Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes. Tim Stinovic from Bloomberg Radio. Our next guy,
Speaker 1: spoke to the Board of the SEC about developing a
Speaker 1: regulation battle plan for cryptocurrencies. Nice to Welcome to Bloomberg
Speaker 1: Business Week. Pat Lavecki a CEO at Oasis Pro Markets.
Speaker 1: It's a finn SEC approved digital ASCID broker dealer. He's
Speaker 1: also managing partner of Lavecki a Group, a privately held
Speaker 1: merchant bank. And Pat spent some thirty years on Wall
Speaker 1: Street working in investment banking and capital market senior positions.
Speaker 1: And he joins us on the phone from Dairy and Connecticut. Pat,
Speaker 1: nice to have you here on Bloomberg. Thank you, Carol.
Speaker 1: It's a it's a real pleasure. And if I may say,
Speaker 1: I've been a big fan of yours free well, thank you.
Speaker 1: I listen to your program, um it's always on in
Speaker 1: the background when I'm on a call. I just think
Speaker 1: you're the best interviewer at Bloomberg. So this is a
Speaker 1: real treat for me. Well, you're very kind. Doesn't mean
Speaker 1: I'm gonna be easy on you. I'm just gonna tell
Speaker 1: you now I'm just I'm kidding. Thank you. You've started
Speaker 1: off my week really nicely. UM take us back to
Speaker 1: the SEC you were there, if I got it right,
Speaker 1: I think a couple of weeks ago. Uh. Tell me
Speaker 1: about that exchange and what they were trying to figure out,
Speaker 1: because I am curious about what they are thinking in
Speaker 1: terms of regulations when it comes to cryptocurrencies. Great, yeah,
Speaker 1: just regards the sec SEC. You know, we're in discussions
Speaker 1: with our regulators all the time. UM, but this is
Speaker 1: really you know, we've been spending time over the last
Speaker 1: several weeks with um uh, the innovation groups at the
Speaker 1: regulators and coming up with ideas, sharing ideas, getting their feedback, etcetera.
Speaker 1: This whole blockchain area and what we focus on is
Speaker 1: digital securities. And I can talk a bit about that later.
Speaker 1: Is completely new. I'd like to say that. UM, well,
Speaker 1: actually I don't like it, but it's reality. We're a
Speaker 1: bicycle with training wheels with Ferrari brakes, which are the regulators.
Speaker 1: You know, a great wave of explaining it. Actually that's
Speaker 1: where we are today. Eventually, the Ferrari, the bicycle will
Speaker 1: become a Ferrari. But you know that's that's several years
Speaker 1: away and um, So we have a lot of ideas
Speaker 1: and the regulators know this tsunami is coming. Um. You know,
Speaker 1: they're very focused on cryptos right now and DEFY or
Speaker 1: decentralized finance. We're taking a step further and focused on
Speaker 1: digital securities, and we view ourselves as the bridge between
Speaker 1: traditional finance and defy. That's that's a direction, that's our
Speaker 1: mission statement, that's where we're heading. But they know this
Speaker 1: is coming. You know. We call it a tsunami of
Speaker 1: of opportunities and it's a tidal wave regarding what's happening
Speaker 1: in the crypto space and they're trying to stay ahead
Speaker 1: of it. A lot of smart people there trying their best.
Speaker 1: You know, they're the guardians of our financial system at
Speaker 1: the FINRA, and they want to make sure that they
Speaker 1: get it right. So talk to a little bit more
Speaker 1: about digital securities exactly what they are, what it what
Speaker 1: it presents, uh, in terms of opportunities for investors. Unpack
Speaker 1: a little bit more for me, if you would pack. Sure,
Speaker 1: digital securities are very similar to traditional securities. So what
Speaker 1: we were approved for. We're equities broadly defined and fixed
Speaker 1: income for corporates both public non national market securities as
Speaker 1: well as privates, and by privates I mean all exempt
Speaker 1: securities reg D, REGGS, one, etcetera. And they represent a
Speaker 1: proof of ownership of some type on the balance sheet
Speaker 1: and are an underlying asset of a company. But unlike
Speaker 1: traditional securities, they can be programmed through smart contracts to
Speaker 1: comply with regulatory requirements and standards as well, and they
Speaker 1: can be purchased and traded just like any other security.
Speaker 1: But it involves the blockchains, so it's very bespoke. It
Speaker 1: can be very tailored. Um, but all the back office um.
Speaker 1: So give you an example with Game Stop in the
Speaker 1: halting of trading a couple of weeks. So one of
Speaker 1: the issues that have come up is it's trade plus
Speaker 1: two days, right, and it you know, in the nineteen
Speaker 1: sixties it was you know, it's transaction day plus five days, uh,
Speaker 1: and then three and then let's jump all the way
Speaker 1: became trade plus three days. Then it took another twenty
Speaker 1: four years for it to get to trade plus two days.
Speaker 1: And while the UI has has improved, like on any
Speaker 1: trading app you might have the trade Charles Schwab Robin Hood,
Speaker 1: the back end is has been improved over the years,
Speaker 1: but it's still based on the infrastructure from the nineteen seventies.
Speaker 1: Now what blockchain does with digital securities, it really it's
Speaker 1: not a revolution, but an evolution of the trading system.
Speaker 1: So it's just taking it. It's just taking it to
Speaker 1: the technology level euro days. So I feel like pat
Speaker 1: and are talking to you. And also just some of
Speaker 1: the research I did coming into this, I know enough.
Speaker 1: I know enough to be dangerous. So in terms of
Speaker 1: digital securities, I mean you you basically you know you
Speaker 1: own an underlying asset, right, what are the advantages? Is
Speaker 1: it the liquidity aspects? Is it the security aspects? Is
Speaker 1: it that you can have fractional ownership of something that
Speaker 1: you might not have been able to own otherwise? Yeah,
Speaker 1: absolutely all the above. Um, there's also uh the advantages
Speaker 1: we were approved for digital cash payments for digital securities
Speaker 1: you own uh stable coins for instance, or um you
Speaker 1: know eventually c B, D C S. And I heard
Speaker 1: the common earlier you had mentioned about yelling he actually
Speaker 1: while she is not a fan of bitcoin, she actually
Speaker 1: came out today and also said that the Central Bank
Speaker 1: should be looking at sovereign debt currencies issued on the blockchain.
Speaker 1: So um, she's not a big fan of bitcoin, but
Speaker 1: she in this was endorsing c CBDCs to a certain extent.
Speaker 1: So all those advantages you just mentioned, So if you
Speaker 1: have stable coins right now and by that that's like
Speaker 1: die or USDC or hack those, you can utilize that
Speaker 1: to purchase digital securities. And another benefit of the digital
Speaker 1: securities is and this is unlike crypto. You've heard stories
Speaker 1: that someone had uh, you know, had fifty dollars in bitcoin,
Speaker 1: it's now worth a hundred million dollars and they can't
Speaker 1: find their wallet right so it's permanently lost. With digital securities,
Speaker 1: while the blockchain is is immutable UM, the regulators have
Speaker 1: determined that the authoritative ledger is either the issuer or
Speaker 1: the transfer agent. So if you own digital securities and
Speaker 1: you lost your your your wallet somehow or whatever, you know,
Speaker 1: whatever custodian was holding it, it got stolen and there
Speaker 1: was fraud. The beauty of digital securities is it could
Speaker 1: actually be burned that digital security was stolen and re
Speaker 1: issued to you. So some of the disadvantages of UH
Speaker 1: let's say cryptos and defy are not applicable to the
Speaker 1: UH digital regulated digital security space. So pat where do
Speaker 1: you see it all going? I mean, you're someone who
Speaker 1: has spent a lot of time on Wall Street in
Speaker 1: different capacities, and you see I mean and aside, I
Speaker 1: feel like the conversation over bitcoin, blockchain, digital currencies has
Speaker 1: definitely evolved from a couple of years ago. So where
Speaker 1: do you see this all going? Do we ultimately does
Speaker 1: digital securities take over from I mean I feel like
Speaker 1: we're doing it already right on some level, Like where
Speaker 1: does this all go in terms of how we trade today,
Speaker 1: how we invest today? You're you're absolutely right, it's not if,
Speaker 1: but when? Yeah, and uh that could be three years away,
Speaker 1: that could be five, it could be a decade. But
Speaker 1: it's coming. And uh, you know, the light was shined
Speaker 1: on me. But one of my partners, Joe Quintilion, who
Speaker 1: convinced me to get involved in this about three years ago,
Speaker 1: and uh I blame him, No, I'm just joking, but
Speaker 1: but got involved in all this and Greg Diprisco as well.
Speaker 1: But it's coming and we're already there. So it's really
Speaker 1: the back end that's getting changed, not the UI the
Speaker 1: front end. If you think about it, and it will
Speaker 1: we will get there. I mean three years ago defy
Speaker 1: decentralized finance where a lot of the ethereum um uh
Speaker 1: projects trade were less than a billion. In fact, was
Speaker 1: like four million. And if you if you want to
Speaker 1: determine value, let's call it market cap. Today, less than
Speaker 1: three years later, it's over forty billion. Bitcoin just surpassed
Speaker 1: a trillion. I think it's a nine billion right now
Speaker 1: or something along those lines. But um, I mean, who
Speaker 1: would have guessed I I opened You know, I tell
Speaker 1: people this story. I really got involved about three years ago.
Speaker 1: But I actually opened a coin based account in two
Speaker 1: thousand fourteen. And the only reason I know is because
Speaker 1: in two thousand nineteen I tried to open a coin
Speaker 1: base account and they told me I already had one.
Speaker 1: So that's one of those things, right. Uh, well you
Speaker 1: know now that I because where do you you know
Speaker 1: when it comes to bitcoin, I think we're watching these
Speaker 1: levels trying to understand it. You know, as I said,
Speaker 1: I know enough just to be dangerous. When I look
Speaker 1: at bitcoin, it's a supply and demand issue on some level,
Speaker 1: and I do wonder how much of that is that play?
Speaker 1: I mean, how do you see it? Is it commodity?
Speaker 1: Is it currency? Is it collectible? What is it? Great,
Speaker 1: great question, um, and my answer would have been different
Speaker 1: three years ago. But let me just say this. Uh,
Speaker 1: you know, this is a disclaimer what I say today
Speaker 1: of my personal views. It does not constitute a recommendation
Speaker 1: or endorsement of any particular security or strategy. Now that's
Speaker 1: out of the way fairness in regard to it. In
Speaker 1: regards to bitcoin, um, you know, I I do view
Speaker 1: it as a modity. Uh some of it. It's an
Speaker 1: inflation hedge of sorts. But um, you know, three years
Speaker 1: ago it was more of a you know, just to
Speaker 1: play like gambling in a way. I mean, not for
Speaker 1: the believers. It was this democratization, etcetera away from central banks.
Speaker 1: I think what's driving a lot of the interest to
Speaker 1: day is beyond uh Elon Musk and others making positive comments.
Speaker 1: You look at the big dogs, what I call the
Speaker 1: big dogs. You look at b n Y Melon now custodian.
Speaker 1: You look at Black Rock that's announced that two of
Speaker 1: their futures funds are buying bitcoin. You look at the
Speaker 1: o c c UH federally federally nationally chartered banks now
Speaker 1: can custody um stable coins. That that's all happened the
Speaker 1: last like three months, which is unbelievable, Like if you
Speaker 1: get your head around that, right, absolutely, Morgan Stanley has
Speaker 1: come out as well, and the MasterCard has come out packing. Uh,
Speaker 1: it's it's uh so to your earlier question is not if,
Speaker 1: but when? All right? Just yeah, just amazing, amazing. UM.
Speaker 1: One last question real quickly, what kind of activity are
Speaker 1: you seeing on your platform in terms of growth? Well, well,
Speaker 1: we're launching Q two, so we're launching in in let's
Speaker 1: call it May or June this year. UM. I wish
Speaker 1: we had launched by down, but our tech guys keep
Speaker 1: telling me that's unrealistic. But we're gonna get We're gonna
Speaker 1: be launching them. Are you guys going to be very similar?
Speaker 1: We hope to what uh like a Robin Hood and
Speaker 1: others have. At this point in time, we're seeing a
Speaker 1: tremendous amount of interest from issuers, both fixed income and equities. Uh.
Speaker 1: They view the this this are a t s is
Speaker 1: an opportunity to actually access new investors who are in
Speaker 1: the who hold cryptos or stable coins. They're very excited
Speaker 1: about that. And uh, institutions as well, because on the
Speaker 1: fixed income side or or dived end paying side, we
Speaker 1: estimate the cost savings on the back end right or
Speaker 1: anywhere between twenty basis points to fifty basis points per issues,
Speaker 1: which is tremendous. I was gonna say that's real money. Hey, listen,
Speaker 1: once you guys launch and everything, come back and update us.
Speaker 1: I'd love to hear more. Um, gotta run, Pat, have
Speaker 1: a great evening and and so great to have you on.
Speaker 1: Pat Lavekia, chief executive officer at Oasis pro Markets, joining
Speaker 1: us on the phone from day in Connecticut. Really interesting
Speaker 1: in terms of digital securities and the platform that they
Speaker 1: are building.