1 00:00:02,520 --> 00:00:08,240 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. I want to kick 2 00:00:08,240 --> 00:00:11,119 Speaker 1: things off now taking a look at shares of Galaxy Digital. 3 00:00:11,119 --> 00:00:14,040 Speaker 1: It's seeing it stock under pressure to start this week. 4 00:00:14,120 --> 00:00:17,120 Speaker 1: Shares down right now by about fifteen percent. This comes 5 00:00:17,120 --> 00:00:19,520 Speaker 1: as the company posted a loss of almost five hundred 6 00:00:19,720 --> 00:00:22,639 Speaker 1: million dollars during the crypto market's fourth quarter crash, with 7 00:00:22,760 --> 00:00:25,600 Speaker 1: trading volumes down forty percent compared to the prior quarter. 8 00:00:26,040 --> 00:00:28,800 Speaker 1: Joining us now for an exclusive interview is Galaxy Digital 9 00:00:28,800 --> 00:00:32,120 Speaker 1: founder and CEO Mike Novograts. Mike, good to see you 10 00:00:32,360 --> 00:00:34,720 Speaker 1: this morning. Thanks for joining us, especially on Earning's day. 11 00:00:34,720 --> 00:00:36,600 Speaker 1: You're fresh off the conference call this morning, and you 12 00:00:36,680 --> 00:00:39,960 Speaker 1: said that quote pain is part of the ethos of 13 00:00:40,040 --> 00:00:41,080 Speaker 1: this whole industry. 14 00:00:42,159 --> 00:00:44,760 Speaker 2: Unfortunately, unfortunately, unfortunately that's true. 15 00:00:44,800 --> 00:00:47,120 Speaker 1: How much more pain is ahead? 16 00:00:47,560 --> 00:00:51,599 Speaker 3: Listen, you never actually know where market's bottom, right crypto. 17 00:00:52,240 --> 00:00:55,000 Speaker 3: When Bigcoin went through one hundred thousand, that was a 18 00:00:55,040 --> 00:00:57,960 Speaker 3: major level it broke down on. And so you know, 19 00:00:58,080 --> 00:01:00,960 Speaker 3: I look at the chart, seven to one hundred is 20 00:01:00,960 --> 00:01:03,520 Speaker 3: probably the new range, and you know, we're at seventy six, 21 00:01:03,600 --> 00:01:04,920 Speaker 3: so I think we're towards the. 22 00:01:04,920 --> 00:01:06,920 Speaker 2: Bottom end of the range. 23 00:01:07,280 --> 00:01:10,520 Speaker 3: There's a lot of pessimism out there, A lot, a 24 00:01:10,520 --> 00:01:13,280 Speaker 3: lot of leverage has been taken out of the system. 25 00:01:13,440 --> 00:01:16,039 Speaker 3: Bitcoin was not supposed to act like this, right, You 26 00:01:16,120 --> 00:01:21,200 Speaker 3: had gold prices higher, the nansdak higher, rates going lower. 27 00:01:22,040 --> 00:01:24,080 Speaker 2: This was a yeah. 28 00:01:24,160 --> 00:01:27,880 Speaker 3: The Trump administration which very pro crypto, and so you know, 29 00:01:27,959 --> 00:01:34,480 Speaker 3: something went wrong. You know, the bitcoin, the crypto market 30 00:01:34,520 --> 00:01:38,959 Speaker 3: is still less than twenty years old, right right, I 31 00:01:38,959 --> 00:01:42,440 Speaker 3: think bigcoin oh nine, so where we're sixteen years old. 32 00:01:42,280 --> 00:01:44,000 Speaker 2: And it's immature. 33 00:01:44,120 --> 00:01:48,280 Speaker 3: We had had a huge run up from you know 34 00:01:48,280 --> 00:01:51,600 Speaker 3: where people bought at fifty one hundred, one thousand, two thousand, 35 00:01:51,680 --> 00:01:53,320 Speaker 3: ten thousand, all the way to one hundred hundred and 36 00:01:53,320 --> 00:01:56,760 Speaker 3: thirty thousand, and I think what ended up happening was 37 00:01:57,320 --> 00:02:00,000 Speaker 3: people finally started taking profits. After we crossed the high 38 00:02:00,240 --> 00:02:02,520 Speaker 3: it felt like the community had won, and it was 39 00:02:02,560 --> 00:02:04,920 Speaker 3: that side of relief, like we did it. We created 40 00:02:04,920 --> 00:02:09,560 Speaker 3: this amazing ecosystem, this amazing asset, and there's been kind 41 00:02:09,560 --> 00:02:11,520 Speaker 3: of like a seller's virus that got into the market. 42 00:02:11,919 --> 00:02:14,160 Speaker 3: People blamed it on quantum. I don't think quantum in 43 00:02:14,160 --> 00:02:17,000 Speaker 3: the long run is really the reason. I think there 44 00:02:17,080 --> 00:02:20,760 Speaker 3: was selling, and that selling is getting you know, executed 45 00:02:20,760 --> 00:02:21,240 Speaker 3: in the market. 46 00:02:21,240 --> 00:02:21,800 Speaker 2: There was buying. 47 00:02:21,880 --> 00:02:24,960 Speaker 3: Sure, lots of new institutions are coming in, but prices 48 00:02:25,000 --> 00:02:26,359 Speaker 3: are set on the margin, and there have been more 49 00:02:26,400 --> 00:02:29,680 Speaker 3: sellers than buyers. I think we're getting close to the bottom, 50 00:02:29,840 --> 00:02:32,160 Speaker 3: but we'll see. You always know a bottom after you 51 00:02:32,200 --> 00:02:37,080 Speaker 3: see it. And listen, there's a couple things that could help, right. 52 00:02:37,280 --> 00:02:42,240 Speaker 3: Market structure bill passing would be a big deal. You know, 53 00:02:42,440 --> 00:02:45,320 Speaker 3: people are really pessimistic on it right now. I actually 54 00:02:45,320 --> 00:02:48,640 Speaker 3: I'm a little more optimistic that things get done because 55 00:02:48,639 --> 00:02:50,280 Speaker 3: I think both sides want it done. 56 00:02:50,840 --> 00:02:51,519 Speaker 2: But we'll see. 57 00:02:51,800 --> 00:02:55,239 Speaker 1: So what is the catalyst that turns the tide right now? 58 00:02:55,280 --> 00:02:57,280 Speaker 1: You mentioned a market structure bill. Maybe that will bring 59 00:02:57,320 --> 00:03:00,280 Speaker 1: some optimism, but I don't know. Is there anything else 60 00:03:00,320 --> 00:03:01,919 Speaker 1: that could turn around this trade? 61 00:03:02,360 --> 00:03:05,800 Speaker 3: Yeah, that's a part of this acceleration recently downwards is 62 00:03:06,600 --> 00:03:11,919 Speaker 3: the thought that Kevin Warsh is going to be very hawkish. Listen, 63 00:03:12,000 --> 00:03:14,400 Speaker 3: what I think Kevin did is he took out the 64 00:03:14,440 --> 00:03:15,799 Speaker 3: tail risks for inflation. 65 00:03:16,400 --> 00:03:17,720 Speaker 2: Right. He's a man of integrity. 66 00:03:17,880 --> 00:03:21,079 Speaker 3: He has worked alongside Stan drucken Miller for a long time, 67 00:03:21,120 --> 00:03:25,280 Speaker 3: lily since he left the FED, and so you don't 68 00:03:25,280 --> 00:03:27,240 Speaker 3: think he's going to do whatever Trump wants him to 69 00:03:27,240 --> 00:03:32,120 Speaker 3: do that said, he's pretty dubvish right now, and I 70 00:03:32,120 --> 00:03:36,240 Speaker 3: think once he gets in and starts talking, you know, 71 00:03:36,440 --> 00:03:39,400 Speaker 3: looking at the environment that we see today, he wants 72 00:03:39,480 --> 00:03:43,200 Speaker 3: rates lower, and I think once that market kind of 73 00:03:43,240 --> 00:03:47,400 Speaker 3: rewrites him as a dove, at least a dove given 74 00:03:47,480 --> 00:03:52,680 Speaker 3: the current environment, that also could help. You know, there's 75 00:03:52,680 --> 00:03:55,400 Speaker 3: probably been an overreaction on how hawkish he's going to be, 76 00:03:55,680 --> 00:03:57,680 Speaker 3: but I do think listen, he took out the tail risk, 77 00:03:58,960 --> 00:04:00,600 Speaker 3: which is a good thing for a Manica and not 78 00:04:00,600 --> 00:04:02,760 Speaker 3: necessarily a good thing for gold, silver or bitcoin. 79 00:04:03,520 --> 00:04:06,960 Speaker 4: I appreciate you making the connection back to the macro 80 00:04:08,000 --> 00:04:11,400 Speaker 4: environment overall. I'm curious with this softness that we're seeing 81 00:04:11,440 --> 00:04:14,840 Speaker 4: in crypto and bitcoin, how does that change what Galaxy 82 00:04:14,920 --> 00:04:16,760 Speaker 4: is doing. Do you still plan to launch this one 83 00:04:16,839 --> 00:04:19,400 Speaker 4: hundred million dollar hedge fund, crypto hedge fund in the 84 00:04:19,400 --> 00:04:21,839 Speaker 4: first quarter that will bet on rising and falling prices. 85 00:04:21,880 --> 00:04:24,360 Speaker 4: Does it change your timeline? That's how you're thinking about it. 86 00:04:24,920 --> 00:04:25,120 Speaker 2: Yeah. 87 00:04:25,160 --> 00:04:26,800 Speaker 3: The great thing about this hedge fund, it's really a 88 00:04:26,800 --> 00:04:30,599 Speaker 3: fintech fund, and it's the broader ecosystem. So I said 89 00:04:30,640 --> 00:04:32,440 Speaker 3: on our call, this is a tale of two cities, 90 00:04:32,560 --> 00:04:35,000 Speaker 3: or really three cities because we have this, we have. 91 00:04:35,000 --> 00:04:37,719 Speaker 2: This data center business which is booming, thank god. 92 00:04:39,120 --> 00:04:41,600 Speaker 3: Like you know, if I didn't have the data center business, 93 00:04:41,960 --> 00:04:44,760 Speaker 3: i'd feel a lot worse. But our data center business 94 00:04:44,839 --> 00:04:48,960 Speaker 3: is now worth more than our crypto business. But within crypto, 95 00:04:49,360 --> 00:04:51,440 Speaker 3: there's still a bullmarkt and there's a bull market in 96 00:04:51,480 --> 00:04:55,719 Speaker 3: infrastructure right The traditional banks and finance companies are moving 97 00:04:55,720 --> 00:04:59,960 Speaker 3: into this space quickly, and you're seeing, we're seeing lots 98 00:05:00,120 --> 00:05:04,880 Speaker 3: some opportunities to partner with them around building wallets, around 99 00:05:05,480 --> 00:05:09,680 Speaker 3: staking and around really thinking about how tokenized real world assets, 100 00:05:10,320 --> 00:05:14,560 Speaker 3: you know, move into the world. And so I think 101 00:05:14,600 --> 00:05:19,919 Speaker 3: I haven't seen more excitement since I started from the 102 00:05:19,960 --> 00:05:21,479 Speaker 3: traditional players to get. 103 00:05:21,320 --> 00:05:22,800 Speaker 2: Engaged in digital assets. 104 00:05:23,600 --> 00:05:28,160 Speaker 3: And we've got the old version of crypto, the tokens 105 00:05:28,160 --> 00:05:31,200 Speaker 3: that exist today that just don't seem to have the 106 00:05:31,279 --> 00:05:36,479 Speaker 3: same the same support and the same appreciation, the same 107 00:05:36,560 --> 00:05:38,400 Speaker 3: energy in them right now, And so some of that 108 00:05:38,520 --> 00:05:41,000 Speaker 3: energy has shifted, and you see you see things like 109 00:05:41,600 --> 00:05:46,640 Speaker 3: you know, perpetual swaps on equities booming all of a sudden. 110 00:05:46,720 --> 00:05:50,039 Speaker 3: So using the crypto infrastructure for real world assets, the 111 00:05:50,040 --> 00:05:53,120 Speaker 3: crypto leverage system for real world assets, and so that 112 00:05:53,240 --> 00:05:56,359 Speaker 3: part of the business is really exciting where we're leaning 113 00:05:56,400 --> 00:06:00,400 Speaker 3: into it both in hiring and more and you know, 114 00:06:00,520 --> 00:06:05,159 Speaker 3: utilizing our engineering team to help others get in this game. 115 00:06:07,240 --> 00:06:09,440 Speaker 3: The other part is moving things more on Shine and 116 00:06:09,480 --> 00:06:11,880 Speaker 3: that is happening quickly, right. So you're going to see 117 00:06:11,960 --> 00:06:14,680 Speaker 3: credit on Shane and you already see the boom of 118 00:06:14,720 --> 00:06:16,479 Speaker 3: stable coins. I mean you look at the volume of 119 00:06:16,480 --> 00:06:19,880 Speaker 3: stable coins in the first month of the year. It's explosive. 120 00:06:20,480 --> 00:06:24,440 Speaker 3: And so we are moving into a digital world and 121 00:06:24,560 --> 00:06:28,120 Speaker 3: it's going to run on crypto, you know, blockchain rails. 122 00:06:28,360 --> 00:06:30,240 Speaker 2: Yeah, that's just. 123 00:06:30,120 --> 00:06:33,440 Speaker 3: Not correlating with the price of bitcoin, the price of ethereum, 124 00:06:33,480 --> 00:06:36,279 Speaker 3: the price of Salona, ripple, you name it. 125 00:06:36,360 --> 00:06:39,080 Speaker 4: So, Mike, with this excitement with the data center business, 126 00:06:39,120 --> 00:06:42,000 Speaker 4: would you consider a spin off to separate your crypto 127 00:06:42,040 --> 00:06:45,120 Speaker 4: and AI data center businesses. Would you be open perhaps 128 00:06:45,160 --> 00:06:47,720 Speaker 4: to selling your data center unit to any of the 129 00:06:47,800 --> 00:06:49,719 Speaker 4: hyperscalers should they come knocking on the door. 130 00:06:50,279 --> 00:06:52,560 Speaker 3: Listen, we are we're in the build mode on the 131 00:06:52,640 --> 00:06:54,839 Speaker 3: data center business. We just got five hundred and thirty 132 00:06:54,880 --> 00:06:59,440 Speaker 3: megawatts of power approved down in Texas. That's probably the 133 00:06:59,520 --> 00:07:03,159 Speaker 3: largest new power approval in the United States for a 134 00:07:03,200 --> 00:07:06,200 Speaker 3: while Uh, and so I couldn't be more excited about that. 135 00:07:06,320 --> 00:07:10,320 Speaker 3: We're we're engaging now with you know, potential tenants that 136 00:07:10,400 --> 00:07:11,360 Speaker 3: you can guess who they are. 137 00:07:12,080 --> 00:07:12,200 Speaker 2: Uh. 138 00:07:12,760 --> 00:07:15,120 Speaker 3: And so I think we're going to run this data 139 00:07:15,120 --> 00:07:16,880 Speaker 3: center business, and we're going to grow this data center 140 00:07:16,920 --> 00:07:17,720 Speaker 3: business ourselves. 141 00:07:18,240 --> 00:07:18,360 Speaker 2: Uh. 142 00:07:19,400 --> 00:07:21,720 Speaker 3: The capital structure and galaxy is something we think about 143 00:07:21,720 --> 00:07:25,120 Speaker 3: a lot. And I said before, if you know, A 144 00:07:25,160 --> 00:07:27,840 Speaker 3: plus B is a bigger number an A plus B. 145 00:07:28,240 --> 00:07:30,520 Speaker 3: We should stay together, and if it looks like we're 146 00:07:30,520 --> 00:07:34,280 Speaker 3: getting penalized, we'll figure a way to you know, maximize 147 00:07:34,280 --> 00:07:37,560 Speaker 3: shareholder value. And so right now, you know, in this 148 00:07:37,680 --> 00:07:43,040 Speaker 3: short term, our stock seems to trade, you know, very 149 00:07:43,120 --> 00:07:45,040 Speaker 3: cheap relative to what I think the data center business 150 00:07:45,120 --> 00:07:47,880 Speaker 3: is worth, let alone the value of our our book, 151 00:07:47,920 --> 00:07:51,920 Speaker 3: in our in our our crypto business. And so yeah, 152 00:07:52,040 --> 00:07:53,120 Speaker 3: we're certainly looking. 153 00:07:52,880 --> 00:07:54,680 Speaker 1: At it, Hey, Mike, very briefly, and then we're going 154 00:07:54,760 --> 00:07:56,560 Speaker 1: to do some news and come back to you in 155 00:07:56,680 --> 00:07:59,320 Speaker 1: just a few minutes. Are we You've seen a lot 156 00:07:59,320 --> 00:08:02,800 Speaker 1: of cycle. You have the tattoos to prove it. Are 157 00:08:02,840 --> 00:08:05,600 Speaker 1: we in a crypto winter right now? 158 00:08:06,920 --> 00:08:07,160 Speaker 2: Yeah? 159 00:08:07,200 --> 00:08:09,600 Speaker 3: Listen, I mean we've read one hundred and thirty thousand 160 00:08:09,640 --> 00:08:12,440 Speaker 3: and we're now at seventy six thousand, and so that 161 00:08:12,600 --> 00:08:18,240 Speaker 3: is what a forty five percent drop if I did 162 00:08:18,280 --> 00:08:21,320 Speaker 3: my math right, or maybe it's forty percent drop. That's 163 00:08:21,600 --> 00:08:25,520 Speaker 3: way through bear market, and that feels awfully chilly. My 164 00:08:25,680 --> 00:08:28,400 Speaker 3: question is when is spring coming? And I think we're 165 00:08:28,440 --> 00:08:30,440 Speaker 3: closer to spring than we are to the start of winner. 166 00:08:31,040 --> 00:08:33,320 Speaker 4: Big picture when it comes to any kind of regulation 167 00:08:33,480 --> 00:08:36,720 Speaker 4: when it comes to crypto is what's going on with 168 00:08:36,720 --> 00:08:39,000 Speaker 4: the crypto market structure bill? And the big sticking point 169 00:08:39,040 --> 00:08:41,560 Speaker 4: at this moment is whether crypto companies can give some 170 00:08:41,720 --> 00:08:45,400 Speaker 4: reward points or yield on stable coin balances. You've said 171 00:08:45,400 --> 00:08:47,720 Speaker 4: that the crypto industry is going to lose the battle 172 00:08:47,720 --> 00:08:49,360 Speaker 4: against the banking lobby on this. 173 00:08:49,520 --> 00:08:53,640 Speaker 3: Why is that, Mike, Listen, there are a lot of banks. 174 00:08:54,720 --> 00:08:58,360 Speaker 3: They've done this a long time. They're good at lobbying. 175 00:08:58,840 --> 00:09:03,880 Speaker 3: They have community banks, their cousins, their poor cousins, very 176 00:09:03,880 --> 00:09:06,720 Speaker 3: poor cousins in every district of every congressman. 177 00:09:07,200 --> 00:09:10,000 Speaker 2: And the community banks are being. 178 00:09:09,880 --> 00:09:13,840 Speaker 3: Used very effectively to say, oh my goodness, oh my goodness, 179 00:09:13,920 --> 00:09:15,920 Speaker 3: we're going to have this terrible deposit flight and then 180 00:09:15,960 --> 00:09:20,320 Speaker 3: we'll not be able to give credit. It's you know, 181 00:09:20,360 --> 00:09:24,400 Speaker 3: it's not a real story, but it's working because listen, 182 00:09:24,600 --> 00:09:27,160 Speaker 3: if people wanted to take their money out of community banks, 183 00:09:27,200 --> 00:09:30,160 Speaker 3: they could have put it into galaxies eight percent offering 184 00:09:30,760 --> 00:09:31,520 Speaker 3: or sofis. 185 00:09:31,920 --> 00:09:33,280 Speaker 2: You know, there are so many neo. 186 00:09:33,120 --> 00:09:38,520 Speaker 3: Banks, and yet deposit flight is slow, right, Deposits in 187 00:09:38,559 --> 00:09:42,120 Speaker 3: general are sticky, and so over time, yes, there would 188 00:09:42,160 --> 00:09:45,280 Speaker 3: be deposit flight, but there should be because in most 189 00:09:45,320 --> 00:09:50,440 Speaker 3: of those banks, including JP, Morgan, Wells, Fargo, you name it, 190 00:09:50,559 --> 00:09:54,840 Speaker 3: Chase City Bank, you put your money in your savings 191 00:09:54,880 --> 00:09:57,200 Speaker 3: account and they pay you nothing, and they make a 192 00:09:57,200 --> 00:09:58,800 Speaker 3: whole lot of money leaving it at the FED at 193 00:09:58,840 --> 00:10:02,360 Speaker 3: three and a half or four percent, and so it 194 00:10:02,480 --> 00:10:05,840 Speaker 3: is terrible for the consumer. It's ironic that Washington, both 195 00:10:05,880 --> 00:10:10,160 Speaker 3: Democrats and Republicans are saying, hey, let's let's let's side 196 00:10:10,200 --> 00:10:12,760 Speaker 3: on the let's side with big banks and not not 197 00:10:12,880 --> 00:10:16,199 Speaker 3: the consumers, not our constituents. But that's exactly what's happening. 198 00:10:16,679 --> 00:10:20,360 Speaker 3: And so Brian Armstrong and and you know, the stable 199 00:10:20,360 --> 00:10:22,640 Speaker 3: point issuers who are saying, hey, we want to we 200 00:10:22,720 --> 00:10:27,040 Speaker 3: want to actually have an innovative, you know, security that 201 00:10:27,040 --> 00:10:31,079 Speaker 3: that allows us to pass on some of that interests 202 00:10:31,160 --> 00:10:35,240 Speaker 3: to our customers through rewards or actually, in the perfect way, 203 00:10:35,240 --> 00:10:39,360 Speaker 3: it would be through direct interests. But you know, banks 204 00:10:39,360 --> 00:10:41,280 Speaker 3: are strong in the lobby and they're you know, I 205 00:10:41,320 --> 00:10:44,120 Speaker 3: do think a deal gets done somewhere in between. But 206 00:10:44,240 --> 00:10:47,160 Speaker 3: right now both sides are kind of at a Mexican standoff. 207 00:10:47,880 --> 00:10:51,000 Speaker 3: Why do I think a deal still gets done? Like 208 00:10:51,080 --> 00:10:53,880 Speaker 3: the Republican senators have put a lot of time in 209 00:10:53,960 --> 00:10:55,200 Speaker 3: this and have a lot at stake. 210 00:10:55,320 --> 00:10:58,960 Speaker 2: Right Trump is the quote crypto president. You you you've 211 00:10:58,960 --> 00:10:59,600 Speaker 2: got the House. 212 00:11:00,280 --> 00:11:01,880 Speaker 3: Hey, on the Senate, you better be able to pass 213 00:11:01,880 --> 00:11:04,600 Speaker 3: a crypto bill or you look pretty weak. 214 00:11:05,840 --> 00:11:07,640 Speaker 1: We'll give us your view on when you think that 215 00:11:07,679 --> 00:11:08,959 Speaker 1: market structure bill will pass. 216 00:11:09,440 --> 00:11:11,920 Speaker 3: And the Democrats have the same you know, the Democrats 217 00:11:11,960 --> 00:11:15,839 Speaker 3: don't want the crypto pack which just came out and 218 00:11:15,840 --> 00:11:18,640 Speaker 3: said we've had one hundred and ninety million dollars of 219 00:11:18,720 --> 00:11:21,200 Speaker 3: a bazooka ready to shoot at people. 220 00:11:21,240 --> 00:11:22,439 Speaker 2: That's stay out of the way of crypto. 221 00:11:23,160 --> 00:11:26,240 Speaker 3: And so the damage just want to pass this thing 222 00:11:26,280 --> 00:11:29,320 Speaker 3: and have crypto off the table. In politics, it never 223 00:11:29,320 --> 00:11:32,160 Speaker 3: should have been political. It always should have been a 224 00:11:32,360 --> 00:11:37,200 Speaker 3: bipartisan issue. Elizabeth Warren made it political. Agaensler made it 225 00:11:37,240 --> 00:11:40,559 Speaker 3: political well, and so listen, I think this is you know, 226 00:11:41,080 --> 00:11:44,040 Speaker 3: two weeks, it's six weeks, and I think my hope 227 00:11:44,160 --> 00:11:45,280 Speaker 3: is we have something done. 228 00:11:45,360 --> 00:11:45,720 Speaker 2: Okay. 229 00:11:46,000 --> 00:11:48,440 Speaker 4: I want to get your take on prediction markets as well. 230 00:11:48,679 --> 00:11:52,880 Speaker 4: The CFTC chairman Michael seeleggs clearly talking about the need 231 00:11:52,960 --> 00:11:54,559 Speaker 4: to come up with some kind of rules of the 232 00:11:54,640 --> 00:11:57,240 Speaker 4: road for this part of the market is growing very 233 00:11:57,360 --> 00:12:00,120 Speaker 4: very quickly. And I'm wondering, from where you sit, what 234 00:12:00,840 --> 00:12:04,560 Speaker 4: is the single most important legislation or rule that needs 235 00:12:04,600 --> 00:12:06,560 Speaker 4: to be put forth on prediction markets. 236 00:12:07,280 --> 00:12:09,520 Speaker 2: You know, it's a good question. I think. 237 00:12:10,760 --> 00:12:17,480 Speaker 3: The industry, not the prediction market industry, but the sports 238 00:12:17,520 --> 00:12:20,199 Speaker 3: betting industry, the gambling industry got caught off guard that 239 00:12:20,280 --> 00:12:22,959 Speaker 3: the CFDAC basically said, hey, this is a new form 240 00:12:23,000 --> 00:12:28,840 Speaker 3: of security, or a new form of a not security, 241 00:12:28,880 --> 00:12:32,640 Speaker 3: a new form of a platform for people to use 242 00:12:32,679 --> 00:12:34,320 Speaker 3: as a hedging to make bets on. 243 00:12:34,640 --> 00:12:36,520 Speaker 2: And they allowed it, right. 244 00:12:36,360 --> 00:12:41,440 Speaker 3: And so since then there has been a furious lobbying 245 00:12:41,480 --> 00:12:45,959 Speaker 3: effort by the casinos and the sports betting places to say, 246 00:12:46,000 --> 00:12:48,280 Speaker 3: that's not fair. We have all this, we have all 247 00:12:48,320 --> 00:12:50,520 Speaker 3: this compliance we need to do, and these guys don't. 248 00:12:51,200 --> 00:12:54,680 Speaker 3: And so I'm guessing the CFDC is trying to thread 249 00:12:54,720 --> 00:12:59,400 Speaker 3: the needle to keep the existing world happy to a 250 00:12:59,480 --> 00:13:03,120 Speaker 3: degree and not have to go back on this new 251 00:13:03,120 --> 00:13:05,760 Speaker 3: industry which is innovative as can be, which is growing, 252 00:13:05,800 --> 00:13:09,400 Speaker 3: which has captured the imagination of of not just the 253 00:13:09,480 --> 00:13:12,679 Speaker 3: retail users of it, but they had somebody like Ice, right, 254 00:13:12,720 --> 00:13:16,760 Speaker 3: Jeff Sprecker put two billion dollars into into poly marketing. 255 00:13:16,880 --> 00:13:19,559 Speaker 2: Yeah, and so I. 256 00:13:19,520 --> 00:13:22,720 Speaker 3: Mean this is another battle of incumbents trying to protect 257 00:13:22,760 --> 00:13:24,360 Speaker 3: their turf against. 258 00:13:24,040 --> 00:13:28,200 Speaker 2: An innovative, uh you know, new new upstart. Yes. 259 00:13:28,200 --> 00:13:31,760 Speaker 1: Well, our colleague Emily Nicole reported back in November that 260 00:13:31,880 --> 00:13:36,800 Speaker 1: Digital Galaxy Digital is experimenting in prediction markets discussions with 261 00:13:36,800 --> 00:13:39,600 Speaker 1: poly market and call shape what's the latest there? 262 00:13:40,400 --> 00:13:44,080 Speaker 3: You know again, we we didn't invest in those guys 263 00:13:44,120 --> 00:13:46,720 Speaker 3: way back. I wish I had I had the opportunity to. 264 00:13:46,800 --> 00:13:51,959 Speaker 3: And you know, I I quite frankly wasn't uh convinced 265 00:13:52,360 --> 00:13:57,920 Speaker 3: that without sports, but you know, they that just you know, 266 00:13:57,920 --> 00:14:00,560 Speaker 3: you weren't allowed to do politics back then. Sports betting 267 00:14:00,600 --> 00:14:04,080 Speaker 3: seemed off the table, and so I didn't see where 268 00:14:04,120 --> 00:14:08,520 Speaker 3: the where the tam was and you know, these guys 269 00:14:08,520 --> 00:14:12,240 Speaker 3: proved me wrong, and and the CFTC gave them the pass. 270 00:14:12,920 --> 00:14:14,920 Speaker 3: And so if you look at prediction markets, most of 271 00:14:14,960 --> 00:14:18,760 Speaker 3: the volume happens around sports betting, and so, uh you know, 272 00:14:19,400 --> 00:14:20,960 Speaker 3: they're not that many things you want to bet on 273 00:14:21,000 --> 00:14:22,360 Speaker 3: every day, but sports happen. 274 00:14:22,480 --> 00:14:27,160 Speaker 2: They have their defined outcomes. Uh right, politics which. 275 00:14:26,960 --> 00:14:30,320 Speaker 3: Again was illegal for us to us investors to bet 276 00:14:30,360 --> 00:14:32,760 Speaker 3: on politics. And you know, you have the whole rate 277 00:14:32,840 --> 00:14:37,200 Speaker 3: of of of polymarket. You know, this is a new regime, 278 00:14:37,400 --> 00:14:41,000 Speaker 3: new regime, it's a new administration with a very different view. 279 00:14:41,600 --> 00:14:45,480 Speaker 3: And so so what could we do. We want to 280 00:14:45,520 --> 00:14:48,080 Speaker 3: look at infrastructure. We want to be market makers. We 281 00:14:48,160 --> 00:14:51,640 Speaker 3: wanted to you know, be providers of liquidity, and we're 282 00:14:51,720 --> 00:14:52,640 Speaker 3: just getting started. 283 00:14:54,080 --> 00:14:57,000 Speaker 4: Other trading firms Mike have also considered getting involved in 284 00:14:57,040 --> 00:15:00,240 Speaker 4: prediction markets, like jump trading or sports betting. AQR Capital 285 00:15:00,280 --> 00:15:02,360 Speaker 4: Management has talked about sports betting. How do you see 286 00:15:02,360 --> 00:15:05,360 Speaker 4: this competitive landscape developing over the next year? 287 00:15:05,440 --> 00:15:08,320 Speaker 3: Yeah, listen, I mean there's if you think about sports betting, 288 00:15:08,360 --> 00:15:10,480 Speaker 3: you've got you Susquehanna has been a giant in it. 289 00:15:10,600 --> 00:15:12,760 Speaker 2: These these high frequency trade. 290 00:15:12,520 --> 00:15:17,240 Speaker 3: Ears with huge technology budgets will all they'll trade anything 291 00:15:17,240 --> 00:15:19,560 Speaker 3: that moves, and they're good at it, and so I 292 00:15:19,600 --> 00:15:22,480 Speaker 3: think there will be lots of liquidity provided from that 293 00:15:22,560 --> 00:15:26,160 Speaker 3: same group of people that provide liquidity in same day 294 00:15:26,200 --> 00:15:32,640 Speaker 3: options and that market making everything, and so if retail comes, 295 00:15:32,640 --> 00:15:34,920 Speaker 3: there will be plenty of institutions to pick up their pennies. 296 00:15:34,920 --> 00:15:38,840 Speaker 1: And Nichols Mike got to leave it there. Always love 297 00:15:38,840 --> 00:15:40,800 Speaker 1: it when you join us on Bloomberg Crypto. Thanks so 298 00:15:40,880 --> 00:15:43,360 Speaker 1: much for taking the time, especially on earning day that's 299 00:15:43,400 --> 00:15:46,840 Speaker 1: Galaxy Digitals. Mike nobergrats joining us from New York.