1 00:00:13,760 --> 00:00:17,480 Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast. 2 00:00:17,560 --> 00:00:20,400 Speaker 1: My name is Mike Reagan. I'm a senior editor at Bloomberg. 3 00:00:20,800 --> 00:00:23,840 Speaker 1: I'm Moldona hi across asset reporter with Bloomberg, And this 4 00:00:23,920 --> 00:00:26,680 Speaker 1: week on the show, well, they've been calling this year's 5 00:00:26,720 --> 00:00:31,440 Speaker 1: bear market and cryptocurrencies a crypto winter, but it's starting 6 00:00:31,480 --> 00:00:34,240 Speaker 1: to look more like a crypto ie age. Hat tip 7 00:00:34,320 --> 00:00:37,200 Speaker 1: to Voldana for that turn of phrase. But the implosion 8 00:00:37,240 --> 00:00:39,800 Speaker 1: of the ft X exchanges and the rest of Sam 9 00:00:39,880 --> 00:00:44,479 Speaker 1: bankman Fried's digital asset empire is reverberating throughout the industry. 10 00:00:45,040 --> 00:00:48,640 Speaker 1: Many many billions of dollars have been evaporated, jobs have 11 00:00:48,680 --> 00:00:52,960 Speaker 1: been lost, and institutions and retail investors of well, they've 12 00:00:52,960 --> 00:00:55,720 Speaker 1: been left holding the bag. So where's all this heading. 13 00:00:56,200 --> 00:00:58,600 Speaker 1: We'll get into it with the chief investment officer of 14 00:00:58,600 --> 00:01:03,040 Speaker 1: a crypto focused set manager, But first the I've I 15 00:01:03,160 --> 00:01:05,400 Speaker 1: got to ask you. Do you happen to own a 16 00:01:05,440 --> 00:01:09,120 Speaker 1: pair of birken Stocks? No? I think Okay, this is 17 00:01:09,160 --> 00:01:13,520 Speaker 1: an unpopular opinion. I think they're so ugly. Really yeah, 18 00:01:13,840 --> 00:01:16,440 Speaker 1: all my friends have them. I think they're absolutely heinous. 19 00:01:16,480 --> 00:01:20,360 Speaker 1: I'm sorry to all my friends. Really yeah, why you have. 20 00:01:20,640 --> 00:01:23,040 Speaker 1: I've got a pair. I prefer to wear them with socks, 21 00:01:23,160 --> 00:01:26,280 Speaker 1: which is that also an unpopular opinion? Which is a 22 00:01:26,360 --> 00:01:29,000 Speaker 1: very unpopular opinion. Yeah, my wife gives me a lot 23 00:01:29,040 --> 00:01:31,560 Speaker 1: of grief over that. But this is kind of a 24 00:01:31,600 --> 00:01:33,840 Speaker 1: tease for my craziest thing of the week, And in fact, 25 00:01:33,880 --> 00:01:35,680 Speaker 1: I feel like a lot of our crazy things end 26 00:01:35,760 --> 00:01:38,320 Speaker 1: up revolving around footwear for some reason. I don't know. 27 00:01:38,640 --> 00:01:41,479 Speaker 1: I'm just picturing you with socks and beat up birken 28 00:01:41,520 --> 00:01:44,440 Speaker 1: stocks going to like a soccer game or something. Yeah, 29 00:01:44,520 --> 00:01:46,880 Speaker 1: I'm not going to ask our guests how he feels 30 00:01:46,880 --> 00:01:52,160 Speaker 1: about birkin stocks, but I do want to introduce him. 31 00:01:52,160 --> 00:01:55,080 Speaker 1: I heard I'm snickering at at this little conversation here, 32 00:01:55,440 --> 00:01:58,320 Speaker 1: Matt Hogan. He's the ce io at bit Wise. Thank 33 00:01:58,360 --> 00:02:00,559 Speaker 1: you so much for joining us in, for coming into 34 00:02:00,560 --> 00:02:03,320 Speaker 1: the studio, thanks for having me. And I'm short birkenstocks 35 00:02:03,320 --> 00:02:06,080 Speaker 1: as well. Thank god, I have a feeling. I had 36 00:02:06,080 --> 00:02:08,360 Speaker 1: a feeling, but I didn't want to venture this. Okay, 37 00:02:08,840 --> 00:02:10,760 Speaker 1: tell us just to start out, tell us about bit 38 00:02:10,800 --> 00:02:14,440 Speaker 1: wise and how you guys have been affected over the 39 00:02:14,520 --> 00:02:17,520 Speaker 1: last couple of weeks in what honestly has felt like 40 00:02:17,960 --> 00:02:21,160 Speaker 1: ten years of my lifetime. It does feel like ten years. 41 00:02:21,280 --> 00:02:24,720 Speaker 1: So bit Wise is a specialist crypto asset manager. Crypto 42 00:02:24,800 --> 00:02:27,600 Speaker 1: is all that we do. We serve primarily professional investors, 43 00:02:27,639 --> 00:02:31,480 Speaker 1: financial advisors, family offices, and institutions. We've been in the 44 00:02:31,520 --> 00:02:36,440 Speaker 1: market since so this is not our first bear marketing crypto, 45 00:02:36,600 --> 00:02:39,600 Speaker 1: and we are best known for creating the world's first 46 00:02:39,600 --> 00:02:42,080 Speaker 1: crypto index fund, the bit Wise ten, which holds the 47 00:02:42,120 --> 00:02:46,160 Speaker 1: ten largest crypto assets waited by market cap. People have 48 00:02:46,240 --> 00:02:48,800 Speaker 1: referred to it as the SMP five hundred of crypto. 49 00:02:48,880 --> 00:02:51,880 Speaker 1: In the scale of crypto asset managers were on the 50 00:02:52,000 --> 00:02:56,720 Speaker 1: very conservative side long term investors uh in in diversified 51 00:02:56,720 --> 00:03:00,320 Speaker 1: index funds, and that's what we've been doing. And about 52 00:03:00,400 --> 00:03:02,760 Speaker 1: the last couple of weeks and how that's affected your 53 00:03:03,000 --> 00:03:05,440 Speaker 1: funds and your operations and everything that's been going on 54 00:03:05,480 --> 00:03:07,640 Speaker 1: has been just Yeah, the last couple of weeks have 55 00:03:07,680 --> 00:03:11,440 Speaker 1: been exhausting. I think everyone in the crypto industry would 56 00:03:11,440 --> 00:03:14,840 Speaker 1: agree with that. As an asset manager, we did not 57 00:03:15,000 --> 00:03:18,880 Speaker 1: trade on ft X. We actually never or almost never 58 00:03:19,000 --> 00:03:22,040 Speaker 1: trade on exchanges. We did not custody assets with ft X, 59 00:03:22,080 --> 00:03:24,680 Speaker 1: so we have no losses associated with that. But of 60 00:03:24,680 --> 00:03:27,240 Speaker 1: course we're part of this broader crypto industry and it's 61 00:03:27,240 --> 00:03:30,640 Speaker 1: had huge effects on that market. But I wanted to 62 00:03:30,680 --> 00:03:33,920 Speaker 1: get into that idea of custody a little bit because 63 00:03:34,280 --> 00:03:36,960 Speaker 1: it's so such an important topic. Now. You know, everyone's 64 00:03:36,960 --> 00:03:39,920 Speaker 1: talking about not your keys, not your coins. You know, 65 00:03:39,960 --> 00:03:44,800 Speaker 1: if you don't actually have the crypto blockchain pass keys, 66 00:03:45,080 --> 00:03:48,200 Speaker 1: everyone's pointing the finger looking at everyone else, wondering, you know, 67 00:03:48,280 --> 00:03:50,240 Speaker 1: sort of where the next domino is going to fall, 68 00:03:50,280 --> 00:03:53,520 Speaker 1: and if you know, whoever actually has the custody of 69 00:03:53,560 --> 00:03:56,520 Speaker 1: their coins will be next. From my understanding, you guys 70 00:03:56,600 --> 00:04:01,080 Speaker 1: custody with coin base, right, and that. Yeah, we custody 71 00:04:01,120 --> 00:04:04,840 Speaker 1: different funds with different custodians. So our flagship fund is 72 00:04:04,880 --> 00:04:08,800 Speaker 1: custoded with coin based Institutional, our Bitcoin fund is custodyed 73 00:04:08,800 --> 00:04:12,000 Speaker 1: with Fidelity. We have another fund that's custodied with Anchorage, 74 00:04:12,000 --> 00:04:15,000 Speaker 1: which is a federally chartered digital bank. The thing that 75 00:04:15,080 --> 00:04:17,320 Speaker 1: connects all three of them, and the way I think 76 00:04:17,360 --> 00:04:22,360 Speaker 1: about this custody landscape is that they're all US domiciled, 77 00:04:22,839 --> 00:04:27,080 Speaker 1: regulated institutions with insurance in place on their custody. If 78 00:04:27,080 --> 00:04:30,200 Speaker 1: you think about the various ways that crypto investors can 79 00:04:30,240 --> 00:04:33,520 Speaker 1: custody assets. It's kind of like a barbell. At one 80 00:04:33,640 --> 00:04:36,040 Speaker 1: end of the barbell is what you mentioned, where you 81 00:04:36,080 --> 00:04:40,760 Speaker 1: hold your crypto keys directly, individually in a safety deposit 82 00:04:40,839 --> 00:04:43,840 Speaker 1: box on a Ledger or whatever. On the other end 83 00:04:43,839 --> 00:04:45,960 Speaker 1: of the spectrum is what bit wise does working with 84 00:04:46,000 --> 00:04:49,279 Speaker 1: some of the largest institutions in the crypto space, firms 85 00:04:49,320 --> 00:04:51,640 Speaker 1: like Fidelity, firms like coin Base, that have been in 86 00:04:51,680 --> 00:04:55,360 Speaker 1: the market, you know, for ten years, it's publicly traded entity, 87 00:04:55,440 --> 00:04:58,360 Speaker 1: and then there's this fuzzy middle, and the fuzzy middle 88 00:04:58,520 --> 00:05:00,800 Speaker 1: is where all the bad things have been. What the 89 00:05:00,800 --> 00:05:04,680 Speaker 1: fuzzy middle looks like is centralized institutions that are not 90 00:05:04,839 --> 00:05:08,840 Speaker 1: regulated and often offshore, and that is not a place 91 00:05:09,040 --> 00:05:13,200 Speaker 1: you should custody crypto assets. Either go toward regulated, US 92 00:05:13,279 --> 00:05:18,040 Speaker 1: domiciled established institutions or yes, if you have great security hygiene, 93 00:05:18,279 --> 00:05:21,280 Speaker 1: do it yourself. I would argue that the regulated side 94 00:05:21,320 --> 00:05:24,240 Speaker 1: of the spectrum is safer for the vast majority of investors. 95 00:05:24,560 --> 00:05:26,320 Speaker 1: But you can be on either end of the barbel. 96 00:05:26,440 --> 00:05:28,640 Speaker 1: You just can't be in this fuzzy middle. It's where 97 00:05:28,680 --> 00:05:31,880 Speaker 1: good crypto ideas go to die, right, you know, and Matt, 98 00:05:31,920 --> 00:05:35,040 Speaker 1: I know in you know, when it comes to equity 99 00:05:35,400 --> 00:05:38,520 Speaker 1: index funds. A lot of times, the way they sort 100 00:05:38,520 --> 00:05:41,440 Speaker 1: of keep costs down and bringing a little electure revenue 101 00:05:41,680 --> 00:05:45,839 Speaker 1: is to allow the securities they hold to be loaned 102 00:05:45,880 --> 00:05:50,680 Speaker 1: out to short sellers, basically through through various prickleges. I 103 00:05:50,720 --> 00:05:53,839 Speaker 1: wonder is that it play at all with the custody 104 00:05:53,920 --> 00:05:56,279 Speaker 1: of your crypto, Is anyone sort of lending it out? 105 00:05:56,880 --> 00:05:59,800 Speaker 1: So we never lend out our our crypto assets that 106 00:05:59,800 --> 00:06:03,680 Speaker 1: are under custody for investors. We're one of the most 107 00:06:03,720 --> 00:06:07,240 Speaker 1: conservative crypto asset managers in the world, which is frustrating 108 00:06:07,279 --> 00:06:10,120 Speaker 1: during bowl markets but feels pretty good right now. There 109 00:06:10,160 --> 00:06:13,400 Speaker 1: are other asset managers that engage in what you describe 110 00:06:13,400 --> 00:06:17,160 Speaker 1: what amounts to securities lending lending out customer assets, but 111 00:06:17,279 --> 00:06:21,560 Speaker 1: we consider that too risky and also not what investors want. 112 00:06:21,800 --> 00:06:23,960 Speaker 1: If you think about what investors who are allocating to 113 00:06:24,040 --> 00:06:27,599 Speaker 1: crypto want, they're betting that bitcoin is worth half a 114 00:06:27,640 --> 00:06:31,080 Speaker 1: million or a million dollars. They're looking for asymmetric upside. 115 00:06:31,480 --> 00:06:33,840 Speaker 1: We don't understand why someone would try to earn an 116 00:06:33,839 --> 00:06:36,359 Speaker 1: extra one or two or three percent yield by lending 117 00:06:36,360 --> 00:06:39,400 Speaker 1: out their bitcoin en route to that. Given the risks 118 00:06:39,440 --> 00:06:42,640 Speaker 1: that are associated with it. So we don't trade on exchanges, 119 00:06:43,240 --> 00:06:46,640 Speaker 1: we don't lend out our assets. We buy assets and 120 00:06:46,680 --> 00:06:49,000 Speaker 1: put them in custody immediately and let them sit there. 121 00:06:49,960 --> 00:06:51,880 Speaker 1: And I want to ask you just a bit more 122 00:06:51,960 --> 00:06:54,760 Speaker 1: on this idea of cold charge, because so many people 123 00:06:54,800 --> 00:06:57,200 Speaker 1: have been coming to me over the last two weeks 124 00:06:57,200 --> 00:06:59,440 Speaker 1: saying like, this is what people have should have been 125 00:06:59,560 --> 00:07:03,960 Speaker 1: doing all along to safeguard their assets, etcetera, etcetera. But 126 00:07:04,040 --> 00:07:08,000 Speaker 1: does that not if everybody has their assets in cold storage? 127 00:07:08,040 --> 00:07:10,080 Speaker 1: Does it not sort of suck away some of the 128 00:07:10,160 --> 00:07:14,080 Speaker 1: fun from crypto, suck away some of the fun because 129 00:07:14,080 --> 00:07:17,280 Speaker 1: it's so boring. Yeah, you use the word boring. It 130 00:07:17,400 --> 00:07:20,520 Speaker 1: wasn't doesn't suck away some of the fun. I don't 131 00:07:20,520 --> 00:07:22,200 Speaker 1: know if the past few weeks have been any fun 132 00:07:22,360 --> 00:07:25,880 Speaker 1: build on. I think most investor would say no. What 133 00:07:25,960 --> 00:07:28,800 Speaker 1: it does is recognize what crypto is as an investment, 134 00:07:29,280 --> 00:07:33,000 Speaker 1: which is this is an early stage, disruptive nasset technology 135 00:07:33,040 --> 00:07:36,240 Speaker 1: that exists in a gray regulatory framework, and people who 136 00:07:36,240 --> 00:07:38,960 Speaker 1: are allocating to it, in my view, should be making 137 00:07:39,040 --> 00:07:41,240 Speaker 1: five or ten year bets. And if you want to 138 00:07:41,280 --> 00:07:43,040 Speaker 1: make a five or ten year bet, you do want 139 00:07:43,080 --> 00:07:45,960 Speaker 1: to put this crypto in a vault and not look 140 00:07:46,000 --> 00:07:48,720 Speaker 1: at it. And that's what cold storage is all about. 141 00:07:49,000 --> 00:07:51,240 Speaker 1: You know. Keeping it on exchange where you can day 142 00:07:51,240 --> 00:07:55,280 Speaker 1: trade and eight evolve asset is maybe fun for some people, 143 00:07:55,400 --> 00:07:58,080 Speaker 1: but I think it's a recipe for high risk, right 144 00:07:58,720 --> 00:08:00,320 Speaker 1: you know, Man, I kind of fell down the rabbit 145 00:08:00,360 --> 00:08:03,200 Speaker 1: hole on this topic just aut of curiosity. And one 146 00:08:03,240 --> 00:08:06,000 Speaker 1: of my weird hobbies is I love reading the risk 147 00:08:06,080 --> 00:08:10,400 Speaker 1: factors of various public companies. Tells you a little bit 148 00:08:10,440 --> 00:08:12,960 Speaker 1: about what a nerd I am. But you know, I'm 149 00:08:12,960 --> 00:08:17,560 Speaker 1: reading coin bases risk factors about custody and their whole 150 00:08:17,640 --> 00:08:20,720 Speaker 1: thing is we're doing. I I can actually read them 151 00:08:20,840 --> 00:08:23,280 Speaker 1: right right for you. Here we we placed great importance 152 00:08:23,280 --> 00:08:26,480 Speaker 1: on safeguard and crypto assets we custody and keeping them 153 00:08:26,560 --> 00:08:31,040 Speaker 1: quote bankruptcy remote from our our general creditors. The problem though, 154 00:08:31,120 --> 00:08:34,200 Speaker 1: is that and they say this here, we believe that 155 00:08:34,280 --> 00:08:38,600 Speaker 1: a court would not treat custodied crypto assets as part 156 00:08:38,760 --> 00:08:41,520 Speaker 1: of our general estate, meaning you know, they're talking about 157 00:08:41,520 --> 00:08:44,640 Speaker 1: a hypothetical bankruptcy here. And again this is risk factors 158 00:08:44,679 --> 00:08:48,840 Speaker 1: where you you have to disclose the works possible scenario. 159 00:08:49,040 --> 00:08:51,920 Speaker 1: You know, no no one's you know, saying coin bases 160 00:08:52,040 --> 00:08:54,800 Speaker 1: is not big of trouble. But they say, however, due 161 00:08:54,840 --> 00:08:57,520 Speaker 1: to the novelty of crypto assets, courts have not yet 162 00:08:57,559 --> 00:09:01,880 Speaker 1: considered this type of treatment for custody crypto assets. But 163 00:09:02,080 --> 00:09:05,679 Speaker 1: I guess the hope really here is that these courts 164 00:09:05,720 --> 00:09:09,880 Speaker 1: would decide, uh, you know, creditors cannot get their hands 165 00:09:09,880 --> 00:09:13,560 Speaker 1: on custody assets. I mean, it seems to me like 166 00:09:13,600 --> 00:09:16,920 Speaker 1: that's a pretty good reasonable thing to assume. But how 167 00:09:17,160 --> 00:09:19,959 Speaker 1: are you thinking about that idea? Yeah, well, first I 168 00:09:20,000 --> 00:09:21,800 Speaker 1: should say, I'm never going to shake the image of 169 00:09:21,840 --> 00:09:25,200 Speaker 1: you and birkenstocks and fleece stocks reading risk factors late 170 00:09:25,240 --> 00:09:28,280 Speaker 1: at night. That's now every time I hear your voice, 171 00:09:28,320 --> 00:09:30,200 Speaker 1: that's what I'm going to see. Yeah, that's it. Yeah, 172 00:09:30,240 --> 00:09:33,680 Speaker 1: that's me. It's a great question and one that we 173 00:09:33,720 --> 00:09:35,880 Speaker 1: think about a lot. You know. I do think it 174 00:09:35,960 --> 00:09:39,560 Speaker 1: points to something in crypto that's really important, which is 175 00:09:39,679 --> 00:09:44,200 Speaker 1: that we need greater clarity from a regulatory perspective so 176 00:09:44,240 --> 00:09:46,560 Speaker 1: that the best actors in the space can build on 177 00:09:46,600 --> 00:09:50,760 Speaker 1: a strong foundation. We agree with coin bases interpretation of 178 00:09:50,800 --> 00:09:53,319 Speaker 1: that that it's highly unlikely in the event of a 179 00:09:53,360 --> 00:09:57,319 Speaker 1: corporate bankruptcy that they would reach across to customer deposit assets. 180 00:09:57,679 --> 00:10:00,840 Speaker 1: We need regulatory clarity that makes this exquisitely clear for 181 00:10:00,880 --> 00:10:03,679 Speaker 1: all the regulated custodians in the space. We think if 182 00:10:03,679 --> 00:10:05,840 Speaker 1: you look at trust charter law and you look at 183 00:10:06,240 --> 00:10:09,320 Speaker 1: national bank account charter law, we view coin based as 184 00:10:09,360 --> 00:10:12,920 Speaker 1: a very sound, very solid institution in place to custody crypto. 185 00:10:12,960 --> 00:10:15,880 Speaker 1: It's also a publicly traded company with audited financials, which 186 00:10:15,920 --> 00:10:17,960 Speaker 1: you can see in a strong balance sheet. But you 187 00:10:18,000 --> 00:10:19,839 Speaker 1: point out that there is a need in crypto for 188 00:10:19,920 --> 00:10:22,959 Speaker 1: greater regulatory clarity. I think we're going to get that 189 00:10:23,440 --> 00:10:27,520 Speaker 1: on an accelerated freight train basis as a result of FTX, 190 00:10:28,000 --> 00:10:30,360 Speaker 1: and I actually think that's going to be great for crypto. 191 00:10:30,480 --> 00:10:32,600 Speaker 1: I think that is going to sew the seeds for 192 00:10:32,640 --> 00:10:36,079 Speaker 1: the next bull marketing crypto. But you're absolutely right, you're 193 00:10:36,120 --> 00:10:38,920 Speaker 1: taking on lots of risk in crypto. There's no free 194 00:10:38,960 --> 00:10:41,600 Speaker 1: lunch in investing. Crypto is the best performing asset class 195 00:10:41,640 --> 00:10:43,680 Speaker 1: in the world over the last three years, five years, 196 00:10:43,679 --> 00:10:46,000 Speaker 1: and ten years. It's up over a hundred thousand percent. 197 00:10:46,160 --> 00:10:49,120 Speaker 1: Even with the current draw down. You don't get those 198 00:10:49,200 --> 00:10:52,080 Speaker 1: kind of returns without risk. There is still risk in 199 00:10:52,120 --> 00:10:54,280 Speaker 1: this market, which to my mind mean there is still 200 00:10:54,720 --> 00:10:58,960 Speaker 1: the opportunity for great returns, but you will need to 201 00:10:58,960 --> 00:11:01,720 Speaker 1: work with glow gold plated providers that are very conservative 202 00:11:01,800 --> 00:11:04,839 Speaker 1: the space to to tap into those. Yeah, and you know, Matt, 203 00:11:04,880 --> 00:11:07,280 Speaker 1: the reason why I bring this up and was thinking 204 00:11:07,320 --> 00:11:09,080 Speaker 1: about it is I look at the you know, you 205 00:11:09,080 --> 00:11:11,800 Speaker 1: look at the bit Wise ten crypto index fund. UH, 206 00:11:11,840 --> 00:11:15,680 Speaker 1: you know about million in assets. It holds the ten 207 00:11:15,720 --> 00:11:19,200 Speaker 1: biggest cryptos, basically a passive index fund UH in the 208 00:11:19,240 --> 00:11:23,520 Speaker 1: crypto world. The net asset value is like fifteen bucks 209 00:11:23,600 --> 00:11:26,920 Speaker 1: and change per share. Uh. The share prices less than 210 00:11:27,000 --> 00:11:29,440 Speaker 1: seven bucks, So we're talking about sort of a fifty 211 00:11:29,480 --> 00:11:33,679 Speaker 1: five discount to the actual assets that you're holding in 212 00:11:33,679 --> 00:11:36,319 Speaker 1: that fund. Why is that? Do you think? Is it? 213 00:11:36,360 --> 00:11:38,440 Speaker 1: Is it the exact things we've just been talking about, 214 00:11:38,480 --> 00:11:40,960 Speaker 1: basically that people are just worried about where the next 215 00:11:41,000 --> 00:11:44,080 Speaker 1: domino is gonna gonna hit? Well, I should start by 216 00:11:44,120 --> 00:11:47,880 Speaker 1: saying we have three different ways that investors could gain 217 00:11:47,960 --> 00:11:52,200 Speaker 1: access to the bit Wise ten, depending on whether they're credited, 218 00:11:52,240 --> 00:11:54,800 Speaker 1: whether they work with advisors, or whether they're buying retail. 219 00:11:55,440 --> 00:11:59,320 Speaker 1: One way is through a private placement for credited investors 220 00:11:59,400 --> 00:12:02,480 Speaker 1: that's available Bowle with with access you know, on a 221 00:12:02,520 --> 00:12:06,400 Speaker 1: weekly basis at NAV, so no premium and discount. Another 222 00:12:06,440 --> 00:12:09,440 Speaker 1: way is a separately managed account that a financial advisor 223 00:12:09,480 --> 00:12:12,600 Speaker 1: can set up that holds the assets directly held at NAV. 224 00:12:13,000 --> 00:12:15,160 Speaker 1: And the third way is the one that you mentioned, 225 00:12:15,440 --> 00:12:17,680 Speaker 1: which is b I t W, which is a publicly 226 00:12:17,720 --> 00:12:21,640 Speaker 1: traded over the counter O t c q X traded security. 227 00:12:22,120 --> 00:12:26,320 Speaker 1: Those securities operate given the regulatory limitations in the crypto 228 00:12:26,360 --> 00:12:29,439 Speaker 1: space like closed end funds, which means they can trade 229 00:12:29,440 --> 00:12:32,120 Speaker 1: at premiums and discounts, and given the volatility of the 230 00:12:32,120 --> 00:12:36,560 Speaker 1: crypto market, not surprisingly they traded larger premiums and discounts 231 00:12:36,600 --> 00:12:39,320 Speaker 1: than you would say, see in a MUNI bond closed 232 00:12:39,400 --> 00:12:42,880 Speaker 1: end e t F. So what that discount reflects is, 233 00:12:43,080 --> 00:12:45,880 Speaker 1: you know, more more sellers than buyers over a period 234 00:12:45,920 --> 00:12:49,280 Speaker 1: of time. What we've stated publicly to investors and what 235 00:12:49,360 --> 00:12:51,920 Speaker 1: I hope the long term outcome is is once we're 236 00:12:51,960 --> 00:12:54,439 Speaker 1: allowed to, we will convert this fund to an e 237 00:12:54,520 --> 00:12:57,320 Speaker 1: t F, which is likely to you know, largely, if 238 00:12:57,320 --> 00:13:01,160 Speaker 1: not entirely, eliminate that discount. The sec is not allowed 239 00:13:01,200 --> 00:13:03,600 Speaker 1: there to be a crypto et F. I think that's 240 00:13:03,640 --> 00:13:09,400 Speaker 1: another good example of regulators not helping investors by pushing 241 00:13:09,440 --> 00:13:12,720 Speaker 1: forward regulatory clarity. Investors want to gain access to bitcoin, 242 00:13:12,800 --> 00:13:14,880 Speaker 1: they want to gain access to other crypto assets. If 243 00:13:14,920 --> 00:13:16,720 Speaker 1: they could do it in an e t F, there 244 00:13:16,720 --> 00:13:20,040 Speaker 1: wouldn't be this question of premiums and discounts. Asset managers 245 00:13:20,080 --> 00:13:23,079 Speaker 1: like bit wise are trying to help investors gain exposure 246 00:13:23,080 --> 00:13:26,600 Speaker 1: to the space within the regulatory limitations we face, and 247 00:13:26,679 --> 00:13:28,480 Speaker 1: so we have these O t c q X traded 248 00:13:28,520 --> 00:13:31,320 Speaker 1: securities that can trade at premiums and discounts. I don't know, 249 00:13:31,440 --> 00:13:33,640 Speaker 1: it's a complex answer. I hope it helped, but that's 250 00:13:33,640 --> 00:13:42,760 Speaker 1: what's going on there. So you sent some notes before 251 00:13:42,760 --> 00:13:45,679 Speaker 1: the podcast and it says it holds the largest and 252 00:13:45,760 --> 00:13:48,800 Speaker 1: digital assets, but it's screened out f t T even 253 00:13:48,960 --> 00:13:51,800 Speaker 1: when that token, which is the doomed f t X 254 00:13:52,240 --> 00:13:55,480 Speaker 1: utility token, um when it would have classified for inclusion. 255 00:13:55,559 --> 00:13:57,200 Speaker 1: So can you tell us about that process, because it 256 00:13:57,200 --> 00:14:02,280 Speaker 1: sounds like you purposefully and cognizantly. Yeah, I I really 257 00:14:02,320 --> 00:14:05,240 Speaker 1: appreciate that question, and I do think in a frontier 258 00:14:05,280 --> 00:14:07,920 Speaker 1: market like crypto, you can't have a simple index fund. 259 00:14:08,000 --> 00:14:10,760 Speaker 1: You need to have lots of rules that screen out assets. 260 00:14:10,800 --> 00:14:13,520 Speaker 1: If you went to coin market cap dot com and 261 00:14:13,559 --> 00:14:16,040 Speaker 1: looked at their list of crypto assets by market cap, 262 00:14:16,400 --> 00:14:18,400 Speaker 1: you'd have to get to asset about twenty one or 263 00:14:18,440 --> 00:14:21,640 Speaker 1: twenty two before you found the tenth asset in our funds. 264 00:14:21,640 --> 00:14:24,000 Speaker 1: So we're screening out a large number of assets. We 265 00:14:24,120 --> 00:14:27,360 Speaker 1: screened out ft T, We screened out Luna. We've never 266 00:14:27,400 --> 00:14:30,280 Speaker 1: held dose coin, we don't hold tron. There are a 267 00:14:30,360 --> 00:14:34,280 Speaker 1: variety of screens that protect us from those examples. We 268 00:14:34,360 --> 00:14:37,080 Speaker 1: look at the fundamental token omics of an asset. That's 269 00:14:37,080 --> 00:14:39,920 Speaker 1: what protected us from Luna. We saw the potential for 270 00:14:39,960 --> 00:14:42,760 Speaker 1: the death spiral that claimed that quote unquote stable coin. 271 00:14:43,480 --> 00:14:45,760 Speaker 1: We look at assets that are at undue risk of 272 00:14:45,800 --> 00:14:49,280 Speaker 1: being found in violation of federal securities laws. F t 273 00:14:49,280 --> 00:14:53,760 Speaker 1: T fell into that framework because we thought it was 274 00:14:53,880 --> 00:14:57,840 Speaker 1: likely or possible to be deemed a security by regulators. 275 00:14:58,120 --> 00:15:01,240 Speaker 1: It was it was largely internally control old. In our view, 276 00:15:01,400 --> 00:15:03,640 Speaker 1: it could potentially meet the Howie test, and so we 277 00:15:03,680 --> 00:15:06,520 Speaker 1: won't hold it in our fund. There are other screens 278 00:15:06,560 --> 00:15:10,080 Speaker 1: as well that that are really important screens around liquidity. 279 00:15:10,120 --> 00:15:12,360 Speaker 1: I'll put on my index geek hat I used to 280 00:15:12,480 --> 00:15:14,760 Speaker 1: edit the Journal of Indexes which is the world's most 281 00:15:14,760 --> 00:15:21,880 Speaker 1: boring publication probably with absolutely absolutely. I used to check 282 00:15:22,000 --> 00:15:24,480 Speaker 1: check Bogol and I I interviewed him a few times 283 00:15:24,520 --> 00:15:28,800 Speaker 1: and and he was a big He could quote chapter 284 00:15:28,840 --> 00:15:32,760 Speaker 1: and verse of that from Yes he was he was. 285 00:15:32,960 --> 00:15:34,920 Speaker 1: He was a big fan and and and wrote some 286 00:15:35,000 --> 00:15:38,360 Speaker 1: articles for us, which was amazing. We free flow adjust 287 00:15:38,520 --> 00:15:42,440 Speaker 1: crypto assets, which means we don't count in the market 288 00:15:42,440 --> 00:15:45,240 Speaker 1: cap of an asset the assets that are held by insiders. 289 00:15:45,520 --> 00:15:48,360 Speaker 1: And that's important because you're hearing things around FTX about 290 00:15:48,400 --> 00:15:51,640 Speaker 1: Serum about these other assets that they were counting the 291 00:15:51,720 --> 00:15:55,280 Speaker 1: full market cap of the maps. Those would never enter 292 00:15:55,280 --> 00:15:58,080 Speaker 1: our index because we will only hold the publicly traded assets, 293 00:15:58,080 --> 00:16:00,800 Speaker 1: which means they're publicly traded. Market cap up it was 294 00:16:00,840 --> 00:16:03,320 Speaker 1: like eighty eight millions. So yeah, we were fortunate to 295 00:16:03,320 --> 00:16:04,880 Speaker 1: have these screens in place. We've been doing it for 296 00:16:04,920 --> 00:16:07,320 Speaker 1: five years. We've we've avoided a number of blow ups. 297 00:16:07,520 --> 00:16:09,640 Speaker 1: That doesn't mean we'll avoid all of them in the future, 298 00:16:09,920 --> 00:16:12,400 Speaker 1: but we do try our best. No doge coin, what 299 00:16:12,480 --> 00:16:16,280 Speaker 1: a buzz kill, Matt, Come on, that was your your 300 00:16:16,400 --> 00:16:20,160 Speaker 1: no dog meme screen? I take it, or although that 301 00:16:20,320 --> 00:16:22,400 Speaker 1: that was that was a case where the float was 302 00:16:22,560 --> 00:16:25,200 Speaker 1: sort of half held in in some burn wallet too, right, 303 00:16:25,520 --> 00:16:27,640 Speaker 1: or the total market cap it would half held in 304 00:16:27,640 --> 00:16:31,280 Speaker 1: a burn wallet. It also piggybacks on other assets proof 305 00:16:31,320 --> 00:16:34,360 Speaker 1: of work, which introduces some security risks into it. You know, 306 00:16:34,400 --> 00:16:36,640 Speaker 1: we have a ten person research team. It takes that 307 00:16:36,720 --> 00:16:39,200 Speaker 1: much effort to screen all these assets and maintain what 308 00:16:39,320 --> 00:16:42,920 Speaker 1: from the outside looks like just the top ten ten assets. 309 00:16:43,120 --> 00:16:44,800 Speaker 1: We put a lot of work into it. And yeah, 310 00:16:44,800 --> 00:16:46,600 Speaker 1: so no doge coin. We think it had a fundamental 311 00:16:46,640 --> 00:16:50,000 Speaker 1: security flaw. It also had that that internal control and 312 00:16:50,040 --> 00:16:52,640 Speaker 1: I'm not sure it was engaged in true price discovery. 313 00:16:52,840 --> 00:16:55,720 Speaker 1: There were so many outstanding coins in such a limited 314 00:16:55,760 --> 00:16:57,680 Speaker 1: trading volume that I think it had that risk too. 315 00:16:58,520 --> 00:17:01,080 Speaker 1: You know, man, I wanted to ask you about a 316 00:17:01,120 --> 00:17:04,720 Speaker 1: lot of the pain in the industry right now is 317 00:17:04,840 --> 00:17:08,920 Speaker 1: centered on these sort of high yield deposit accounts where 318 00:17:08,920 --> 00:17:12,359 Speaker 1: you know, you give the Winklevoss twins your coins and 319 00:17:12,400 --> 00:17:14,320 Speaker 1: you you collect out on a seven eight percent and 320 00:17:14,359 --> 00:17:19,040 Speaker 1: they loaded out to uh someone else where. Do you 321 00:17:19,080 --> 00:17:23,120 Speaker 1: see that whole sort of both centralized and decentralized high 322 00:17:23,200 --> 00:17:26,560 Speaker 1: yield component of crypto going Because I feel like it 323 00:17:26,720 --> 00:17:30,760 Speaker 1: really is, really, really helped bring a lot of assets, 324 00:17:30,880 --> 00:17:33,119 Speaker 1: a lot of attention into the market, a lot of interest. 325 00:17:33,280 --> 00:17:35,480 Speaker 1: And now it seems like the whole notion of that 326 00:17:36,000 --> 00:17:38,960 Speaker 1: concept of getting a really high yield and crypto seems 327 00:17:39,000 --> 00:17:43,520 Speaker 1: to be questionable whether that business model can continue to exist. 328 00:17:43,600 --> 00:17:45,959 Speaker 1: How are you looking at that? Yeah, I think that 329 00:17:46,040 --> 00:17:49,240 Speaker 1: business model is going to go very quiet and then 330 00:17:49,240 --> 00:17:52,480 Speaker 1: emerge as a much smaller, much more regulated, much more 331 00:17:52,480 --> 00:17:56,080 Speaker 1: institutional model. I would actually argue that the yields weren't 332 00:17:56,119 --> 00:17:59,600 Speaker 1: high enough to reflect the underlying risks. Um. You know, 333 00:17:59,640 --> 00:18:02,400 Speaker 1: there is no free lunch. If you were looking at 334 00:18:02,440 --> 00:18:05,760 Speaker 1: doing what amounts to securities lending of a bitcoin asset 335 00:18:05,920 --> 00:18:09,239 Speaker 1: or an ethereum asset and expecting to get, you know, 336 00:18:09,840 --> 00:18:13,879 Speaker 1: a yield on those working with unregulated counterparties with an 337 00:18:13,880 --> 00:18:15,959 Speaker 1: E D E voll asset, the yield should have been very, 338 00:18:16,040 --> 00:18:18,000 Speaker 1: very high because you were taking on a huge amount 339 00:18:18,000 --> 00:18:21,800 Speaker 1: of risk. What turned out in those examples is, uh, 340 00:18:21,840 --> 00:18:24,760 Speaker 1: those were bad loans. The collateral didn't match up. I 341 00:18:24,760 --> 00:18:27,200 Speaker 1: think some of it's gonna migrate to D five platforms. 342 00:18:27,359 --> 00:18:30,840 Speaker 1: It's worth noting D five platforms work perfectly through this, 343 00:18:30,920 --> 00:18:35,000 Speaker 1: which is really remarkable. There were no losses on things 344 00:18:35,040 --> 00:18:37,600 Speaker 1: like A A and other D five platforms, and then 345 00:18:37,680 --> 00:18:40,760 Speaker 1: there's going to be, of course an institutional prime brokerage, 346 00:18:40,800 --> 00:18:43,960 Speaker 1: but people will only work with regulated entities. I don't 347 00:18:43,960 --> 00:18:46,200 Speaker 1: think retail investors should be leaning out their crypto trying 348 00:18:46,200 --> 00:18:48,400 Speaker 1: to get five percent yields anyway. I really don't think 349 00:18:48,400 --> 00:18:50,640 Speaker 1: that's the bet most people want to make. People thought 350 00:18:50,680 --> 00:18:52,640 Speaker 1: it was a free lunch, they thought it was riskless. 351 00:18:52,800 --> 00:18:55,520 Speaker 1: It turned out they were wrong. Um, and so I 352 00:18:55,560 --> 00:18:58,200 Speaker 1: think that that retail focused lending is just going to 353 00:18:58,240 --> 00:19:01,280 Speaker 1: go away. And what about the DEFY space, because this 354 00:19:01,359 --> 00:19:03,520 Speaker 1: is the other thing that I keep hearing that Defy 355 00:19:03,600 --> 00:19:06,320 Speaker 1: is going to benefit amidst all this because when we 356 00:19:06,359 --> 00:19:08,840 Speaker 1: think of f t X and coin Base, etcetera, those 357 00:19:08,880 --> 00:19:14,639 Speaker 1: are more centralized places versus Defy maybe coming out possibly 358 00:19:14,720 --> 00:19:17,120 Speaker 1: stronger from it, or what is your view? Definitely true, 359 00:19:17,160 --> 00:19:19,879 Speaker 1: It's definitely true. I go back to that Barbell image. 360 00:19:20,359 --> 00:19:24,280 Speaker 1: Regulated centralized institutions that are trustworthy will benefit. Coin Base 361 00:19:24,320 --> 00:19:26,320 Speaker 1: will pick up share. I think it's the most important 362 00:19:26,320 --> 00:19:31,120 Speaker 1: exchange in the world. And defy exchanges, lending platforms, etcetera. 363 00:19:31,119 --> 00:19:32,879 Speaker 1: Where you can trust the code and don't have to 364 00:19:32,920 --> 00:19:35,960 Speaker 1: trust you know Sam Bankman freed with his crazy hair, 365 00:19:36,040 --> 00:19:39,800 Speaker 1: wearing shorts and berken stocks. Almost certainly now he now 366 00:19:39,840 --> 00:19:43,439 Speaker 1: he wears he wears grungey old new balances. Don't you 367 00:19:43,520 --> 00:19:45,640 Speaker 1: are right? You are right? There's a funny, funny meme 368 00:19:45,640 --> 00:19:48,640 Speaker 1: about that. No. I think Defy will benefit tremendously. There's 369 00:19:48,720 --> 00:19:52,280 Speaker 1: there is a argument to make that's uncomfortable to make 370 00:19:52,400 --> 00:19:55,359 Speaker 1: right now, that the flaw of f t X was 371 00:19:55,400 --> 00:19:58,840 Speaker 1: that it wasn't crypto enough. That rings hollow in the 372 00:19:58,880 --> 00:20:01,640 Speaker 1: current market because the market is crashing and people are 373 00:20:01,760 --> 00:20:05,320 Speaker 1: unable to disambiguate between good crypto and bad crypto. But 374 00:20:05,359 --> 00:20:09,439 Speaker 1: it's subjectively true if investors did hold their own keys, 375 00:20:09,480 --> 00:20:13,320 Speaker 1: if those loans were really collateralized and overcollateralized in a 376 00:20:13,359 --> 00:20:16,280 Speaker 1: way people could see, you wouldn't have these blow ups. 377 00:20:16,640 --> 00:20:19,840 Speaker 1: I think if you look a year from now, you're 378 00:20:19,880 --> 00:20:23,320 Speaker 1: going to see many investors who favor doing it internally 379 00:20:23,400 --> 00:20:26,400 Speaker 1: migrate to DEFY, and other investors the kind of investors 380 00:20:26,400 --> 00:20:31,400 Speaker 1: that bit wise serves migrating to well regulated centralized institutions. 381 00:20:32,080 --> 00:20:35,480 Speaker 1: I think the question I have though, is that this 382 00:20:35,520 --> 00:20:41,280 Speaker 1: notion of defied decentralized exchanges and finances it's a great concept, 383 00:20:41,960 --> 00:20:45,439 Speaker 1: but in practice it often seems like, well, there is 384 00:20:45,560 --> 00:20:48,520 Speaker 1: some sort of central party that is a very big 385 00:20:48,560 --> 00:20:50,439 Speaker 1: player in it. And I think Tera Lune is a 386 00:20:50,440 --> 00:20:53,400 Speaker 1: good example of that. You know, technically a defied project, 387 00:20:53,520 --> 00:20:57,240 Speaker 1: but do quan and and Terraform Labs were basically in 388 00:20:57,320 --> 00:21:00,199 Speaker 1: control of it. Um so when it blew up up, 389 00:21:00,600 --> 00:21:03,680 Speaker 1: you know, there was no halting of withdrawals there were 390 00:21:03,720 --> 00:21:06,800 Speaker 1: there was no bankruptcy. But you know, you you you've 391 00:21:06,840 --> 00:21:09,240 Speaker 1: got your coins out at sort of pennies on the 392 00:21:09,240 --> 00:21:12,440 Speaker 1: dollar of what you they were a week ago. Um, 393 00:21:12,480 --> 00:21:14,040 Speaker 1: So how do you think about that? You know, is 394 00:21:14,080 --> 00:21:16,920 Speaker 1: it are we really at the point where these things 395 00:21:16,960 --> 00:21:20,360 Speaker 1: are everything is truly defy or is there still sort 396 00:21:20,400 --> 00:21:24,200 Speaker 1: of that big player risk in a lot of these projects. 397 00:21:24,320 --> 00:21:26,600 Speaker 1: I think if you look at the better projects, there 398 00:21:26,720 --> 00:21:30,600 Speaker 1: is relatively low big player risk, but not zero. I 399 00:21:30,640 --> 00:21:32,800 Speaker 1: think you're right to point out that in most projects 400 00:21:32,880 --> 00:21:36,359 Speaker 1: there is still an obvious big player that has significant 401 00:21:36,359 --> 00:21:39,240 Speaker 1: control or a worry that that is true. Even even 402 00:21:39,240 --> 00:21:41,920 Speaker 1: the best projects need to continue to migrate down that platform. 403 00:21:41,920 --> 00:21:44,159 Speaker 1: But if you look at something like unit Swap, you know, 404 00:21:44,200 --> 00:21:47,560 Speaker 1: I think Hayden Adams could go on vacation in in 405 00:21:47,800 --> 00:21:50,119 Speaker 1: UH for for a year, and the team at UNI 406 00:21:50,160 --> 00:21:52,400 Speaker 1: Swap Labs could go away and un swap would still 407 00:21:52,400 --> 00:21:56,200 Speaker 1: be processing almost the same volume of transactions as coin base, 408 00:21:56,600 --> 00:21:59,560 Speaker 1: which is a really remarkable thing. When you think about 409 00:21:59,640 --> 00:22:02,359 Speaker 1: an and T with no employees, no offices, no no 410 00:22:02,480 --> 00:22:06,600 Speaker 1: centralized entity that's matching coin based on a volume perspective, 411 00:22:06,720 --> 00:22:09,760 Speaker 1: I think that's pretty incredible. Um. But absolutely the DeFi 412 00:22:09,840 --> 00:22:12,800 Speaker 1: space needs to get more decentralized. I think there is 413 00:22:12,840 --> 00:22:16,359 Speaker 1: a centrifugal force from the fallout of FTX that is 414 00:22:16,400 --> 00:22:18,919 Speaker 1: going to push that people are going to insist on 415 00:22:18,960 --> 00:22:21,719 Speaker 1: that happening. In the case of Luna, that was just 416 00:22:21,800 --> 00:22:24,240 Speaker 1: an up, a failed design from the start. If you've 417 00:22:24,280 --> 00:22:27,679 Speaker 1: been in crypto, you've seen algorithmic stable coins come and 418 00:22:27,720 --> 00:22:31,040 Speaker 1: they always go. They just don't work, They will never work, 419 00:22:31,440 --> 00:22:33,639 Speaker 1: and so I think that one was one where you 420 00:22:33,640 --> 00:22:36,080 Speaker 1: could you could have trusted the code and if you 421 00:22:36,119 --> 00:22:38,320 Speaker 1: thought about the code long enough, you knew it was 422 00:22:38,359 --> 00:22:40,600 Speaker 1: going to end up at zero. But but you're right, 423 00:22:40,720 --> 00:22:43,720 Speaker 1: DEFY needs to get more Defy it needs to be 424 00:22:43,760 --> 00:22:46,679 Speaker 1: truly decentralized so that we don't have these issues of trust. 425 00:22:47,480 --> 00:22:50,120 Speaker 1: And you mentioned your clients, and I'm wondering, like, who 426 00:22:50,240 --> 00:22:53,440 Speaker 1: is buying crypto products right now? Are people buying or 427 00:22:53,560 --> 00:22:56,480 Speaker 1: is it mostly so absolutely people are buying at least 428 00:22:56,480 --> 00:22:59,920 Speaker 1: from the institutions we serve. So again, we serve prime 429 00:23:00,000 --> 00:23:05,960 Speaker 1: early financial advisors, family offices, and institutions. Most financial advisors 430 00:23:06,000 --> 00:23:08,960 Speaker 1: today have zero exposure to crypto, and they have clients 431 00:23:09,000 --> 00:23:12,680 Speaker 1: who want exposure in a trustworthy format. Some of these 432 00:23:12,680 --> 00:23:14,960 Speaker 1: clients were doing it on their own right. Coin Base 433 00:23:15,040 --> 00:23:19,280 Speaker 1: has more customers than e Trade, Charles Schwab, tdum merit Trade, 434 00:23:19,280 --> 00:23:22,800 Speaker 1: and interactive brokers combined, and so advisors are now helping 435 00:23:22,880 --> 00:23:27,000 Speaker 1: those those customers move into a more sound format. We've 436 00:23:27,000 --> 00:23:32,119 Speaker 1: had very low outflows and continued significant inflows into the space. 437 00:23:32,600 --> 00:23:34,840 Speaker 1: One of the reasons for that the reason that it 438 00:23:35,040 --> 00:23:38,000 Speaker 1: may seem counterintuitive, but I think it makes sense if 439 00:23:38,040 --> 00:23:41,239 Speaker 1: you think about it. If you're a professional investor, if 440 00:23:41,280 --> 00:23:44,679 Speaker 1: you're a financial advisor or family office, and you're allocating 441 00:23:44,680 --> 00:23:49,120 Speaker 1: to crypto, two things are true. One, you're doing it appropriately, 442 00:23:49,160 --> 00:23:51,480 Speaker 1: which means you have a small percentage of your portfolio, 443 00:23:51,520 --> 00:23:54,720 Speaker 1: and crypto one to five of your portfolio. If you 444 00:23:54,720 --> 00:23:56,879 Speaker 1: have one percent of your portfolio and it goes to zero, 445 00:23:57,080 --> 00:23:59,920 Speaker 1: you're down one percent. Well, the SPID goes down one 446 00:24:00,040 --> 00:24:03,440 Speaker 1: or two percent on a normal day. Portfolio sizing means 447 00:24:03,480 --> 00:24:06,159 Speaker 1: they don't have to panic and sell. The other reason 448 00:24:06,600 --> 00:24:09,320 Speaker 1: is that those investors have to have very high conviction 449 00:24:09,359 --> 00:24:12,680 Speaker 1: to allocate in the first place. It's not like choosing 450 00:24:12,680 --> 00:24:15,200 Speaker 1: to allocate to the S and P five hundred, where 451 00:24:15,200 --> 00:24:18,760 Speaker 1: you may be convicted. You have to be confident that 452 00:24:18,800 --> 00:24:21,040 Speaker 1: this is a good long term bet. And so what 453 00:24:21,119 --> 00:24:24,360 Speaker 1: we've experienced in this bear market, and what we experienced 454 00:24:24,359 --> 00:24:31,159 Speaker 1: in is net inflows from these professional investors. Uh. You know, 455 00:24:31,200 --> 00:24:34,280 Speaker 1: one fund stat the number of clients that bit wise 456 00:24:34,400 --> 00:24:38,120 Speaker 1: serves has doubled in the past year. Uh. And that's 457 00:24:38,160 --> 00:24:40,440 Speaker 1: that's a it's a big number. And I want to 458 00:24:40,480 --> 00:24:43,320 Speaker 1: ask you about the crypto E, T, F ETP space 459 00:24:43,359 --> 00:24:46,240 Speaker 1: in general, because we've seen some liquidations recently as well. 460 00:24:46,440 --> 00:24:50,080 Speaker 1: I'm wondering if you think the space was oversaturated with products. 461 00:24:50,200 --> 00:24:54,439 Speaker 1: Launches have dwindled. I think we saw I mean a 462 00:24:54,520 --> 00:24:56,399 Speaker 1: bunch in the first half of the year, actually, but 463 00:24:57,160 --> 00:24:59,800 Speaker 1: since the third quarter, I think they've only been for 464 00:25:00,040 --> 00:25:03,080 Speaker 1: teen or fifteen or so. So are you expecting more 465 00:25:03,200 --> 00:25:06,679 Speaker 1: liquidations in the space in general, and and did we 466 00:25:06,720 --> 00:25:08,760 Speaker 1: have too much do you mean on on bitcoin futures 467 00:25:08,760 --> 00:25:11,320 Speaker 1: et fs, on crypto equity e t f yes, all 468 00:25:11,359 --> 00:25:15,520 Speaker 1: of them, yeah, across the space, and sorry not just 469 00:25:15,600 --> 00:25:17,960 Speaker 1: in New US, I mean yeah. Uh you know, look 470 00:25:18,320 --> 00:25:21,880 Speaker 1: there there was a giant bowl marketing crypto in one 471 00:25:21,880 --> 00:25:24,560 Speaker 1: and that attracted a lot of tourist companies to the space. 472 00:25:24,600 --> 00:25:27,240 Speaker 1: That we're launching products, trying to seize on that momentum, 473 00:25:27,240 --> 00:25:30,159 Speaker 1: and they're now being filtered out. I suspect there'll be 474 00:25:30,160 --> 00:25:33,119 Speaker 1: more crypto et fs in five years than there are today. 475 00:25:33,640 --> 00:25:36,080 Speaker 1: But yes, during this bear market, you'll see a winnowing, 476 00:25:36,200 --> 00:25:38,239 Speaker 1: as you would in any other asset class. I think 477 00:25:38,320 --> 00:25:42,440 Speaker 1: that's completely normal. Um. But you know, long term, e 478 00:25:42,600 --> 00:25:43,840 Speaker 1: t f s are going to be one of the 479 00:25:43,920 --> 00:25:47,440 Speaker 1: primary ways that investors gain access to crypto, and I 480 00:25:47,560 --> 00:25:50,520 Speaker 1: suspect long term you'll see significant flows into the into 481 00:25:50,560 --> 00:26:08,440 Speaker 1: the space, you know, Matt. I think one of the 482 00:26:08,560 --> 00:26:11,120 Speaker 1: issues that really maybe is not being talked about enough 483 00:26:11,359 --> 00:26:14,320 Speaker 1: from the ft X blow up is this notion that 484 00:26:15,000 --> 00:26:18,920 Speaker 1: in crypto, you actually your balance is held by the 485 00:26:19,040 --> 00:26:22,600 Speaker 1: exchange itself, whereas you know inequities, Uh, you know, it's 486 00:26:22,640 --> 00:26:25,520 Speaker 1: in a brokerage account. The n y SC or NASDAC 487 00:26:25,960 --> 00:26:28,840 Speaker 1: never actually holds your assets. They just match up the 488 00:26:28,880 --> 00:26:31,320 Speaker 1: buyers and sellers. Or whether you're talking about a dark 489 00:26:31,359 --> 00:26:35,320 Speaker 1: pool or electronic market maker whatever. Is that something you 490 00:26:35,359 --> 00:26:38,399 Speaker 1: know that needs to be changed in crypto The notion 491 00:26:38,520 --> 00:26:41,480 Speaker 1: that these exchanges are also basically your broker and that 492 00:26:41,640 --> 00:26:46,159 Speaker 1: they have control of your assets. Yes, yes, yes, is 493 00:26:46,200 --> 00:26:50,119 Speaker 1: the answer. There should be a separation of custody and exchange. 494 00:26:50,960 --> 00:26:53,560 Speaker 1: Finance has existed for hundreds of years. We've built up 495 00:26:53,600 --> 00:26:57,360 Speaker 1: many norms for very good reasons, and you only disrupt 496 00:26:57,440 --> 00:27:01,920 Speaker 1: those norms, you know, very carefully and significant peril. The 497 00:27:02,040 --> 00:27:05,000 Speaker 1: reason we've had a separation of exchange and custody is 498 00:27:05,080 --> 00:27:08,080 Speaker 1: exactly the reason that we saw on FTX. You don't 499 00:27:08,080 --> 00:27:11,000 Speaker 1: want to commingle those pools. That's the reason why bit 500 00:27:11,119 --> 00:27:15,040 Speaker 1: wise doesn't keep assets on exchanges, settles direct to our 501 00:27:15,080 --> 00:27:18,239 Speaker 1: custodian and just leaves them there. I think that's an 502 00:27:18,280 --> 00:27:21,920 Speaker 1: example of the kind of UH regulatory clarity that we 503 00:27:22,000 --> 00:27:24,640 Speaker 1: will get in the next twelve months, and that will 504 00:27:24,680 --> 00:27:28,320 Speaker 1: create a stronger foundation for crypto to grow in the future. 505 00:27:28,880 --> 00:27:31,720 Speaker 1: But there are many, many examples in the space where 506 00:27:31,760 --> 00:27:34,880 Speaker 1: we need that kind of push forward, and I think 507 00:27:34,880 --> 00:27:37,359 Speaker 1: we'll get there. But it's a great point. Another thing 508 00:27:37,520 --> 00:27:41,520 Speaker 1: that it's not gone unnoticed, but it just hasn't gotten 509 00:27:41,520 --> 00:27:44,080 Speaker 1: as much attention recently, just because the news flow has 510 00:27:44,119 --> 00:27:47,560 Speaker 1: been so heavy, is that bitcoin did sell off. But 511 00:27:49,160 --> 00:27:50,920 Speaker 1: I keep seeing all these notes where people are saying, 512 00:27:51,080 --> 00:27:53,199 Speaker 1: I expect a bitcoin to be at like ten thousand 513 00:27:53,359 --> 00:27:56,200 Speaker 1: or like thirteen thousand at this point versus it being 514 00:27:56,240 --> 00:28:00,640 Speaker 1: around sixteen or just like slightly below seventeen thousands. Why 515 00:28:00,680 --> 00:28:03,040 Speaker 1: do you think that is? It's incredible. It's like the 516 00:28:03,119 --> 00:28:06,800 Speaker 1: honey Badger of risk assets. It doesn't care about what's 517 00:28:06,960 --> 00:28:09,639 Speaker 1: going on out there in an asset class that's a 518 00:28:09,760 --> 00:28:12,720 Speaker 1: trillion dollars and the flagship asset is down. You know, 519 00:28:14,080 --> 00:28:19,120 Speaker 1: it's absolutely incredible. One reason for that is that all 520 00:28:19,160 --> 00:28:21,719 Speaker 1: the people who would sell have have have not all 521 00:28:21,760 --> 00:28:24,240 Speaker 1: of them, many of them have already left. This is 522 00:28:24,280 --> 00:28:26,600 Speaker 1: not the first bad piece of news this year. Remember 523 00:28:26,640 --> 00:28:28,560 Speaker 1: we were in a risk off regime that took crypto 524 00:28:28,600 --> 00:28:30,840 Speaker 1: down significantly, and then we had Luna and three a 525 00:28:30,960 --> 00:28:34,440 Speaker 1: C and Celsius and block Fi and Voyager, and it 526 00:28:34,480 --> 00:28:37,200 Speaker 1: took crypto down more. And now we have ft X, 527 00:28:37,280 --> 00:28:39,160 Speaker 1: there's a lot of bad news, there's a lot of 528 00:28:39,240 --> 00:28:42,040 Speaker 1: uncertainty and doubt. If you look on chain at data, 529 00:28:42,440 --> 00:28:45,280 Speaker 1: the percentage of investors who are holding bitcoin at a 530 00:28:45,360 --> 00:28:48,280 Speaker 1: loss is at or near it's all time high. So 531 00:28:48,400 --> 00:28:51,520 Speaker 1: there's max pain in the crypto market. And it may 532 00:28:51,600 --> 00:28:54,120 Speaker 1: be that, at least in the short term, we've run 533 00:28:54,160 --> 00:28:56,600 Speaker 1: out of sellers. That doesn't mean it can't go lower. 534 00:28:56,720 --> 00:29:00,200 Speaker 1: Of course, it can go lower longer term. Investors get 535 00:29:00,280 --> 00:29:03,200 Speaker 1: tired of the market. People who are watching, you know, 536 00:29:03,360 --> 00:29:05,880 Speaker 1: inflation continue to print it eight percent, may not want 537 00:29:05,920 --> 00:29:09,200 Speaker 1: to hold a non yielding asset. All of those things, 538 00:29:09,320 --> 00:29:12,959 Speaker 1: but it is really remarkable. Um. And you know, it's 539 00:29:13,000 --> 00:29:16,640 Speaker 1: worth noting crypto has had blow ups before and it's 540 00:29:16,920 --> 00:29:18,920 Speaker 1: gone on to be the best performing asset class in 541 00:29:18,920 --> 00:29:22,360 Speaker 1: the world. It's worth noting there's more venture capital money 542 00:29:22,480 --> 00:29:24,680 Speaker 1: in crypto. It raised more money in the last eighteen 543 00:29:24,720 --> 00:29:27,640 Speaker 1: months than it's in first twelve years. They're more engineers 544 00:29:27,680 --> 00:29:30,640 Speaker 1: working in crypto today than at any point in the past. Um. 545 00:29:31,120 --> 00:29:33,120 Speaker 1: You know, this too shall pass. This isn't the end 546 00:29:33,200 --> 00:29:36,160 Speaker 1: of crypto by any means. Uh. It's a disruption, it 547 00:29:36,200 --> 00:29:38,640 Speaker 1: will It's a hangover. It will take time to reset. 548 00:29:39,120 --> 00:29:41,360 Speaker 1: But I think the resiliency you're seeing in bitcoin, not 549 00:29:41,520 --> 00:29:46,440 Speaker 1: just Bitcoin, in Ethereum, in Maker, in many other leading assets, 550 00:29:46,880 --> 00:29:49,200 Speaker 1: points to the resiliency of the space and the fact 551 00:29:49,240 --> 00:29:51,440 Speaker 1: that it will be back. Matt. The other day, someone 552 00:29:51,480 --> 00:29:54,200 Speaker 1: in the newsroom asked me a good question, uh that 553 00:29:54,320 --> 00:29:56,120 Speaker 1: I did not have the exact answer too, so I 554 00:29:56,400 --> 00:29:58,240 Speaker 1: pulled out the you know, the Irish blarney, trying to 555 00:29:58,440 --> 00:30:01,840 Speaker 1: trying to figure out a good answer. You're admittedly to them, 556 00:30:01,880 --> 00:30:05,360 Speaker 1: but you know, the question was, basically, bitcoin miners are 557 00:30:05,440 --> 00:30:08,600 Speaker 1: under a lot of stress these days. What happens to 558 00:30:08,640 --> 00:30:13,680 Speaker 1: bitcoin if that issue worsens? If miners just start unplugging 559 00:30:13,720 --> 00:30:18,240 Speaker 1: their rigs and there are just you know, the economics 560 00:30:18,320 --> 00:30:20,480 Speaker 1: of mining don't make as much sense for as many 561 00:30:20,560 --> 00:30:25,640 Speaker 1: people as many uh mining companies. UM. And my guess was, 562 00:30:25,920 --> 00:30:29,440 Speaker 1: you know, while transactions slowed down, that sort of thing, 563 00:30:29,680 --> 00:30:32,040 Speaker 1: what what what do you think what would happen if 564 00:30:32,120 --> 00:30:35,200 Speaker 1: that if that mining stress gets worse and worse to 565 00:30:35,320 --> 00:30:38,320 Speaker 1: the point of crisis. Yeah, well, first they're going to 566 00:30:38,360 --> 00:30:40,440 Speaker 1: be bitcoin miners that go out of business. There's no 567 00:30:40,560 --> 00:30:42,760 Speaker 1: question about that. If you look at the marginal cost 568 00:30:42,840 --> 00:30:45,960 Speaker 1: of bitcoin production by miners. It ranges from a low 569 00:30:46,040 --> 00:30:49,040 Speaker 1: of around ten thousand, which means they're still extremely profitable, 570 00:30:49,400 --> 00:30:52,320 Speaker 1: to things like which means it doesn't make sense to 571 00:30:52,360 --> 00:30:55,240 Speaker 1: be in business. Many of them are highly levered, but 572 00:30:55,360 --> 00:30:57,200 Speaker 1: not all of them. Some of them will go out 573 00:30:57,240 --> 00:30:59,800 Speaker 1: of out of bankruptcy. For the Bitcoin network, it won't 574 00:30:59,840 --> 00:31:02,960 Speaker 1: mean much. You know, the the difficulty adjustment happens every 575 00:31:03,000 --> 00:31:05,200 Speaker 1: two weeks in bitcoin, So if a lot of miners 576 00:31:05,280 --> 00:31:07,680 Speaker 1: come off over the next two weeks, it will become 577 00:31:07,800 --> 00:31:10,800 Speaker 1: easier to mind bitcoin. The cost of mining will go 578 00:31:10,920 --> 00:31:13,080 Speaker 1: down for the remaining miners that are in the space, 579 00:31:13,560 --> 00:31:16,800 Speaker 1: So it's set up to adjust to this kind of volatility. 580 00:31:17,000 --> 00:31:20,640 Speaker 1: I don't think we're anywhere close to not having enough 581 00:31:20,720 --> 00:31:23,720 Speaker 1: hash power in the Bitcoin network to it not being secure. 582 00:31:24,200 --> 00:31:27,200 Speaker 1: We're way over that burden. It's the most secure database 583 00:31:27,240 --> 00:31:29,440 Speaker 1: in the world. So even if you know half or 584 00:31:29,800 --> 00:31:32,960 Speaker 1: two thirds or three quarters of miners went out of business, 585 00:31:33,000 --> 00:31:35,680 Speaker 1: there's still be enough mining power in the space to 586 00:31:35,760 --> 00:31:38,280 Speaker 1: maintain the network. I don't even think you'd see transactions 587 00:31:38,280 --> 00:31:40,880 Speaker 1: slow down for more than a couple of week period, 588 00:31:41,080 --> 00:31:44,200 Speaker 1: but I do think there's stress in that market. I 589 00:31:44,240 --> 00:31:47,040 Speaker 1: think the companies that survive will be well positioned to thrive, 590 00:31:47,600 --> 00:31:51,200 Speaker 1: but you'll you'll see companies, including possibly publicly traded companies, 591 00:31:51,240 --> 00:31:54,440 Speaker 1: go bankrupt under that stress in the coming days. And 592 00:31:54,520 --> 00:31:56,920 Speaker 1: you mentioned recovery a couple of times, So what does 593 00:31:57,040 --> 00:31:59,200 Speaker 1: recovery even look like at this point, Like, how does 594 00:31:59,200 --> 00:32:01,760 Speaker 1: scripto start to recover and what does it look like? 595 00:32:02,320 --> 00:32:05,120 Speaker 1: I think you mentioned six months. Yeah, I think there 596 00:32:05,200 --> 00:32:08,160 Speaker 1: are three milestones the crypto investors should look for in 597 00:32:08,240 --> 00:32:12,160 Speaker 1: the recovery. So first we have to get past the hangover, right, 598 00:32:12,240 --> 00:32:15,080 Speaker 1: crypto investors are going to be uncomfortable jumping in until 599 00:32:15,120 --> 00:32:17,600 Speaker 1: they know they're no more shoes to drop, and I 600 00:32:17,680 --> 00:32:21,640 Speaker 1: think that period could take four months, six months, eight months, 601 00:32:21,720 --> 00:32:24,959 Speaker 1: a year something in that zone before we're like, Okay, 602 00:32:25,200 --> 00:32:29,640 Speaker 1: the credit crisis has really abated, there are no more genesis. 603 00:32:29,800 --> 00:32:32,640 Speaker 1: Is there are no more block fives? Um, we've we've 604 00:32:32,720 --> 00:32:37,200 Speaker 1: we've hit that bottom. The next milestone we need regulatory progress. 605 00:32:37,560 --> 00:32:40,800 Speaker 1: So we need to see regulatory progress around CBD, around 606 00:32:40,880 --> 00:32:44,920 Speaker 1: stable coins, around crypto exchanges. I suspect that will happen 607 00:32:45,120 --> 00:32:47,320 Speaker 1: in the next year as well. We'll start to see 608 00:32:47,440 --> 00:32:49,960 Speaker 1: legislation move forward that I think will be very positive 609 00:32:50,000 --> 00:32:54,080 Speaker 1: for the crypto market. And then ultimately what always sparks 610 00:32:54,160 --> 00:32:57,680 Speaker 1: the next bowl marketing crypto is products that people like 611 00:32:57,840 --> 00:33:00,280 Speaker 1: to use. I know that sound goofy, but if you 612 00:33:00,320 --> 00:33:03,680 Speaker 1: think about crypto, it's had three big Bowl markets. One 613 00:33:03,840 --> 00:33:07,440 Speaker 1: was fourteen That was when bitcoin emerged. Coin based launched 614 00:33:07,480 --> 00:33:09,720 Speaker 1: in twenty eleven. All of a sudden, you could buy bitcoin, 615 00:33:09,840 --> 00:33:12,080 Speaker 1: big product product market fit. It went up a lot. 616 00:33:12,720 --> 00:33:18,360 Speaker 1: The next one was Etherorium was created in product market fit. 617 00:33:18,440 --> 00:33:20,040 Speaker 1: We found I c O s went up a lot. 618 00:33:20,280 --> 00:33:22,840 Speaker 1: Regulators reset us by saying I c A s were illegal. 619 00:33:23,360 --> 00:33:25,680 Speaker 1: The most recent one was DeFi n F T s 620 00:33:25,680 --> 00:33:29,840 Speaker 1: and stable coins. Those words didn't exist. Now they're in 621 00:33:29,920 --> 00:33:32,600 Speaker 1: the pages of the New York Times, of the Wall 622 00:33:32,640 --> 00:33:35,480 Speaker 1: Street Journal, of every major media outlet. So the next 623 00:33:35,560 --> 00:33:39,600 Speaker 1: real Bowl market is when we see crypto develop useful apps. 624 00:33:40,480 --> 00:33:42,640 Speaker 1: I actually think the next Bowl market will be marked 625 00:33:42,720 --> 00:33:45,360 Speaker 1: by apps that people use in their everyday lives that 626 00:33:45,440 --> 00:33:47,440 Speaker 1: are mainstream, and for that reason, I think it will 627 00:33:47,440 --> 00:33:49,360 Speaker 1: be the biggest Bowl market in crypto from a market 628 00:33:49,440 --> 00:33:52,160 Speaker 1: cap perspective. But that will be the third milestone when 629 00:33:52,200 --> 00:33:56,200 Speaker 1: we see new applications emerged that people are using talking 630 00:33:56,280 --> 00:33:59,840 Speaker 1: about sharing with their friends and colleagues. So six months, 631 00:34:00,000 --> 00:34:02,800 Speaker 1: twelve months, and then twenty four months from now, I 632 00:34:02,840 --> 00:34:05,280 Speaker 1: think it'll be pretty exciting. So what what kind of 633 00:34:05,280 --> 00:34:08,040 Speaker 1: apps are you thinking? You know? Is this uh metaverse stuff? 634 00:34:08,080 --> 00:34:10,480 Speaker 1: Do I need to do? I need to get the goggles. 635 00:34:10,960 --> 00:34:13,640 Speaker 1: I think there's so many potential applications. I don't think 636 00:34:13,680 --> 00:34:15,520 Speaker 1: you need to get the goggles yet and put them on. 637 00:34:16,400 --> 00:34:19,719 Speaker 1: They are fun. Yeah, you probably should get the goggles yet. 638 00:34:19,920 --> 00:34:23,520 Speaker 1: The metaverse is one kind of application, you know. I 639 00:34:23,640 --> 00:34:26,120 Speaker 1: think n f t s have a huge place to 640 00:34:26,160 --> 00:34:28,960 Speaker 1: play in society and culture uh and and n f 641 00:34:29,040 --> 00:34:31,360 Speaker 1: t s as digital property rights have an even bigger 642 00:34:31,400 --> 00:34:34,520 Speaker 1: place to play. UM. I think defy could be substantially bigger. 643 00:34:34,560 --> 00:34:37,480 Speaker 1: I think stable coins could be substantially bigger. I think 644 00:34:37,560 --> 00:34:39,759 Speaker 1: one of the breakthroughs that will see in the next 645 00:34:39,880 --> 00:34:45,440 Speaker 1: round of applications UH is individual identity on chain uh 646 00:34:45,719 --> 00:34:48,359 Speaker 1: and and zero knowledge proves the ability to prove something 647 00:34:48,440 --> 00:34:51,680 Speaker 1: on chain without revealing that information. A good example for 648 00:34:51,800 --> 00:34:55,560 Speaker 1: investors of how that might matter. If you run I 649 00:34:55,600 --> 00:34:59,040 Speaker 1: don't know, institutional funds, you have to do you have 650 00:34:59,120 --> 00:35:01,640 Speaker 1: to prove that you're invest stars are accredited. In order 651 00:35:01,680 --> 00:35:04,440 Speaker 1: to do that, today everyone has to disclose their brokerage 652 00:35:04,440 --> 00:35:07,080 Speaker 1: statements or have their advisor a test that they are accredited. 653 00:35:07,520 --> 00:35:09,720 Speaker 1: No one wants to do that with twenty different firms 654 00:35:09,760 --> 00:35:12,000 Speaker 1: that they're trying to invest in, because it reveals their 655 00:35:12,000 --> 00:35:15,200 Speaker 1: public information twenty different times. Well what if that could 656 00:35:15,200 --> 00:35:18,120 Speaker 1: be stored on chain and you could use cryptographic functions 657 00:35:18,160 --> 00:35:21,279 Speaker 1: to prove that you're accredited without revealing that underlying data. 658 00:35:21,719 --> 00:35:23,680 Speaker 1: I think those are the kind of applications we're going 659 00:35:23,760 --> 00:35:25,400 Speaker 1: to see in the next round. That's what I mean 660 00:35:25,480 --> 00:35:29,600 Speaker 1: by real world examples. This technology of public blockchains, of 661 00:35:29,640 --> 00:35:33,640 Speaker 1: cryptographic proofs has significant real world utility, and we're just 662 00:35:33,719 --> 00:35:36,399 Speaker 1: at the earliest phase of unlocking it. I think you're 663 00:35:36,400 --> 00:35:40,200 Speaker 1: going to see I don't know, dozens, maybe more of 664 00:35:40,320 --> 00:35:44,080 Speaker 1: those applications in the next bull market. Oh good stuff, Matt, 665 00:35:44,239 --> 00:35:47,560 Speaker 1: really really appreciate your time, but we can't let you 666 00:35:47,680 --> 00:35:51,400 Speaker 1: go just yet. Unfortunately, I know you probably want to 667 00:35:51,440 --> 00:35:54,200 Speaker 1: dodge this next thing, but it's time, Bill Donna for 668 00:35:54,280 --> 00:35:57,040 Speaker 1: the craziest things we saw in markets this week. The 669 00:35:57,120 --> 00:35:59,200 Speaker 1: markets have blessed us with a lot of crazy things. 670 00:35:59,600 --> 00:36:01,640 Speaker 1: They really have, They really have. What do you got 671 00:36:01,719 --> 00:36:05,399 Speaker 1: for us. Okay, this is from Matt Levine, So I'm 672 00:36:05,480 --> 00:36:08,480 Speaker 1: quoting one of his columns from earlier this week, and 673 00:36:09,000 --> 00:36:11,880 Speaker 1: it was so good. It went through the entire FTX 674 00:36:11,920 --> 00:36:13,879 Speaker 1: balance sheet and everything that was going on in there. 675 00:36:14,440 --> 00:36:17,959 Speaker 1: But then at the end he said, quote cryp, cryp. 676 00:36:18,160 --> 00:36:21,000 Speaker 1: This is separate from ft X. Crypto dot com said 677 00:36:21,040 --> 00:36:24,399 Speaker 1: it recovered almost four million in crypto acid ether from 678 00:36:24,480 --> 00:36:28,680 Speaker 1: Asian exchange gate dot io after it accidentally transferred the 679 00:36:28,719 --> 00:36:31,440 Speaker 1: funds to the wrong account. Not now crypto dot com. 680 00:36:35,320 --> 00:36:39,240 Speaker 1: That's that's funny. So even even something like that almost 681 00:36:39,280 --> 00:36:42,279 Speaker 1: want unnoticed because the rest of the newsful has been 682 00:36:42,320 --> 00:36:45,319 Speaker 1: So how did the owner that wrong account? They must 683 00:36:45,360 --> 00:36:48,479 Speaker 1: have They must have been living large from hot minute, 684 00:36:48,480 --> 00:36:54,440 Speaker 1: they not crypto dot com. How about you, Matt? You 685 00:36:54,480 --> 00:36:56,799 Speaker 1: see anything crazy this week? Pretty boring week? Had nothing 686 00:36:56,840 --> 00:36:59,920 Speaker 1: going on, Pretty boring week. Uh, nothing to talk about? 687 00:37:00,320 --> 00:37:03,279 Speaker 1: Yeah to two bar bells are crazy. When we talked 688 00:37:03,320 --> 00:37:07,440 Speaker 1: about the world imploded in crypto and bitcoin shrugged trading 689 00:37:07,480 --> 00:37:10,320 Speaker 1: at sixteen thousand, I think that's pretty crazy. Uh. The 690 00:37:10,440 --> 00:37:13,120 Speaker 1: other thing, just so I'm not seen as a Pollyanna 691 00:37:13,200 --> 00:37:15,880 Speaker 1: for crypto, f t T token is still trading for 692 00:37:15,920 --> 00:37:18,960 Speaker 1: half a billion dollars UH in emotional market cap, and 693 00:37:19,080 --> 00:37:22,920 Speaker 1: that is just nuts. I wonder why, what do you 694 00:37:23,080 --> 00:37:25,880 Speaker 1: what do you think? Is there any possible reason for that? 695 00:37:26,120 --> 00:37:28,239 Speaker 1: Is it, uh, some kind of squeeze or something. I 696 00:37:28,280 --> 00:37:30,040 Speaker 1: don't know, I don't I don't know why did game 697 00:37:30,120 --> 00:37:32,319 Speaker 1: stop trade to a million? I think it's a little 698 00:37:32,360 --> 00:37:34,360 Speaker 1: bit of that and a little bit of limited supply, 699 00:37:35,239 --> 00:37:38,160 Speaker 1: and people maybe can't access most of it because it's 700 00:37:38,200 --> 00:37:41,560 Speaker 1: held on ft X exchange can't. It's all locked up. 701 00:37:41,600 --> 00:37:44,480 Speaker 1: It's a zombie coin, right, um. But still, if you 702 00:37:44,560 --> 00:37:47,959 Speaker 1: look there, it is half a billion dollars of worthless money. 703 00:37:48,840 --> 00:37:51,759 Speaker 1: That's pretty good. I think that might that might take it. 704 00:37:51,800 --> 00:37:54,359 Speaker 1: But I'll give you mine here this courtesy of our 705 00:37:54,360 --> 00:37:57,239 Speaker 1: own Drake Bennett at Bloomberg. I'm just gonna read the 706 00:37:57,320 --> 00:38:02,680 Speaker 1: first two paragraphs paragraph story, yes, because because he really 707 00:38:02,719 --> 00:38:06,719 Speaker 1: wrote this pretty well. On Sunday, the auction house Julian's Auctions, 708 00:38:06,960 --> 00:38:09,960 Speaker 1: which is a specialist in memorabilia, closed a bidding for 709 00:38:10,040 --> 00:38:15,480 Speaker 1: a pair of used suede birknsock standals barkensock sandals not 710 00:38:15,600 --> 00:38:20,279 Speaker 1: scandals that the two strap Arizona model. I didn't know 711 00:38:20,320 --> 00:38:22,040 Speaker 1: there were there was more than one model. I think 712 00:38:22,080 --> 00:38:25,320 Speaker 1: I have the Arizona model. The sandals don't appear to 713 00:38:25,360 --> 00:38:28,279 Speaker 1: be in great shape. The best the auctioneers could say 714 00:38:28,360 --> 00:38:32,480 Speaker 1: is that they quote appear intact. However, the cork and 715 00:38:32,600 --> 00:38:36,799 Speaker 1: the jute footbeds also retained the imprint of their one 716 00:38:36,920 --> 00:38:42,680 Speaker 1: time owner's feet. That owner was Steve Jobs, the founder 717 00:38:42,800 --> 00:38:47,600 Speaker 1: of Apple Computers. So it's time to play our favorite 718 00:38:47,719 --> 00:38:51,320 Speaker 1: game show, The Prices Precise built prices, right, this is 719 00:38:51,400 --> 00:38:55,680 Speaker 1: not the prices, the prices percise. I'll give you one 720 00:38:56,280 --> 00:39:00,160 Speaker 1: extra point of price discovery for this item that that 721 00:39:00,239 --> 00:39:02,839 Speaker 1: may or may not help your answer. Six years ago, 722 00:39:03,400 --> 00:39:06,960 Speaker 1: these sandals sold for two thousand dollars. So what do 723 00:39:07,040 --> 00:39:11,800 Speaker 1: you suppose winning anonymous bidder paid for Steve Jobs is 724 00:39:12,680 --> 00:39:17,440 Speaker 1: broken down, falling apart pair of Birkenstocks. Oh my gosh. Okay, 725 00:39:17,800 --> 00:39:22,239 Speaker 1: I'm gonna go with one hundred fifty nine thousand, one 726 00:39:22,760 --> 00:39:30,919 Speaker 1: fifty thousand U S. Dollars token. Alright, Matt, how about 727 00:39:30,960 --> 00:39:32,719 Speaker 1: you all? I was hoping I get to play. I'm 728 00:39:32,760 --> 00:39:36,640 Speaker 1: going with five hundred and thirty two. Okay, but if 729 00:39:36,680 --> 00:39:40,040 Speaker 1: you're way over, you lose. I'm willing to take that risk. Okay, 730 00:39:41,160 --> 00:39:45,480 Speaker 1: all right, let's see for for once the donna has 731 00:39:45,520 --> 00:39:51,399 Speaker 1: taken the w on this one. Two eighteen thousand, seven 732 00:39:51,480 --> 00:39:56,680 Speaker 1: hundred fifty dollars for Steve Jobs is old Birkenstocks. I 733 00:39:57,000 --> 00:39:59,239 Speaker 1: have a feeling that Julian's Auctions is going to be 734 00:39:59,280 --> 00:40:01,840 Speaker 1: reaching out to Matt for the next Berken sock auction, 735 00:40:01,880 --> 00:40:04,839 Speaker 1: though after after they heard what he's willing a bit 736 00:40:04,880 --> 00:40:07,279 Speaker 1: on these things. But think about what this is. You're 737 00:40:07,320 --> 00:40:11,000 Speaker 1: buying another person's old shoes. And y' all thought pictures 738 00:40:11,040 --> 00:40:13,520 Speaker 1: of monkeys selling for hundreds of thousands of dollars was silly. 739 00:40:15,760 --> 00:40:17,880 Speaker 1: I mean, that's it, right, that's it. It's you know 740 00:40:18,000 --> 00:40:19,719 Speaker 1: what's it worth? Well? Hey, what are you willing to 741 00:40:19,760 --> 00:40:22,360 Speaker 1: pay for it? There you go. That's where all we 742 00:40:22,440 --> 00:40:25,680 Speaker 1: live in. Matt Hogan, real pleasure to talk to you 743 00:40:25,840 --> 00:40:29,279 Speaker 1: and tap your brain on all these developments. Wish you 744 00:40:29,360 --> 00:40:30,759 Speaker 1: the best of luck and hopefully we can get you 745 00:40:30,800 --> 00:40:33,160 Speaker 1: back on the show again someday. Thanks for having me. 746 00:40:33,280 --> 00:40:44,359 Speaker 1: This is fun. Thank you, Matt. What goes up, we'll 747 00:40:44,360 --> 00:40:46,200 Speaker 1: be back next week and so then you can find 748 00:40:46,280 --> 00:40:49,320 Speaker 1: us on the Bloomberg Terminal website and app or wherever 749 00:40:49,400 --> 00:40:51,960 Speaker 1: you get your podcast. We love it if you took 750 00:40:52,000 --> 00:40:54,200 Speaker 1: the time to rate and review the show on Apple 751 00:40:54,280 --> 00:40:57,239 Speaker 1: Podcasts so more listeners can find us. And you can 752 00:40:57,280 --> 00:41:01,040 Speaker 1: find us on Twitter. Follow me at Rea Anonymous. Bildonna 753 00:41:01,120 --> 00:41:04,279 Speaker 1: Hierrich is at Bldonna high Rich. You can also follow 754 00:41:04,320 --> 00:41:08,880 Speaker 1: Bloomberg Podcasts at podcasts. What Goes Up is produced by 755 00:41:08,960 --> 00:41:11,640 Speaker 1: Stacy Won. Thanks for listening. To see you next time.