Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisenthal and unfortunately this week my co host
Speaker 1: Tracy Alloway is off, though she's not going to be
Speaker 1: joining us, and I swear, or she swears that it's
Speaker 1: not just because we're going to be talking about cryptocurrencies today.
Speaker 1: She really couldn't make it. But in fact, we are
Speaker 1: doing another crypto episode, and I'm really excited about our
Speaker 1: guest today, a very important player in the industry. Of course,
Speaker 1: over the last several months, along with everything else, everything
Speaker 1: is going to the moon these days, stocks, gold, bonds,
Speaker 1: you name it. Cryptocurrencies are no exception, and it feels
Speaker 1: like there is certainly the most amount of enthusiasm that
Speaker 1: we've seen in crypto pribace since the the boom in
Speaker 1: UH And still the questions are remain and that there's
Speaker 1: still plenty of skeptics. What's it for? Where is this
Speaker 1: all going? Is this just another bubble that will burst
Speaker 1: like last time? So we're gonna dig into some of
Speaker 1: these questions today. Very excited to bring in our guest,
Speaker 1: Katherine Coley. She is the CEO of Finance US, a
Speaker 1: cryptocurrency exchange in the u S a wholly owned subsidiary
Speaker 1: subsidiary of Finance, which is one of the biggest cryptocurrency
Speaker 1: exchanges in the world. Katherine, thank you very much for
Speaker 1: joining us. Thank you so much. Joe really excited to
Speaker 1: be on. So I do remember last time, during last
Speaker 1: the last boom, we did see the emergence of Finance,
Speaker 1: which is the company that owns you. Just what is
Speaker 1: the structure and relationship of Finance and Finance US. I
Speaker 1: hate to come out of the gates correcting you on
Speaker 1: a couple of things, but I'm going to Okay, that's fine,
Speaker 1: that's fine. So Binance dot com it's a global ecosystem
Speaker 1: that really has been around for about last three years,
Speaker 1: really expanding the access around the world for people to
Speaker 1: engage with digital assets. And around last year in the summertime,
Speaker 1: I joined to become the CEO of Finance US, which
Speaker 1: is actually an independent entity entirely run out of the
Speaker 1: United States, with the ability to license the technology that
Speaker 1: Finance dot Com has, So you think about matching engine,
Speaker 1: the tech st act that's really there. We're able to
Speaker 1: really bring that into the US as well as customize
Speaker 1: it entirely for an American audience. So when you think
Speaker 1: about a cryptoo crypto global platform, so many things are
Speaker 1: so different in the United States on ramps, a c H,
Speaker 1: debit cards, wires, all the dollar components, so everything has
Speaker 1: to be custom fit and made specifically to the US.
Speaker 1: So that's really where Finance US comes in. The other
Speaker 1: components are the US regulation, so uh in terms of
Speaker 1: violence US, we're registered with fins in we have are
Speaker 1: are regulated by the state level, with the money transmitter
Speaker 1: licenses fully operating in thirty eight states, with the newest
Speaker 1: state being Florida, and so everything we're doing is in
Speaker 1: line with the U S regulation as well as catered
Speaker 1: to an American user. Got it? Okay, with that out
Speaker 1: of the way, and I appreciate you clarifying it, and
Speaker 1: I want people to understand what the exact structure is.
Speaker 1: Let me start with what I see as sort of
Speaker 1: one of the issues or problems with the crypto currency
Speaker 1: industry at large as a market and carried out I
Speaker 1: want to hear. I'm sure you'll disagree with me, but
Speaker 1: this is this is something that I think about a lot.
Speaker 1: So late seventeen or you know, people started getting like
Speaker 1: super into bitcoin. Also ethereum, and maybe a couple of others,
Speaker 1: and then by like no member and December of that year,
Speaker 1: suddenly the market was just flooded with supply, and suddenly
Speaker 1: it's like and now here buy some bitcoin cash. And
Speaker 1: then here by like eight more hard forks of bitcoin cash. Oh,
Speaker 1: and there's like fifty other I c o s, And
Speaker 1: so basically you have this thing which kind of started
Speaker 1: off essentially as bitcoin and bitcoin alone. And one of
Speaker 1: the big selling points was the fact that it's unique
Speaker 1: that there's a fixed supply of it. But then the industry,
Speaker 1: strikes me, is manufacturing so many new assets to capture
Speaker 1: the demand for crypto, and so suddenly exchange has become,
Speaker 1: in my mind, flooded with new coins, new project very fast.
Speaker 1: The incentive for new players is not to jump on
Speaker 1: a project that, say, has already gone up ten percent,
Speaker 1: but to start a new project that could itself go
Speaker 1: up ten thousand percent. And so then eventually it all
Speaker 1: sort of comes crumbling down because the investor the empire
Speaker 1: is just sort of choked with so much supply, and so, hey,
Speaker 1: I'm curious if you think that phenomenon is real. It
Speaker 1: seems like that way to me. And are we seeing
Speaker 1: it again this time with the sort of numerous, the
Speaker 1: hundreds of new coins that seemed to be emerging onto
Speaker 1: the ecosystem every day, you hit the nail on the head.
Speaker 1: So when Satoshi Knakamoto came out with IS or her
Speaker 1: imagination for a peer to peer network with this scarce asset,
Speaker 1: you realized that this would be absolutely possible assuming no
Speaker 1: other coin was manufactured, no other supply came in to
Speaker 1: dilute it, and this was the only way that would
Speaker 1: be But you forget that humans have a competitive need,
Speaker 1: and so we really can't take people away from building
Speaker 1: something that can be better, faster, stronger, or better marketed
Speaker 1: or cater to a different audience. And so you're going
Speaker 1: to always see people try to riff on it or
Speaker 1: fork as the you know, the industry says along when
Speaker 1: you're using the same elements of the blockchain and just
Speaker 1: rebranding it. Uh. And so with that, I agree with
Speaker 1: you that it does seem like, oh no, I can't
Speaker 1: I can't really see which one I'm going to be
Speaker 1: involved in. But that's really the element that we face
Speaker 1: into all things in life. You know, it wasn't that
Speaker 1: Coca cola was the only carbonated beverage that was out there.
Speaker 1: You're always going to see something come up new, something
Speaker 1: that was going to either be capturing a new market
Speaker 1: audience or something that was going to be delivering a
Speaker 1: different need. So that that's really where I see the
Speaker 1: human need for competition continuing and we have to accept that. Um.
Speaker 1: The best part about that is you get innovation of
Speaker 1: so where there's things like the birth of Ethereum, which
Speaker 1: then has let us see items as humorous as crypto
Speaker 1: kitties and then as impactful as stable coins, you're also
Speaker 1: seeing it change the way we're we're seeking yield now.
Speaker 1: So you've got different components that are letting people really
Speaker 1: evaluate how this industry can change the game. And I'm
Speaker 1: all for it. Okay, So your comparison to Coca Cola
Speaker 1: and then you know, Pepsi emerged and there's other sodas
Speaker 1: that kind of makes sense to me. It's like, right,
Speaker 1: that's capitalism, that's human nature. We're going to compete, ingenuity, innovate,
Speaker 1: so forth. Coca Cola is still around, but people have
Speaker 1: other options. They're being said, it's one thing to have
Speaker 1: a new competitor to Coca Cola, on the market. It's
Speaker 1: another thing for the listed exchanges to capitalize on the
Speaker 1: hype for Cola and suddenly list every new Cola project
Speaker 1: as something that trades. So, okay, you have Coke shares,
Speaker 1: But what if you know, over the next few months
Speaker 1: there was a boom and coke suddenly all kinds of
Speaker 1: new cola startups existed primarily to um well quench investor
Speaker 1: thirst for soda related assets, so to related financial assets.
Speaker 1: Doesn't this end up just sort of diluting and swamping
Speaker 1: the sort of supply demand supply demand effects that was
Speaker 1: pushing the original asset asset up of the first place
Speaker 1: Insider it more of a marketplace. I'm going to have
Speaker 1: Coca Cola, I'm going to have Mountain Dew, I'm going
Speaker 1: to have a sprite, I'm going to have a variety
Speaker 1: of options because i know that my user base is
Speaker 1: going to be demanding it. So I'm going to make
Speaker 1: sure that what I'm serving isn't poison. I'm going to
Speaker 1: make sure that what I'm providing is in demand of
Speaker 1: the market, and I'm going to be possibly pushing the
Speaker 1: market into seeing if something you know is worthwhile keeping
Speaker 1: on our menu. So so that's really how we view
Speaker 1: offering digital assets. There's going to be the majors, the
Speaker 1: ones that we see as having the largest adoption so far,
Speaker 1: the ones that have either been there the longest when
Speaker 1: you think about it, or we're going to be providing
Speaker 1: things where the current market environment is both approval of
Speaker 1: a from a regulatory standpoint as well as the market
Speaker 1: is demanding it, asking for it to be included in
Speaker 1: certain things because there's actual growth or team and and
Speaker 1: a mission behind it that's going to be catered to
Speaker 1: a US growth that concept um or the idea that
Speaker 1: we're going to be needing this from a utility perspective.
Speaker 1: So we've launched a series of coins forty six of
Speaker 1: them in total today, and we break them through with
Speaker 1: with different you can kind of put them in categories too, um,
Speaker 1: you've got your diet sodas, you've got your caffeine free,
Speaker 1: you've got your fruity fruity drinks, uh, And you can
Speaker 1: kind of break them through in that where you see
Speaker 1: governance tokens being something as a need for people to
Speaker 1: understand and want to be involved in. You see staking
Speaker 1: as something where people want to be involved in these
Speaker 1: proof of steaks where if you park your deposits you're
Speaker 1: able to earn um you know, rewards on top of that.
Speaker 1: So those are kind of the subcategories to which digital
Speaker 1: assets provide people different ways to interact with the markets.
Speaker 1: You don't have to be high frequency trader in order
Speaker 1: to capitalize on digital assets. You could possibly be very
Speaker 1: involved in staking having large deposits there. You could be
Speaker 1: involved in the governance of these defy or decentralized finance
Speaker 1: UH protocols and and so forth. So that that's really
Speaker 1: how we break it down and offer people that variety,
Speaker 1: because being a gatekeeper in this industry is way too soon.
Speaker 1: This gets to UH something that you know, you need
Speaker 1: to help educate me on. And during that boom, you know,
Speaker 1: I thought I was pretty reasonably informed on various goings
Speaker 1: on in the crypto industry, and I'd like to think
Speaker 1: that I would have been reasonably informed, except I don't
Speaker 1: know if you've noticed, but a bunch of other things
Speaker 1: that have happened in and so I have to admit
Speaker 1: that I haven't paid as close attention to all the
Speaker 1: development as I did back then because I've kind of
Speaker 1: been distracted with some of this other stuff that's been
Speaker 1: happening this year. So to a sort of nubie in
Speaker 1: the space or someone who like isn't paying attention, how
Speaker 1: would you describe this world? I mean, all this stuff
Speaker 1: staking and stable coins and yield farming and governmentce tokens
Speaker 1: like I actually have, I don't really understand it. So
Speaker 1: you were to like describe to someone what the big
Speaker 1: new things are in that were sort of characterized the
Speaker 1: ecosystem versus what's your sort of like I don't know,
Speaker 1: elevator pitch for it all because I see these charts
Speaker 1: of like a million coins interacting with each other, and
Speaker 1: I just have to admit I don't really get it.
Speaker 1: If you could have predicted, I would have given you
Speaker 1: all my money in So, Uh, there's certainly some components
Speaker 1: that none of us saw happening. Um, but of those
Speaker 1: I break it down into two. Really the benefits of
Speaker 1: the freedom of digital assets. And that sounds like a
Speaker 1: big jarble of words, so I'll break it down. I
Speaker 1: am currently trapped in my living room, uh, with a
Speaker 1: limited amount of exposure externally, unable to get most of
Speaker 1: my news or media except for online or Bloomberg TV.
Speaker 1: And the components to which I can interact with other persons,
Speaker 1: my team, a company of business all have to be digital.
Speaker 1: So when you look at a space that allows you
Speaker 1: to interact, access funds, invest trade from a mobile device,
Speaker 1: you think about how that benefits us for whatever may come.
Speaker 1: Unless we're all underwater and the internet is bad there.
Speaker 1: But the the components that we've currently faced in this
Speaker 1: pandemic have all been suited for a resilient industry to
Speaker 1: take off. And that's really where digital assets has thrived
Speaker 1: is the idea that you anyone with an Internet connection
Speaker 1: can access their funds in digital sets. And the digital
Speaker 1: assets can either be placed in highly volatile assets staple
Speaker 1: assets pegged to the dollar, or ones that reward you
Speaker 1: for keeping it parked there and not trading it, or
Speaker 1: ones that help you, uh, you know, build on top
Speaker 1: of it and create different things, be it tokens or
Speaker 1: chips that are rewarded, or things that unlocked doors like
Speaker 1: a chucky cheese or a gaming token. Let's say, I'm
Speaker 1: actually really curious on the tokens that pay you for
Speaker 1: not doing anything, and so people collect yield and this
Speaker 1: is something I don't still don't quite understand, but you
Speaker 1: can buy a token, stake it somewhere, which basically means
Speaker 1: kind of like it seems to me, like putting it
Speaker 1: in a c D kind of where you commit to
Speaker 1: locking it up for a certain out of time and
Speaker 1: then you get some yield, some above market yield. How
Speaker 1: does that whole world work? And who is paying me
Speaker 1: that yield? So I get some sort of income from it,
Speaker 1: But who's the one, uh, you know, spending that money
Speaker 1: that's becoming my income. There's a common word from every
Speaker 1: part of finance that you know before this that is
Speaker 1: not changing, and that's liquidity. So the need for a
Speaker 1: market to have enough supply to be able to meet
Speaker 1: the demands without fluctuating the price of the asset is
Speaker 1: still something that is a component in any marketplace. Um,
Speaker 1: I only have one soda and I have thirty people
Speaker 1: that need it, that's going to be a very expensive soda.
Speaker 1: If I have an infinite supply of this soda, or
Speaker 1: if people want to give me their sodas so that
Speaker 1: I can sell them for other people, I can lower
Speaker 1: that price. I can have a better market, I can
Speaker 1: have more users. So we think about it in ways
Speaker 1: where yield farming, which is this you know foreign word
Speaker 1: that comes up with the same thing as you know,
Speaker 1: seeking yield, which is what you do in f X
Speaker 1: when you're deciding to go into the AUSI dollar. But
Speaker 1: the components of being able to provide your supply of
Speaker 1: a token to a provider so that they can make
Speaker 1: markets with it allows you to then be rewarded for
Speaker 1: sacrificing the chance to BILO so high during those times.
Speaker 1: So because you're actively taking a stance that says I'm
Speaker 1: not going to touch it, I'm not going to you know,
Speaker 1: seek to trade this thing actively, I am sacrificing some
Speaker 1: element of the market that is out there currently so
Speaker 1: that this whole entire marketplace can have more supply to
Speaker 1: be able to make healthier markets. That's where you're getting
Speaker 1: this reward or this this staking reward or the yield
Speaker 1: guilt in return. So the yield payer in this case,
Speaker 1: I don't even know that's called. I'm not sure if
Speaker 1: I'm using the right term. But whoever is paying me
Speaker 1: that a market maker who is then using that coin
Speaker 1: to engage in a facilitate a more a liquid trading environment,
Speaker 1: basically in in a in our old world, in our
Speaker 1: centralized world, that is a market maker in this new world,
Speaker 1: it is anyone. So that is that that is the
Speaker 1: component that gets people, especially you know as a former banker,
Speaker 1: gets them going confused, like what about what about my counterparty?
Speaker 1: How do I know who they are? How how am
Speaker 1: I familiar with this? And that's the feature, not the bug,
Speaker 1: that you're going to be able to give up your
Speaker 1: assets into um an unknown pool that someone, anyone can
Speaker 1: be able to use to then make markets on. And
Speaker 1: so that is a huge benefit to people that are
Speaker 1: not classified as the Susquehannas Steve r twos of the
Speaker 1: world UM that would naturally have that as a business.
Speaker 1: And you're able to see you first time traders able
Speaker 1: to pick up and learn about this as well as
Speaker 1: provide automated market making strategies and build this out and
Speaker 1: therefore take advantage of a bad advantage but be able
Speaker 1: to capitalize on visibility to provide markets safely. So that's
Speaker 1: like the unusual component. But you can break it down
Speaker 1: into I'm giving up my asset into a to a
Speaker 1: market maker, and the market maker is paying me for
Speaker 1: that service, and then you have to flip it and say,
Speaker 1: in decentralized finance, I'm giving that up to an unknown entity,
Speaker 1: and that unknown entity is then doing what they want
Speaker 1: with it um, which is a benefit if you are
Speaker 1: democratizing the access to this capital. Right, two questions. The
Speaker 1: first one is a very short one. So again I'm
Speaker 1: assuming that for a lot of listeners this is like
Speaker 1: pretty new stuff. Yield forming, locking up your coin is
Speaker 1: actually collecting an interest rate on a cryptocurrency. First question
Speaker 1: is how big is this market or like how you know,
Speaker 1: how how big is this growth? This has grown astronomically
Speaker 1: in the last few weeks, with the astronomic being still
Speaker 1: under you under ten billion dollars we're talking about the
Speaker 1: stable coin industry inside of digital assets is ten billion dollars.
Speaker 1: But this component of yield farming and decentralized finance is
Speaker 1: now eclipsing these centralized exchanges. So for the first time
Speaker 1: ever you saw unit swaps volume, daily volume exceed coin basis.
Speaker 1: You know, as a as a company that's also working
Speaker 1: on eclipsing other people's market share. Um, there is an
Speaker 1: ability to do this, but it's also just the differentiation
Speaker 1: of your of your feature or of your platform. So
Speaker 1: the the excellence of these decentralized platforms is that they
Speaker 1: are allowing a global participation level, not just a regional
Speaker 1: So I said, I had two questions, but I'm going
Speaker 1: to ask a question in between again for the purpose
Speaker 1: health listeners. You know, the hot exchange was coin based.
Speaker 1: That's more or less a regulated bank in the sense
Speaker 1: that you can wire your money to them, put it
Speaker 1: on deposit, and then they hold something for you that
Speaker 1: they call a bitcoin or some other coin that's really
Speaker 1: just their liability, and when you want to take it off,
Speaker 1: they'll send it to you. But it's like people in regulation.
Speaker 1: Something like nice swap is just a protocol. There's no
Speaker 1: actual fiat money held, and it's a sort of purely
Speaker 1: digital algorithmic exchange on chain that essentially has there's no
Speaker 1: custodial aspect to it at all. Is that more or
Speaker 1: less right? Very accurate? I except for the fact that
Speaker 1: I'm sure coin base in myself would both say we
Speaker 1: are bank life, but definitely not. We did none of
Speaker 1: our banking licenses to be a chartered bank, so just
Speaker 1: to be just for every everyone out there listening, we
Speaker 1: have our money transmission licenses, but I'm not the bank
Speaker 1: chart an important distinction. Okay, So then this gets to
Speaker 1: me to my other question, which is one of the
Speaker 1: common complaints of um crypto towards crypto from skeptics. So like, yeah, okay,
Speaker 1: it's kind of interesting. Maybe the technology is interesting, but
Speaker 1: all it's used for basically is speculation and games and trading.
Speaker 1: And when you we sort of look at the last
Speaker 1: three years and the you know, I guess innovation that's
Speaker 1: taken place. There are a lot of new things that
Speaker 1: have been built, but it seems like still the only
Speaker 1: thing in the end is more speculation in trading. There's
Speaker 1: just sort of like a new layer. It's it's a
Speaker 1: more sophisticated market. Maybe it's more liquid, maybe there are
Speaker 1: more participants in more different different ways of profit. But
Speaker 1: in the end, what's being built is yet another layer
Speaker 1: for a speculative game. Having been someone that's dedicated her
Speaker 1: entire career too speculative assets, and my first five years
Speaker 1: were with Morgan Stanley and Foreign Exchange, not that much
Speaker 1: as different. So uh, to clarify, the past three years
Speaker 1: have been dedicated to crypto. I have stayed busy, I've
Speaker 1: stayed employed, and I've constantly been learning. So for an
Speaker 1: industry to be able to provide that much opportunity as
Speaker 1: well as give me the chance to hire and bring
Speaker 1: in new voices and names and give them careers in
Speaker 1: something that is an added benefit any industry would hope
Speaker 1: to have. So the the benefits of anything blossoming, whether
Speaker 1: it is for a speculative purpose or not, is that
Speaker 1: this is able to build a sustainable ecosystem for enthusiasts
Speaker 1: as well as experts as well. As the on ramps
Speaker 1: into crypto are so much wider than the on ramps
Speaker 1: into finance, into technology, and with that it's it's a
Speaker 1: global benefit of people's curiosity. So I see it as
Speaker 1: despite the skepticism, I've been able to stay off the
Speaker 1: streets because of crypto um and there's so much benefit
Speaker 1: in that that people underestimate. And for the ability to have, uh,
Speaker 1: you know, a woman's CEO of of an American exchange.
Speaker 1: We only just got our first woman in banking as
Speaker 1: the CEO. So the changes we can make inside of
Speaker 1: the digital asset industry, whether it is seen as skeptical
Speaker 1: or you know, concerning for folks, is merely a birth
Speaker 1: of a new industry that is giving more people an
Speaker 1: opportunity to seek it out. I'm actually like how did
Speaker 1: you go crypto? Because you know, over the years there're
Speaker 1: been stories is like longtime banker makes the leap, but
Speaker 1: they jump into some new thing. They launched their own
Speaker 1: new thing, or like one of the exchanges will pluck
Speaker 1: a well known exact from the legacy finance world. What's
Speaker 1: your story, like, how did you decide um to make
Speaker 1: the dive to leave Morgan Stanley than you went to
Speaker 1: Ripple than to finance us? But what was that like
Speaker 1: making that decision to sort of leave the warm embrace
Speaker 1: of traditional finance into this new world. Well, I definitely
Speaker 1: wouldn't call it a warm embrace, but the I've always
Speaker 1: wanted to be in front of the biggest wave out there,
Speaker 1: and so right after college, I threw myself into Hong
Speaker 1: Kong FCS trading and saw a world that was wild
Speaker 1: and it was you know, while while we were comparing
Speaker 1: ourselves with our New York and London colleagues, we were
Speaker 1: the wild West. We were you know, Asian and the
Speaker 1: f's we were um these wild options on China. Uh,
Speaker 1: the the components inside of the Asian market landscape. We're
Speaker 1: still wild, We're still untamed and had so many idiosyncratic
Speaker 1: features to them. It kept you captivated. And so when
Speaker 1: I moved to London with Morgan Stanley and was you
Speaker 1: know then just doing huge size of euro and sterling
Speaker 1: and nothing, nothing, nothing too exotic, you saw that kind
Speaker 1: of Uh, this is this is, this is where my
Speaker 1: future is headed. And so I leaned into the electronic
Speaker 1: trading side. UM being able to provide this for our
Speaker 1: users to have that autonomy, to be able to trade
Speaker 1: without me, which helped for a human errors, be prioritization
Speaker 1: of my own personal time and see better execution from
Speaker 1: a trading standpoint. They were able to use algos, they
Speaker 1: were able to have trade cost analysis. Um, it was
Speaker 1: much more of a transparent market. Uh. The other component
Speaker 1: while I was in Digital Asso or while I was
Speaker 1: in Wall Street was this this item on Bloomberg that
Speaker 1: was that was popping up with DTCC, and it was
Speaker 1: the ability for you to see the trades when a
Speaker 1: client of yours traded away, which was in my opinion,
Speaker 1: revolutionary because I could immediately call out my client for
Speaker 1: having a premium and an option that was bullshit. So UM,
Speaker 1: I could I could look at that list and say,
Speaker 1: why why in the world did they trade away on this,
Speaker 1: you know, we had we had a tighter price, we
Speaker 1: had a bet, we had a better deal there. Let
Speaker 1: me let me engage with that. And when I realized
Speaker 1: that's exactly what blockchain was providing. The realized now that
Speaker 1: that was two years after I left Wall Street, was
Speaker 1: when I really recognized what crypto could could hold. But
Speaker 1: that was the connection point I saw is that transactions
Speaker 1: that were able to be as transparent as as Bitcoin transactions,
Speaker 1: where they were able to be found on a block explorer,
Speaker 1: which just is the essentially DTCC on Bloomberg, but provided
Speaker 1: to anyone with an Internet connection, you're able to track
Speaker 1: and trans and identify each transaction that takes place. And
Speaker 1: in my opinion, that's a frightening for certain things that
Speaker 1: don't want to be visible to the to the naked eye.
Speaker 1: But the counter to it is that you would be
Speaker 1: able to have a significantly higher amount of efficiency in
Speaker 1: a market if that was the component. So if we're
Speaker 1: moving from Hong Kong, where I was feeling like the
Speaker 1: inefficiencies were so great that the margins were appropriate there,
Speaker 1: I witnessed them get decimated. I was trading Indonesia back
Speaker 1: at the time, and and you you could drive a
Speaker 1: bus through the spread that they were providing you on shore.
Speaker 1: And now I think it's you know tips, which you're
Speaker 1: just like what that you know that there's there's no
Speaker 1: there's no space there anymore because the market has moved
Speaker 1: so so quickly efficiently, and so when you're seeking out
Speaker 1: where are the most inefficient markets that we can improve
Speaker 1: upon or acknowledge while they're still rich, that to me
Speaker 1: was what digital assets didn't have because it was birthed
Speaker 1: out of a computer science regime. It was missing the
Speaker 1: components of a natural trader mindset that came in an
Speaker 1: understanding trader psychology, supply and demand, arbitrage, all the components
Speaker 1: that a professional that is working to make a market's
Speaker 1: more efficient enjoys. So so that to me is really
Speaker 1: where I saw the lights go off that said, I mean,
Speaker 1: well at first, I mean, I'll admit it, and plenty
Speaker 1: of people listening probably may go, yeah, me too. When
Speaker 1: I when I heard about bitcoin, it was from a
Speaker 1: client that had bought some as a joke, I think
Speaker 1: for his fantasy football league. He lost that season and
Speaker 1: had to buy bitcoin. Um. He ended up selling I
Speaker 1: think it a five and bought his mom a house,
Speaker 1: So I was like, well that's something. Um. But the
Speaker 1: he felt good, he probably felt good about himself for
Speaker 1: like six months and then he and then he hated
Speaker 1: himself for the rest of his laf Oh, well, his
Speaker 1: mom has a house, so I hope himself. But the
Speaker 1: the components of of bitcoin when I heard about them,
Speaker 1: sounded terrible. It's super slow to move, it's clunky, it's expensive,
Speaker 1: and you got to do work in order to earn
Speaker 1: it out of thin air. Um. And and to me,
Speaker 1: I was like, Okay, well this isn't gonna be f
Speaker 1: X because we're getting close to T plus two is
Speaker 1: our normal settlement. Um. We have nearly efficient markets in
Speaker 1: terms of our pricing and or just banks competition is
Speaker 1: forcing us to have no margins, so we're pricing everyone
Speaker 1: at market and taking glosses because that's the only way
Speaker 1: to retain customers at that time. But the the components
Speaker 1: of bitcoin were not competitive in my opinion, for replacing
Speaker 1: a currency that would be moved around the world like payments,
Speaker 1: which payments are only one portion of it. You think
Speaker 1: about the FX markets, they have the corporate flow, the
Speaker 1: speculative flow, as well as just the natural course of
Speaker 1: this business or travel, and then as well the economic
Speaker 1: factors of countries creating their reserves in it. And I
Speaker 1: was going out, well, there's no way a country would
Speaker 1: build for their reserves and something like this unless it
Speaker 1: was going to be improved upon. And so that's really
Speaker 1: where when when you say, like, why would you have
Speaker 1: more than Coca cola? In my opinion, I was like,
Speaker 1: this could be improved upon. There could be a better
Speaker 1: soda flavor out there, which made me look into the
Speaker 1: different digital assets at the time. And so this was
Speaker 1: about when I was leaving banking, going into the new
Speaker 1: unknown for me. Um. I moved to San Francisco saying, Okay,
Speaker 1: I know the world of hedge funds, I know the
Speaker 1: world of global macro. I love it, but it's feels
Speaker 1: one dimensional at sometimes. How does my generation and tech
Speaker 1: get involved in that component? And so I came over
Speaker 1: to San Francisco to try everything. And I remember all
Speaker 1: of my interviews with these great fin techs. I kept
Speaker 1: on asking them about their balance sheet and their f
Speaker 1: X risk, and I knew that I had a sickness,
Speaker 1: but I was just so so focused on the the
Speaker 1: inefficiencies that these companies were having partially because they were
Speaker 1: VC funded, but there there's so many components that they
Speaker 1: were leaving chips on the table because they weren't aware
Speaker 1: of how these markets were moving. And so I I
Speaker 1: learned a little bit about x RP and said, well,
Speaker 1: this is faster, this is cheaper, this is UM you know,
Speaker 1: seems to be more scalable, but definitely has the features
Speaker 1: that are also appealing to bitcoin. Not they're not present,
Speaker 1: so that self sovereignty that UM, you know, the entire
Speaker 1: supply being limited UM. Some of those components with x
Speaker 1: RP were a little bit different because there were there
Speaker 1: people working on it UM and so I I joined
Speaker 1: Ripple and that was kind of my first foray two
Speaker 1: feet in UM, just having been an observer. I was
Speaker 1: at Silicon Valley Bank for a hop that UM observing
Speaker 1: how these startups were, as I said, leaving so many
Speaker 1: chips on the table because they weren't hedging their f
Speaker 1: X risks with their you know, their Indian arms or
Speaker 1: their their Chinese arms, with their businesses. Sure enough, you
Speaker 1: know it's three people in a garage. They're not going
Speaker 1: to be whipping out FX options to protect their to
Speaker 1: protect their hedging their operational costs. So UM, fair on them,
Speaker 1: they're growing, They're probably all I p o by now.
Speaker 1: But the components to me where I just had to
Speaker 1: learn more about it, and the the way that I
Speaker 1: learned as an obvious statement to moving to Hong Kong.
Speaker 1: To understand effects, I have to go in with all
Speaker 1: two feet. So I completely submerge myself into an industry
Speaker 1: in order to learn about it, in order to be
Speaker 1: a liaison translator to my peers, to people that are
Speaker 1: too intimidated to understand a space as obscure and frankly
Speaker 1: intimidating as crypto. So where where I can be the
Speaker 1: the liaison or the translator for an industry, I'm all there.
Speaker 1: And so I did my I did my tour of
Speaker 1: duty with uh, you know, foreign exchange, understanding how those
Speaker 1: markets worked. Um, it's nearly page for page of Liars Poker.
Speaker 1: But there's a new book to be written and that's
Speaker 1: in crypto, and I want to make sure that that
Speaker 1: industry we can educate people on rather than intimidate. I
Speaker 1: love that. I love your story because I mean, I'm
Speaker 1: aware you obviously, every there's always headlines about people leaving
Speaker 1: legacy finance for crypto, but I don't think I've ever
Speaker 1: really heard anyone sort of spell out the whole thought
Speaker 1: process like that. So that was really cool and also
Speaker 1: sort of gives me another question, and it gets back
Speaker 1: to the sort of what for questions? What is crypto four?
Speaker 1: And it's interesting, you know, your comparison of Okay, by
Speaker 1: the end of your effects stint, you saw the incredible
Speaker 1: spread and narrowing i'd say Indian or Indonesian rupia trading,
Speaker 1: and you realize they're like massive inefficiencies with are still
Speaker 1: you know, huge spreads and massive inefficiencies left out there
Speaker 1: with digital assets and crypto assets. But it still gets
Speaker 1: to the question, okay, okay, maybe the trading can be improved,
Speaker 1: become more decentralized, can become faster, spreads can be narrowed,
Speaker 1: but it still raises to me the question, like, okay,
Speaker 1: what for. So let's say the market does get much
Speaker 1: more efficient and liquid and so forth, then what do
Speaker 1: we do with those markets? What's done with that liquidity?
Speaker 1: To actually sort of I guess bridge the gap between
Speaker 1: finance and the real world, because when I think about finance, yes,
Speaker 1: you know, there's a lot of gambling and speculation. But
Speaker 1: at the end of where there's somewhere on a chain
Speaker 1: someone gets the liquidity to buy a house, or someone
Speaker 1: gets the liquidity to make an M and A transaction. Somewhere,
Speaker 1: you know, there's sort of a real world coral area
Speaker 1: at the end that all this liquidity or liquidity transformation
Speaker 1: is serving some real world action and I don't yet
Speaker 1: really see that um in the crypto space. So you
Speaker 1: mentioned those great kernels, and those are kind of the
Speaker 1: shining lights of why capital markets exist UM to to
Speaker 1: get that, you know, to get the mortgage to um
Speaker 1: close the M and A deal, to be able to
Speaker 1: repatriate the revenues of a foreign on you know, foreign
Speaker 1: product overseas, and there's still so many limitations on when
Speaker 1: and who can get those and that's really where digital
Speaker 1: assets comes in. So closing that M and A deal
Speaker 1: on a Friday night at four pm is no longer
Speaker 1: the deadline. You can close it on Saturday morning at
Speaker 1: two am, you can close it on Sunday at five pm.
Speaker 1: Digital assets are going to be trading, operating, transacting, and
Speaker 1: being able to be accessed. So what does that free
Speaker 1: up in terms of the ability for us to provide funds,
Speaker 1: remit payments, close books, be able to send transactions to
Speaker 1: close deals by homes, by buildings, uh, you name it.
Speaker 1: It's going to be freeing in that aspect that this
Speaker 1: can be done now without the time constraints that the
Speaker 1: current banking system, as the other components are the access
Speaker 1: So when I think about my time in Wall Street,
Speaker 1: my current status as a analyst and associate still limited
Speaker 1: me from being an accredited investor. Yet I was reading
Speaker 1: Bloomberg every day, talking to the world's largest hedge fund managers,
Speaker 1: and fully aware of financial products, so that the current
Speaker 1: the current sec adjustments have benefit of that. But only
Speaker 1: if I still was at a bank, working, taking my
Speaker 1: taking my licensing exams. Um. So there's still so many
Speaker 1: components where people are prevented from taking steps in their
Speaker 1: own financial futures. The digital assets alleviates and to me,
Speaker 1: that is a huge component and a shift that makes
Speaker 1: it less of this hard to attain. You know, you
Speaker 1: can only get a mortgage if you can only your
Speaker 1: credit score has to be this. If we were we
Speaker 1: are going to be able to free up capital and
Speaker 1: let people take control of their own capital in ways
Speaker 1: that may give them a better life. And that is
Speaker 1: the ability to work in a a nine to five job
Speaker 1: and still go home and invest, the ability to um
Speaker 1: work night shifts and yet be able to send money
Speaker 1: to your parents anywhere around the world at any time
Speaker 1: that you need to. Is that the revolution? Because I
Speaker 1: mean it does. It is annoying that when say I
Speaker 1: need to wire my rent check to a landlord that
Speaker 1: you know I can't do it on certain days or
Speaker 1: you know, it would be very annoying to have to
Speaker 1: wait till Monday to close an m and a deal fixing.
Speaker 1: That doesn't exactly sound revolutionary to me. It sounds like, yeah,
Speaker 1: that should just be something that they fixed and finance.
Speaker 1: Is it that sort of in universal access part that
Speaker 1: in your view is sort of the potential revolution with crypto?
Speaker 1: In my opinion, it's a huge component. I was an
Speaker 1: early adopter of globalization UM, which was a huge burden
Speaker 1: looking back. Um, you know, my I have I have
Speaker 1: to four o one case around the world that I
Speaker 1: can only act as when I'm sixty five, um, and
Speaker 1: they're not even four one key is there? You know,
Speaker 1: a UK pension and Hong Kong pension. So when you
Speaker 1: think about you know, giving people this opportunity to grow
Speaker 1: their own, you know, their own lives. We're telling people,
Speaker 1: by the ways that our infrastructure is built and by
Speaker 1: the way that banking is built, stay home, don't talk
Speaker 1: to anybody, get your local bank and growth. We're we're
Speaker 1: discouraging people from taking risks to go outside of their
Speaker 1: own boundaries to be able to build businesses overseas, to
Speaker 1: be able to build businesses in the United States that
Speaker 1: reach overseas audiences, or or take components and funding from
Speaker 1: um others, And that to me is still so stifling
Speaker 1: that I'm not sure the world is that courageous to
Speaker 1: be able to continue to push that forward. Yet there
Speaker 1: are an insane amount of benefits from looking outside of
Speaker 1: your own neighborhood, and so that that that universal access
Speaker 1: is a huge component. The ability to reduce the fees
Speaker 1: that you you get at every turn of an international
Speaker 1: transaction and give that back to the user are some
Speaker 1: of the huge ways to unlock this and allow people
Speaker 1: to actually get a lot from it. You think about
Speaker 1: if you're running a foreign company, you basically have to
Speaker 1: have a huge balance sheet in order to accommodate the
Speaker 1: f x P and L loss that you're going to
Speaker 1: be having You think about every earnings call where there's
Speaker 1: a drop down that from these largest companies in the world,
Speaker 1: and there's always like, yeah, we we acknowledge our f
Speaker 1: X pan L wasn't that good this year. So there
Speaker 1: there are huge losses taken that only benefit those that
Speaker 1: come with the cash already to be able to afford
Speaker 1: to take on this tyle of business that can be
Speaker 1: drastically reduced by having something that is universally accepted at
Speaker 1: any corner um. The other component of that is truly
Speaker 1: the access to it. If it is internet based. We
Speaker 1: are moving to a world and the world is actually
Speaker 1: caught up faster than America in terms of mobile banking,
Speaker 1: and so if we're moving to a world where phones
Speaker 1: are the new wallet, and that component allows people to
Speaker 1: really transact in ways that are significantly better for business,
Speaker 1: you're not going to have the same style of burden
Speaker 1: that people face when even small mom and pop shops
Speaker 1: don't want to be running an amex. Before we wrap up,
Speaker 1: you know, one of the things that strikes me as
Speaker 1: the space is that there's sort of this spectrum of
Speaker 1: projects out there and I think, you know, I'm sure
Speaker 1: it's always in the sense going to be like that.
Speaker 1: Due to the zero barriers to entry, really anyone can
Speaker 1: launch a new coin in theory and may be traded
Speaker 1: on one of these decentralized exchanges UM, as long as
Speaker 1: they meet some technical requirements. There are obviously some projects
Speaker 1: that are pretty interesting and take it pretty seriously. Then
Speaker 1: there are projects that I think probably everyone would agree
Speaker 1: are blatant egregious scams. And then there's probably projects that
Speaker 1: are in the middle which are not really scams per se,
Speaker 1: but they're also like are they a joke? You get
Speaker 1: these like weird ones. You mentioned crypto kitties earlier. I
Speaker 1: don't think that was a scam, but like it was
Speaker 1: difficult to tell how seriously to take the whole thing.
Speaker 1: This year's like all these new random coins and things
Speaker 1: with names like Sushi and yam, and it's like, I
Speaker 1: can't tell if it's performance art when people talk about
Speaker 1: this is like a serious new experiment and monetary governance,
Speaker 1: or is it just to get someone's get rich quick scame?
Speaker 1: Like I can't tell, And so I'm curious how much
Speaker 1: of a challenge that is for the space for education,
Speaker 1: for regulators, for UM legacy investors, that would like to
Speaker 1: have an allocation to crypto. The difficulty in discerning what
Speaker 1: is UM a sort of serious legit project that people
Speaker 1: are going to nurture and build on for a while,
Speaker 1: versus either a joke or a scam that was like
Speaker 1: pumped in some telegram room that we're not part of. Right,
Speaker 1: you mentioned a couple of things of like not being
Speaker 1: able to tell if a trend is worthwhile or not,
Speaker 1: and I still am worried about Capri pants in that
Speaker 1: way too. UM. But the crypto industry continues to fight
Speaker 1: against bad apples, and because of the inclusivity of the space,
Speaker 1: the ability for anyone to be involved, you are going
Speaker 1: to face that need to educate the customers and the
Speaker 1: community about more components than you do in the traditional world.
Speaker 1: Because the barriers to entry are just so high, people
Speaker 1: don't even get involved. So around internet security, around how
Speaker 1: to protect yourselves and your privacy, those are those are
Speaker 1: kind of items that we have to remain vigilant about
Speaker 1: from educating people that are first stepping into these waters.
Speaker 1: That's kind of the one oh one of entering crypto.
Speaker 1: You need to be aware of how your privacy and
Speaker 1: your data and your crypto is being protected, and that
Speaker 1: is being protected by yourself. So we we take those
Speaker 1: components to to educate people there. The next components to
Speaker 1: really educate people on are really just showing how traceable
Speaker 1: and transparent these are, so that you can do your
Speaker 1: research and be able to see all of the components
Speaker 1: that you need in order to make a decision. And
Speaker 1: that is one of the unique things about digital assets
Speaker 1: is that the college courses, and the financial degrees and
Speaker 1: the pH d s are all available online to anyone.
Speaker 1: The components of education in this space are wildly available
Speaker 1: and made available, and as our purpose of our platform,
Speaker 1: we continue to produce content that helps people get educated
Speaker 1: specifically on this to make better decisions. The third component
Speaker 1: is understanding the risks, and this is something that I
Speaker 1: think everyone needs to understand and also needs to be
Speaker 1: aware of that you can take risks. You don't always
Speaker 1: have to just be afraid of them. So understanding that
Speaker 1: is your balance that you're going to be taking. There
Speaker 1: is the trade off between am I engaging in something
Speaker 1: that is highly volatile? Does this help and benefit the
Speaker 1: long term benefits that I hope to seek, or is
Speaker 1: this something that I'm a believer in the technology as
Speaker 1: a changing component as the world needs something that needs
Speaker 1: to be more inclusive, more digitally accessible, and more transparent,
Speaker 1: and I'm here for the long haul. So we see
Speaker 1: we see regulation coming in in ways that are helping
Speaker 1: curb the near term volatility, which confuses the long term
Speaker 1: benefits in these short term gains, and this kind of
Speaker 1: hype hyper cycles um definitely depreciates the long term value
Speaker 1: of building an ecosystem that is increasingly inclusive, providing financial
Speaker 1: freedom and access to everyone with the shadow of UH
Speaker 1: scammers and those kind of components. So what we can
Speaker 1: do in our mission to build out mainstream cryptocurrencies is
Speaker 1: building that education component as as a as a required
Speaker 1: layer to feel comfortable about this space and make sure
Speaker 1: that as you're accessing these digital assets, you're fully aware
Speaker 1: of one the privacy and the protection needed on your
Speaker 1: on your information, as well as the risks inherent in
Speaker 1: investing and trading into an asset class as volatil is
Speaker 1: this one. And then understanding the fundamentals or the economics
Speaker 1: in supply and demand, which I think is one of
Speaker 1: the fascinating things that we've seen accelerated by digital assets.
Speaker 1: Unlike finance before is that this is an entire industry
Speaker 1: that is reaching a significantly different audience than finance, and
Speaker 1: yet every single day the conversation topic is money. Money
Speaker 1: has been a taboo table conversation for so long. Finally
Speaker 1: we've had an industry that makes it digestible for people,
Speaker 1: interesting for folks, and they're they're beginning to learn the components.
Speaker 1: There have been more people in the last two months
Speaker 1: that now understand what a basis trade is, not be
Speaker 1: because they've been following the interest rate markets. They've been
Speaker 1: following crypto. Oh, I thought it was because like they
Speaker 1: were listening to odd lots and they are listening to
Speaker 1: odd lots, but also because of the explosion of crypto. Right.
Speaker 1: But much like odd lots, you have been democratizing the
Speaker 1: way for people to get information and educate them through
Speaker 1: digital needs, which is a huge component of how we're
Speaker 1: seeing this world take a turn. And I think that's
Speaker 1: you know, one of the fascinating things is for the
Speaker 1: first time ever, students online are attending their econ one
Speaker 1: on one courses and they're already familiar with the supply
Speaker 1: and demand model because they have bitcoin. So final question
Speaker 1: real quickly if we revisit, if we do a follow
Speaker 1: up interview into five years, by then you would you
Speaker 1: predict that by then cryptocurrency in some form will have
Speaker 1: this sort of real world corollary where the market infrastructure
Speaker 1: that you're building is actually helping people engage in recognizably commerce,
Speaker 1: whether it's an investing in new businesses, doing him an
Speaker 1: A deals, mortgages, things like that are recognizably uses of
Speaker 1: money beyond speculation. Will that happen in five years? Absolutely? Okay.
Speaker 1: If you're if you're building a company in the next
Speaker 1: five years and you do not consider digital assets as
Speaker 1: a component, you're going into this in an ignorant way.
Speaker 1: All right. So it is, it is a trend that
Speaker 1: is picking up. It is an adoption case that is
Speaker 1: pandemic resilient, and if you're planning on any business model
Speaker 1: going forward, I would sure hope that you make it
Speaker 1: pandemic resilient as well. All Right, Well, September two, I'm
Speaker 1: looking forward to our that's been recording this September two.
Speaker 1: September second five, looking forward to our follow up. Katherine Collie,
Speaker 1: thank you so much for joining us. Fascinating conversation. Thank you,
Speaker 1: I hope to not be in my living room by then. Yeah,
Speaker 1: I hope so too. Good luck, Thank you too, m Um.
Speaker 1: Well that was Catherine Coley. If Tracy we're here, which
Speaker 1: she's not, we would banter for a little while. But
Speaker 1: you know, I'll just say my one observation is, and
Speaker 1: it really does seem to me like there is to
Speaker 1: some extent, and this is actually even true of bitcoin
Speaker 1: as well. How this sort of random people on the
Speaker 1: Internet got into it before Wall Street. So much of
Speaker 1: crypto is backwards to me. And I don't actually mean
Speaker 1: that in a negative or judgmental way. I mean that
Speaker 1: in a literal sense, crypto or bitcoin start off with
Speaker 1: sort of random people on the outside and then it's
Speaker 1: sort of invaded a legacy finance. Crypto in general seems
Speaker 1: to be this thing where they're building all of these
Speaker 1: sort of liquidity and market infrastructure first prior to actual
Speaker 1: it being used in sort of recognizable finance. It feels
Speaker 1: like very much the opposite of the history of finance,
Speaker 1: where you probably had loans and uh, you know, stock
Speaker 1: joint stock companies early on, and then people developed more
Speaker 1: sophisticated infrastructure to trade loans in stocks. So it'll be
Speaker 1: interesting to see if that continues to develop, whether all
Speaker 1: this infrastructures much of its speculative does then become the
Speaker 1: sort of facilitating platform for more recognizable uses of money.
Speaker 1: But um, that will be the question, and like I said,
Speaker 1: we'll follow up in five years. So this has been
Speaker 1: another episode of the Odd Lots Podcast. I'm Joe Wise
Speaker 1: and thought you can follow me on Twitter at the Stalwart.
Speaker 1: Follow my co host on Twitter even though she wasn't here,
Speaker 1: Tracy Alloway at Tracy Alloway. Follow Catherine Coley on Twitter.
Speaker 1: Her handle is at Crypto Cooley. Follow our producer Laura
Speaker 1: Carlston at Laura M. Carlston. Follow The Bloomberg had a podcast,
Speaker 1: Francesca Levy at Francesca Today and check out all of
Speaker 1: our podcasts under the handle at podcast. Thanks for listening
Speaker 1: to