to Provide Stablecoin Infrastructure and Support Distribution for SoFiUSD
- Crypto market outlook
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⏰ Time Stamps ⏰
00:00 Intro
02:54 BitGo's IPO
04:41 Crypto maturing
07:56 Tokenization race
17:02 SoFiUSD Custody
20:38 Banks Stablecoin Yield
24:56 Stablecoin and Tokenized Deposits
29:06 SEC CFTC guidance
32:40 Crypto market outlook
39:01 Latest BitGo updates
=================================================
#Crypto #Tokenization #Blockchain #CryptoNews #Cryptocurrency #Bitcoin #BTC #BitcoinNews #ETF #News #Ripple #XRP #XRPNews #RippleXRP #Ethereum #EthereumNews #ETH #Solana #money #investing #trading #Altcoin #Altcoins #NFTs #Metaverse #Podcast #ThinkingCrypto =================================================
The Thinking Crypto Podcast is your home for the best Crypto News and Interviews - crypto, cryptocurrency, crypto news, bitcoin, bitcoin news, xrp, xrp news, ripple, ripple news, ripple xrp, ethereum, ethereum news, cardano, ada, solana, altcoins, defi, news, interviews, podcast, metaverse, nft, altcoin daily, cryptosrus, coin bureau, altcoin news, bitcoin today, markets, investing =================================================
Disclaimer - The Thinking Crypto podcast and Tony Edward are not financial or investment experts. You should do your own research on each cryptocurrency and make your own conclusions and decisions for investment. Invest at your own risk, only invest what you are willing to lose. This channel and its videos are just for educational purposes and NOT investment or financial advice. Note that links included in this description might be affiliate links. If you purchase a product or service with the
Speaker 1: I think everyone in the crypto space deserves credit. We
pushed the US stock market to figure out how to
go twenty four to seven. That is crypto do it.
Crypto deserves full credit for this. It would not have
happened if we had not had bitcoin. Obviously, the US
stock markets are not twenty four to seven yet. They
will move in some waves. It'll probably be a little
bit disappointing, but it's coming, and of course this makes sense.
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Speaker 2: Hey, everyone, welcome into the Thinking Crypto podcast. I'm your host,
Tony Edward, and joining me today is Mike Belshi, who
is the co founder and CEO of Bitgo. Bitco is
a digital asset infrastructure company delivering custody, wallet, staking, trading, financing,
stable coins, and settlement services from regulated cold storage. Mike,
great to see you. Good see you again, Tony, how
are you very good? We haven't spoken in a while,
but there were some huge, huge news arount Bidgo going
public a couple months ago, so I'm excited to dive
into that and of course get your take on the
crypto market and where we're at. Let's start with the
IPO on the New York Stock Exchange. Tell us about
the decision to go public and you know what was
that experience?
Speaker 1: Like, well, thanks, Tony, Yet on January twenty second, we did,
we entered into the public markets. We did the traditional
IPO route, which it takes about it a year, so
it's a lot of work in the making. So look,
it's a it's a proud moment. I think the entire
company deserves credit as much as I do for persistence
and continuing through it. Obviously, can't talk about things on
the go forward. But the reason we did did go
public was actually pretty simple. Look, we've been working with
the world's largest institutions for a while. For infrastructure provider,
you can buy and work with Bicco at the self
custody layergies to the Walt Larry work custody layery you
work on the financial service up about and the companies
on Wall Street are predominantly public companies themselves, and it's
so much easier for them to interface to another company
that's public already because you've got this spotlight and for
all of it's you know, faults, the SEC spotlight is
a heavy one, and it means that we have signed
up for all of the financial disclosures, all the risk
disclosures that you know, another public company can need. So
we think this is very good for us. We think
it allows us to work closer with those firms. And also,
you know, we've we're now a OCC charter that's a
national bank, So for custody, it's been moved up to
the highest level of regulation to get here in the
United States. So you put those two things together, along
with the SoC audits and everything else that goes behind it,
and we're really just continuing down the mission of making
sure that people know exactly who we are so they
can count on us absolutely.
Speaker 2: And Mike, you've been building since what one point oh
and two point oh, of course, and now in three
point zero, it feels like crypto is having that moment
where the acid class is maturing at technology maturing, companies
are going public sector's bidgo and others. Do you feel
that same way, you know, given the history of building
in previous cycles, for sure. Look, this takes a long time.
I think one thing, if I want to say, there's
a difference between this and Web one point zero. With
Web one point zero, we had this proliferation of applications
and business models that all came out at once and
there wasn't anything holding it back. There was no regulatory concern.
Speaker 1: Now, of course, in the crypto space there is, and
there's a lot of difference between how different folks are regulated. Now.
Regulation by itself doesn't make great product, doesn't make a business,
doesn't mean that people want to buy it. What makes
this so they want to buy it, of course, is
the product. You've got to be good, it's got to
add value, things like that. So we've got all of
the all of the burdens that you would have in
any business, but on top of it, it's money. And
when it comes to money, we do regulate it differently,
so it takes a long time. Deployments take longer, confidence
takes longer. And then, look, I hope that we are
as a nation turning a corner in terms of being
able to figure out how to embrace innovation in a
way that's responsible rather than just completely thwarting it. So
one answer to innovation that's new that you're not sure
quite how to manage the risk of is just stop it.
Just say hey, we're not going to have it. And
then the problem with that is your economy falls behind
the competitors around the globe that will do it. And
with digital assets in particular, they've finally unlocked a problem
which had never been solved for which is global access.
So all of a sudden, we have digital assets that
are usable everywhere around the planet. Previously, with our monetary system,
we'd taken a path of isolationism, right, we'd said what
we're going to do is we're going to stand up
these banks is the basically the bouncers to us money.
And then if you're not one of those guys are
not already in the system, then you just can't participate
with digital assets, there's no bouncers. It goes everywhere. Everyone
can create this, everyone can move this, and look, this
is coming. It's needed. We have a global economy. Of
course we need global financials. So I would say that,
you know, the comparing contrast between today and you know,
twenty years ago is mainly this. When it comes to money,
it manages a lot more. We do not want people
to get scammed out of their money. We do not
want money to be used for illegal, illegal goods. So
it's harder. It's a little slower, slower than I thought
it would be. We're thirteen years in on this at BICCO.
There's definitely thirteen more years to go. But yeah, everything
moves a little bit slower when it comes to money.
Speaker 2: Pardon the interruption. Hi, I'm Tony. I'm the host of
the Thinking Crypto podcast. I wanted to ask you if
you can please support the podcast by hitting the like
button subscribing. If you haven't as yet, you can leave
a comment below as well, and if you're listening on
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get your podcasts, please be sure to follow and hit
the five star rating. I'll let you get back to
the content. Thank you so much, So speak you of
thirteen years to go, Mike. The race is on on
Wall Street to tokenize assets. And you mentioned the global
economy and these assets having more of a global distribution,
and we're seeing stock exchanges and much more looking to
go twenty four to seven. So do you think in
ten years' time we're going to have a blending, a
convergence of these markets where it's no longer going to
be crypto and the stock market is just going to
be the market because everything's going to be running on
blockchain rails.
Speaker 1: Everything's going to be digital. Like you don't have to
just take my word for it. I mean, of course
you're caring about it almost every day. We got Morgan
Stanley making huge efforts that are very public about that,
City Bank making huge efforts are public about it. Black
Rocks already in Fidelity, is already in Wisdom, Treetes already
in So I mean just down the line, like all
of these parties are are moving in. Why the digitization
makes that makes the products programmable and it makes it
so that you can be way more liquid. So look,
I think everyone in the crypto space deserves credit. We
pushed the US stock market to figure out how to
go twenty four seven. That is crypto do it. Crypto
deserves full credit for this. It would not have happened
if we had not had bitcoin. So obviously the US
stock markets are not twenty four to seven yet. They
will move in some waves. It'll probably be a little
bit disappointing, but it's coming. And of course this makes sense.
Like the markets you know around the world. What imagine
if you live on completely the opposite side of the
world in Dubai and basically the markets are closed when
you're awake every day. It's difficult to participate in that.
And remember and also the US. Everyone should know. Capital
markets of the US are fifty percent of all capital
markets in the world. There's nobody even close to having
the US capital market. So the idea that the US
markets are closed during the waking hours for most people
around the globe, imagine how much growth we're going to
see when that's no longer true. So, yes, everything's going digital.
Now you can program it, now, you can access it everywhere.
Now you can fractualize things and that gives you more liquidity.
So of course everything's going to be digital.
Speaker 2: So with the race of to tokenization and different assets
getting tokenized, is bit go seeing a lot of demand
from these traditional institutions for custody of tokenized assets. Absolutely, look,
So there's a bunch of different ways forward.
Speaker 1: We just did it. We did the work with Figure
going public on the blockchain I think in February, and
there's a few different approaches. So you've had already the
special purpose Vehicles SPV, single asset products where they create
these wrappers and these are security so they can't trade
them inside the US, and then they give access to
non US people. You can buy those today I think
through crack and through jem and I probably even coinbase,
I'm not sure, but they're okay products, but they don't
trade in the US, and the US, like I just said,
is absolutely capital Marcus. So it's good but not great.
There's also I think a lot of parts that are
just really excited to digitize. Private companies, you know, obviously
like SpaceX, Open Ai, very exciting companies. A lot of
people won't have access to it. Why are people trying
to digitize it so badly well, because if you can
be the first person to build that market, you can
basically charge you know, two hundred basis points to everybody
to exist, which I think is exactly the wrong reason
why you should be digitizing. Digitizing is about open, open networks.
It's about reducing costs, eliminating middlemen in my opinion, but
there's there's there's always a lot of people doing different
types of business. Then, so now the figure product, they're
completely un chain. The downside of that one is that
you actually have to issue the shares directly from the
issuer on chain and that takes work. However, it's going
to build better markets. You know, having seen kind of
what it looks like when you go through this IPO process,
you realize what a game this thing is is. You know,
we're all familiar with the ipo pop. Everybody wants to
get in on an IPO pop. Then, you know, when
a company does go public, for the first six months
is his lockout period. So all you've got is whatever
the flow to shares that were sold kind of in
that beginning period, so that means you've got a small market.
Hedge funds love to bat this back and forth, and
like you know, manipulate markets. They do this all the time.
It's been studied, there's lots of research about it. And
then finally you've got the unlocked that happens where a
bunch of people the majority of this year has suddenly
become available to sell. So what happens shortening happens again.
Going back to Cagney, he went public late last year.
Oh yeah, fall last year, and then he posted that
he had fifty plus percent short interest in his stock,
you know, just before they're unlocking. All right, we can
do much better. We can build blockchain based market which
are going to take all of this on chain. It's
going to make it so that you can see exactly
what's going on. Shorting is going to continue to happen.
You know, shorting is a natural part of any market.
I'm not not complaining about that part. What I'm complaining
about is the processes that we're using are are designed
for playing games for six months. On the financial market.
It's a casino. It's the sec sanctions casino, and we
can do better, so, Mike, in the future. I didn't
answer your final question. So the other part you asked
about was whether the traditional financial firms are looking to
tokenize equities. Yes, there's a whole bunch of different models,
and I can't talk about them because we haven't announced them.
Some of them you've probably heard of, and we do
look forward to participating on those.
Speaker 2: Yes, So would the scenario at play be that a
company goes public let's say in ten years time or
even sooner than that, it goes on chain kind of
what you guys did would figure, and it's more globally
distributed to someone in a country and after go or
in South America can access some of that where they
they can't write now let's say, you know, depending on
the country, and they can simply do it from their
mobile phone.
Speaker 1: Maybe. Look, the SEC has rules about who's allowed to
have access to to the equities and you know how
how they can be traded in which participants. That actually
is going to take regulatory and legislative change. There's there's
nothing you can do about that part. There will be, however,
these SPVs like like what's been created, which can give
you kind of wrapper type access. It's sort of like
an ETF maybe more like a closed end fund, I
guess you would call it. But yes, you will have
more global access. No, but but but more importantly, you'll
have equities that are for grammable and visible on change,
so you'll know exactly what's going on. There's a lot
of speculation as to whether naked shorting happens out in
the in the market is not supposed to happen. It's illegal,
I guess, except when you have a green ship in
an IPO, but that's a different story. And you know,
when it's on chain, you'll know exactly what's going on
all the time, and you'll be able to see who's short.
Interesting thing about you know shorts. You know that the
exchange is published roughly twice a month. You know what
the short interest is in a stock, and it's not
a perfect thing. But anytime you have like some market
designed around as twice a month reporting, I don't it
just sounds pretty arbitrary to me, Like why wouldn't you
want that real time? You know you've got you've got
the the long interest available all the time when the
markets are open, but the short interest, I guess for
some reason those are considered to be special. I don't know,
it sounds fishy to me.
Speaker 2: And to your point, everything going going on chain. It
will make the regulators job easier, but also for the
participants in the markets to be able to see more
of what's happening, more transparency. That sounds like a better market,
a better economics setup in the future.
Speaker 1: Look, I do think we also take out uh A
mid men. So the challenge of the figure model is
that every issuer has to go and issue direct so
it'll take time for that to take full effect. But
there's real benefits when you do that, which is you
kind of take out all the middlemen, you take all
the risk elements. So I do believe there's also going
to be models where we see reg NMS securities that
are wrapped and available and you can start to use them.
I think the number one use case is going to
be securities lending or collateral lending. What you can do
now is you can have your TESLA stock and you
can use that as collateral. Today that can only be
done if you're like really wealthy and you have a
big private wealth management account and prime worker. But that
can be brought all the way down to retail, just
like what we've done with lending against your bitcoin, and
it can be done in a very safe and secure way,
and it can be done a very transparent way too.
Speaker 2: Also, Mike, there's a lot happening on the stable coin
front where that race is heating up since the genius
actor has passed, and there was recent news that a
bitgo was selected to be the stable coin infrastructure provider
and support distribution of SOFI USD tell us about that partnership. Yes,
Security stable coins. You know, we do infrastructure for them.
We've got a service that's got a modular service.
Speaker 1: It's got the tokenization layer, which you can put on
a theorem Penslana, you can put it on a BnB
and a bunch of different different chains. You've got the
mint component, which is being able to take dollars or
any other type of stay cooin converted to your stable
point and barn of course is also a capability there.
And then you've got the treasury. So those are the
three parts, and you know, clients can use our infrastructure
in any kind of piece of that that they want.
In the case of USD one, you know, which is
now about five billion in size, they've used all three
of those things allowed them to market way faster, and
we've got a great partnership there so far. Is coming in.
They're going to use those first parts. They're going to
manage treasury on their own as you would expect their bank,
but they have the ability to take this to their
broad distribution of retail members and really open up the
way payments work. Additionally, you know, you've got people starting
to understand the differences of you know, tokenized deposits versus
stable coins slightly different. I think we'll see products coming there.
Sofi is a stable coin so far, but there's definitely
more to come. And then this is just it's just
better payments. You know, it's twenty four to seven, it's
almost no fees. You know, you can put all kinds
of wallets, so it's it's just a better product. But yeah,
we're proud to have been selected by Sofi. They're great company.
They've been TechEd forward for like forever. They've had a
huge growth story of their own despite being you know,
a pretty pretty large sized company. So yeah, we're going
to continue to see lots of movement on the scape
going in front. The government's got to play in it
in terms of interest, which, as you know, as being
debated like crazy right now. Of course, people should be
able to get interest on their stable coins. We'll see
what the law comes back with. The banker claim that
you know, somehow this is going to cause a deposit
risk of the banks is ridiculous, and it's ridiculous, you know,
kind of with data. We saw the same argument made
back in the early seventies when we first had treasury
backed money markets that gave interest, and of course there
was no run on the bank and we didn't have
a liquidity dry up in that Purcasilly, by the way,
what is going to happen once you do have stable
coins in broad distribution in the US? Lending markets are
going to get tokenized and get better too. And you know,
we're seeing some of this where how do you take
like loans, pull them together and then tokenize them in
a way that you can now make them liquid, So
all of a sudden it makes it so that the
chance of a bank run is like way less because
you can make these loans liquid kind of all the time. Obviously,
there's a lot of maturing in this market to happen.
There's risks in lending, but everybody should be able to lend.
You know, why why is it only this thing that
banks do, like lens of course, they take their own
set of risks. Corporates take their own set of risks,
Governments take their own set of risks. Retail takes their
own set of risks. Everyone should be able to participate
in this. We can make it so that there's no
problem with there's no chance of a bank run by
decoupling the deposits from the lending markets. This is an
antiquated notion. It doesn't need to exist anymore. We can
create lending markets and have you know, stable points savings
deposits side by side in a very very different way.
Speaker 2: Mike, Is it simply these banks look there, the incumbents.
They're going to lose some market share here, and that's
why they're fighting. You know, they don't want to give
up some of the money they're parking where they park
their money of the FED and they just give consumers
zero point zero one percent on interest.
Speaker 1: I think it comes down to the folks that are
borrowing from them are have more power than the folks
that are lending to them. What's really happening is is
not so much the banks taking a lot of profit,
although that's part of it. What's happening is retail is
unknowingly subsidizing lending. So think about it. At the end
of the day, you've got somebody that's lending the money
to the bank, that's the depositor, and we got somebody
that the bank is lending too, that's the borrower. The
borrowers are getting subsidized rates from the depositors because the
banks aren't paying the depositors. So as a deposit you're
getting zero point one percent. You should be able to
get the risk free rate. It's called the risk free
rate for a reason. It's where the bar should be
held for Like, all you have to do is go
put it in T bills and you get four percent,
So it should be four. Now, if they gave four
to the depositors, they would have to give you an
additional They would have to take an additional three point
nine percent from the borrower. So what's really happening is
the borrowers are being subsidized by the depositors. Now you
could already well, no, the bank should just take less.
Maybe you know, maybe it would cause that right. Where
you prevent gouging is competition. You need to have lots
of banks that are competing against each other to kind
of have their feed be lower. But at the end
of the day, of course depositors should get the risk
free rate and then lenders just have to pay, you know,
the price. And right now the banks are saying like, hey,
we really want to compete and win that big, chunky
business from the barrower, so we're going to give him
lower rates, and we're going to just continue to try
to trick our depositors into not taking that much. So
it really comes down to like the big guy versus
the little guy in negotiating with the bank. And you know, look,
this needs to be taken away. It needs to be stopped.
It's it's ridiculous in my opinion, But that's what's happening today.
It's not so much that the banks are just pocketing
the money as it is you're being made forced to
subsidize some corporate loan that you don't even know exists.
Speaker 2: That's great insight. See, I think the majority of folks,
you know, from the outside look at it as the
bank's just trying to keep the majority of the funds.
But that's great insight out.
Speaker 1: And by the way, some bankers would argue, and they're
not entirely wrong that by having by forcing retail to
subsidize these loans. We're helping the economy be better, right,
So remember liquidity is what keeps the economy going. There
is some allegedly small business owner that took that loan
on the other side and he only had to pay
six percent instead of ten percent. Right, that's a big difference,
so he can now afford to borrow that and build
a business. So there's a fair argument that that we're
actually helping the economy with this. Now, I kind of
don't believe that. I think that really the guy who
should be paying that is most of that should be
coming out of compressed bank fees. The banks are more
profitable than they've ever been, and I do think they've
allowed to become very sloppy. I think as a retail person,
you deserve to get the risk free rate, whatever it is,
and banks, if they're doing their job right, should be
doing their damnedest to make sure that retail gets that number.
Then you know, on the other side, did they have
to pass that full cost through? Do they subsize it?
You know from the banking fees. You know, that's where
you could see more compression. I don't know what the
full spectrum of bank take rate on lending is, but
I think it's between six and eight percent of what
they're you know, kind of what they're trying to get
on their money. You know, maybe they need to squeeze
down by two and a half or three percent and
then yes, maybe lending rates need to increase a little
bit so that retail should they are the depositor, they're
the one source in the money, they should be getting
the risk free rate.
Speaker 2: There's been a lot of talks. We've been hearing certain
things coming out from big banks like Bank of America
City and SUP for that they want to launch their
own stable coins. But there's also talks of tokenized deposits.
So I'm curious, how.
Speaker 1: Do you think they do.
Speaker 2: You think they do both and it's used in different ways,
and you know, will the stable point market become too saturated.
Speaker 1: I'm not sure how token is deposits are going to
go exactly. So you know, the banks with deposits, they
have to know who all the clients are, right so
they can then give interest and you got to be tokenized.
But if it's just for your own clients, you know,
tokenizing it by itself may not have enough value because
you can already it's your deposits. You already have technology.
You know, banks have tons of technology. They can already
do a lot, So the tokenized deposit may not really
help that much. I guess it might work on closed
loop networks, so maybe permission ledgers and things like that,
it could work on a little bit better. But it's
it's a trickier thing, so we'll see how that goes.
I'm not sure exactly how it's gonna unfold.
Speaker 2: Get the bangs in fighting the stable coin yields situation.
They're obviously holding up the Clarity Act. I'm curious about
you know what your take is on that Clarity Act.
Do you think it's a good bill as it is?
And do you think it might pass this year?
Speaker 1: I guess I've actually stopped paying attention to a lot
of the details behind Clarity. I feel like whatever gets passed,
we will manage through it. There's better and there's worse,
and I suppose there's some things that are so bad
you shouldn't have anything. But actually, I do think Clarity
in almost any form adds one really important part, which
is it's the legislative path forward for digital assets. And
you know, we had a president before this one that
put a whole bunch of people in charge that we're
all just killing crypto and we can't have that again.
So getting Clarity passed in almost any form prevents that.
Now I realized there's some variance of clarity which could,
you know, block a lot of DeFi, which could of
course block a stable cooin interest, et cetera. I am
mostly hoping that those things don't happen. I think it's
hard to keep track of all of the various drafts
and versions and variants that are out there. So if
DeFi got killed, I think that would be kind of
where my line would be. And then almost anything else,
you know, losing the interest at least for now, we
could deal with that. Will come around on it, It'll
be fine. I think it's annoying. I think America has
a chance to do better on the on the the
the interest bearing stable coins one particular thing which I
think is kind of funny. The reason there's so many
stable coins getting issued is because if you can't give
interest to the depositor, well then everybody wants to have
their own stable coins. So think about it. The only
way to get the interest is to do the issuance.
So you're like, okay, well I don't want circle to
get it. I don't want to tether to get it
my user. I guess we'll create my own stable coin. Now,
imagine if you just had a stable coin which was
able to pass through most of it and ran like
an etf where you know, you keep fifty bases points
for administration and governance and stuff like that, and then
the rest passes through. Well, now the calculus on should
I run my own stable point completely changes Now. Instead
it's like, well, gee, I just pay that guy fifty
BIPs and then I get all the I get all
the interest on it, so I can go build my
applications and so things move a lot faster, they move
a lot better for everybody. So all right, if you
want to block interest, we'll do that for a little while.
There'll be this explosion of stable coins out there. They'll
be competition. We'll see who wins. I do think that
traditional finance you I like so far, and others will
come in and they will try to make make grounds
to win on the stable cooin space, and then eventually
we'll have interest on stable coins, and then at that
point it'll be like who does that the fastest and
the best, and then that that will be kind of
the dominant stablecoin ongoing we have that, then I think
it becomes a much less interesting game.
Speaker 2: I guess the silver lining of the situation, Mike, is
we saw just last week the SEC and the CFDC
are putting out guidance and rulemaking. They gave a breakdown
of crypto securities categories where majority are not securities, and
they highlighted a tokenize securities like stocks and so forth
continue to be security. So it's good that we have that,
But to your point, we still need the Clarity Act
to put this stamp and seal on it because another
administration can come in and roll things back.
Speaker 1: That's right. Yeah. Like Paul Atkins, I think has had
such a great attitude at the SEC. Every time I
talk to him, every time I see him talk, I'm
just delighted. So he wants to grow American capital markets.
And look, we've just been through the IPEO process of Bitco.
It's painful, it's costly. The reason we do it is
because we believe we actually get more business by being
a public company than not. It's a rare situation that's
be because Bicco happens to sit in a particular place
in the financial services industry. For most companies, No, you
don't make more business by just being public, right, Actually,
they're on the capital markets in order to be able
to raise money, raise capital. But they've made it so
difficult that well, maybe you should just stay private and
you should go to the private equity markets. You look,
there's a lot of money out there, and this has
worked very well. We have some very very large companies
that are still private as a results of it. Paul
Atkins wants to make it so like, look, let's bring
all these companies onto the public markets by making it easy,
and then we get better regulated markets, we get larger markets,
we bring more capital to the United States. It's just
it's all winning, and the previous administrations have seemed to
have lost that plot. It's not about like I like
this company or I like that company. Your regulator, you
have a job about making sure that people sit a
certain set of rules. That's it. You don't have to
like it. You don't have to like bitcoin, you know,
like bitco. Your job is to do regulations. So anyway,
I think we very much need clarity to make sure
that we can't have this again. I think most people
are worried. Some people are really paranoid worried, and sometimes
I hear those arguments about what would happen with if,
you know, when when we have a new president. I'm
not as paranoid. I'm more of an optimistic person, I think,
but I can't really dispel their fears either. It happened once,
so why wouldn't you believe it could happen again? Yeah?
Speaker 2: Absolutely, And sometimes it just takes something bad to happen
which has nothing to do necessarily with the technology, just
like a bad actor like a Sam bag mun freed
to change the narrative and in you know, they put
some new laws in place, and that hurts the adoption
of the technology.
Speaker 1: Yeah. I think SPF was a particularly special case. Look,
a lot of things were going fast. Part of why
we had to be public is because, you know, we
are a Silicon Valley company. You know, a people have
learned you can't trust Silicon Valley diligence, uh when it
comes to financial products. You know, obviously SBF had a
glowing review from Sequoia two hundred million dollars in this
massive you know puff piece about how awesome this guy
was and you didn't even have a CFO and you're
stealing money as fast as he could and Sequoia didn't
even know. So you have to be public, right, You
got to put a spotlight on all this stuff. You
got to go through the time, go through the diligence,
and then people can count on you.
Speaker 2: Mike, You've been here for a long time in this
market and a lot of folks, you know, are kind
of struggling with what happened in October of last year
with the market, you know, with bitcoin crashing down, and
it seems like the four year cycles still intact. But
it was the way it happened. There was no euphoria.
There was a blow off top, so to speak. You know,
what do you think happened? Was it kind of macro
conditions affected or stunted the bull market? And do you
think the four year cycle continues? Let's see for October
there was something that happened. You know, Finances has acknowledged
this and it did affect some parties. I don't know
if that was like the thing that's really going on
at the macro level right now. I think we have
two conflating things that are happening, which makes it just
really hard to tell because one is going up and
the other one's going down. So, first off, you know,
the world chaos continues to play out the Bitcoin narrative
that you need to get off of fiat rails, and
the fiat rails are going to continue to just be
inflated and inflated, inflated.
Speaker 1: And you will lose all your money. You throw in
wars and instability in certain local regions, that becomes even
more important. So this is all, you know, Bitcoin's thesis,
and you know Tether, I think you know you look around.
I've started to hear it's not the taxi driver, but
from various business sides where you're just like that guy's
heard of tether, wow, And you know for international money movements,
tether is awesome. So those those those components are all
bullish for bitcoin digital assets. Then the negative part. I
do think bitcoin is the most liquid asset in the world.
You can trade it twenty four to seven. It does
have a higher volatility, which means it's a risk asset,
which means that as soon as you start retreating to
your corners because you're worried about what's going on in
the markets. It's the first thing you saw. It just
is now you might be buying it back, you know,
a little bit later, but it's the thing that you
have access to the most. So these two things are
going against each other and it's really making it hard
to read. I do think there's a number of parties
that a lot of money early on in bitcoin that
have been moving to the sidelines and saying, you know
what I'm gonna I'm gonna cash out some of this
and kind of go into different things. So that's happening
as well. Look, all these happened at the same time,
so the patterns sometimes are hard hard to see. But
the two main ones I think is like, yes, the
thesis is continuing to prove itself and you know, bitcoin
will continue to go up. The second one is fear
and what's liquid causes people to sell, and it's making
it really hard to read. I guess maybe another thing
is that people are uncertain about you know, you see
things like micro strategy strategy. Now they's got a big
pile of bitcoin and we haven't seen this before. And
the other thing is, you know, I think Sailor deserves
a ton of credit here you know, he's figured out
how to use the public equity markets in a way
that the traditional bankers didn't do. And remember when companies
get big, they do get a little less innov it
if they just kind of cling to the thing that
they did in the past that work. And by the way,
make no mistake, I mean investment banking is the most
profitable vision of these large investments, these large banks, So
they're very, very good at what they do. They don't
want that to change. And Sailor is coming up with
new pioneering models for how you can use that thing
that nobody's ever thought of before. The bankers certainly don't.
They're not they're not innovators like like Sailors. So that
that does leave a little bit of question where people
are just like, how's this going to work? And I
think what has to happen is I just have to
settle out a little bit longer. People have to get
more educated about how it works, and we'll see. Look,
everything's got risk on it, even what Michael's doing. I
think these I think he understands the risks that he's
taking and and he's probably gonna work. But it does
create some amount of skepticism. That skepticism will come and
go in waves. That's not specifical. Some bitcoin cycles, that's
just like market cycles go up and down like this.
Speaker 2: Yeah, well said, And it feels like we're near a
bottom mic knock on wood. I don't know, you know
what's going to happen if we're going to go in anottle
lead down to the fifty k's or so, but it
feels like the majority of the downside has happened, right
if you look at the percentage wise, we may be
the thesis of we didn't have a massive parabolic run up,
so maybe we're not going to have.
Speaker 1: The same type of downside we've seen in previous bull
markets or bear markets. Yeah. I mean one thing I
forgot to mention in terms of proving the bitcoin thesis.
You know, we saw gold this year perform tremendously well.
And what that is is, look, gold at some level
has the same thesis as Bitcoin, which is that the
Fiat side is going to continue to go down and
so get into gold. And what happened was that particular
fear grew. You know, you can hear Gray Dalio talking
all the time about the cycles that we're in at
the macromacro level, and people are like, yeah, they agree
with that, but they may not understand bitcoin. And if
you're an investor, you should not invest in things you
don't understand, right, No discredit to bitcoin here, just this
is this is this is anybody smart, you should not
invest this stuff you don't understand. But gold they do understand,
and so they buy go. So so that again for
the for the for proves that that that side and
then I guess the last track of your last question.
Speaker 2: You know, I mean it just seemed like, uh, maybe
the downside won't be as bad down. Yeah, here's what
I think. I think I can guarantee this part. Uh,
dollar will go down more in the next ten years
than bitcoin will. So I think we're looking at another
you know, dollars could be thirty percent down over the
next ten years, maybe forty percent.
Speaker 1: It's just tremendous. So you know, the one hundred dollars
bill that you have in your wallet right now in
ten years is only worth fifty bucks. I mean, it's crazy.
And uh, and bitcoins socketing go down that much, so
you sed buy bitcoin? Yeah, I definitely agree. There. Final
item before I let you go what's on your roadmap? Well,
I can't talk about the roadmap anymore. This is the
funny thing create a company like gosh, you know I
had to I had to get so many you know,
counsel and advice from lawyers. Oh you can't talk about
material now look at it. I'm like, okay, well can
I can I go on a podcast with this this
tony guy. He's been been talking to him every every
year for for like five years now, and like no, no, no, no, okay, yes,
yeah we can. We can talk about general stuff. We
can talk about stuff we've been ounced, but we can't
talk about what's what's coming. But look, the company continues
to do what it's always done, which is which is infrastructure.
I think, you know, check and and and look around.
I think a lot of people are talking about infrastructure.
I guess I'll go back to one thing that's kind
of unique about Bicco. We started, you know, pushing this
two out of three multi sig wallet way way back,
and nowadays everybody uses you know, some amount of multi
so it could be MPC can be multi sig, but
of course it just it eliminates single point failure and
who gravitated towards that all the way from the beginning, well,
it was people that had lots of bitcoin than it
was businesses and institutions. So we've always been this institutional player.
And in twenty thirteen, twenty fourteen, twenty fifteen, everybody else
was talking about retail, retail, retail, and we were doing
kind of to start institutional infrastructure pieces. And of course
they all want to use it via API. So you know,
whether you're a broker dealer, whether you're a payment process
or whether you're exchange, all those guys that started using bicco,
we're helping us refine the product, make it stronger, make
it better for what institutions need in order to put
this infrastructure into their own products. And then today, of
course it's it's far more. We've got more coin support
than anybody else or the fireblocks, more on the coinbase,
more than Anchorage buy a Maya by the way, it's
not even close. And that's just at the technology layer,
and everything we do is two out of three, which
takes against both theft and loss, and so we've really,
I think honed this very well. And eventually other companies
came in, you know, those are the companies I mentioned
on the institutional side, they didn't start on the institutional
side until I don't know, twenty seventeen, twenty eighteen didn't
even exist, right, So nowadays it's sexy, but we've been
doing it from the beginning. I think that puts it
more in our DNA, and it's certainly been helping us lately.
So we'll continue to do that, continue to grow what works,
and hopefully continue to build great solutions.
Speaker 2: Well, Mike, I know I'm going to see great updates.
You guys are always ahead of the curve and building
really cool things. So and the next one we're gonna
have to do it in person in New York and
talk about the latest and greatest.
Speaker 1: But thank you so much for it's good earnings later
this week. So yeah, then then you get the answer
to the question gives you.
Speaker 2: Just there awesome, Thank you, Mike, all right, take care,
Thank you so much for tuning in. Please hit the
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Speaker 1: Thank you so much.