WEBVTT - DeFi versus TradFi 0:00:02.560 --> 0:00:06.120 I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News, 0:00:06.440 --> 0:00:09.640 and this is Bloomberg Crypto, a daily Bloomberg I Heart podcast. 0:00:10.119 --> 0:00:17.640 It's Friday, July two. Something we say a lot here 0:00:17.680 --> 0:00:21.120 on the Bloomberg Crypto team is everything old is new 0:00:21.160 --> 0:00:23.840 in crypto. And what we mean by that is while 0:00:23.920 --> 0:00:27.560 there's a perception that ideas like the blockchain or novel 0:00:27.640 --> 0:00:31.639 and groundbreaking, the reality is there's lots of precedents for 0:00:31.760 --> 0:00:35.800 other concepts in crypto. This is particularly clear right now 0:00:36.200 --> 0:00:39.680 as crypto experiences its own version of a beer Stearns moment, 0:00:40.240 --> 0:00:44.040 which all begs the question, our concepts like Defy or 0:00:44.080 --> 0:00:49.280 decentralized finance just reinventing traditional finance with more complexity and 0:00:49.280 --> 0:00:52.760 a sprinkling of the blockchain, or is their genuine novelty 0:00:52.840 --> 0:00:56.320 Here for more on these questions, I'm joined by Bloomberg 0:00:56.400 --> 0:01:05.920 opinion columnist Matt Levine and Bloomberg reporta muy Sen Matt, 0:01:06.400 --> 0:01:09.840 we are this is a truly exciting moment in the 0:01:09.880 --> 0:01:13.920 history of the pod. We have none other than Matt Levine, who, 0:01:13.959 --> 0:01:15.480 if you're not reading him, for his takes on Elon 0:01:15.560 --> 0:01:17.440 Musk you should be reading him for his takes on crypto, 0:01:17.480 --> 0:01:19.200 like what is wrong with you? Get it together? Subscribe 0:01:19.240 --> 0:01:22.920 to his newsletter. And Muyao, who has been you know 0:01:23.040 --> 0:01:26.199 since joining Bloomberg, just absolutely on fire as it relates 0:01:26.240 --> 0:01:30.120 to covering everything defy which all seems to be melting 0:01:30.120 --> 0:01:32.680 down in one in one direction right now. So what 0:01:32.680 --> 0:01:35.560 we're gonna do today with these two fantastic guests is 0:01:35.760 --> 0:01:40.600 explore a little bit how what we're seeing into centralized 0:01:40.600 --> 0:01:46.200 finance and centralized finance have echoes of what we've seen before. 0:01:46.760 --> 0:01:49.240 And without revealing just how old Matt and I are, 0:01:49.360 --> 0:01:51.200 I can say that we were both around in two 0:01:51.200 --> 0:01:55.520 thousand and eight and we're aware of the financial crisis 0:01:55.600 --> 0:01:57.360 of that time, and we're going to make a couple 0:01:57.360 --> 0:02:01.680 of other historical references. Does that work for you both? Yeah? Alright, 0:02:01.800 --> 0:02:06.760 let's get started. So we are what's defy defies, you know, 0:02:06.880 --> 0:02:11.120 show forced decentralized finance. It is one of the narrative 0:02:11.240 --> 0:02:15.240 or innovation crypto wants to uh sort of created to 0:02:15.320 --> 0:02:19.760 replace the traditional finance, which you know, crypto people like 0:02:19.840 --> 0:02:25.679 to say trifi and it's basically tokenalized in every financial 0:02:25.760 --> 0:02:30.200 instrument on blockchain and matt as two of us who 0:02:30.240 --> 0:02:32.880 have covered you know, trad fire or whatever heard referred 0:02:32.880 --> 0:02:39.240 to even more disparagingly as old FI, which, wow, rude, 0:02:40.520 --> 0:02:43.799 we are we are old five. Um what about DEFY 0:02:43.960 --> 0:02:50.000 looks to you like old five? Well, you know, I 0:02:50.000 --> 0:02:52.040 want to be careful. I think that like there is 0:02:52.080 --> 0:02:54.280 a sort of like core element of DeFi that is 0:02:54.280 --> 0:02:57.360 truly decentralized, and that is different and interesting. But what's 0:02:57.360 --> 0:03:01.280 been interesting in the last like you weeks two months 0:03:01.400 --> 0:03:04.440 has been that so many people who were in sort 0:03:04.440 --> 0:03:07.679 of broadly speaking, the DEFISE space turned out to be 0:03:08.440 --> 0:03:10.680 much more centralized than people thought, and to look a 0:03:10.680 --> 0:03:13.840 lot like the financial system of sort of you know, 0:03:13.960 --> 0:03:15.960 late two thousand seven, where it was a lot of 0:03:16.000 --> 0:03:19.840 like very levered players lending to each other in opaque 0:03:19.840 --> 0:03:23.120 ways where it was hard from the outside to know 0:03:24.080 --> 0:03:27.280 who was going to blow up when someone else blew up. 0:03:27.680 --> 0:03:31.520 So like you know, when like Lehman Brothers collapsed, that 0:03:31.639 --> 0:03:33.440 was that was an investment bank. For those of you 0:03:33.480 --> 0:03:37.200 who are you know, nineteen, when Lehman by this collapse, 0:03:37.240 --> 0:03:39.960 there is a lot of like who has exposure to Lehman? 0:03:40.080 --> 0:03:43.280 What commercial paper flunt, what you know, money market funder, 0:03:43.360 --> 0:03:46.000 what investment bank or what commercial bank is going to 0:03:46.040 --> 0:03:48.160 go down because they were lending money too, Lehman. And 0:03:48.160 --> 0:03:51.960 there there are worries like that that are repeating and 0:03:52.000 --> 0:03:55.480 propagating through the cryptosystem where you know, there were a 0:03:55.520 --> 0:04:00.760 couple of very high profile failures in crypto. One was 0:04:01.760 --> 0:04:04.760 the Terra Lunar ecosystem, which I think you'd probably called 0:04:04.800 --> 0:04:07.840 DeFi um, and the other was it was a hedge 0:04:07.840 --> 0:04:09.920 fund called Three Arrows Capital, which is like a hedge 0:04:09.920 --> 0:04:12.839 fund that defied stuff some other crypto stuff. And both 0:04:12.920 --> 0:04:15.960 of those, basically, like the fallout of that has been 0:04:16.000 --> 0:04:18.880 interesting to trace, and it wasn't I think necessarily obvious 0:04:18.880 --> 0:04:22.279 to everyone where that fallout would go until you know, 0:04:22.400 --> 0:04:27.159 other platforms started declaring bankrupts. And you know, you mentioned 0:04:27.520 --> 0:04:30.200 commercial paper, which I remember when none of us cared 0:04:30.200 --> 0:04:31.640 about commercial people, and then we all have to care 0:04:31.640 --> 0:04:33.599 about commercial people. And I feel like I'm there again 0:04:34.279 --> 0:04:36.479 because that's also at the center of a lot of 0:04:36.480 --> 0:04:40.600 speculation around stable coins. Or anytime you're caring about commercial paper, 0:04:40.839 --> 0:04:43.960 it's a bad sign, right, Yeah, No, it's just it's 0:04:43.960 --> 0:04:47.520 not good. So you know, I know you're not nineteen 0:04:47.560 --> 0:04:49.800 And I know you know what Lehman Brothers is, but 0:04:50.200 --> 0:04:53.400 what are you seeing, especially as it relates to some 0:04:53.480 --> 0:04:57.840 of the folks from you know, TRADFI who are interested 0:04:57.880 --> 0:05:01.640 in crypto or even disparaging of too. Where do you 0:05:01.680 --> 0:05:04.200 find yourself saying yeah, actually that's how that's similar, but 0:05:04.240 --> 0:05:09.640 this is how that's different. Yeah, for sure, I think, yes, 0:05:09.760 --> 0:05:13.120 I'm not that old. Oh I'm not that young. But 0:05:13.279 --> 0:05:15.839 I want to say, like, all of my knowledge from 0:05:15.920 --> 0:05:20.479 finance is actually from what I learned in DeFi. You know, 0:05:20.520 --> 0:05:22.080 there are a lot of cons of in DeFi that 0:05:22.240 --> 0:05:25.080 was claimed to be innovations, but after I talk to 0:05:25.160 --> 0:05:28.280 people who are you know, had a ull Street experience, 0:05:28.600 --> 0:05:31.080 So tell me, oh, that's been long existing in in 0:05:31.160 --> 0:05:35.480 traditional finance. However, I think a classic example recently would 0:05:35.520 --> 0:05:39.640 be uh steak East own Lato, which is easier and 0:05:40.440 --> 0:05:45.680 steaking platform. What it is is basically, if you stake 0:05:45.800 --> 0:05:48.640 your East with this platform, light though that you get 0:05:48.680 --> 0:05:53.560 a deridive token called steak East instead, and can use 0:05:53.600 --> 0:05:56.880 the stakes to trade and or to use the as 0:05:56.880 --> 0:06:00.479 a clatteral on different other defied platform for lending and 0:06:00.560 --> 0:06:03.760 brawling and things like that, and often time I heard 0:06:03.839 --> 0:06:06.760 from people who had a Trifi experience that it will 0:06:06.839 --> 0:06:12.280 tell me that sounds like security back back loans. And 0:06:12.400 --> 0:06:15.480 you know, Matt's as you have written about, I mean everything, 0:06:15.520 --> 0:06:17.880 but as you've written about elements of these, including this 0:06:18.000 --> 0:06:21.640 concept of shadow banking, which really came up in that 0:06:21.720 --> 0:06:25.000 two thousand and eight context. Are there things where you're 0:06:25.040 --> 0:06:27.039 sort of looking at this and you're like, really, really, 0:06:27.120 --> 0:06:31.120 we're reinventing this again. Oh sure, I mean just like 0:06:31.800 --> 0:06:34.320 just like the very simple core of like shadow banking. 0:06:34.320 --> 0:06:37.000 I mean, Chad, you know, a bank is an entity 0:06:37.000 --> 0:06:39.880 that borrows short term and lends long term. Classically, there's 0:06:39.880 --> 0:06:43.080 a lot of you know, nuance around that, but basically, 0:06:43.320 --> 0:06:45.960 a bank is something that takes deposits that people can take, 0:06:46.080 --> 0:06:48.560 can withdraw on demand, and it makes like mortgage lens 0:06:48.560 --> 0:06:50.400 where people don't have to pay them back for thirty 0:06:50.480 --> 0:06:53.920 years and so that is profitable. That's like a you know, 0:06:54.240 --> 0:06:56.800 in vary those terms, it's an arbitrage because the mortgages 0:06:56.839 --> 0:06:58.880 pay more than the deposits and so you can collect 0:06:58.920 --> 0:07:03.800 the interest difference. Um. But it's conceptually very risky business, 0:07:03.880 --> 0:07:06.640 right like, uh, if there's a run on the bank 0:07:06.920 --> 0:07:08.880 and you don't have any money in the vault, then 0:07:09.200 --> 0:07:13.160 you know you're getting big trouble. And so banking is 0:07:13.400 --> 0:07:15.840 a business that has existed for hundreds of years and 0:07:16.320 --> 0:07:18.160 ran into a lot of problems around runs on the 0:07:18.160 --> 0:07:21.960 bank and around various sorts of shenanigans and related party 0:07:21.960 --> 0:07:25.440 loans and whatever, and so in modern America, banking is 0:07:25.480 --> 0:07:29.200 like pretty regulated and so like that's that's banking, right, Like, 0:07:29.280 --> 0:07:31.360 banking has a lot of rules, and those rules are 0:07:31.400 --> 0:07:34.880 all sort of from from bad experience, right, Like those 0:07:34.920 --> 0:07:37.520 rules exist because something went wrong and people like, oh, 0:07:37.560 --> 0:07:39.640 we need a new rule. And in two thousand and 0:07:39.680 --> 0:07:41.640 eight they were like two thousands, you know, five to 0:07:41.640 --> 0:07:43.560 two thou seven, there were there were a lot of 0:07:44.120 --> 0:07:45.640 there's a lot of talking about shadow banks, and a 0:07:45.680 --> 0:07:48.680 shadow bank is basically something that does that business of 0:07:48.760 --> 0:07:51.520 borrowing short to len long, but it's not a bank, 0:07:51.800 --> 0:07:54.440 and so can do stuff that banks are not allowed 0:07:54.440 --> 0:07:57.560 to do. One thing that sometimes shadow banks do is 0:07:57.560 --> 0:08:00.280 is they are even more leveraged than a bank. Right 0:08:00.320 --> 0:08:03.960 where a bank typically has you know, like in the 0:08:04.000 --> 0:08:08.200 ballpark of three to ten percent equity, so like most 0:08:08.240 --> 0:08:10.040 of its loans are funded by deposits, but some of 0:08:10.080 --> 0:08:12.200 their funded by shareholder money, and so if some of 0:08:12.240 --> 0:08:15.080 the loans go bad, the shareholders is money off the depositors. 0:08:15.240 --> 0:08:17.120 Shadow banks can be you know, a hundred times lever 0:08:17.280 --> 0:08:20.600 to you know, a money market mutual fund. Arguably, shadow 0:08:20.600 --> 0:08:28.800 bank can be like sort of almost infinitely levered. In crypto, 0:08:29.240 --> 0:08:31.000 you sort of look around and I don't think people 0:08:31.040 --> 0:08:35.360 knew this until like platforms like Voyager and Celsius sort 0:08:35.440 --> 0:08:37.240 of blowing up. But you look at like these crypto 0:08:37.280 --> 0:08:43.200 platforms and their leverage ratios are are somewhere between very high, 0:08:43.360 --> 0:08:46.920 like you know, like four or five percent equity two 0:08:47.600 --> 0:08:49.960 practically infinite. And if you look at like if you 0:08:50.000 --> 0:08:53.880 look at tethers balance sheet, they're like, oh, we're totally backed, 0:08:54.120 --> 0:08:57.400 we are super solid. And then you like do the 0:08:57.400 --> 0:08:58.920 math and it's like they have like zero point two 0:08:58.960 --> 0:09:01.440 percent equity and you're like, well that's very low, right, 0:09:01.640 --> 0:09:03.760 and like and you know, you look at their assets 0:09:03.840 --> 0:09:05.920 and you know the question is how much equity do 0:09:05.920 --> 0:09:07.520 you need for like the kind of assets you have? 0:09:07.800 --> 0:09:11.720 And if tether was a thing that took deposits from 0:09:11.760 --> 0:09:15.200 like stable creint investors and invested them in like accounts 0:09:15.200 --> 0:09:18.280 at the fed then running at zero point equity would 0:09:18.280 --> 0:09:20.280 be great, would be like you know, more than you need. 0:09:20.760 --> 0:09:23.400 But like, in fact, they're list of assets is like 0:09:23.559 --> 0:09:25.720 commercial paper, which no one knows what it is, and 0:09:25.760 --> 0:09:28.679 everyone sort of assumes the worst about their commercial paper. 0:09:28.720 --> 0:09:32.199 But it's also it's like crypto back loans, loans to 0:09:32.800 --> 0:09:35.679 crypto headphones and and other platforms that some of whom 0:09:35.760 --> 0:09:37.320 have gone bankrupt and tell it's like, oh, we got 0:09:37.360 --> 0:09:40.880 out in time, it's fine. Um, And it's like cryptocurrencies, 0:09:40.880 --> 0:09:42.920 which like maybe those are stable coins that are fine. 0:09:42.920 --> 0:09:44.680 Maybe those are stable coins that are not fine. Maybe 0:09:44.679 --> 0:09:46.760 those are bitcoin, which is super volatile. And so you 0:09:46.760 --> 0:09:49.600 look at their asset and you think, you know, is 0:09:49.640 --> 0:09:53.080 there enough volatility in this, like in the asset side 0:09:53.080 --> 0:09:54.839 of the balance sheet that they should have more than 0:09:54.920 --> 0:09:58.280 zero point two equity? And I don't know, man, I'm 0:09:58.320 --> 0:10:00.680 just like a simple old five guy, but like that 0:10:00.720 --> 0:10:02.840 seems like a really low amount of equity for like 0:10:02.960 --> 0:10:05.040 the asset mix that they have. And I think, you know, 0:10:05.080 --> 0:10:07.040 if you ask, you know, tell people they're like, no, no, 0:10:07.120 --> 0:10:10.360 it's fine, it's totally great. Like nothing can ever lose money. 0:10:10.360 --> 0:10:12.840 Our commercial paper is money. Good. We get out of 0:10:12.880 --> 0:10:15.320 all of our bankrupt companies just before they go back there. 0:10:15.320 --> 0:10:18.080 If it's great, it's no problem. We'll be right back 0:10:18.160 --> 0:10:19.960 with more from Mual and Matt on how a lot 0:10:20.040 --> 0:10:23.400 of the complex DeFi so called innovations have existed in 0:10:23.480 --> 0:10:33.480 trad fy for a very long time. We all you 0:10:33.520 --> 0:10:36.560 have reported on defy for a long time. You have 0:10:36.640 --> 0:10:40.080 spoken to people who supported Tara and Luna. You've spoken 0:10:40.120 --> 0:10:42.120 to people who lost money on Tara and Luna, either 0:10:42.160 --> 0:10:45.960 because they were retail investors or because they were counterparties 0:10:46.040 --> 0:10:48.800 of Is there anything about what Matt is describing to 0:10:48.800 --> 0:10:51.840 you in the context of, you know, how we navigated 0:10:51.880 --> 0:10:54.400 our way through two thousand and eight that you're seeing 0:10:55.120 --> 0:10:57.880 folks now trying to do a better job of or 0:10:57.960 --> 0:10:59.839 is this more like you're like, wow, two thousand eight, 0:10:59.840 --> 0:11:02.600 see like we were in better shape than we are 0:11:02.679 --> 0:11:07.280 right now. One thing I've been thinking about, Lady, most 0:11:07.520 --> 0:11:11.400 majority of platforms or complaints we're talking about here, who 0:11:11.440 --> 0:11:17.200 have felt in crypto they're all centralized entities versus truly defied. 0:11:17.480 --> 0:11:22.120 Even Terra itself, which is quite complicated in consistent that 0:11:22.240 --> 0:11:25.040 you know, it is a defied platform, as you know, 0:11:25.200 --> 0:11:28.680 just everything runs on terror blockchain, but you do have 0:11:29.200 --> 0:11:32.160 do Ka and Terra Phone Labs, all these entities and 0:11:32.400 --> 0:11:36.960 individuals behind this this platform. Like you know, literally when 0:11:37.040 --> 0:11:39.520 do k On tweet about something and people would believe 0:11:39.559 --> 0:11:42.800 it and then people would you know, trust his kind 0:11:42.840 --> 0:11:45.160 of intent in terms of how he's going to save 0:11:45.240 --> 0:11:49.319 this project and whatsoever. And all other platforms such such 0:11:49.400 --> 0:11:52.720 as you know Voyager, which bankrupt as a result of 0:11:52.760 --> 0:11:56.000 the contention of Serio Arrows, Touch Fund. These are all 0:11:56.480 --> 0:12:01.199 centralizentis that had a very little transparency in terms how 0:12:01.200 --> 0:12:05.160 how healthy their business had had been. I think this 0:12:05.200 --> 0:12:08.320 is the one thing that I would say potentially similar 0:12:08.400 --> 0:12:11.160 what to what happened in the Great Financial Crisis, which 0:12:11.240 --> 0:12:14.720 I don't have much experience with, but Defy itself because 0:12:14.760 --> 0:12:18.560 it's transparency and also because you know, majority loans that 0:12:18.679 --> 0:12:22.920 was made on Defy are overly are overcladaized, and you 0:12:23.040 --> 0:12:26.640 we have not really see any D five projects has 0:12:26.679 --> 0:12:30.760 collapsed or felt in the latest crypto crash. As my 0:12:30.840 --> 0:12:34.160 last question to both of you, is there anything when 0:12:34.200 --> 0:12:37.240 you're talking to folks and Defy that they are looking 0:12:37.320 --> 0:12:39.600 to transfy and they're like, hmm, maybe we should do 0:12:39.640 --> 0:12:41.560 that and Matt. Same for you. You know, have you 0:12:41.600 --> 0:12:46.079 observed any like defy ifications That is a terrible phrase, 0:12:46.120 --> 0:12:49.920 but have you observed any examples of traditional lenders or 0:12:49.920 --> 0:12:53.320 more traditional Wall Street banks adopting any DFI practices that 0:12:53.400 --> 0:12:58.040 seem useful. That's a really good question. I think in general, 0:12:58.960 --> 0:13:02.720 something I am confused about when I Oftentine talked to 0:13:03.160 --> 0:13:06.679 not just Defy people, for crypto people that you know, 0:13:07.000 --> 0:13:11.920 Defy is supposed to completely replace the whole traditional finance, 0:13:12.520 --> 0:13:16.120 But every time when we see kind of headlines within 0:13:16.160 --> 0:13:19.959 the involvement of Goldman Sex or Morgan Stanley with crypto, 0:13:20.440 --> 0:13:23.280 all the crypto people get excited. They're like, oh my god, 0:13:23.320 --> 0:13:26.040 they're doing something in Defy. They're doing something in crypto. 0:13:26.840 --> 0:13:29.760 I think that's that's to me, it's just fascinating because 0:13:29.920 --> 0:13:33.760 I cannot imagine any of these investment banks would take 0:13:33.800 --> 0:13:37.960 advantage of whatever Defy is trying to create in terms 0:13:38.000 --> 0:13:42.920 as like better than Trify for example, the transparency. But 0:13:43.280 --> 0:13:45.720 I think, just based on what my experience talking to 0:13:45.760 --> 0:13:49.240 all all the people in Trify and Defy, there's this 0:13:49.480 --> 0:13:53.000 kind of this is just like a very contradictory sort 0:13:53.000 --> 0:13:56.520 of phenomenon that they wanted Wall Street to do more 0:13:56.640 --> 0:14:00.360 in defy, but in reality is that like that's should 0:14:00.440 --> 0:14:02.960 not be the direction they are going. If they truly 0:14:03.080 --> 0:14:05.920 believe in defy, they should think more that like we 0:14:06.000 --> 0:14:08.200 are going to like beat them up and we're going 0:14:08.240 --> 0:14:12.040 to replace them instead of oh, we're going to embrace 0:14:12.120 --> 0:14:16.000 all these investment thanks going or other or Street giants 0:14:16.040 --> 0:14:20.080 going to defy. Yeah. I mean what I'd say is, um, 0:14:20.320 --> 0:14:23.560 defy is is cool, Like like if you're a person 0:14:23.600 --> 0:14:25.760 with a certain mindset, if you're like a technologist or 0:14:25.800 --> 0:14:30.320 like market structure person, like DeFi is like we have 0:14:30.440 --> 0:14:32.640 built all new market structures for you to play with. 0:14:32.800 --> 0:14:37.120 Isn't that fun? Right? And so there are efficiency reasons 0:14:37.120 --> 0:14:39.400 why you might find like some aspects of you know, 0:14:39.480 --> 0:14:42.400 smart contracting or whatever compose ability of functions, you might 0:14:42.440 --> 0:14:46.240 find those things appealing, But there's also just like it's 0:14:46.280 --> 0:14:48.520 intellectually appealing to someone who sort of works in like 0:14:48.560 --> 0:14:51.280 the minds of the financial markets all day to like 0:14:52.400 --> 0:14:54.280 they kind of like go over into this like holy 0:14:54.280 --> 0:14:58.080 new territory. And so you certainly see people at banks 0:14:59.080 --> 0:15:01.640 get excited a at like defy buzz words. I mean 0:15:01.680 --> 0:15:04.040 like like this is sort of old news by now, 0:15:04.280 --> 0:15:06.920 like in like two seventeen, like you couldn't go a 0:15:07.000 --> 0:15:09.680 day without a bank announcing a blockchain project, right, Like 0:15:09.720 --> 0:15:11.280 no one knew what it meant, but it was just 0:15:11.360 --> 0:15:13.920 like banks like, oh my gosh, a blockchain and like 0:15:14.000 --> 0:15:15.560 that's like, you know, that's like a sort of DEFY 0:15:15.640 --> 0:15:18.040 is concept of like we're going to like have this 0:15:18.120 --> 0:15:20.920 sort of shared ledger of our transactions where like there'll 0:15:20.960 --> 0:15:24.200 be some sort of like you know, decentralization and like 0:15:24.280 --> 0:15:27.640 open ledger of the transactions rather than like us faxing 0:15:27.920 --> 0:15:30.520 you know, our lawyers, like the confirms or whatever. Right, 0:15:30.560 --> 0:15:34.320 Like it just seems so shiny and efficient. Um. But 0:15:34.360 --> 0:15:36.280 the other thing I'll say is that like a lot 0:15:36.320 --> 0:15:39.480 of people in trad FI feel that way, but rather 0:15:39.560 --> 0:15:42.200 than implementing a DeFi project at their bank, they quit 0:15:42.240 --> 0:15:46.240 and become you know, like crypto hedgeman managers. Right, So, 0:15:46.280 --> 0:15:48.200 like you mentioned Sam Bankman Freed, like he's a guy 0:15:48.360 --> 0:15:50.520 who's like a market structured guy at a you know, 0:15:50.640 --> 0:15:54.720 traditional market maker. And then it was like crypto crypto 0:15:54.800 --> 0:15:57.240 seems really fun, but also I can make so much 0:15:57.240 --> 0:16:00.280 money there, Like I said, like DeFi is like cool 0:16:00.320 --> 0:16:02.400 and possibly more efficient in some ways. But also just 0:16:02.440 --> 0:16:06.480 like the spreads, are you insane? And so you can 0:16:06.520 --> 0:16:07.840 make a lot of money, and so like a lot 0:16:07.880 --> 0:16:10.440 of people are trying to find ways for their banks 0:16:10.440 --> 0:16:13.320 to make more money, but like these are regulated entities, 0:16:13.360 --> 0:16:17.640 and like custody and crypto is challenging, and you know, 0:16:18.000 --> 0:16:21.440 regular like supervisors don't necessarily like it and all this stuff. 0:16:21.520 --> 0:16:23.360 But if you quit and just start your own crypto 0:16:23.480 --> 0:16:25.360 hedge fund, there's like so much money to be made. 0:16:25.480 --> 0:16:26.960 And so I think that's a lot of what's happening 0:16:27.000 --> 0:16:29.600 in traditional finances. Everyone's scorting to do crypto, or they 0:16:29.600 --> 0:16:33.160 were before cryptocrash, right, And on that note, thank you both, 0:16:33.720 --> 0:16:37.360 thank you, thank you. You can find more of Muya 0:16:37.440 --> 0:16:40.240 Shan's reporting on the Bloomberg Terminal on Bloomberg dot com 0:16:40.360 --> 0:16:44.600 and on Twitter. She's at Muya Shen That's m u 0:16:44.840 --> 0:16:48.800 y a O s h e N. You can also 0:16:48.840 --> 0:16:51.360 find more of Matt Levin's columns on the Bloomberg Terminal 0:16:51.440 --> 0:16:54.360 on Bloomberg dot com or follow him on Twitter. He's 0:16:54.440 --> 0:17:00.720 at Matt underscore Levine. On the next episode of bloom Crypto, 0:17:00.920 --> 0:17:03.800 Mary Catherine later has a story to tell. She was 0:17:03.840 --> 0:17:06.120 a rising star at Black Rock when she left Wall 0:17:06.240 --> 0:17:10.400 Street and traditional finance for crypto and decentralized finance. She's 0:17:10.440 --> 0:17:13.480 now Chief operating Officer at unit Swap Labs, which is 0:17:13.480 --> 0:17:17.560 the creator of the world's biggest decentralized exchange protocol. She'll 0:17:17.640 --> 0:17:20.880 join my colleague Bloomberg Reports a Lga Karif to talk 0:17:20.880 --> 0:17:24.160 about her belief in blockchain, what comes after the terror collapse, 0:17:24.400 --> 0:17:30.800 and how she sees decentralized folence shaping the future. I'm 0:17:30.840 --> 0:17:34.359 Stacy Marie Ishmael and this is Bloomberg Crypto, a daily 0:17:34.400 --> 0:17:37.639 podcast from Bloomberg and I Heart Radio. For more shows 0:17:37.640 --> 0:17:39.960 from I Heart Radio, visit the I Heart Radio app, 0:17:40.240 --> 0:17:44.679 Apple Podcasts, or wherever you get your podcasts. Email your questions, comments, 0:17:44.720 --> 0:17:47.600 or suggestions for the show to Crypto at Bloomberg dot 0:17:47.640 --> 0:17:52.000 net and you'll find us on Twitter at Crypto. The 0:17:52.040 --> 0:17:55.239 supervising producer of Bloomberg Crypto is Vicky ver Galina. Our 0:17:55.280 --> 0:17:58.960 senior producer is Janet Babin. Our producer is Mohammed Perup. 0:17:59.359 --> 0:18:03.000 Our associated producers Osanam Sidiki and Moses and um dast 0:18:03.000 --> 0:18:05.920 to wonder At is our engineer. Original music by Leo 0:18:06.000 --> 0:18:24.560 sidron h