WEBVTT - Galaxy Digital CEO Mike Novogratz Talks Tokenizing Shares

0:00:02.520 --> 0:00:07.080
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

0:00:07.360 --> 0:00:10.640
<v Speaker 2>Let's talk right now with Galaxy Digital. It's trading on

0:00:10.720 --> 0:00:16.079
<v Speaker 2>the NASDAC after a nearly after a long drawn out

0:00:16.200 --> 0:00:20.239
<v Speaker 2>process with the SEC that reportedly costs over twenty five

0:00:20.320 --> 0:00:23.400
<v Speaker 2>million dollars. Joining us to discuss as Mike Novogratz, the

0:00:23.400 --> 0:00:27.680
<v Speaker 2>founder and CEO. Mike, great to have you on the program.

0:00:27.680 --> 0:00:30.080
<v Speaker 2>Really excited to talk about a lot of other happy

0:00:30.120 --> 0:00:32.400
<v Speaker 2>things with you, But I want to start with this listing.

0:00:32.600 --> 0:00:37.839
<v Speaker 2>Why was it so long drawn out, problematic, infuriating? What

0:00:37.880 --> 0:00:38.800
<v Speaker 2>word would you use?

0:00:39.560 --> 0:00:41.960
<v Speaker 3>Listen the I would use the word Unamerican.

0:00:43.400 --> 0:00:47.800
<v Speaker 1>The SEC under the Biden administration really just wasn't fair.

0:00:48.479 --> 0:00:51.239
<v Speaker 1>And it's been a breath of fresh air with the

0:00:51.280 --> 0:00:55.800
<v Speaker 1>new administration that their process says they're looking at your business,

0:00:55.880 --> 0:00:58.200
<v Speaker 1>they're doing what the SEC is supposed to do. And

0:00:58.240 --> 0:01:01.000
<v Speaker 1>so we waited thirteen hundred and seven to go public.

0:01:02.040 --> 0:01:04.679
<v Speaker 1>It kept us out of the deepest capital markets in

0:01:04.720 --> 0:01:07.319
<v Speaker 1>the world. It put all the companies, not just ours,

0:01:07.959 --> 0:01:09.360
<v Speaker 1>at a big disadvantage.

0:01:10.480 --> 0:01:13.440
<v Speaker 3>But we're looking forward. We listed on Friday.

0:01:13.480 --> 0:01:16.440
<v Speaker 1>It was a glorious day for you know, our Galaxy family.

0:01:16.959 --> 0:01:19.240
<v Speaker 1>The NASDAQ does an amazing job of making you feel

0:01:19.280 --> 0:01:23.559
<v Speaker 1>special and we couldn't be happier to have finally cleared

0:01:23.560 --> 0:01:24.039
<v Speaker 1>that hurdle.

0:01:24.200 --> 0:01:26.240
<v Speaker 4>Okay, so you cleared that hurdle, but as you said,

0:01:26.280 --> 0:01:28.080
<v Speaker 4>it took a long time. So I'm curious as to

0:01:28.560 --> 0:01:31.280
<v Speaker 4>how you feel the company, Your company has evolved since

0:01:31.280 --> 0:01:33.480
<v Speaker 4>you first filed to Listen in the US.

0:01:34.680 --> 0:01:36.440
<v Speaker 3>Well, we're a very different company, Listen.

0:01:36.480 --> 0:01:40.520
<v Speaker 1>I mean, sometimes scarcity makes you tough, and you you know,

0:01:40.640 --> 0:01:44.600
<v Speaker 1>most of our growth was funded by trading profits and

0:01:44.640 --> 0:01:48.720
<v Speaker 1>investing profits, and so it kept us, it kept us

0:01:48.800 --> 0:01:53.240
<v Speaker 1>very focused on not being wrong. What's changed. We're now

0:01:53.320 --> 0:01:55.960
<v Speaker 1>really a holding company with two different divisions.

0:01:56.040 --> 0:01:59.520
<v Speaker 3>Right. We have a very large AI data center company.

0:01:59.560 --> 0:02:02.240
<v Speaker 1>We've got a project in Helios called Helios down in

0:02:02.240 --> 0:02:06.520
<v Speaker 1>West Texas that in the Panhandle that we think will

0:02:06.560 --> 0:02:09.400
<v Speaker 1>be the largest data center in America by twenty thirty.

0:02:10.320 --> 0:02:13.480
<v Speaker 3>We already have eight hundred megawatts of power and we're

0:02:13.520 --> 0:02:16.280
<v Speaker 3>in the queue for more. We've had a great partnership

0:02:16.280 --> 0:02:16.919
<v Speaker 3>with core Weave.

0:02:17.280 --> 0:02:19.239
<v Speaker 1>I watched core Weave stock seems to go up every

0:02:19.280 --> 0:02:24.120
<v Speaker 1>single day, and so we share for them because there

0:02:24.160 --> 0:02:28.799
<v Speaker 1>are tenant you know, we have contracts signed with them

0:02:28.840 --> 0:02:33.000
<v Speaker 1>on the first six hundred megawats of our power to

0:02:33.080 --> 0:02:35.760
<v Speaker 1>deliver a little bit less than that to them.

0:02:35.880 --> 0:02:38.000
<v Speaker 3>And so that's a big business.

0:02:38.080 --> 0:02:39.720
<v Speaker 1>And so we have that business, and then we have

0:02:39.800 --> 0:02:43.560
<v Speaker 1>our traditional crypto business. And the crypto business really was

0:02:43.600 --> 0:02:47.680
<v Speaker 1>built to be a bridge between institutions and the crypto community.

0:02:48.120 --> 0:02:50.679
<v Speaker 1>And to be fair, I was really early right. This

0:02:50.800 --> 0:02:53.760
<v Speaker 1>idea that the herd was coming was my tag phrase.

0:02:55.600 --> 0:02:58.640
<v Speaker 1>They just didn't come. But they're here now with this

0:02:58.680 --> 0:03:03.480
<v Speaker 1>new administration, the regulatory clarity that we're starting to get

0:03:03.520 --> 0:03:07.640
<v Speaker 1>from sec, CFDC, FDIC, you know, getting the right people

0:03:07.680 --> 0:03:10.799
<v Speaker 1>in those seats who are pro crypto. We just got

0:03:10.800 --> 0:03:14.919
<v Speaker 1>stable coined legislation on Monday, and so there's only one

0:03:14.919 --> 0:03:17.760
<v Speaker 1>more piece of one more hurdle for Congress, which is

0:03:17.800 --> 0:03:20.440
<v Speaker 1>going to be called a market structure bill. But after

0:03:20.440 --> 0:03:22.320
<v Speaker 1>that it's up to the crypto industry to build something

0:03:22.360 --> 0:03:23.760
<v Speaker 1>that America wants.

0:03:24.120 --> 0:03:25.760
<v Speaker 2>I do want to point out Core Weave is up

0:03:25.800 --> 0:03:29.240
<v Speaker 2>another ten percent today and the stock is more than

0:03:29.320 --> 0:03:36.119
<v Speaker 2>doubled tripled basically since the IPO. So yes, very successful.

0:03:36.160 --> 0:03:39.200
<v Speaker 2>Tenant a great one to sign up for that data center.

0:03:39.560 --> 0:03:42.760
<v Speaker 2>In terms of Galaxy, you did have a decline in

0:03:42.800 --> 0:03:45.000
<v Speaker 2>revenue in the first quarter, and a lot of people

0:03:45.040 --> 0:03:49.040
<v Speaker 2>will find that puzzling since the price of bitcoin was

0:03:49.160 --> 0:03:52.800
<v Speaker 2>up so much, right it rallied up over through through

0:03:52.840 --> 0:03:55.200
<v Speaker 2>and over one hundred thousand dollars. Are you going to

0:03:55.280 --> 0:03:58.040
<v Speaker 2>see a bounce back in revenue now that this legislation

0:03:58.120 --> 0:03:59.640
<v Speaker 2>has passed well?

0:04:00.000 --> 0:04:03.400
<v Speaker 1>And so if you look at big Coin from start

0:04:03.440 --> 0:04:05.160
<v Speaker 1>to finish in the first quarter, it was actually down

0:04:05.200 --> 0:04:07.520
<v Speaker 1>a little bit in the Ethereum and the other coins

0:04:07.520 --> 0:04:09.920
<v Speaker 1>were down a lot. Right, Ethereum was down over forty percent,

0:04:10.000 --> 0:04:13.000
<v Speaker 1>And so we still have a big balance sheet. Right

0:04:13.040 --> 0:04:16.480
<v Speaker 1>we have roughly a billion dollars of crypto assets at

0:04:16.480 --> 0:04:19.880
<v Speaker 1>another four hundred million of ventury private equity crypto assets,

0:04:19.920 --> 0:04:21.479
<v Speaker 1>and so we have a lot of beta to the

0:04:21.480 --> 0:04:26.040
<v Speaker 1>overall market. And so traditionally our earnings have been very

0:04:26.080 --> 0:04:30.240
<v Speaker 1>correlated with price. We are changing that quickly as our

0:04:30.279 --> 0:04:33.680
<v Speaker 1>businesses become more stable. Right when we started, we made

0:04:33.720 --> 0:04:35.440
<v Speaker 1>most of our money by being long at the right

0:04:35.440 --> 0:04:38.599
<v Speaker 1>time and short at the right time. Now we've got

0:04:39.040 --> 0:04:41.479
<v Speaker 1>a staking business, a lot of recurring revenue businesses that

0:04:41.520 --> 0:04:44.440
<v Speaker 1>we're building as well as this data center. The data

0:04:44.440 --> 0:04:46.839
<v Speaker 1>center won't really be a cash flow positive for another

0:04:46.920 --> 0:04:50.240
<v Speaker 1>year and then it becomes literally a cash machine, and

0:04:50.279 --> 0:04:54.559
<v Speaker 1>so we hope the volatility of our earnings goes down

0:04:55.160 --> 0:04:57.560
<v Speaker 1>when these other businesses come online.

0:04:58.160 --> 0:05:00.679
<v Speaker 4>So, Mike, the crypto industry is definitely having a moment

0:05:00.760 --> 0:05:04.280
<v Speaker 4>right now. There's a listing of your company, Galaxy Digital Coinbase,

0:05:04.360 --> 0:05:06.599
<v Speaker 4>joining the S and P five hundred. You also have

0:05:06.880 --> 0:05:09.080
<v Speaker 4>the debut of etro, and of course a price of

0:05:09.120 --> 0:05:13.240
<v Speaker 4>bitcoin itself on an upswing today hitting a record a

0:05:13.320 --> 0:05:16.400
<v Speaker 4>one hundred and eight thousand dollars. Do you think the

0:05:16.400 --> 0:05:20.279
<v Speaker 4>news around the crypto ecosystem is helping to drive the

0:05:20.320 --> 0:05:24.479
<v Speaker 4>price of bitcoin? Is? What's what's a what's whigging the

0:05:24.520 --> 0:05:24.960
<v Speaker 4>dog here?

0:05:25.600 --> 0:05:25.920
<v Speaker 3>I think?

0:05:25.960 --> 0:05:29.200
<v Speaker 1>Listen, it started with Larry Fink when he got orange pilled,

0:05:29.720 --> 0:05:32.160
<v Speaker 1>and the largest ask managers of the world said, this

0:05:32.240 --> 0:05:34.320
<v Speaker 1>is a real asset in at least bitcoin that everyone

0:05:34.360 --> 0:05:37.960
<v Speaker 1>should be part of, and and lots of other companies

0:05:38.240 --> 0:05:41.880
<v Speaker 1>Investo with us followed suit, right, and so that was

0:05:41.920 --> 0:05:45.080
<v Speaker 1>kind of round one of institutions coming in. But really

0:05:45.080 --> 0:05:49.279
<v Speaker 1>it was the change of the shift of approach from

0:05:49.440 --> 0:05:53.480
<v Speaker 1>the Gary Ganzler sec. To this Trump administration which has

0:05:53.640 --> 0:05:57.720
<v Speaker 1>just embraced our industry, and that freed up the animal

0:05:57.720 --> 0:06:01.760
<v Speaker 1>spirits both here and abroad. I've had conversations with heads

0:06:01.800 --> 0:06:05.200
<v Speaker 1>of large sovereign wealth funds that said, if America's buying bitcoind,

0:06:05.240 --> 0:06:09.039
<v Speaker 1>we're buying bitcoin. And so you're seeing like the snowball

0:06:09.120 --> 0:06:12.800
<v Speaker 1>is rolling downhill. The one thing that could have held

0:06:12.839 --> 0:06:15.800
<v Speaker 1>it back some at least the bitcoin price would have

0:06:15.839 --> 0:06:19.240
<v Speaker 1>been if you know, Scott Besson and his and his

0:06:19.839 --> 0:06:25.720
<v Speaker 1>team and Congress could have really not that deficit from

0:06:25.760 --> 0:06:29.000
<v Speaker 1>seven percent of GDP down towards three, which was his plan.

0:06:29.480 --> 0:06:31.320
<v Speaker 1>Right now it looks like it's going from seven to eight.

0:06:31.880 --> 0:06:33.560
<v Speaker 1>And you know, I like Scott Bess and a lot.

0:06:33.800 --> 0:06:37.360
<v Speaker 1>I think he's as competent and capable as anybody. We're

0:06:37.400 --> 0:06:40.240
<v Speaker 1>in a really hard position as a country, and when

0:06:40.240 --> 0:06:41.960
<v Speaker 1>you have this kind of debt and you're seeing it.

0:06:41.880 --> 0:06:44.680
<v Speaker 3>With long ends of interest yield.

0:06:44.440 --> 0:06:49.240
<v Speaker 1>Curves are selling off everywhere, the dollars under pressure, and

0:06:49.279 --> 0:06:51.960
<v Speaker 1>that all is very good for bitcoin and crypto assets

0:06:51.960 --> 0:06:52.360
<v Speaker 1>as well.

0:06:52.720 --> 0:06:55.719
<v Speaker 2>Yeah, it was pretty shocking to look at weakness in

0:06:55.800 --> 0:06:59.000
<v Speaker 2>the dollar and other haven assets, and for a long

0:06:59.040 --> 0:07:01.080
<v Speaker 2>time Bitcoin was kind of bucking the trend and going

0:07:01.120 --> 0:07:03.160
<v Speaker 2>the other way, almost as if it was taking on

0:07:03.279 --> 0:07:06.080
<v Speaker 2>a reserve currency status. I know that would be a

0:07:06.080 --> 0:07:10.160
<v Speaker 2>fantasy for a lot of bitcoiners, for sure. I want

0:07:10.160 --> 0:07:14.520
<v Speaker 2>to ask you about tokenization though, Mike, you at Galaxy

0:07:14.600 --> 0:07:18.320
<v Speaker 2>have tokenized a number of really cool things. I think

0:07:18.360 --> 0:07:23.320
<v Speaker 2>I read you tokenized as stratavarious violin and you mentioned

0:07:23.320 --> 0:07:27.400
<v Speaker 2>the new SEC you want to tokenize your shares or

0:07:27.440 --> 0:07:29.440
<v Speaker 2>you're in talks with them to do that. How are

0:07:29.440 --> 0:07:31.880
<v Speaker 2>those talks progressing and when do you think that's going

0:07:31.960 --> 0:07:32.560
<v Speaker 2>to be possible.

0:07:33.160 --> 0:07:36.119
<v Speaker 3>Listen, the SEC is really open minded to people coming

0:07:36.160 --> 0:07:38.360
<v Speaker 3>down with ideas, and so.

0:07:40.240 --> 0:07:43.320
<v Speaker 1>I think you're going to see tokenized equities at least

0:07:43.360 --> 0:07:45.840
<v Speaker 1>experiments with them in the next you know, one to

0:07:46.080 --> 0:07:48.640
<v Speaker 1>one to two months. I'm just throwing at it, throwing

0:07:48.680 --> 0:07:51.760
<v Speaker 1>out a range. I don't know for certain, but it's

0:07:51.800 --> 0:07:55.360
<v Speaker 1>going to happen. And tokenization itself, I keep saying, this

0:07:55.440 --> 0:07:56.800
<v Speaker 1>is going to got to go real slow and then

0:07:56.840 --> 0:08:00.760
<v Speaker 1>all of a sudden, real fast, and I think, quite frankly,

0:08:00.840 --> 0:08:03.880
<v Speaker 1>might end up driving a lot of crypto adoption. You know,

0:08:03.920 --> 0:08:08.160
<v Speaker 1>people will be more comfortable owning Apple stock in a

0:08:08.240 --> 0:08:11.240
<v Speaker 1>token ized form maybe than owning your crypto. But once

0:08:11.280 --> 0:08:14.080
<v Speaker 1>you start learning to go from an account to a wallet.

0:08:14.600 --> 0:08:18.000
<v Speaker 1>The big migration in the next five years are going

0:08:18.080 --> 0:08:21.000
<v Speaker 1>to be from accounts to wallets. Right this stable coin

0:08:21.120 --> 0:08:24.320
<v Speaker 1>bill is going to allow lots of new issues of

0:08:24.360 --> 0:08:27.480
<v Speaker 1>stable coins, and all of a sudden, people are gonna

0:08:27.920 --> 0:08:32.520
<v Speaker 1>in this in this device here, going to have their

0:08:32.600 --> 0:08:35.600
<v Speaker 1>money market fund and maybe some of their stock and

0:08:35.640 --> 0:08:39.480
<v Speaker 1>maybe some of their bitcoin in a custody self custodied

0:08:39.520 --> 0:08:40.040
<v Speaker 1>wallet as.

0:08:40.000 --> 0:08:43.000
<v Speaker 3>Opposed to having to call their bank or their brokerage.

0:08:43.120 --> 0:08:46.600
<v Speaker 2>But you know what, Mike, you know, I've spent some

0:08:46.679 --> 0:08:51.520
<v Speaker 2>time on our ETF program last year Scarlett now co

0:08:51.640 --> 0:08:54.840
<v Speaker 2>anchors that she kicked me off the set, and for

0:08:54.880 --> 0:09:01.160
<v Speaker 2>a long time we talked about the ETF of crypto assets.

0:09:01.679 --> 0:09:07.120
<v Speaker 2>Will crypto now replace? Will token tokenization replace et I

0:09:07.280 --> 0:09:10.200
<v Speaker 2>F ETFs? I mean is is Eric Balchuna is going

0:09:10.240 --> 0:09:11.880
<v Speaker 2>to cover tokens instead of ETFs.

0:09:13.080 --> 0:09:15.240
<v Speaker 3>You will have a token I show in a few years.

0:09:15.800 --> 0:09:19.280
<v Speaker 3>I don't think you'll replace. Listen, the US capital markets

0:09:19.320 --> 0:09:20.640
<v Speaker 3>are gigantic.

0:09:21.080 --> 0:09:22.599
<v Speaker 1>But crypto is going to take a piece of it,

0:09:22.640 --> 0:09:24.559
<v Speaker 1>and it's going to and tokenization is going to grow

0:09:24.640 --> 0:09:25.880
<v Speaker 1>much faster than people think.

0:09:27.480 --> 0:09:28.000
<v Speaker 3>You know it.

0:09:29.120 --> 0:09:31.240
<v Speaker 1>One of the advantages of having a token is stock

0:09:31.520 --> 0:09:35.040
<v Speaker 1>is much broader distribution. You know, I can envision a

0:09:35.120 --> 0:09:38.120
<v Speaker 1>day where the young kid in Tanzania who's got a

0:09:38.960 --> 0:09:41.920
<v Speaker 1>you know, two dollars and thirty seven cent savings has

0:09:41.920 --> 0:09:45.960
<v Speaker 1>put it into a tiny piece of applestock, right like

0:09:46.200 --> 0:09:49.960
<v Speaker 1>the the the democratization of being able to participate in

0:09:50.040 --> 0:09:53.640
<v Speaker 1>markets is going to go limit up, Yeah, because almost

0:09:53.679 --> 0:09:57.000
<v Speaker 1>everyone on the planet has one of these, and it's

0:09:57.040 --> 0:09:59.720
<v Speaker 1>going to be very easy to get, you know, digital

0:10:00.520 --> 0:10:02.480
<v Speaker 1>digital wallets, got.

0:10:02.280 --> 0:10:05.079
<v Speaker 4>It, got it, Mike, Really appreciate your joining us. A

0:10:05.240 --> 0:10:07.960
<v Speaker 4>pleasure speaking with you, Mike Novograts of Galaxy Digital, and

0:10:07.960 --> 0:10:11.440
<v Speaker 4>who knows, maybe we'll launch a tokenization IQ or token

0:10:11.520 --> 0:10:12.960
<v Speaker 4>IQ show sometimes soon.

0:10:12.960 --> 0:10:14.559
<v Speaker 3>We'll come back for that, all right, there you go,