1
00:00:02,759 --> 00:00:06,360
Speaker 1: I'm Stacy Murray Ishmael, Managing editor of Crypto for Bloomberg News.

2
00:00:06,640 --> 00:00:10,120
Speaker 1: And this is Bloomberg Crypto, a daily Bloomberg I Hood podcast.

3
00:00:10,800 --> 00:00:29,920
Speaker 1: It's Friday, March seventeenth. Well, it has been another wild

4
00:00:30,000 --> 00:00:32,760
Speaker 1: week of financial mayhem, some of it connected to crypto,

5
00:00:32,920 --> 00:00:36,120
Speaker 1: some of it very trad fi because this time a

6
00:00:36,159 --> 00:00:40,560
Speaker 1: lot of that crisis has focused on banks. Stocks tumbled

7
00:00:40,560 --> 00:00:43,959
Speaker 1: today as fears grow over the stability of the banking industry,

8
00:00:44,240 --> 00:00:47,120
Speaker 1: now that two US banks have failed this morning. The

9
00:00:47,200 --> 00:00:50,760
Speaker 1: failure of two regional banks has revealed the delayed effect

10
00:00:50,840 --> 00:00:54,000
Speaker 1: of the federal reserves approach to fighting inflation, the biggest

11
00:00:54,040 --> 00:00:56,920
Speaker 1: bank collapse since the two thousand and eight financial crisis.

12
00:00:56,960 --> 00:01:00,680
Speaker 1: It all started earlier this year when Silvergate Cappit shut

13
00:01:00,720 --> 00:01:04,559
Speaker 1: down operations. The California based bank was known for being

14
00:01:04,640 --> 00:01:09,160
Speaker 1: one of the last remaining crypto friendly banks and counted

15
00:01:09,240 --> 00:01:13,160
Speaker 1: among its clients vega crypto companies like coin Base and Gemini.

16
00:01:13,680 --> 00:01:17,600
Speaker 1: But its most famous or infamous client, depending on your perspective,

17
00:01:18,160 --> 00:01:22,520
Speaker 1: was the now bankrupt crypto exchange FTX and its sister firm,

18
00:01:22,560 --> 00:01:27,880
Speaker 1: Alimeter Research. As these two former crypto giants faultered so

19
00:01:28,160 --> 00:01:35,080
Speaker 1: did Silvergate. In addition, Silvergate fell under increasingly intense regulatory scrutiny.

20
00:01:35,920 --> 00:01:39,760
Speaker 1: Then last Friday, just a week ago, the tech and

21
00:01:39,840 --> 00:01:44,720
Speaker 1: startup focused Silicon Valley Bank collapsed. Crypto didn't cause Silicon

22
00:01:44,800 --> 00:01:48,200
Speaker 1: Valley Bank to collapse. It actually had relatively low exposure

23
00:01:48,240 --> 00:01:52,160
Speaker 1: to digital assets at all. But what did happen is

24
00:01:52,200 --> 00:01:56,080
Speaker 1: that Circle, the issuer of the token known as USDC

25
00:01:56,360 --> 00:01:59,960
Speaker 1: the stable coin, revealed that it had a three billion

26
00:02:00,080 --> 00:02:06,280
Speaker 1: in dollar exposure to SVB. That led to some slightly

27
00:02:06,440 --> 00:02:11,000
Speaker 1: panicky investor response in the crypto markets and circles. Stable

28
00:02:11,000 --> 00:02:15,040
Speaker 1: Coin was markedly less stable over the weekend. By Sunday,

29
00:02:15,440 --> 00:02:18,000
Speaker 1: regulators had made it clay that they would make all

30
00:02:18,080 --> 00:02:22,799
Speaker 1: depositors whole. But at the same time, yet another bank

31
00:02:23,480 --> 00:02:27,280
Speaker 1: was getting seized. New York State regulators said they were

32
00:02:27,280 --> 00:02:32,640
Speaker 1: taking possession of Signature Bank. Now, Signature did have pretty

33
00:02:32,639 --> 00:02:36,600
Speaker 1: significant ties to the digital acid industry, both because it

34
00:02:36,680 --> 00:02:41,040
Speaker 1: had crypto companies who deposited money there, but also because,

35
00:02:41,080 --> 00:02:46,800
Speaker 1: like Silvergate, it ran a crypto FUCUS payments platform. Signature

36
00:02:46,800 --> 00:02:50,200
Speaker 1: Bank represented again one of the largest bank failures in

37
00:02:50,320 --> 00:02:54,280
Speaker 1: US history. So you've got these trio of bank closures,

38
00:02:54,520 --> 00:02:57,440
Speaker 1: two of which were actually crypto banks, one of which

39
00:02:57,520 --> 00:03:00,200
Speaker 1: did have exposure to crypto in the form of having

40
00:03:00,280 --> 00:03:04,399
Speaker 1: been one of the banks of choice for Circle. Confusingly enough,

41
00:03:04,880 --> 00:03:07,680
Speaker 1: there was a major bitcoin rally happening while all of

42
00:03:07,720 --> 00:03:11,320
Speaker 1: this was going down. What does this even mean in

43
00:03:11,360 --> 00:03:13,120
Speaker 1: the aftermath of one of what's been one of the

44
00:03:13,160 --> 00:03:16,440
Speaker 1: biggest weeks in finance so far this year, how has

45
00:03:16,440 --> 00:03:20,280
Speaker 1: the crypto industry faded and how does it move forward? Fortunately,

46
00:03:20,480 --> 00:03:23,320
Speaker 1: we're joined today by Chris Nigi, a senior executive editor

47
00:03:23,360 --> 00:03:26,160
Speaker 1: here at Boomberg and my boss. He joins us now

48
00:03:26,200 --> 00:03:34,960
Speaker 1: to talk more about the state of markets, crypto and otherwise. Chris,

49
00:03:35,000 --> 00:03:37,320
Speaker 1: Welcome back to the podcast. Hi, thank you for having

50
00:03:37,360 --> 00:03:43,520
Speaker 1: me Stacey. I feel like it's been an interesting time

51
00:03:43,640 --> 00:03:47,280
Speaker 1: in markets. Is that a fair assessment of the world

52
00:03:47,840 --> 00:03:50,440
Speaker 1: depending on what If your baseline is two thousand and eight,

53
00:03:50,480 --> 00:03:54,839
Speaker 1: maybe it's for a little sleepy but versus practically any

54
00:03:54,880 --> 00:03:57,000
Speaker 1: other time, I think it's fair to say we're at

55
00:03:57,080 --> 00:04:00,840
Speaker 1: an inflection point, an interesting time, and some of that

56
00:04:00,960 --> 00:04:04,640
Speaker 1: interestingness has manifested in institutions that are supposed to be

57
00:04:04,880 --> 00:04:07,680
Speaker 1: entirely outside of the universe of things. This podcast cares

58
00:04:07,680 --> 00:04:11,440
Speaker 1: about right there. There were three bank collapses in the

59
00:04:11,560 --> 00:04:16,000
Speaker 1: past two weeks. As we record this episode, credit suite

60
00:04:16,040 --> 00:04:20,320
Speaker 1: shares are at not looking like positive levels of what

61
00:04:20,360 --> 00:04:23,359
Speaker 1: you would want a bank to be at. We have

62
00:04:23,760 --> 00:04:25,560
Speaker 1: no idea what the next few days are going to

63
00:04:25,640 --> 00:04:29,039
Speaker 1: look like, and yet we have a Crypto rally. It's

64
00:04:29,080 --> 00:04:33,599
Speaker 1: so good. I mean, it's sort of everything come full

65
00:04:33,680 --> 00:04:35,960
Speaker 1: circle and there's a lot to unpack and what you

66
00:04:36,040 --> 00:04:39,760
Speaker 1: just describe these things. These are financial institutions that five

67
00:04:39,839 --> 00:04:42,280
Speaker 1: years ago probably no one would have associated with Crypto.

68
00:04:42,480 --> 00:04:45,640
Speaker 1: Certainly several of them probably wouldn't have existed unless Crypto

69
00:04:45,680 --> 00:04:50,240
Speaker 1: existed as well. But you're seeing Crypto as sort of

70
00:04:50,960 --> 00:04:53,599
Speaker 1: at least a purple player in all of the drama.

71
00:04:53,760 --> 00:04:56,599
Speaker 1: It's definitely interesting in that regard. I feel like the

72
00:04:56,760 --> 00:04:59,080
Speaker 1: rally to some degree, which is going to be the

73
00:04:59,120 --> 00:05:01,720
Speaker 1: most ironic the top in the entire time that we've

74
00:05:01,760 --> 00:05:06,600
Speaker 1: been covering this thing, is maybe a restoration of Crypto

75
00:05:06,720 --> 00:05:11,080
Speaker 1: to its somewhat peripheral role, the kind of renegade outside

76
00:05:11,080 --> 00:05:14,640
Speaker 1: a role that it first imagined himself as. Now that

77
00:05:14,720 --> 00:05:16,800
Speaker 1: to become because it did have its moment in the sun.

78
00:05:16,880 --> 00:05:19,440
Speaker 1: There was a period where I think people were under

79
00:05:19,440 --> 00:05:21,640
Speaker 1: pressure to believe the crypto is becoming part of the

80
00:05:21,680 --> 00:05:26,400
Speaker 1: institutional picture, and what's happened in the last couple of

81
00:05:26,480 --> 00:05:29,320
Speaker 1: months I think has been a pretty resounding rejection of

82
00:05:29,360 --> 00:05:33,080
Speaker 1: that idea and crypto being sort of kicked to the sideline,

83
00:05:33,120 --> 00:05:35,640
Speaker 1: kicked to the curb a little bit, and funnily enough,

84
00:05:35,720 --> 00:05:38,200
Speaker 1: that seems to be where it's most apt to thrive.

85
00:05:38,320 --> 00:05:40,440
Speaker 1: And now we're getting a rally because everyone's like, well,

86
00:05:40,480 --> 00:05:44,040
Speaker 1: good luck with your banking system. Maybe crypto isn't such

87
00:05:44,040 --> 00:05:47,640
Speaker 1: an awful thing after all. When you use the phrase

88
00:05:47,720 --> 00:05:49,920
Speaker 1: kick to the side, I mean, it's almost like that

89
00:05:50,040 --> 00:05:54,800
Speaker 1: metaphor really describes how US regulators in particular have been

90
00:05:54,800 --> 00:05:58,479
Speaker 1: treating this, Like there's this enormous narrative right now, and

91
00:05:58,720 --> 00:06:01,400
Speaker 1: I think it's a somewhat misleading one. On the merits

92
00:06:01,440 --> 00:06:06,600
Speaker 1: that the reason that Silicon Valley Bank silver Gates signature

93
00:06:06,880 --> 00:06:10,680
Speaker 1: went down, like the immediate proximate cause was crypto. The

94
00:06:10,800 --> 00:06:13,800
Speaker 1: reality is much more complex than that Silicon Valley Bank

95
00:06:13,839 --> 00:06:16,400
Speaker 1: in particular didn't actually have a heroic amount of exposure

96
00:06:16,440 --> 00:06:20,840
Speaker 1: at all to digital assets. But the crypto faithful have

97
00:06:20,920 --> 00:06:24,159
Speaker 1: really seized upon this idea that you're describing that it's like, well,

98
00:06:24,560 --> 00:06:26,520
Speaker 1: if you all don't want to bank us, we'll be

99
00:06:26,560 --> 00:06:28,600
Speaker 1: fine over here. We have defied, we have table coins.

100
00:06:28,640 --> 00:06:31,040
Speaker 1: We're going to figure this out. Yeah. Again, a million

101
00:06:31,120 --> 00:06:34,120
Speaker 1: little strands to connect. But one thing you can say

102
00:06:34,320 --> 00:06:37,400
Speaker 1: is that when big tectonic crises like destruct, your breakout.

103
00:06:37,400 --> 00:06:39,280
Speaker 1: And that's what it seems like. Certainly crypto didn't have

104
00:06:39,279 --> 00:06:43,760
Speaker 1: a role in the huge role in the siability mismatches

105
00:06:43,800 --> 00:06:48,600
Speaker 1: playing banks. Well, when you have the beginnings emanations of

106
00:06:48,680 --> 00:06:50,160
Speaker 1: a crisis and I I don't want to push you too far,

107
00:06:50,360 --> 00:06:53,560
Speaker 1: this is a day worth recording. When it looks particularly

108
00:06:53,640 --> 00:06:55,719
Speaker 1: grim for the financial system, that God knows how it'll

109
00:06:55,720 --> 00:06:57,960
Speaker 1: shake out. There are reasons to think that that's overborne

110
00:06:58,000 --> 00:07:02,480
Speaker 1: as well. But you can feel regulators coming into this

111
00:07:02,640 --> 00:07:05,800
Speaker 1: and operating in this with a kind of sentiment that

112
00:07:05,920 --> 00:07:09,920
Speaker 1: crypto is maybe a luxury that a we can afford,

113
00:07:10,080 --> 00:07:12,160
Speaker 1: and b is kind of part of the problem, and

114
00:07:12,360 --> 00:07:14,720
Speaker 1: that it's luring you know, it's a bubble phenomenon that

115
00:07:14,840 --> 00:07:18,960
Speaker 1: was luring a certain amount of kind of crime to

116
00:07:19,600 --> 00:07:21,920
Speaker 1: the borders of the financial system sort and they've seen

117
00:07:21,960 --> 00:07:25,400
Speaker 1: some pretty big blow up since our last discussion, and

118
00:07:26,480 --> 00:07:30,680
Speaker 1: tolerance for the kind of shenanigans that I think regulators

119
00:07:30,720 --> 00:07:34,440
Speaker 1: view Crypto is representing is pretty much zero at the moment,

120
00:07:34,560 --> 00:07:38,520
Speaker 1: so consciously or unconsciously seemed to be trying to chase

121
00:07:38,560 --> 00:07:41,080
Speaker 1: it out of a system that they're worried about, just

122
00:07:41,200 --> 00:07:43,560
Speaker 1: at it's sort of core. At this point. What I

123
00:07:43,600 --> 00:07:47,160
Speaker 1: find sort of fascinating is how this is now being

124
00:07:47,240 --> 00:07:53,520
Speaker 1: seized upon as a victory for and buy people who

125
00:07:53,720 --> 00:07:59,400
Speaker 1: over the weekend were like freaking out about Circles exposure

126
00:07:59,480 --> 00:08:01,640
Speaker 1: to one of those traditional banks to an extent that

127
00:08:01,840 --> 00:08:06,280
Speaker 1: caused circles stable coin to significantly deepeg from the dollar. Like,

128
00:08:06,480 --> 00:08:09,200
Speaker 1: how would you describe the psychology at play here? I mean,

129
00:08:09,600 --> 00:08:13,680
Speaker 1: where things start to move very fast, and going from

130
00:08:14,040 --> 00:08:17,960
Speaker 1: the favorite bank going under to giant Rowley and Kryptberry

131
00:08:18,080 --> 00:08:20,600
Speaker 1: is extremely fast. I think we can agree with that,

132
00:08:21,360 --> 00:08:26,280
Speaker 1: but it's as you've lived through these crisis periods before,

133
00:08:26,160 --> 00:08:30,040
Speaker 1: the speed with which history starts to unfold that is crazy.

134
00:08:30,240 --> 00:08:34,640
Speaker 1: And Crypto's favorite thesis the whole time has been that

135
00:08:34,679 --> 00:08:38,080
Speaker 1: when the banking system goes to proof, they'll be there

136
00:08:38,160 --> 00:08:41,679
Speaker 1: as sort of the inheritors of the dilapidated Kingdom. It

137
00:08:41,960 --> 00:08:44,360
Speaker 1: probably wasn't that difficult for them to jump from one

138
00:08:44,400 --> 00:08:46,000
Speaker 1: to the other, even though it was their bank. It

139
00:08:46,080 --> 00:08:48,480
Speaker 1: was their bank that went under. They maybe I agree

140
00:08:48,480 --> 00:08:50,960
Speaker 1: that they didn't cause it to go under, but the

141
00:08:51,080 --> 00:08:55,160
Speaker 1: dCas came past and furious, and look, is that clearly

142
00:08:55,200 --> 00:08:58,000
Speaker 1: the reason Bitcoin's going up? To be honest, that that

143
00:08:58,120 --> 00:09:00,719
Speaker 1: may be the reason. That's certainly a suggestion, and a

144
00:09:00,840 --> 00:09:04,160
Speaker 1: markets journalist, I've never convinced in any one one idea,

145
00:09:04,280 --> 00:09:07,120
Speaker 1: one explanation is clear way the right one, I would

146
00:09:07,160 --> 00:09:10,160
Speaker 1: point out. I mean, people thrown a lot of money

147
00:09:10,280 --> 00:09:12,839
Speaker 1: at things like the ARC Fund in the last week.

148
00:09:13,000 --> 00:09:17,800
Speaker 1: They've punters have been pouring money into regional bank stocks

149
00:09:17,840 --> 00:09:21,600
Speaker 1: of all things like Hope Springs Eternal. It may just

150
00:09:21,760 --> 00:09:23,800
Speaker 1: be the same ethic that's driving that. You know, we

151
00:09:23,840 --> 00:09:26,480
Speaker 1: had a big fallow in bond rates, not for good reasons,

152
00:09:26,480 --> 00:09:28,400
Speaker 1: but interest rates to go way down, and there's a

153
00:09:28,400 --> 00:09:31,160
Speaker 1: pavlon Van reaction and cryptos based to that as well.

154
00:09:31,360 --> 00:09:36,000
Speaker 1: So while the usurpers of the banking system thesis is

155
00:09:36,040 --> 00:09:39,200
Speaker 1: definitely the most attractive one to crypto proponents right now,

156
00:09:39,880 --> 00:09:43,319
Speaker 1: it's not clear that it's exactly that's it's indisputably the

157
00:09:43,360 --> 00:09:46,840
Speaker 1: reason for the rally we've seen. I'm going to use

158
00:09:46,840 --> 00:09:49,080
Speaker 1: this phrase only because there's like literally a dozen headlines

159
00:09:49,080 --> 00:09:50,960
Speaker 1: about it on the Bloomberg terminal right now, which is

160
00:09:51,280 --> 00:09:53,920
Speaker 1: credit to fold swaps. And in two thousand and eight,

161
00:09:53,960 --> 00:09:56,440
Speaker 1: there was this idea that you know, people would look

162
00:09:56,480 --> 00:09:59,680
Speaker 1: at the credit to fold swaps against the United States government,

163
00:09:59,679 --> 00:10:01,800
Speaker 1: which is essentially an armor get untrade. Right if you

164
00:10:01,840 --> 00:10:04,240
Speaker 1: think that the United States government is not going to

165
00:10:04,320 --> 00:10:08,040
Speaker 1: repay its debts, it sort of doesn't matter, like what's

166
00:10:08,040 --> 00:10:10,320
Speaker 1: your plan be here, Like you're talking, you're doing complete

167
00:10:10,320 --> 00:10:13,640
Speaker 1: financial armor get on. And so right now we're in

168
00:10:13,679 --> 00:10:16,840
Speaker 1: this situation in which the bitcoin and the crypto thesis

169
00:10:16,880 --> 00:10:19,720
Speaker 1: that you're describing is like, well, if all banks go bust,

170
00:10:20,440 --> 00:10:23,839
Speaker 1: bitcoin is going to persist. But what we've seen is

171
00:10:24,000 --> 00:10:26,480
Speaker 1: that if all banks go bust, getting in and out

172
00:10:26,559 --> 00:10:31,120
Speaker 1: of crypto becomes hard, if not untenable. So I think

173
00:10:31,280 --> 00:10:33,840
Speaker 1: what I find fascinating is the you know, it's almost

174
00:10:33,840 --> 00:10:36,760
Speaker 1: like that underwear gnomes Self park joke where they're like,

175
00:10:36,800 --> 00:10:38,839
Speaker 1: we're going to steal some underwear. There's going to be profit,

176
00:10:38,880 --> 00:10:41,160
Speaker 1: but in between is just a big question mark. I

177
00:10:41,200 --> 00:10:43,040
Speaker 1: think that that's fair. I mean, I wouldn't want to

178
00:10:43,080 --> 00:10:46,320
Speaker 1: say that there's absolutely no rail into crypto if the

179
00:10:46,360 --> 00:10:50,720
Speaker 1: banking system goes under by would agree, it's not the

180
00:10:50,880 --> 00:10:53,200
Speaker 1: all of the sort of convenient ways in Middle America

181
00:10:53,280 --> 00:10:57,080
Speaker 1: I access their crypto, their crypto bags would would would

182
00:10:57,120 --> 00:10:59,560
Speaker 1: presumably be gone. Are very much in the process of

183
00:10:59,600 --> 00:11:02,360
Speaker 1: being rooted out as it is. Never mind, the banking

184
00:11:02,360 --> 00:11:04,839
Speaker 1: crisis regulators seemed pretty peld bat. I mean, they've taken

185
00:11:04,840 --> 00:11:08,439
Speaker 1: down two of the big sort of conduits for that

186
00:11:08,600 --> 00:11:11,560
Speaker 1: specific task in the last you know, seven days. So

187
00:11:12,320 --> 00:11:14,760
Speaker 1: I think the crypto the bitcoin faithful would say, oh,

188
00:11:14,760 --> 00:11:17,240
Speaker 1: we never we never needed those conduits anyway, there's still

189
00:11:17,360 --> 00:11:21,719
Speaker 1: basically other ways to get into the bitcoin network. And indeed,

190
00:11:22,160 --> 00:11:24,800
Speaker 1: I think it's true that over this weekend lots of

191
00:11:24,840 --> 00:11:26,640
Speaker 1: them did. I think that was that sort of one

192
00:11:26,720 --> 00:11:30,120
Speaker 1: notable fact of the last seven days, that the amount

193
00:11:30,160 --> 00:11:34,040
Speaker 1: of crypto owning addresses surged over the weekend. So the

194
00:11:34,240 --> 00:11:38,040
Speaker 1: kind of rhymes with their theory and why why the

195
00:11:38,120 --> 00:11:41,160
Speaker 1: rally happened. Another theory is that there's a bunch of

196
00:11:41,160 --> 00:11:43,840
Speaker 1: whales to kind of control everything. It's kind of kind

197
00:11:43,840 --> 00:11:46,360
Speaker 1: of goes against that that thesis, you had a pretty

198
00:11:46,440 --> 00:11:49,680
Speaker 1: heterogeneous group of people deciding all at the same time

199
00:11:49,800 --> 00:11:53,720
Speaker 1: Saturday and Sunday to take a stab atus. So I

200
00:11:53,760 --> 00:11:56,199
Speaker 1: think you're right. I think that the dream of sort

201
00:11:56,200 --> 00:12:00,280
Speaker 1: of a seamless well some people sort of track five

202
00:12:00,280 --> 00:12:03,440
Speaker 1: stream of relatively seems give and take between the two systems,

203
00:12:03,520 --> 00:12:05,560
Speaker 1: seems like pretty much a pipe dream at this point.

204
00:12:05,920 --> 00:12:08,680
Speaker 1: I've no doubt that there are bitcoin masks Maximus stall

205
00:12:08,720 --> 00:12:10,120
Speaker 1: over the world. It would say we never needed that

206
00:12:10,200 --> 00:12:13,199
Speaker 1: stuff to begin with. We'll be right back with more

207
00:12:13,200 --> 00:12:16,720
Speaker 1: of the top crypto stories, joined by Bloomberg Senior Executive

208
00:12:16,800 --> 00:12:28,320
Speaker 1: editor Chris Niji. What about the defied people, Because one

209
00:12:28,320 --> 00:12:31,360
Speaker 1: of the storylines that I have found personally fascinating is

210
00:12:31,400 --> 00:12:35,240
Speaker 1: the fact that decentralized finance, this corner that's supposed to

211
00:12:35,280 --> 00:12:39,200
Speaker 1: be even further away from traditional banking than you know,

212
00:12:39,240 --> 00:12:43,120
Speaker 1: Bitcoin and ETHA, turned out to be heavily underpinned by

213
00:12:43,120 --> 00:12:48,640
Speaker 1: stable coins, which by definition are tied into traditional banking systems. Yeah,

214
00:12:48,760 --> 00:12:50,760
Speaker 1: they have they have to be feeling a little queezy

215
00:12:50,760 --> 00:12:52,960
Speaker 1: about that as well. But although that, I mean, let's

216
00:12:53,000 --> 00:12:56,400
Speaker 1: face it, that's the that's sort of the rarefied realm

217
00:12:56,440 --> 00:12:59,800
Speaker 1: of the absolute true believers, I'm sure, in spite of

218
00:13:00,440 --> 00:13:04,040
Speaker 1: the inconvenience that all of this is causing and their

219
00:13:04,280 --> 00:13:07,679
Speaker 1: general antipathy towards anything kind of new wavy and new

220
00:13:07,679 --> 00:13:09,559
Speaker 1: fangle that's going on, which you know is going to

221
00:13:09,600 --> 00:13:13,200
Speaker 1: rewide on de fight already has lar Joy that their

222
00:13:13,640 --> 00:13:16,520
Speaker 1: public posture is that at some level this is all

223
00:13:16,559 --> 00:13:19,560
Speaker 1: good and that this is precisely the environment that we

224
00:13:19,600 --> 00:13:21,640
Speaker 1: expected to thrive in when we're all the banks go

225
00:13:21,679 --> 00:13:24,000
Speaker 1: out of business. And as all of this is happening,

226
00:13:24,080 --> 00:13:28,360
Speaker 1: there are some pivotal foundational like pick some kind of

227
00:13:28,400 --> 00:13:32,480
Speaker 1: overblown metaphor court cases working their way to the system. Right.

228
00:13:32,520 --> 00:13:35,920
Speaker 1: You have the Securities and Exchange Commission versus Gray Scale

229
00:13:36,080 --> 00:13:39,040
Speaker 1: on the topic of whether Great Scale's Bitcoin trust will

230
00:13:39,040 --> 00:13:41,720
Speaker 1: be allowed to convert into an ETF. You have the

231
00:13:41,760 --> 00:13:45,400
Speaker 1: Security and Exchange Commission versus Ripple on the question of

232
00:13:45,400 --> 00:13:48,439
Speaker 1: whether Ripple is a security But going back to the

233
00:13:48,480 --> 00:13:50,640
Speaker 1: trod five thing, like, one of the dynamics that's playing

234
00:13:50,640 --> 00:13:52,720
Speaker 1: out right now with all of these banks collapsing is

235
00:13:53,120 --> 00:13:57,319
Speaker 1: which of the so called systemically important banks and institutions

236
00:13:57,320 --> 00:13:59,319
Speaker 1: will step in to save the day, or be allowed

237
00:13:59,320 --> 00:14:02,440
Speaker 1: to step into the day. Is there any sense at

238
00:14:02,480 --> 00:14:06,120
Speaker 1: all that you are getting, or that any of our

239
00:14:06,160 --> 00:14:08,880
Speaker 1: collegies are getting, that any of these major banks are

240
00:14:08,880 --> 00:14:10,760
Speaker 1: also looking at crypto as a place that they can

241
00:14:10,800 --> 00:14:14,640
Speaker 1: be like cleaning up on the cheap right now. If

242
00:14:14,679 --> 00:14:17,480
Speaker 1: that's happening, it's not. That's not known to me at

243
00:14:17,520 --> 00:14:20,440
Speaker 1: they have big, bigger problems. I mean, yeah, right, this

244
00:14:20,600 --> 00:14:24,920
Speaker 1: kind of upheaval frequently does sort of present big opportunities

245
00:14:25,040 --> 00:14:29,720
Speaker 1: and a kind of leavening of the forest where a

246
00:14:29,760 --> 00:14:32,800
Speaker 1: sort of new kind of initiatives same place. My sense

247
00:14:32,960 --> 00:14:36,800
Speaker 1: is that everyone is so worried right now. I mean, yes,

248
00:14:36,880 --> 00:14:40,320
Speaker 1: the very big systemically important banks are probably not really

249
00:14:40,360 --> 00:14:42,960
Speaker 1: at risk of any kind of insolvency thing or all

250
00:14:43,040 --> 00:14:45,640
Speaker 1: at two thousand and who knows, But that doesn't strike

251
00:14:45,680 --> 00:14:49,320
Speaker 1: me as the issue, except that they are counterparties with

252
00:14:49,840 --> 00:14:52,920
Speaker 1: a bank that appears to be in legitimate trouble right now,

253
00:14:53,080 --> 00:14:57,120
Speaker 1: credit suits. So whether or not they're holding conferences about

254
00:14:57,120 --> 00:15:00,200
Speaker 1: the bitcoin or the crypto opportunity at the moment, it

255
00:15:00,240 --> 00:15:03,800
Speaker 1: strikes me somewhat unlikely. I think longer term what you're

256
00:15:03,840 --> 00:15:09,200
Speaker 1: talking about is possibly realistic, although again away from any

257
00:15:09,320 --> 00:15:13,040
Speaker 1: legal stuff around gray scale, the regulatory response at the

258
00:15:13,080 --> 00:15:18,520
Speaker 1: moment seems really definitively the last thing we need on

259
00:15:18,560 --> 00:15:22,760
Speaker 1: our hands now is a bunch of crypto kook's muddying

260
00:15:22,960 --> 00:15:26,400
Speaker 1: the already pretty pretty murky waters. You know, it gives

261
00:15:26,440 --> 00:15:27,920
Speaker 1: me a joy to say that bit. That does seem

262
00:15:28,000 --> 00:15:31,560
Speaker 1: to be the direction of sort of the larger financial

263
00:15:32,120 --> 00:15:39,360
Speaker 1: institution at the moment. If you believed that FTX was

264
00:15:39,640 --> 00:15:42,760
Speaker 1: financially solvent and that they were separate from Alameda, or

265
00:15:42,800 --> 00:15:46,320
Speaker 1: if you believed that the condition of bitcoin miners would

266
00:15:46,320 --> 00:15:48,640
Speaker 1: have no bearing on the people who lent them a

267
00:15:48,640 --> 00:15:51,200
Speaker 1: bunch of uncollateralized money, then you have to have a

268
00:15:51,240 --> 00:15:55,600
Speaker 1: severe talking to to your like risk people about you know,

269
00:15:55,720 --> 00:15:58,080
Speaker 1: the risks that were proposed by those things. And now

270
00:15:58,120 --> 00:16:01,240
Speaker 1: to your points, we're seeing other banks that are currently

271
00:16:01,280 --> 00:16:03,600
Speaker 1: fine exposed to a bank that has all of the

272
00:16:03,640 --> 00:16:06,760
Speaker 1: trappings of not being so fine, which is like the

273
00:16:06,800 --> 00:16:08,440
Speaker 1: classic thing that happened in two thousand and eighths, and

274
00:16:08,440 --> 00:16:09,640
Speaker 1: the thing that came out in two thousand and eight

275
00:16:09,720 --> 00:16:12,040
Speaker 1: was supposedly that everybody was going to get better at

276
00:16:12,080 --> 00:16:14,280
Speaker 1: risk modeling, that the regulators were going to get better

277
00:16:14,320 --> 00:16:17,240
Speaker 1: at enforcing capital requirements and everything else. And yet here

278
00:16:17,240 --> 00:16:20,400
Speaker 1: we are again. So how come yeah? Right, Well, the

279
00:16:20,440 --> 00:16:22,840
Speaker 1: reason is that greed will always find a way. And

280
00:16:22,880 --> 00:16:26,600
Speaker 1: I think that every all of the best efforts of

281
00:16:26,880 --> 00:16:30,320
Speaker 1: regulators to stop the last crisis from happening, which is

282
00:16:30,520 --> 00:16:34,359
Speaker 1: what always happens, are not going to buy definition anticipate

283
00:16:34,400 --> 00:16:36,880
Speaker 1: the next crisis. Just the fact of nature. The people

284
00:16:36,880 --> 00:16:38,960
Speaker 1: are just too clever when it comes to greed. And

285
00:16:39,400 --> 00:16:42,800
Speaker 1: in describing what went on in bitcoin, that is the

286
00:16:42,880 --> 00:16:46,600
Speaker 1: long and short of everything, people were amazingly clever and

287
00:16:46,720 --> 00:16:49,040
Speaker 1: how they tried to ring money out of this thing.

288
00:16:49,120 --> 00:16:52,800
Speaker 1: They there were some actually legitimate innovations in the area

289
00:16:52,800 --> 00:16:56,440
Speaker 1: of future is trading. The defy itself has really got

290
00:16:56,480 --> 00:16:58,720
Speaker 1: some interesting stuff going on as far as market making,

291
00:16:58,720 --> 00:17:01,520
Speaker 1: et cetera. So there was a huge amount of innovation

292
00:17:01,600 --> 00:17:04,320
Speaker 1: that nobody could possibly have foreseen. On the other hand,

293
00:17:04,560 --> 00:17:07,320
Speaker 1: there was a bunch of people who were too young

294
00:17:07,480 --> 00:17:10,560
Speaker 1: to have lived through the real counterparty risk wars that

295
00:17:10,600 --> 00:17:13,520
Speaker 1: you're describing, and to put it mildly, there was some

296
00:17:13,560 --> 00:17:16,920
Speaker 1: foolishness going on. There are people who just hadn't heard

297
00:17:16,920 --> 00:17:20,720
Speaker 1: of all the stuff. It's this ongoing meme in crypto,

298
00:17:20,840 --> 00:17:24,360
Speaker 1: this idea that everything needs to be re experienced by

299
00:17:25,000 --> 00:17:28,920
Speaker 1: the new population that clearly was the main thing. There

300
00:17:29,040 --> 00:17:32,280
Speaker 1: is a big dose of innovation, of legitimate innovation. I

301
00:17:32,280 --> 00:17:35,840
Speaker 1: mean innovation could also have been used to describe things

302
00:17:35,880 --> 00:17:39,600
Speaker 1: like CDOs and etc. That's not always the greatest thing

303
00:17:39,600 --> 00:17:41,879
Speaker 1: in the world for the stability of the financial system.

304
00:17:42,160 --> 00:17:46,280
Speaker 1: But I would argue, given the much fonted intellectual power

305
00:17:46,320 --> 00:17:50,280
Speaker 1: that's always touted around crypto and also existed around things

306
00:17:50,320 --> 00:17:52,680
Speaker 1: like investment, banking and trading in two thousand and eight,

307
00:17:53,160 --> 00:17:58,200
Speaker 1: it's impossible for anyone to anticipate exactly how to regulate

308
00:17:58,240 --> 00:18:00,960
Speaker 1: it and keep it from blow wearing up more ors.

309
00:18:01,080 --> 00:18:04,240
Speaker 1: It's just going to be sort of a cyclical thing

310
00:18:04,280 --> 00:18:07,000
Speaker 1: that occurs in the world. Thank you, Chris, appreciate you

311
00:18:07,040 --> 00:18:09,879
Speaker 1: being on the show. Thank you for having me. That

312
00:18:10,000 --> 00:18:13,480
Speaker 1: was Bloomberg Senior Executive Editor Chris Nig. You can find

313
00:18:13,520 --> 00:18:15,399
Speaker 1: more of his work on the Bloomberg terminal and on

314
00:18:15,400 --> 00:18:23,360
Speaker 1: Bloomberg dot com. This is Bloomberg Crypto, a daily podcast

315
00:18:23,400 --> 00:18:26,800
Speaker 1: from Bloomberg and iHeartRadio. For more shows from iHeartRadio, visit

316
00:18:26,840 --> 00:18:30,840
Speaker 1: the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

317
00:18:31,280 --> 00:18:34,440
Speaker 1: A quick programming note for you We're working on something

318
00:18:34,520 --> 00:18:37,439
Speaker 1: new that expands on how we're covering crypto and the

319
00:18:37,440 --> 00:18:40,200
Speaker 1: future of finance, and we'll be back soon to tell

320
00:18:40,240 --> 00:18:43,440
Speaker 1: you more. Follow a subscribe to Bloomberg Cryptos to stay

321
00:18:43,440 --> 00:18:46,240
Speaker 1: tuned for updates. We'll be bringing you info about what's

322
00:18:46,280 --> 00:18:50,040
Speaker 1: next right here in this feed. In the meantime, get

323
00:18:50,040 --> 00:18:52,560
Speaker 1: caught up on all of our Bloomberg iHeart podcasts, The

324
00:18:52,600 --> 00:18:57,160
Speaker 1: Big Take, Daily Crash Course, and our narrative series in Trust.

325
00:18:57,840 --> 00:19:00,400
Speaker 1: To stay in touch with Bloomberg Crypto, you can find

326
00:19:00,400 --> 00:19:04,000
Speaker 1: out coverage as always at Bloomberg dot com slash Crypto.

327
00:19:07,560 --> 00:19:11,280
Speaker 1: The supervising producer of Bloomberg Crypto is Vicky Vergelina. Our

328
00:19:11,320 --> 00:19:15,159
Speaker 1: senior producer is Janet Babin. Our producers are Mohammed Faroup

329
00:19:15,200 --> 00:19:18,600
Speaker 1: and Sharon Barrero. Our associate producers are Ty Butler and

330
00:19:18,680 --> 00:19:22,960
Speaker 1: Moses on m Desta wonder At is our engineer. Original

331
00:19:23,040 --> 00:19:27,800
Speaker 1: music by Leo Sidrin. I'm Stacy Marie schml We'll be

332
00:19:27,800 --> 00:19:28,440
Speaker 1: back tomorrow