WEBVTT - Oasis Pro Markets CEO on Bitcoin Surge

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<v Speaker 1>This is Bloomberg Business Week with Carol Masser and Bloomberg

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<v Speaker 1>Quick Takes. Tim Stinovic from Bloomberg Radio. Our next guy,

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<v Speaker 1>spoke to the Board of the SEC about developing a

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<v Speaker 1>regulation battle plan for cryptocurrencies. Nice to Welcome to Bloomberg

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<v Speaker 1>Business Week. Pat Lavecki a CEO at Oasis Pro Markets.

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<v Speaker 1>It's a finn SEC approved digital ASCID broker dealer. He's

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<v Speaker 1>also managing partner of Lavecki a Group, a privately held

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<v Speaker 1>merchant bank. And Pat spent some thirty years on Wall

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<v Speaker 1>Street working in investment banking and capital market senior positions.

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<v Speaker 1>And he joins us on the phone from Dairy and Connecticut. Pat,

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<v Speaker 1>nice to have you here on Bloomberg. Thank you, Carol.

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<v Speaker 1>It's a it's a real pleasure. And if I may say,

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<v Speaker 1>I've been a big fan of yours free well, thank you.

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<v Speaker 1>I listen to your program, um it's always on in

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<v Speaker 1>the background when I'm on a call. I just think

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<v Speaker 1>you're the best interviewer at Bloomberg. So this is a

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<v Speaker 1>real treat for me. Well, you're very kind. Doesn't mean

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<v Speaker 1>I'm gonna be easy on you. I'm just gonna tell

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<v Speaker 1>you now I'm just I'm kidding. Thank you. You've started

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<v Speaker 1>off my week really nicely. UM take us back to

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<v Speaker 1>the SEC you were there, if I got it right,

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<v Speaker 1>I think a couple of weeks ago. Uh. Tell me

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<v Speaker 1>about that exchange and what they were trying to figure out,

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<v Speaker 1>because I am curious about what they are thinking in

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<v Speaker 1>terms of regulations when it comes to cryptocurrencies. Great, yeah,

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<v Speaker 1>just regards the sec SEC. You know, we're in discussions

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<v Speaker 1>with our regulators all the time. UM, but this is

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<v Speaker 1>really you know, we've been spending time over the last

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<v Speaker 1>several weeks with um uh, the innovation groups at the

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<v Speaker 1>regulators and coming up with ideas, sharing ideas, getting their feedback, etcetera.

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<v Speaker 1>This whole blockchain area and what we focus on is

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<v Speaker 1>digital securities. And I can talk a bit about that later.

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<v Speaker 1>Is completely new. I'd like to say that. UM, well,

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<v Speaker 1>actually I don't like it, but it's reality. We're a

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<v Speaker 1>bicycle with training wheels with Ferrari brakes, which are the regulators.

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<v Speaker 1>You know, a great wave of explaining it. Actually that's

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<v Speaker 1>where we are today. Eventually, the Ferrari, the bicycle will

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<v Speaker 1>become a Ferrari. But you know that's that's several years

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<v Speaker 1>away and um, So we have a lot of ideas

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<v Speaker 1>and the regulators know this tsunami is coming. Um. You know,

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<v Speaker 1>they're very focused on cryptos right now and DEFY or

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<v Speaker 1>decentralized finance. We're taking a step further and focused on

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<v Speaker 1>digital securities, and we view ourselves as the bridge between

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<v Speaker 1>traditional finance and defy. That's that's a direction, that's our

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<v Speaker 1>mission statement, that's where we're heading. But they know this

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<v Speaker 1>is coming. You know. We call it a tsunami of

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<v Speaker 1>of opportunities and it's a tidal wave regarding what's happening

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<v Speaker 1>in the crypto space and they're trying to stay ahead

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<v Speaker 1>of it. A lot of smart people there trying their best.

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<v Speaker 1>You know, they're the guardians of our financial system at

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<v Speaker 1>the FINRA, and they want to make sure that they

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<v Speaker 1>get it right. So talk to a little bit more

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<v Speaker 1>about digital securities exactly what they are, what it what

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<v Speaker 1>it presents, uh, in terms of opportunities for investors. Unpack

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<v Speaker 1>a little bit more for me, if you would pack. Sure,

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<v Speaker 1>digital securities are very similar to traditional securities. So what

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<v Speaker 1>we were approved for. We're equities broadly defined and fixed

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<v Speaker 1>income for corporates both public non national market securities as

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<v Speaker 1>well as privates, and by privates I mean all exempt

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<v Speaker 1>securities reg D, REGGS, one, etcetera. And they represent a

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<v Speaker 1>proof of ownership of some type on the balance sheet

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<v Speaker 1>and are an underlying asset of a company. But unlike

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<v Speaker 1>traditional securities, they can be programmed through smart contracts to

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<v Speaker 1>comply with regulatory requirements and standards as well, and they

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<v Speaker 1>can be purchased and traded just like any other security.

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<v Speaker 1>But it involves the blockchains, so it's very bespoke. It

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<v Speaker 1>can be very tailored. Um, but all the back office um.

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<v Speaker 1>So give you an example with Game Stop in the

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<v Speaker 1>halting of trading a couple of weeks. So one of

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<v Speaker 1>the issues that have come up is it's trade plus

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<v Speaker 1>two days, right, and it you know, in the nineteen

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<v Speaker 1>sixties it was you know, it's transaction day plus five days, uh,

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<v Speaker 1>and then three and then let's jump all the way

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<v Speaker 1>became trade plus three days. Then it took another twenty

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<v Speaker 1>four years for it to get to trade plus two days.

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<v Speaker 1>And while the UI has has improved, like on any

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<v Speaker 1>trading app you might have the trade Charles Schwab Robin Hood,

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<v Speaker 1>the back end is has been improved over the years,

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<v Speaker 1>but it's still based on the infrastructure from the nineteen seventies.

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<v Speaker 1>Now what blockchain does with digital securities, it really it's

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<v Speaker 1>not a revolution, but an evolution of the trading system.

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<v Speaker 1>So it's just taking it. It's just taking it to

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<v Speaker 1>the technology level euro days. So I feel like pat

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<v Speaker 1>and are talking to you. And also just some of

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<v Speaker 1>the research I did coming into this, I know enough.

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<v Speaker 1>I know enough to be dangerous. So in terms of

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<v Speaker 1>digital securities, I mean you you basically you know you

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<v Speaker 1>own an underlying asset, right, what are the advantages? Is

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<v Speaker 1>it the liquidity aspects? Is it the security aspects? Is

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<v Speaker 1>it that you can have fractional ownership of something that

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<v Speaker 1>you might not have been able to own otherwise? Yeah,

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<v Speaker 1>absolutely all the above. Um, there's also uh the advantages

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<v Speaker 1>we were approved for digital cash payments for digital securities

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<v Speaker 1>you own uh stable coins for instance, or um you

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<v Speaker 1>know eventually c B, D C S. And I heard

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<v Speaker 1>the common earlier you had mentioned about yelling he actually

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<v Speaker 1>while she is not a fan of bitcoin, she actually

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<v Speaker 1>came out today and also said that the Central Bank

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<v Speaker 1>should be looking at sovereign debt currencies issued on the blockchain.

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<v Speaker 1>So um, she's not a big fan of bitcoin, but

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<v Speaker 1>she in this was endorsing c CBDCs to a certain extent.

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<v Speaker 1>So all those advantages you just mentioned, So if you

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<v Speaker 1>have stable coins right now and by that that's like

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<v Speaker 1>die or USDC or hack those, you can utilize that

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<v Speaker 1>to purchase digital securities. And another benefit of the digital

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<v Speaker 1>securities is and this is unlike crypto. You've heard stories

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<v Speaker 1>that someone had uh, you know, had fifty dollars in bitcoin,

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<v Speaker 1>it's now worth a hundred million dollars and they can't

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<v Speaker 1>find their wallet right so it's permanently lost. With digital securities,

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<v Speaker 1>while the blockchain is is immutable UM, the regulators have

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<v Speaker 1>determined that the authoritative ledger is either the issuer or

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<v Speaker 1>the transfer agent. So if you own digital securities and

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<v Speaker 1>you lost your your your wallet somehow or whatever, you know,

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<v Speaker 1>whatever custodian was holding it, it got stolen and there

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<v Speaker 1>was fraud. The beauty of digital securities is it could

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<v Speaker 1>actually be burned that digital security was stolen and re

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<v Speaker 1>issued to you. So some of the disadvantages of UH

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<v Speaker 1>let's say cryptos and defy are not applicable to the

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<v Speaker 1>UH digital regulated digital security space. So pat where do

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<v Speaker 1>you see it all going? I mean, you're someone who

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<v Speaker 1>has spent a lot of time on Wall Street in

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<v Speaker 1>different capacities, and you see I mean and aside, I

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<v Speaker 1>feel like the conversation over bitcoin, blockchain, digital currencies has

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<v Speaker 1>definitely evolved from a couple of years ago. So where

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<v Speaker 1>do you see this all going? Do we ultimately does

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<v Speaker 1>digital securities take over from I mean I feel like

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<v Speaker 1>we're doing it already right on some level, Like where

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<v Speaker 1>does this all go in terms of how we trade today,

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<v Speaker 1>how we invest today? You're you're absolutely right, it's not if,

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<v Speaker 1>but when? Yeah, and uh that could be three years away,

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<v Speaker 1>that could be five, it could be a decade. But

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<v Speaker 1>it's coming. And uh, you know, the light was shined

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<v Speaker 1>on me. But one of my partners, Joe Quintilion, who

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<v Speaker 1>convinced me to get involved in this about three years ago,

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<v Speaker 1>and uh I blame him, No, I'm just joking, but

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<v Speaker 1>but got involved in all this and Greg Diprisco as well.

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<v Speaker 1>But it's coming and we're already there. So it's really

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<v Speaker 1>the back end that's getting changed, not the UI the

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<v Speaker 1>front end. If you think about it, and it will

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<v Speaker 1>we will get there. I mean three years ago defy

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<v Speaker 1>decentralized finance where a lot of the ethereum um uh

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<v Speaker 1>projects trade were less than a billion. In fact, was

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<v Speaker 1>like four million. And if you if you want to

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<v Speaker 1>determine value, let's call it market cap. Today, less than

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<v Speaker 1>three years later, it's over forty billion. Bitcoin just surpassed

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<v Speaker 1>a trillion. I think it's a nine billion right now

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<v Speaker 1>or something along those lines. But um, I mean, who

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<v Speaker 1>would have guessed I I opened You know, I tell

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<v Speaker 1>people this story. I really got involved about three years ago.

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<v Speaker 1>But I actually opened a coin based account in two

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<v Speaker 1>thousand fourteen. And the only reason I know is because

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<v Speaker 1>in two thousand nineteen I tried to open a coin

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<v Speaker 1>base account and they told me I already had one.

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<v Speaker 1>So that's one of those things, right. Uh, well you

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<v Speaker 1>know now that I because where do you you know

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<v Speaker 1>when it comes to bitcoin, I think we're watching these

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<v Speaker 1>levels trying to understand it. You know, as I said,

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<v Speaker 1>I know enough just to be dangerous. When I look

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<v Speaker 1>at bitcoin, it's a supply and demand issue on some level,

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<v Speaker 1>and I do wonder how much of that is that play?

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<v Speaker 1>I mean, how do you see it? Is it commodity?

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<v Speaker 1>Is it currency? Is it collectible? What is it? Great,

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<v Speaker 1>great question, um, and my answer would have been different

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<v Speaker 1>three years ago. But let me just say this. Uh,

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<v Speaker 1>you know, this is a disclaimer what I say today

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<v Speaker 1>of my personal views. It does not constitute a recommendation

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<v Speaker 1>or endorsement of any particular security or strategy. Now that's

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<v Speaker 1>out of the way fairness in regard to it. In

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<v Speaker 1>regards to bitcoin, um, you know, I I do view

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<v Speaker 1>it as a modity. Uh some of it. It's an

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<v Speaker 1>inflation hedge of sorts. But um, you know, three years

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<v Speaker 1>ago it was more of a you know, just to

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<v Speaker 1>play like gambling in a way. I mean, not for

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<v Speaker 1>the believers. It was this democratization, etcetera away from central banks.

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<v Speaker 1>I think what's driving a lot of the interest to

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<v Speaker 1>day is beyond uh Elon Musk and others making positive comments.

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<v Speaker 1>You look at the big dogs, what I call the

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<v Speaker 1>big dogs. You look at b n Y Melon now custodian.

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<v Speaker 1>You look at Black Rock that's announced that two of

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<v Speaker 1>their futures funds are buying bitcoin. You look at the

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<v Speaker 1>o c c UH federally federally nationally chartered banks now

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<v Speaker 1>can custody um stable coins. That that's all happened the

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<v Speaker 1>last like three months, which is unbelievable, Like if you

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<v Speaker 1>get your head around that, right, absolutely, Morgan Stanley has

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<v Speaker 1>come out as well, and the MasterCard has come out packing. Uh,

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<v Speaker 1>it's it's uh so to your earlier question is not if,

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<v Speaker 1>but when? All right? Just yeah, just amazing, amazing. UM.

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<v Speaker 1>One last question real quickly, what kind of activity are

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<v Speaker 1>you seeing on your platform in terms of growth? Well, well,

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<v Speaker 1>we're launching Q two, so we're launching in in let's

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<v Speaker 1>call it May or June this year. UM. I wish

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<v Speaker 1>we had launched by down, but our tech guys keep

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<v Speaker 1>telling me that's unrealistic. But we're gonna get We're gonna

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<v Speaker 1>be launching them. Are you guys going to be very similar?

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<v Speaker 1>We hope to what uh like a Robin Hood and

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<v Speaker 1>others have. At this point in time, we're seeing a

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<v Speaker 1>tremendous amount of interest from issuers, both fixed income and equities. Uh.

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<v Speaker 1>They view the this this are a t s is

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<v Speaker 1>an opportunity to actually access new investors who are in

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<v Speaker 1>the who hold cryptos or stable coins. They're very excited

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<v Speaker 1>about that. And uh, institutions as well, because on the

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<v Speaker 1>fixed income side or or dived end paying side, we

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<v Speaker 1>estimate the cost savings on the back end right or

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<v Speaker 1>anywhere between twenty basis points to fifty basis points per issues,

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<v Speaker 1>which is tremendous. I was gonna say that's real money. Hey, listen,

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<v Speaker 1>once you guys launch and everything, come back and update us.

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<v Speaker 1>I'd love to hear more. Um, gotta run, Pat, have

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<v Speaker 1>a great evening and and so great to have you on.

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<v Speaker 1>Pat Lavekia, chief executive officer at Oasis pro Markets, joining

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<v Speaker 1>us on the phone from day in Connecticut. Really interesting

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<v Speaker 1>in terms of digital securities and the platform that they

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<v Speaker 1>are building.