WEBVTT - Pensions & Crypto 0:00:13.320 --> 0:00:17.200 Hello, and welcome to What Goes Up a weekly markets podcast. 0:00:17.440 --> 0:00:19.840 My name is Mike Reagan, and I'm a senior editor 0:00:19.840 --> 0:00:24.680 at Bloomberg enumbled On Across asset reporter at Bloomberg, and 0:00:24.840 --> 0:00:27.240 this week on the show, Well, if you still think 0:00:27.280 --> 0:00:30.920 that cryptocurrencies are on the fringe, consider this stat A 0:00:31.040 --> 0:00:34.000 recent survey from Fidelity found that more than half of 0:00:34.080 --> 0:00:38.520 institutional investors in Asia, Europe and the US already invest 0:00:38.560 --> 0:00:42.199 in digital assets and expect to invest in them in 0:00:42.240 --> 0:00:45.160 the future. So we're gonna talk about what that means 0:00:45.159 --> 0:00:47.880 for the asset class with the head of asset management 0:00:47.920 --> 0:00:50.800 at one of the biggest firms in the crypto investing world. 0:00:51.479 --> 0:00:53.920 But fill down. I think this is the portion of 0:00:53.960 --> 0:00:57.880 a podcast where traditionally the hosts engage in some witty 0:00:57.920 --> 0:01:01.680 banner back and forth. You know, it's almost never witty, 0:01:02.120 --> 0:01:05.240 almost never. You don't almost them. I want to better 0:01:05.440 --> 0:01:08.880 about while you never read the scripted intros I write 0:01:08.880 --> 0:01:13.240 for you because I don't like to. I'm supposed to 0:01:13.280 --> 0:01:18.559 say I'm Mike Reagan and you go and I'm Dana Banana. 0:01:18.160 --> 0:01:21.520 Oh those are really really good. You've you've been writing 0:01:21.560 --> 0:01:26.280 me really really good introductions. I've just been totally ignoring them. 0:01:26.319 --> 0:01:30.399 I think last week it was I'm Madonna, right, and 0:01:30.400 --> 0:01:32.319 then this week it was banana fan of a fan, 0:01:33.040 --> 0:01:38.319 Total opportunities. Yeah, you had something else to banner about. 0:01:38.360 --> 0:01:41.080 I think what was it? I did because we got 0:01:41.120 --> 0:01:45.279 this really witty tweet you and I did from Tweegy Sunday, 0:01:45.319 --> 0:01:48.640 one of our our fans on Twitter, and uh he 0:01:48.840 --> 0:01:52.000 or or she? I suppose because the profile pictures is 0:01:52.000 --> 0:01:55.160 a doggie. Um, it says craziest thing I saw in 0:01:55.560 --> 0:01:59.920 supermarkets this week and it's the cover of People magazine 0:02:00.320 --> 0:02:05.200 and it's Paul Rodd sexiest man Alive. You know, I 0:02:05.240 --> 0:02:07.680 don't know how I feel about opening the craziest things 0:02:07.680 --> 0:02:12.920 in markets up to supermarkets that supermarket. No, I love it, 0:02:13.000 --> 0:02:15.560 since it's Twiggy Sunday, as you said, a listener from 0:02:15.600 --> 0:02:17.760 day one will allow it. But I don't know. I 0:02:17.800 --> 0:02:19.520 don't know if we want to go down in that 0:02:19.600 --> 0:02:24.120 rabbit hole. I love it. I I I'm all for it, 0:02:24.480 --> 0:02:26.400 and I want to open it up to others who 0:02:27.280 --> 0:02:31.720 have seen something crazy in any market, including the supermarket. 0:02:32.240 --> 0:02:34.960 So um. You know, we close out the show typically 0:02:34.960 --> 0:02:36.920 with the craziest thing we saw in markets. If you 0:02:36.960 --> 0:02:40.240 guys saw anything, give us a call at our hotline. 0:02:40.280 --> 0:02:44.239 It's six four six three two four three four nine zero. 0:02:44.760 --> 0:02:46.560 Leave us a voicemail and maybe we'll play it on 0:02:46.600 --> 0:02:50.160 the show and then you can also hit me and 0:02:50.480 --> 0:02:54.000 my careaging up on Twitter as well. Although needs to 0:02:54.000 --> 0:02:56.960 tweet at us about what's so crazy about all Ruddby 0:02:56.960 --> 0:02:59.680 in the sexiest man in the world. I don't know, 0:03:00.080 --> 0:03:04.320 is it's not true? Right? Sorry Paul rod fans. Anyway, 0:03:04.680 --> 0:03:06.520 enough crazy things. We have a lot to talk about 0:03:06.520 --> 0:03:09.600 with our With our guest this week, it's Steve Kurtz. 0:03:09.639 --> 0:03:13.840 He's the global head of asset management at Galaxy Digital. Steve, 0:03:13.880 --> 0:03:17.040 welcome to the show and thanks so much for joining us. Well, 0:03:17.280 --> 0:03:19.640 thank you both, And my life mission is now to 0:03:19.720 --> 0:03:25.040 help work some crypto Twitter banter into your show going forward. 0:03:25.520 --> 0:03:27.720 That would be that would be really really great. But 0:03:27.760 --> 0:03:30.480 maybe just to to start us out, Galaxy is a 0:03:30.480 --> 0:03:33.560 really big name in the crypto world, as Mike said 0:03:33.600 --> 0:03:36.400 in your introduction, So maybe you can just set up 0:03:36.440 --> 0:03:39.480 for our listeners what Galaxy is and what your job 0:03:39.560 --> 0:03:42.640 is at the company. Yeah. Sure, Well, it's been four 0:03:42.720 --> 0:03:44.840 years since we started Galaxy and it was. It was 0:03:44.880 --> 0:03:48.320 eight people, uh with with Mike Novigrats leading the charge 0:03:48.320 --> 0:03:52.840 in and we had this uh, this idea, um that 0:03:52.960 --> 0:03:55.720 what had been a retail phenomenon, right, crypto started as 0:03:55.720 --> 0:04:00.480 a retail um uh phenomenon, like I said, And we 0:04:00.520 --> 0:04:02.600 thought for this really to grow into what it was 0:04:02.680 --> 0:04:05.600 able to grow into, we would have to have um 0:04:05.640 --> 0:04:08.880 all kinds of developments on the institutional side. And that 0:04:08.960 --> 0:04:11.320 was a little antithetical to the crypto community and in 0:04:11.320 --> 0:04:13.960 a way the crypto ethos, but it was really important 0:04:13.960 --> 0:04:16.680 to us, having worked on the traditional side of finance, 0:04:16.960 --> 0:04:20.080 to help the space sort of grow up and really 0:04:20.120 --> 0:04:25.599 to be the translation mechanism between crypto and the institutional world. 0:04:25.640 --> 0:04:28.360 And so we thought we had a unique ability to 0:04:28.400 --> 0:04:31.560 build a company that looks a little bit like Goldman Sachs, 0:04:31.960 --> 0:04:34.560 although uh, you know that that's a that's a mental 0:04:34.600 --> 0:04:37.279 model that again is not so crypto cool, I would say. 0:04:37.760 --> 0:04:39.400 And so we built out you know, trading as a 0:04:39.520 --> 0:04:43.360 as a as a client business. We built out investment banking, 0:04:44.080 --> 0:04:48.120 principal mining business, a principal investments business. And the business 0:04:48.120 --> 0:04:49.719 that I've been leading for the last four years is 0:04:49.720 --> 0:04:52.719 the asset management business. And so the consistent thread across 0:04:52.760 --> 0:04:55.599 all that is a real need for education and working 0:04:55.600 --> 0:04:57.680 with the regulators and you know, doing things the right 0:04:57.720 --> 0:05:00.599 way as good sort of corporate citizens. Uh, and in 0:05:00.680 --> 0:05:04.480 so doing move the crypto phenomenon into the mainstream. Steve, 0:05:04.560 --> 0:05:09.240 let's get unpack a little bit about the asset management business. 0:05:09.400 --> 0:05:12.400 Uh latest number I saw three point two billion. Wow, 0:05:12.440 --> 0:05:14.720 it's uh nice little chunk of change you got you 0:05:14.800 --> 0:05:19.799 got under management there. UM, we're working on it and uh, 0:05:20.080 --> 0:05:23.640 you know obviously uh, you know, maybe you can unpack 0:05:23.680 --> 0:05:24.880 it for as a little bit. A big chunk of 0:05:24.880 --> 0:05:27.200 that I think is in the index type of funds 0:05:27.200 --> 0:05:30.160 and you know, full disclosure, Bloomberg does partner with Galaxy 0:05:30.279 --> 0:05:33.360 on creating the index is uh, And I want to 0:05:33.400 --> 0:05:35.600 get back to the indexes, but I'm kind of fascinated with, 0:05:35.800 --> 0:05:38.080 um the other portion of it, which is the fund 0:05:38.080 --> 0:05:42.880 of funds um where you guys sort of identify, you know, 0:05:43.240 --> 0:05:47.760 more active management type of funds UM. Talking to us 0:05:47.760 --> 0:05:50.680 a little bit about that portion. UM. It was an 0:05:50.680 --> 0:05:54.720 acquisition right, uh, that you guys made in the active 0:05:54.720 --> 0:05:56.760 fund business. Talk us a little bit about that sort 0:05:56.760 --> 0:05:59.479 of what how the fund of fund business works? UM, 0:06:00.000 --> 0:06:02.200 do you look for in other funds to invest in 0:06:02.240 --> 0:06:05.159 and that sort of thing. Yeah. Sure, so we we 0:06:05.200 --> 0:06:10.159 acquired UM Galaxies asset management business acquired Vision Hill in 0:06:10.200 --> 0:06:12.120 May of this year. And and Vision Hill is run 0:06:12.120 --> 0:06:16.240 by two wonderful, brilliant guys, Danzela and Scott Army. And 0:06:16.279 --> 0:06:18.320 for the last three years before that they had been 0:06:18.720 --> 0:06:24.000 building a database and real connectivity to the crypto funds 0:06:24.640 --> 0:06:28.120 all around the world, passive funds, hedge funds, venture funds, 0:06:28.560 --> 0:06:31.520 and UM. You know, when you think about the need 0:06:31.600 --> 0:06:32.880 for a fund of funds, what does the fund of 0:06:32.920 --> 0:06:36.200 funds do? It wraps a number of different fund investments 0:06:36.279 --> 0:06:40.480 under one vehicle. UM. In the traditional world, Uh, maybe 0:06:40.480 --> 0:06:42.440 Blackstone would argue with me, but you you would look 0:06:42.440 --> 0:06:43.719 at that and say, well, why do you need that 0:06:43.800 --> 0:06:48.760 model when people can go find their own managers themselves. Um, 0:06:48.839 --> 0:06:52.440 that's true. Twenty years later, I would analogize the crypto 0:06:52.560 --> 0:06:55.480 funds space too, very similar to the hedge funds space. 0:06:55.480 --> 0:06:58.160 In the early two thousands, there are eight and fifty funds. 0:06:58.200 --> 0:07:01.839 It's a shocking statistic that people don't understand the breadth 0:07:01.839 --> 0:07:04.560 and scope of that. And they're divided out in many 0:07:04.600 --> 0:07:08.120 different ways and when you go to a pension, or 0:07:08.120 --> 0:07:09.800 you go to an endowment, or you go to a 0:07:09.800 --> 0:07:12.600 sovereign wealth fund, and they say, great, we believe in 0:07:12.640 --> 0:07:14.880 the crypto future. We believe in with web three. What 0:07:14.920 --> 0:07:17.840 do we do now? Uh, okay, you can buy bitcoin, 0:07:17.920 --> 0:07:20.440 you can buy ethereum, maybe you can buy a venture fund, 0:07:21.040 --> 0:07:23.360 but what else is there? And and intuitively they really 0:07:23.400 --> 0:07:26.040 go to hedge funds because it's kind of an alternative asset. 0:07:26.720 --> 0:07:28.080 And then they say, well, wait, who are the big 0:07:28.080 --> 0:07:30.120 hedge fund players? And the answer is there really aren't 0:07:30.320 --> 0:07:33.080 big hedge fund players. There are a handful that have 0:07:33.520 --> 0:07:37.080 reached some escape velocity, a couple hundred million here or there, 0:07:37.120 --> 0:07:39.400 but how can someone put two million dollars into that? 0:07:39.440 --> 0:07:41.320 They can't do that. So it was a real pain 0:07:41.360 --> 0:07:45.760 point for large institutions to access this more active body 0:07:45.800 --> 0:07:48.840 of the asset class um. And we we just felt 0:07:48.880 --> 0:07:51.480 that it was really part of our mission, which is 0:07:51.520 --> 0:07:54.760 both education and access, to give that tool in the toolkit. 0:07:55.080 --> 0:07:56.560 And a big part of that is not just the 0:07:56.600 --> 0:08:00.560 access vehicles, it's really defining who those funds are. What 0:08:00.560 --> 0:08:03.600 do we look for? Um, Well, no one's really done 0:08:03.640 --> 0:08:06.480 great operational due diligence in the space until until we've 0:08:06.480 --> 0:08:08.680 come to the market with these vehicles. So we look 0:08:08.760 --> 0:08:12.560 for great entrepreneurs, talented entrepreneurs who have built good fund 0:08:12.600 --> 0:08:15.880 management businesses, and then on the back end, UM we 0:08:15.960 --> 0:08:20.120 look for really robust, thoughtful approaches that can scale, that 0:08:20.160 --> 0:08:23.080 our regulatory compliant and that meet a set of standards 0:08:23.120 --> 0:08:25.800 that were in the process of helping sort of define 0:08:25.840 --> 0:08:27.840 for the asset class. So the same way that we 0:08:27.880 --> 0:08:31.559 do indexing with Bloomberg on the passive side, this hedge 0:08:31.560 --> 0:08:35.600 fund of funds model, both through indices and through great 0:08:35.679 --> 0:08:38.520 data and setting of standards UM is really important to 0:08:38.640 --> 0:08:41.800 more money coming into the space, more talented traders and 0:08:41.800 --> 0:08:44.920 financial services professionals coming to the space, and ultimately much 0:08:44.920 --> 0:08:46.559 bigger a u M s for all of those underlying 0:08:46.600 --> 0:08:50.360 fund managers. We think. And then just to break down 0:08:50.400 --> 0:08:52.440 a little bit more of what you guys do, I 0:08:52.480 --> 0:08:55.840 think Galaxy also has a mining business. Correct me if 0:08:55.840 --> 0:08:57.640 I'm wrong, But maybe you can just break down a 0:08:57.679 --> 0:09:01.080 little bit like what those internally conversations are like for 0:09:01.120 --> 0:09:03.840 you guys. Considering how much in the news, like the 0:09:03.960 --> 0:09:07.839 environmental aspect of all of this has been recently, it's 0:09:07.840 --> 0:09:09.760 a great question, and we we do have We have 0:09:09.920 --> 0:09:14.839 a mining business that's run by a fidelity alumna Amanda Fabriano, 0:09:15.360 --> 0:09:17.559 one of the one of the most brilliant bitcoin mining 0:09:18.120 --> 0:09:21.480 minds out there, and that's part of our principal investing business. 0:09:21.480 --> 0:09:23.560 We've got a large balance sheet that does a number 0:09:23.559 --> 0:09:26.480 of investments and so UM, you know, we're very as 0:09:26.559 --> 0:09:30.160 you say, involved in this UM, this question of E. 0:09:30.360 --> 0:09:33.319 S G and Bitcoin, And I don't think at all 0:09:33.360 --> 0:09:37.080 as a starting point that having passion for UH the 0:09:37.200 --> 0:09:41.480 environment is inconsistent with bitcoin. UM. What happened in May 0:09:41.559 --> 0:09:44.640 really of this year was that bitcoin started to grow 0:09:44.720 --> 0:09:46.640 up as a macro asset, right it hit a trillion 0:09:46.679 --> 0:09:50.320 in UH in overall market cap, and then the kitchen 0:09:50.360 --> 0:09:54.640 sink of macro problems were thrown at bitcoin China band UH. 0:09:54.679 --> 0:09:57.600 You know E s G regulatory and for bitcoin to 0:09:57.600 --> 0:10:00.640 become a five trillion dollar asset, it needs to not 0:10:00.720 --> 0:10:03.880 only meet those questions, but have good answers to those questions. 0:10:03.880 --> 0:10:05.520 And so E s G was a big part of that. 0:10:06.080 --> 0:10:09.120 UM when when you look under the hood, UH, a 0:10:09.200 --> 0:10:13.040 lot of those initial arguments were somewhat flimsy, and I 0:10:13.080 --> 0:10:15.240 think you have to start with. Before you say how 0:10:15.320 --> 0:10:19.160 much energy can something, uh should something utilize, you have 0:10:19.200 --> 0:10:21.439 to agree that it's worth something. So the first question 0:10:21.480 --> 0:10:23.559 is why is bitcoin valuable to the world. And once 0:10:23.600 --> 0:10:25.800 we agree on that, then you can talk about the 0:10:25.880 --> 0:10:28.719 energy aspect. You know, we've been really active. We've got 0:10:28.720 --> 0:10:31.199 an E S G working group across the firm, uh 0:10:31.240 --> 0:10:35.160 that's continuing to evolve. We were an active founding part 0:10:35.200 --> 0:10:38.120 of the Bitcoin Mining Council, and our mission is actually 0:10:38.120 --> 0:10:43.480 to make bitcoin green much faster than all of these goals. Uh. 0:10:43.559 --> 0:10:45.880 You know that we're hearing broadly. Um, we think that, 0:10:46.400 --> 0:10:50.240 for instance, the ability for bitcoin to utilize renewables is 0:10:50.040 --> 0:10:53.080 a huge and accelerating piece of the pie. Um. We 0:10:53.160 --> 0:10:56.440 think that, um, you know, oftentimes bitcoin is using energy 0:10:56.480 --> 0:10:59.640 that's actually already being wasted by the grid. So yes, 0:10:59.640 --> 0:11:02.920 it's you energy, but that's not net new energy. And 0:11:02.960 --> 0:11:05.240 so but we put out a piece from this research 0:11:05.280 --> 0:11:07.640 group that um that sort of estimates I think it 0:11:07.679 --> 0:11:12.560 was around bitcoin is already uh mind using green sources, 0:11:12.559 --> 0:11:14.680 and that number is going to accelerate very quickly. So 0:11:14.720 --> 0:11:16.600 I think when you look back on this in five years, 0:11:17.040 --> 0:11:19.480 given how much brain power is being focused on that 0:11:19.520 --> 0:11:22.240 exact issue, You're actually gonna look to bitcoin and say, wow, 0:11:22.280 --> 0:11:24.920 that was a great case study for other industries to 0:11:24.960 --> 0:11:28.440 accelerate the adoption of green technologies and becoming fully green. 0:11:38.960 --> 0:11:42.199 You know, Steve, I wanna get back to the the 0:11:42.280 --> 0:11:46.200 passive index funds a little bit too. Um. You know, obviously, 0:11:46.679 --> 0:11:50.880 you know, one of the appeals of UH indexing is 0:11:50.920 --> 0:11:53.800 you get diversity. You know, Uh, it's kind of tricky, 0:11:54.200 --> 0:11:58.160 uh in the crypto world, considering that Ether and Bitcoin 0:11:58.200 --> 0:12:00.360 are just so huge compared to everyone else. And I 0:12:00.440 --> 0:12:03.600 was looking at the the the one index fund and 0:12:03.600 --> 0:12:07.240 it's you know, you cap the holdings at or the 0:12:07.240 --> 0:12:12.600 weights at of each you know, so it's Bitcoin ethereum 0:12:12.640 --> 0:12:14.840 and then and then the other ones make up the balance. 0:12:14.960 --> 0:12:19.240 And in the defy index you're you know about of 0:12:19.280 --> 0:12:22.280 the unit swap token. So I just I'm curious where 0:12:22.320 --> 0:12:25.120 you see that going forward. I mean, will the do 0:12:25.200 --> 0:12:27.400 you think the other coins will catch up to the 0:12:27.440 --> 0:12:30.600 point where you know it will naturally bring down those 0:12:30.640 --> 0:12:33.760 waitings um or you know, is there a case to 0:12:33.760 --> 0:12:35.840 be made for sort of an equal weighted crypto fund. 0:12:35.840 --> 0:12:38.720 Do you think it's a great question? And look at 0:12:38.760 --> 0:12:42.199 for for us UM. We were privileged to start working 0:12:42.200 --> 0:12:45.959 with Bloomberg and when I think, um, you know, crypto 0:12:46.000 --> 0:12:47.520 was in a very different place and that was a 0:12:47.520 --> 0:12:51.160 really important part of the puzzle. In our opinion, indusicries 0:12:51.200 --> 0:12:53.400 are important for a million different reasons, but with a 0:12:53.440 --> 0:12:56.480 new asset class, it's as much about the taxonomy and 0:12:56.520 --> 0:12:59.640 defining that taxonomy as it is anything else. UM. The 0:12:59.720 --> 0:13:03.280 one thing that is uh, you know, very consistent and 0:13:03.520 --> 0:13:06.520 different than other indicries is that cap. UM. You know, 0:13:06.520 --> 0:13:08.120 We've got members of the team that have spent their 0:13:08.160 --> 0:13:10.920 careers in the et F space, and what we really 0:13:10.960 --> 0:13:13.920 wanted to focus on over time was the growth of 0:13:13.920 --> 0:13:16.640 the asset class. And our view was, if you want 0:13:16.640 --> 0:13:18.959 Bitcoin exposure, or if you want a Theorum exposure or 0:13:18.960 --> 0:13:22.080 any single asset exposure, you can go to other places, 0:13:22.120 --> 0:13:24.840 including our single asset vehicles. You don't need to go 0:13:24.880 --> 0:13:27.439 to an index to do that for you for that exposure, 0:13:27.960 --> 0:13:32.440 and we felt that UM, the way to facilitate the 0:13:32.480 --> 0:13:36.400 growth of the space was really to set that cap 0:13:36.559 --> 0:13:39.679 and then really start to educate around forget the waitings 0:13:39.720 --> 0:13:42.560 for now really educate the verticals. And so Bitcoin is 0:13:42.559 --> 0:13:45.840 digital goal thetheroreum is web three right defy as an 0:13:45.920 --> 0:13:49.120 entire construct n f T s UH and so um 0:13:49.240 --> 0:13:52.040 I expect to answer your question that you will have 0:13:52.679 --> 0:13:56.520 a number of very large assets in crypto in our 0:13:56.600 --> 0:13:59.480 large cap index. It is difficult at the moment to 0:13:59.520 --> 0:14:02.320 see how something could compete with a five billion dollar 0:14:02.360 --> 0:14:05.440 market cap and ethereum or a trillion plus in bitcoin. 0:14:05.520 --> 0:14:08.520 But look at how quickly we've seen aspects of the 0:14:08.559 --> 0:14:10.800 space grow. We've got over a hundred billion total lock 0:14:10.880 --> 0:14:13.480 value and defy in less than a year. So we 0:14:13.600 --> 0:14:16.200 just don't know. And anyone who says they know, I 0:14:16.240 --> 0:14:19.360 think is is uh either confused or or or telling 0:14:19.400 --> 0:14:21.840 a story. Uh. You know, you look at something like 0:14:21.840 --> 0:14:25.200 Salana and you could see an ETH competitor come into 0:14:25.240 --> 0:14:27.800 that index at one point and be a really sizeable 0:14:28.200 --> 0:14:31.040 chunk of the index as well. And so our expectation 0:14:31.400 --> 0:14:33.000 not in a month or in a year, but over 0:14:33.040 --> 0:14:36.120 a cycle five ten years, which is an eternity in crypto, 0:14:36.480 --> 0:14:38.480 is that like an accordy and you're gonna have uh 0:14:38.640 --> 0:14:41.560 fewer and then more constituents of the index, and then 0:14:41.600 --> 0:14:44.880 over time you're gonna have different competitive dynamics within the 0:14:44.920 --> 0:14:48.320 index within different verticals of the index, and what will 0:14:48.360 --> 0:14:50.280 be really cool is when we can start to subdivide 0:14:50.600 --> 0:14:53.120 and have a different sub indicries, kind of like the 0:14:53.160 --> 0:14:57.880 Defy index that we launched with Bloomberg in August. So 0:14:57.920 --> 0:14:59.640 you just mentioned having a lot of e t F 0:14:59.680 --> 0:15:02.200 player is working with you, And obviously the big news 0:15:02.280 --> 0:15:06.560 recently has been the launch of the Bitcoin Futures ETFs. 0:15:06.960 --> 0:15:09.800 I was looking at some of the notes that, uh, 0:15:09.920 --> 0:15:12.480 some of the research that you had done recently, and 0:15:12.520 --> 0:15:15.600 you said in order for digital assets to continue to flourish, 0:15:15.760 --> 0:15:18.440 they must be accessible to all investors, but that the 0:15:18.520 --> 0:15:21.520 launch of the futures ETFs concerns you and I want 0:15:21.520 --> 0:15:24.960 to I wanted to ask you why why that is? Yeah, Look, 0:15:25.000 --> 0:15:27.680 it's it's a nuanced um. It's a nuanced discussion, and 0:15:27.960 --> 0:15:31.440 I think on some levels as a crypto company, Galaxy 0:15:31.480 --> 0:15:35.120 looks at something like this from the SEC uh favorably, Right. 0:15:35.240 --> 0:15:38.720 It's it's important that there's an engagement and that there 0:15:38.800 --> 0:15:41.880 is for the first time, you know, this regulated public 0:15:42.600 --> 0:15:45.320 fund construct that's available in the United States. So as 0:15:45.400 --> 0:15:48.160 at a broad level, we think that's progress and we 0:15:48.160 --> 0:15:50.880 applaud the regulators for that. And we think it's another 0:15:51.400 --> 0:15:55.040 in many recent developments around not the cool stuff that's 0:15:55.040 --> 0:15:57.200 on crypto Twitter, but the guts of the market and 0:15:57.240 --> 0:16:00.680 the actual infrastructure that's being built around the markets that's 0:16:00.720 --> 0:16:04.040 really foundational. So so that's great. Um, when you when 0:16:04.040 --> 0:16:06.520 you look under the hood as a fiduciary business, so 0:16:06.560 --> 0:16:08.480 now not with the galaxy crypto had on, but with 0:16:08.520 --> 0:16:12.240 the galaxy asset management had on, and you think about um, 0:16:12.320 --> 0:16:14.760 something like USO. Uh you know, and I think you 0:16:14.800 --> 0:16:17.000 might have talked about this on a recent podcast. You know, 0:16:17.040 --> 0:16:19.840 the role dynamic is a real issue. And when you 0:16:19.880 --> 0:16:22.800 when you bring new participants to a new market in 0:16:22.840 --> 0:16:26.320 a volatile asset that's already enough you don't need to 0:16:26.360 --> 0:16:30.440 have structural uh questions on top of that, like leverage, 0:16:30.440 --> 0:16:32.840 which is obviously a feature of of the products that 0:16:32.880 --> 0:16:35.520 are that are approved and out there. And it reminds 0:16:35.520 --> 0:16:38.360 me a little bit of the trust structure. Uh. You know, 0:16:38.400 --> 0:16:42.000 we chose not to do a trust structure for bitcoin access, 0:16:42.080 --> 0:16:44.600 just like we're choosing at the moment not to engage 0:16:44.600 --> 0:16:47.400 with the futures product. You know, the tracking relative to 0:16:47.440 --> 0:16:51.760 bitcoin hasn't been great. That doesn't mean that a company 0:16:51.800 --> 0:16:54.000 like gray scale isn't very important for the space. When 0:16:54.240 --> 0:16:56.760 when when the market really needed something like that, just 0:16:56.800 --> 0:16:58.720 like the market needs the futures et F right now. 0:16:59.240 --> 0:17:02.240 But I would call that more of a trading vehicle 0:17:02.680 --> 0:17:05.880 as opposed to an investor retail vehicle. And so we're 0:17:05.880 --> 0:17:09.480 focusing on the spottyt F and putting all our energy 0:17:09.520 --> 0:17:13.760 into that project in partnership with Investco. All Right, Steve, 0:17:13.800 --> 0:17:16.080 I got a multi part question for you, and Vilton 0:17:16.240 --> 0:17:18.000 is gonna give me a hard time about that, probably 0:17:18.119 --> 0:17:20.800 as she always does this. This is trademark. Well, if 0:17:20.800 --> 0:17:22.800 I thought I was listening you ever heard of the 0:17:22.840 --> 0:17:27.640 smart List podcast with Jason Bateman and um uh Will Arnett. 0:17:27.960 --> 0:17:32.719 Uh He Jason Bateman asks like three minute questions. So 0:17:32.760 --> 0:17:34.680 I think I think I'm onto something here. I think 0:17:34.720 --> 0:17:37.920 this is the way it's done. To me, Steve, it's 0:17:37.960 --> 0:17:41.520 been fascinating watching over recent years sort of the evolution 0:17:41.840 --> 0:17:45.520 of traditional finance. Uh. And that's sort of the big 0:17:45.560 --> 0:17:48.040 bold face names of the banking world. In the way 0:17:48.080 --> 0:17:50.200 they talk about crypto. You know, it sort of went 0:17:50.240 --> 0:17:52.919 from all they roll the rise at it. You know 0:17:53.119 --> 0:17:56.760 that this is digital toolips five years ago too. Well, 0:17:56.800 --> 0:17:58.919 we're kind of warming up to it now. So okay, 0:17:58.960 --> 0:18:03.000 we're diving in know with two feet now. Um. So 0:18:03.000 --> 0:18:05.879 so part of of the question is, know, what are 0:18:05.920 --> 0:18:09.600 your conversations like with the institutions, Um, you know, what 0:18:09.720 --> 0:18:12.480 kind of allocations are are sort of typical for say, 0:18:12.560 --> 0:18:16.040 I don't know a pension or we're an endowment. What 0:18:16.119 --> 0:18:20.840 kind of allocations are they looking at? And the one 0:18:20.840 --> 0:18:24.439 person who keeps whose evolution of thought on this topic 0:18:24.480 --> 0:18:27.400 to me that's really fascinating is Ken Griffin of Citadel. 0:18:27.480 --> 0:18:30.280 You know he uh, he's he's warming up. You can 0:18:30.280 --> 0:18:32.560 tell he's warming up to it. Um, he's still a 0:18:32.560 --> 0:18:34.480 little uneasy about it. And one of his some of 0:18:34.520 --> 0:18:36.440 his recent comments were like, I just don't know how 0:18:36.440 --> 0:18:40.480 to value this, you know, other than um, it's worth 0:18:40.520 --> 0:18:42.480 whatever the next person is willing to pay for. We're 0:18:43.080 --> 0:18:45.760 so hopefully that's not too much for you there. But 0:18:45.800 --> 0:18:48.639 if you can answer my questions and and Ken Griffin's questions, 0:18:49.080 --> 0:18:52.359 you know, uh, what's the sort of climate among the 0:18:52.400 --> 0:18:55.879 institutional investors, what kind of allocations are they thinking about? 0:18:56.000 --> 0:18:57.880 And how do you what would you say to Ken 0:18:57.880 --> 0:18:59.480 Griffin if you if you got him in the elevator 0:18:59.520 --> 0:19:03.320 and he said, how how do I value this stuff? Uh? Great, 0:19:03.400 --> 0:19:05.440 I'll try not to answer the last question first because 0:19:05.440 --> 0:19:08.160 then I'll go down the rabbit hole. The rabbit hole, 0:19:08.200 --> 0:19:10.520 but uh, why don't I start with it? So, first 0:19:10.520 --> 0:19:14.240 of all, when you mentioned the banks, I I worked 0:19:14.240 --> 0:19:17.600 at a bank. It was called Lehman Brothers. Uh it didn't. 0:19:19.720 --> 0:19:22.400 So yeah, well we'll spare my leaving story for now. 0:19:22.480 --> 0:19:26.720 But uh, I empathize a bit. It's there. There's there's 0:19:26.760 --> 0:19:29.480 what there's what you can do. There's what you want 0:19:29.480 --> 0:19:31.239 to do. There's what your your clients are asking you 0:19:31.280 --> 0:19:34.760 to do. There's committees. It's just it's a complicated process 0:19:35.280 --> 0:19:37.400 that necessarily is going to take time. But I think 0:19:37.400 --> 0:19:39.600 that they're getting there when you look at the institutional 0:19:39.640 --> 0:19:43.640 allocators first of all, hunter trillion dollar plus market globally. Uh, 0:19:43.920 --> 0:19:48.440 you know a number of of necessary structural impediments to 0:19:48.520 --> 0:19:51.480 doing anything different in place, whether it's the investment committees 0:19:51.560 --> 0:19:53.960 or the consultants or the O D D work. Uh. 0:19:54.000 --> 0:19:57.399 And so really, uh, you can't fake it with this crowd, 0:19:57.400 --> 0:19:59.840 nor should you try. And so for the last four years, 0:20:00.119 --> 0:20:03.399 why do we focus on indexing first? And then we 0:20:03.560 --> 0:20:07.280 literally treated service providers like Deloyd, like clients, we had 0:20:07.320 --> 0:20:10.000 forty meetings with them before we would have them as 0:20:10.040 --> 0:20:11.879 they would have us as as their auditor for our 0:20:11.920 --> 0:20:15.320 fund for our for our crypto funds, And you needed 0:20:15.359 --> 0:20:17.639 all those pieces in line before you could even have 0:20:17.680 --> 0:20:21.080 a credible conversation. So a lot of that between the 0:20:21.119 --> 0:20:23.879 period of time when crypto was down where we are 0:20:23.920 --> 0:20:27.919 today was happening behind the scenes. The conversations, the product 0:20:27.960 --> 0:20:31.320 structure is being developed. Uh, even sort of the valuation 0:20:31.359 --> 0:20:34.199 frameworks we're being tooled around with a little bit so 0:20:34.240 --> 0:20:36.080 that when you came out of this and the world 0:20:36.080 --> 0:20:38.960 exploded and had a catalyst for crypto to really matter, 0:20:39.040 --> 0:20:42.120 which we can talk about and which is covid um, 0:20:42.160 --> 0:20:47.040 you're not starting from zero. In every single institution that 0:20:47.160 --> 0:20:49.640 you can think of, in every vertical, they have people 0:20:49.640 --> 0:20:51.720 who have done work on this. It's been socialized with 0:20:51.720 --> 0:20:54.480 their committees, and they're much further along than than you 0:20:54.480 --> 0:20:57.800 would expect. Um. As an example, there's a there's an 0:20:57.880 --> 0:21:01.360 endowment that we spoke with recently and I'll not say 0:21:01.400 --> 0:21:04.920 their name obviously, uh that actually has now six percent 0:21:04.960 --> 0:21:07.600 crypto exposure because the bet has done so well over 0:21:07.640 --> 0:21:09.920 the last few years. And so that's a whole different 0:21:09.960 --> 0:21:14.440 risk management challenge. Um for those who haven't participated yet, 0:21:14.840 --> 0:21:17.120 there's a lot of reasons why they haven't, but there's 0:21:17.119 --> 0:21:20.000 a real pull for them to now make that step. 0:21:20.080 --> 0:21:22.040 And the reason is that cryptos now a three trillion 0:21:22.080 --> 0:21:26.439 dollar asset class. If wealth broadly is fo fifty trillion, 0:21:26.680 --> 0:21:30.159