1 00:00:03,600 --> 00:00:06,680 Speaker 1: This is Bloomberg Crypto, a daily Bloomberg I Heard podcast, 2 00:00:06,800 --> 00:00:09,600 Speaker 1: and I'm Stacy Marie Ishmael, Managing editor of Crypto for 3 00:00:09,640 --> 00:00:27,280 Speaker 1: Bloomberg News. It's Friday, January. There's a common saying among 4 00:00:27,320 --> 00:00:29,200 Speaker 1: folks who work in crypto, and by that I mean 5 00:00:29,280 --> 00:00:31,960 Speaker 1: there's a common saying on my team that a week 6 00:00:32,200 --> 00:00:35,239 Speaker 1: often feels like a year in this asset class, and 7 00:00:35,240 --> 00:00:38,800 Speaker 1: as we wrap up the second week of three, sometimes 8 00:00:38,840 --> 00:00:40,599 Speaker 1: we really feel like it might actually be the week 9 00:00:40,680 --> 00:00:42,879 Speaker 1: and feel like a decade. So what are some of 10 00:00:42,880 --> 00:00:46,200 Speaker 1: the things that happened this week. Well, we saw more 11 00:00:46,280 --> 00:00:50,240 Speaker 1: evidence of the distress facing crypto. There is an emerging 12 00:00:50,440 --> 00:00:55,040 Speaker 1: fight and a pretty ugly emerging fight between Gemini, which 13 00:00:55,080 --> 00:00:58,120 Speaker 1: is a crypto exchange that's owned by the Winklevoss twins, 14 00:00:58,600 --> 00:01:00,880 Speaker 1: and a company called Jen Assists, which was one of 15 00:01:00,960 --> 00:01:04,640 Speaker 1: the biggest crypto lenders in the world. We also had 16 00:01:04,680 --> 00:01:08,360 Speaker 1: some updates as it relates to ft X, including confusingly 17 00:01:08,480 --> 00:01:12,319 Speaker 1: or not why Tom Brady, Giselle Bunch, and Bob Kraft 18 00:01:12,520 --> 00:01:16,160 Speaker 1: their names are popping up in bankruptcy filing statements coming 19 00:01:16,160 --> 00:01:19,720 Speaker 1: out from f t X, And of course this week 20 00:01:19,760 --> 00:01:22,160 Speaker 1: we will be tackling some of the biggest questions that 21 00:01:22,280 --> 00:01:24,280 Speaker 1: you had for us. So thank you to everybody who's 22 00:01:24,240 --> 00:01:27,679 Speaker 1: sent in questions for our three survey. Joining me to 23 00:01:27,680 --> 00:01:30,080 Speaker 1: help answer those questions today will be Dave Lita, Senior 24 00:01:30,200 --> 00:01:34,080 Speaker 1: editor at Bloomberg. Everybody talks about it, whether you're covering 25 00:01:34,120 --> 00:01:37,520 Speaker 1: the bond market or the stock market, there's always some 26 00:01:37,600 --> 00:01:40,640 Speaker 1: talk about what the influence of crypto is on any 27 00:01:40,680 --> 00:01:53,440 Speaker 1: given time. Dave, Welcome back to the podcast. Another week 28 00:01:53,480 --> 00:01:56,200 Speaker 1: in Crypto. Some stuff has been happening as usual. I 29 00:01:56,240 --> 00:01:59,160 Speaker 1: have to admit I was not expecting to start the 30 00:01:59,240 --> 00:02:03,200 Speaker 1: week with Tom Brady so much. Why are we talking 31 00:02:03,200 --> 00:02:05,880 Speaker 1: about Tom Brady in this context? What happened this week, Well, 32 00:02:06,040 --> 00:02:11,000 Speaker 1: besides the football playoffs, it's also f t X reckoning 33 00:02:11,040 --> 00:02:15,240 Speaker 1: time for those who decided to jump on board and 34 00:02:15,280 --> 00:02:20,000 Speaker 1: in this case through Tom Brady as advertising and spokespersons. 35 00:02:20,080 --> 00:02:23,040 Speaker 1: And it's an interesting We got an insight into what 36 00:02:23,080 --> 00:02:27,160 Speaker 1: they actually received, what was equity in ft X, and 37 00:02:27,200 --> 00:02:30,600 Speaker 1: how the various stakes were handed out, whether it was him, 38 00:02:30,720 --> 00:02:34,680 Speaker 1: his former wife or his former boss Bob Craft who 39 00:02:34,760 --> 00:02:37,360 Speaker 1: stole into the New England Patriots. So this is the 40 00:02:37,360 --> 00:02:41,800 Speaker 1: sort of difference between folks who had like money on 41 00:02:41,960 --> 00:02:45,280 Speaker 1: the ft X platform, and then folks like the Celebtis 42 00:02:45,360 --> 00:02:48,600 Speaker 1: that you mentioned Giselle, Tom Brady, Bob Kraft who were 43 00:02:48,680 --> 00:02:51,720 Speaker 1: investors in ft X. Is that correct? Sure, you can 44 00:02:51,760 --> 00:02:54,600 Speaker 1: almost use an analogy like since there are celebrities of 45 00:02:55,000 --> 00:02:57,960 Speaker 1: movie actors when they get a stake in the movie, Um, 46 00:02:58,000 --> 00:03:00,680 Speaker 1: the smart ones instead of getting straight houry will take 47 00:03:00,680 --> 00:03:03,760 Speaker 1: a percentage of the movie and if it does well, 48 00:03:03,919 --> 00:03:07,200 Speaker 1: you're gonna do very well. Right. But there are other 49 00:03:07,280 --> 00:03:10,679 Speaker 1: exchanges that are I mean, I think the word troubled 50 00:03:10,800 --> 00:03:13,880 Speaker 1: is fair fair to apply. And one of them has 51 00:03:14,200 --> 00:03:16,880 Speaker 1: I would say, like reasonably well known and cool founders 52 00:03:16,880 --> 00:03:21,160 Speaker 1: as well, the Winklevoss Twins. Sure, it's been a fascinating story. 53 00:03:21,200 --> 00:03:26,040 Speaker 1: They've been caught up in the broader implosion of the 54 00:03:26,080 --> 00:03:30,480 Speaker 1: market going back to the springtime, and basically they used 55 00:03:30,480 --> 00:03:34,600 Speaker 1: their exchange to let customers put the money in a 56 00:03:34,639 --> 00:03:37,840 Speaker 1: product that's called Urn that was really more of a 57 00:03:37,880 --> 00:03:42,880 Speaker 1: pass through device on their platform that went into Genesis, 58 00:03:42,920 --> 00:03:45,000 Speaker 1: which was one of the biggest lenders, if not the 59 00:03:45,000 --> 00:03:47,840 Speaker 1: biggest lender in the crypto market before it imploded, and 60 00:03:47,920 --> 00:03:51,320 Speaker 1: now their customers are about a billion dollars um out 61 00:03:51,320 --> 00:03:54,760 Speaker 1: of luck over you know, the holiday period. At the 62 00:03:54,800 --> 00:03:58,640 Speaker 1: end of two, we asked folks to send in what 63 00:03:58,800 --> 00:04:06,560 Speaker 1: some of their burning questions were about crypto. But I 64 00:04:06,640 --> 00:04:10,800 Speaker 1: wanted to start with someone who acknowledged I'll use the 65 00:04:10,880 --> 00:04:13,440 Speaker 1: quote that for somebody who came into crypto with a 66 00:04:13,480 --> 00:04:15,800 Speaker 1: lot of enthusiasm and maybe a bit of a starry 67 00:04:15,840 --> 00:04:20,200 Speaker 1: eyed approach, it was pretty heartbreaking for them in two 68 00:04:20,320 --> 00:04:24,520 Speaker 1: just looking at the direction of prices right where it was. 69 00:04:25,120 --> 00:04:27,200 Speaker 1: At the end of one, you had these all time 70 00:04:27,279 --> 00:04:30,039 Speaker 1: high is going too you still had a lot of enthusiasm. 71 00:04:30,400 --> 00:04:33,680 Speaker 1: The end of two, you're like, not so good. What 72 00:04:33,760 --> 00:04:36,279 Speaker 1: would you tell this person about you know, what to 73 00:04:36,400 --> 00:04:39,200 Speaker 1: expect next in the depths of this crypto winter that 74 00:04:39,240 --> 00:04:42,000 Speaker 1: we're in. Sure, but they have to kind of figure 75 00:04:42,040 --> 00:04:45,960 Speaker 1: out why they're there first. If you believe the argument 76 00:04:46,040 --> 00:04:47,960 Speaker 1: that this is the cutting edge of money, you can 77 00:04:48,000 --> 00:04:51,200 Speaker 1: write it out, or you're there to make money quickly, 78 00:04:51,520 --> 00:04:54,200 Speaker 1: And it really comes down to that. And if people 79 00:04:54,200 --> 00:04:57,720 Speaker 1: the industry will take the former and say we're here 80 00:04:57,760 --> 00:04:59,560 Speaker 1: to build you here, that a lot becomes a catch 81 00:04:59,640 --> 00:05:02,120 Speaker 1: time to build, Yes, but it's been building with other 82 00:05:02,120 --> 00:05:05,440 Speaker 1: people's money for the most part, and and honestly, speculation 83 00:05:05,520 --> 00:05:07,839 Speaker 1: has been the number one use case. It's the beginning. 84 00:05:08,000 --> 00:05:10,720 Speaker 1: Our colleagues on Bloomberg Intelligence, which is sort of our 85 00:05:10,760 --> 00:05:15,120 Speaker 1: in house research service, you know, did um some analysis 86 00:05:15,120 --> 00:05:19,920 Speaker 1: where they found that the use of bitcoin, specifically bitcoin 87 00:05:20,040 --> 00:05:24,680 Speaker 1: as a means of exchange like for transactions hit almost 88 00:05:24,839 --> 00:05:28,479 Speaker 1: record lose in two So to your point, so much 89 00:05:28,480 --> 00:05:31,680 Speaker 1: of the utility that people were getting was mostly speculation, 90 00:05:31,760 --> 00:05:36,120 Speaker 1: frankly true, and it questions the original argument for bitcoin 91 00:05:36,160 --> 00:05:38,640 Speaker 1: and other cryptocurrencies. If you're going to be a currency, 92 00:05:38,760 --> 00:05:41,159 Speaker 1: you have to be a means of exchange, and it 93 00:05:41,240 --> 00:05:44,600 Speaker 1: really hasn't been. It's been a means of speculation. And 94 00:05:44,680 --> 00:05:47,400 Speaker 1: this is something that the industry still struggled with one 95 00:05:47,440 --> 00:05:52,400 Speaker 1: that a dozen years later. But there are absolutely still 96 00:05:52,600 --> 00:05:54,600 Speaker 1: you know, the kind of the original die hards who 97 00:05:54,640 --> 00:05:59,320 Speaker 1: have a much more philosophical take on the utility of 98 00:05:59,680 --> 00:06:02,560 Speaker 1: bit points specifically and for some of them crypto more broadly. 99 00:06:03,040 --> 00:06:05,479 Speaker 1: What is that like and how are those folks reacting 100 00:06:05,480 --> 00:06:08,400 Speaker 1: to the current crisis? Sure, well, the the core group 101 00:06:08,520 --> 00:06:11,480 Speaker 1: goes back to the post financial crisis of two thousand 102 00:06:11,480 --> 00:06:16,640 Speaker 1: and eight, and he had a libertarian undercurrent where government 103 00:06:16,680 --> 00:06:19,640 Speaker 1: basically does no good staut of our way and we 104 00:06:19,720 --> 00:06:22,719 Speaker 1: can go independent. We can do this better. That had 105 00:06:22,839 --> 00:06:26,320 Speaker 1: been a major selling point for crypto and still is 106 00:06:26,320 --> 00:06:29,480 Speaker 1: since the beginning, and since the various crashes and this 107 00:06:29,520 --> 00:06:33,040 Speaker 1: one that what they call the maxis the maximal lists 108 00:06:33,040 --> 00:06:35,520 Speaker 1: are now pointing this is what it should be. Honest, 109 00:06:35,680 --> 00:06:38,159 Speaker 1: it shouldn't be about this. We told you back then, 110 00:06:38,480 --> 00:06:41,239 Speaker 1: stay away because they basically blame a lot of it 111 00:06:41,800 --> 00:06:45,160 Speaker 1: on government spending, changed the FED, that type of thing. 112 00:06:46,800 --> 00:06:48,680 Speaker 1: We'll be right back to answer the questions sent in 113 00:06:48,760 --> 00:06:51,680 Speaker 1: by you, our listeners, and you'll hear more from Bloomberg 114 00:06:51,760 --> 00:07:06,440 Speaker 1: Senior editor Dave Litka. Another thing we fully expect and 115 00:07:06,480 --> 00:07:12,320 Speaker 1: we're all frankly already seeing, is even more regulatory scrutiny 116 00:07:12,440 --> 00:07:15,000 Speaker 1: than was the case last year. And I think one 117 00:07:15,040 --> 00:07:17,640 Speaker 1: of the things that's been interesting so far if some 118 00:07:17,800 --> 00:07:22,520 Speaker 1: of it has been aimed at non crypto native financial 119 00:07:22,560 --> 00:07:26,040 Speaker 1: institutions who have been playing in crypto or who want 120 00:07:26,080 --> 00:07:28,960 Speaker 1: to play in crypto. This is especially timely when you 121 00:07:28,960 --> 00:07:33,200 Speaker 1: look at circumstances like what happened to Silver Gates exactly. 122 00:07:33,240 --> 00:07:37,520 Speaker 1: Silver Gates great example. It's a regulated bank that basically 123 00:07:37,560 --> 00:07:40,400 Speaker 1: had a bank run and they were able to tap 124 00:07:40,640 --> 00:07:46,120 Speaker 1: into the traditional federal government system this time that the 125 00:07:46,120 --> 00:07:49,680 Speaker 1: home loan bank system and borrow money from then and 126 00:07:50,000 --> 00:07:52,000 Speaker 1: this time as the tune of over four billion dollars. 127 00:07:52,160 --> 00:07:54,360 Speaker 1: That is a lot of money on it, and the 128 00:07:54,360 --> 00:07:56,680 Speaker 1: amount of banks that have been involved in crypto are 129 00:07:56,800 --> 00:07:59,600 Speaker 1: very limited kind of on your hand, at least yours banks. 130 00:08:00,040 --> 00:08:02,240 Speaker 1: One of the other trends that we may or may 131 00:08:02,240 --> 00:08:04,000 Speaker 1: not see this is one of those too soon to 132 00:08:04,040 --> 00:08:08,400 Speaker 1: tell questions, is what it means for kind of global coordination. 133 00:08:08,760 --> 00:08:10,680 Speaker 1: The holy grail for a lot of folks when they 134 00:08:10,680 --> 00:08:12,960 Speaker 1: think about crypto regulation is you could set up in 135 00:08:13,000 --> 00:08:15,559 Speaker 1: any country and you would have the same things apply 136 00:08:15,720 --> 00:08:18,160 Speaker 1: to you if you're a crypto exchange or you're a 137 00:08:18,160 --> 00:08:21,040 Speaker 1: crypto customer. Our colleagues on regulation tell us that that 138 00:08:21,120 --> 00:08:24,760 Speaker 1: doesn't seem to be in the cards. Have you, in 139 00:08:24,800 --> 00:08:27,320 Speaker 1: your sort of history of covering financial markets, ever seen 140 00:08:27,440 --> 00:08:31,320 Speaker 1: coordinates a global financial regulation for like anything? Really? Oh sure? 141 00:08:31,360 --> 00:08:33,560 Speaker 1: I mean you could point back to the post global 142 00:08:33,559 --> 00:08:36,360 Speaker 1: financial crisis example, and you still see it. I mean, 143 00:08:36,520 --> 00:08:39,720 Speaker 1: you could see central banks move lockstep and interest rates 144 00:08:39,760 --> 00:08:43,280 Speaker 1: and things like that. But in terms of regulatory oversight, 145 00:08:43,360 --> 00:08:46,200 Speaker 1: on markets like this, I would expect more to be 146 00:08:46,360 --> 00:08:48,960 Speaker 1: in unison, just because of the nature of this market 147 00:08:49,040 --> 00:08:53,720 Speaker 1: being so fluid, all the regulatory arbitrage that has gone 148 00:08:53,720 --> 00:08:56,920 Speaker 1: on over the years on it basically firms bouncing from 149 00:08:56,960 --> 00:09:00,480 Speaker 1: one island to another wherever they get the most advantageous help. 150 00:09:01,040 --> 00:09:04,000 Speaker 1: And some of the you can actually look in the 151 00:09:04,000 --> 00:09:07,120 Speaker 1: the examples of the relationship right now between the US 152 00:09:07,160 --> 00:09:09,640 Speaker 1: and the Bahamas and dealing with m f t X. 153 00:09:09,760 --> 00:09:15,119 Speaker 1: Bahamas were very pro crypto from a very economic development perspective. 154 00:09:15,240 --> 00:09:17,520 Speaker 1: It seemed like a good thing on it, and some 155 00:09:17,679 --> 00:09:21,480 Speaker 1: of those moves appeared to maybe coming back to bite 156 00:09:21,480 --> 00:09:23,240 Speaker 1: them a little bit. And there's been a lot of 157 00:09:23,240 --> 00:09:27,720 Speaker 1: tension between regulations in the US and uh in the Bahamas. 158 00:09:27,760 --> 00:09:29,960 Speaker 1: And it was actually a big deal a couple of 159 00:09:29,960 --> 00:09:36,280 Speaker 1: weeks ago when the Bohemian regulators came to an agreement 160 00:09:36,559 --> 00:09:39,680 Speaker 1: with you know, the US based Liquid Data's on winding 161 00:09:39,720 --> 00:09:42,559 Speaker 1: ft X over here, and they were like, okay, fine, 162 00:09:43,160 --> 00:09:45,200 Speaker 1: Like we agree that what we're trying to do is 163 00:09:45,240 --> 00:09:47,640 Speaker 1: make the creditors to ft X as whole as possible, 164 00:09:47,640 --> 00:09:48,760 Speaker 1: and we don't want to get caught up in the 165 00:09:48,840 --> 00:09:52,079 Speaker 1: jurisdictional fight but you know, to your point, the financial 166 00:09:52,120 --> 00:09:56,800 Speaker 1: crisis was a huge event. It had absolutely global consequences 167 00:09:56,800 --> 00:10:01,079 Speaker 1: and reverberations, and there were very real fairs that potentially 168 00:10:01,160 --> 00:10:03,320 Speaker 1: hundreds of millions of people around the world could be 169 00:10:03,360 --> 00:10:07,679 Speaker 1: seriously negatively affected. One of the challenges facing the momentum 170 00:10:07,679 --> 00:10:11,480 Speaker 1: for regulation of cryptota global scale is we cover it 171 00:10:11,520 --> 00:10:14,720 Speaker 1: all day long, but the as you say, like the 172 00:10:14,840 --> 00:10:18,439 Speaker 1: number of people and entities involved is like relatively small 173 00:10:18,800 --> 00:10:21,000 Speaker 1: compared to people who are say, exposed to the stock 174 00:10:21,040 --> 00:10:25,880 Speaker 1: market exactly, but it's become so prominent in ourselves, the media, 175 00:10:26,400 --> 00:10:29,079 Speaker 1: and just the general markets in general. I mean, everybody 176 00:10:29,440 --> 00:10:32,880 Speaker 1: talks about it, whether you're covering the bond market or 177 00:10:32,920 --> 00:10:36,000 Speaker 1: the stock market. There's always some talk about what the 178 00:10:36,040 --> 00:10:42,400 Speaker 1: influence of crypto is on any given time. And just 179 00:10:42,440 --> 00:10:44,440 Speaker 1: as a kind of a final closing point to that 180 00:10:44,800 --> 00:10:47,839 Speaker 1: note on influence, certainly one of the things that we 181 00:10:47,840 --> 00:10:52,920 Speaker 1: started seeing in twenty one but especially was kind of 182 00:10:52,960 --> 00:10:55,880 Speaker 1: the crossover with crypto and other industries. Right, so, like 183 00:10:56,040 --> 00:11:01,040 Speaker 1: non fungible tokens and art or crypto mining, bitcoin mining 184 00:11:01,200 --> 00:11:05,679 Speaker 1: and environmental considerations or energy considerations. Are there any like 185 00:11:05,760 --> 00:11:08,959 Speaker 1: emerging trends or themes that we're seeing where it's like, oh, 186 00:11:09,040 --> 00:11:11,800 Speaker 1: tech companies are really paying attention over here, or financial 187 00:11:11,800 --> 00:11:13,600 Speaker 1: services firms are trying to figure out if they should 188 00:11:13,600 --> 00:11:17,360 Speaker 1: do crypto mortgages. Like those sorts of intersections in anything 189 00:11:17,360 --> 00:11:19,840 Speaker 1: you've seen so far, this interesting. Yeah, they've been percolating 190 00:11:19,920 --> 00:11:22,160 Speaker 1: for a while, but I still think it's gonna be 191 00:11:22,240 --> 00:11:25,280 Speaker 1: The biggest area to watch, in my opinion, is going 192 00:11:25,360 --> 00:11:29,559 Speaker 1: to be what the mainstream banks do. The Wall Street firms, 193 00:11:29,800 --> 00:11:34,080 Speaker 1: they're very good at compartmentalizing businesses on and and we 194 00:11:34,200 --> 00:11:37,080 Speaker 1: live in a world really where money is electronic, and 195 00:11:37,240 --> 00:11:40,720 Speaker 1: if some of the guiding principles of kind of removing 196 00:11:40,760 --> 00:11:43,480 Speaker 1: some of the friction and speeding up the guardrails, they 197 00:11:43,800 --> 00:11:45,920 Speaker 1: see it as a benefit on us. I think they're 198 00:11:45,960 --> 00:11:48,280 Speaker 1: the ones that aren't gonna walk away. You may see 199 00:11:48,280 --> 00:11:53,440 Speaker 1: the trading outfits pulled back, whether they're associated proprietarry shops 200 00:11:53,520 --> 00:11:56,040 Speaker 1: or things like that, but um, I think they're still 201 00:11:56,080 --> 00:11:57,640 Speaker 1: going to get the guys in the back room working 202 00:11:57,760 --> 00:12:01,120 Speaker 1: on this. Money will be made somewhere in other Thank you, Dave, 203 00:12:01,240 --> 00:12:05,120 Speaker 1: pleasure having you in the show. Happy that was Bloomberg 204 00:12:05,160 --> 00:12:07,720 Speaker 1: Senior editor Dave Litka, You can find more of Dave's 205 00:12:07,720 --> 00:12:10,239 Speaker 1: work on the Bloomberg terminal or on Bloomberg dot com. 206 00:12:10,240 --> 00:12:12,600 Speaker 1: And once again, thanks to everyone who submitted questions and 207 00:12:12,640 --> 00:12:15,760 Speaker 1: participated in our survey. We always welcome your input and 208 00:12:15,760 --> 00:12:18,679 Speaker 1: feel free to email us anytime at Crypto at Bloomberg 209 00:12:18,720 --> 00:12:27,640 Speaker 1: dot net. This is Bloomberg Crypto, a daily podcast from 210 00:12:27,640 --> 00:12:30,680 Speaker 1: Bloomberg and I Heart Radio. For more shows from I 211 00:12:30,760 --> 00:12:34,040 Speaker 1: Heart Radio, visit the I Heart Radio app, Apple Podcasts, 212 00:12:34,200 --> 00:12:38,120 Speaker 1: or wherever you get your podcasts. Send us your comments, questions, 213 00:12:38,200 --> 00:12:41,280 Speaker 1: or suggestions for the show to Crypto at Bloomberg dot net. 214 00:12:44,480 --> 00:12:48,160 Speaker 1: The supervising producer of Bloomberg Crypto is Vicky Vergelina. Our 215 00:12:48,240 --> 00:12:52,040 Speaker 1: senior producer is Janet Babin. Our producers are Mohammed Faruke 216 00:12:52,120 --> 00:12:55,520 Speaker 1: and Sharon Berriro. Our associate producers are Ty Butler and 217 00:12:55,559 --> 00:12:59,800 Speaker 1: Moses on Them. Desta wonder At is our engineer. Original 218 00:12:59,840 --> 00:13:04,480 Speaker 1: me Sick by Leo Sidrin. I'm Stacy, Marie Ishmael. Have 219 00:13:04,559 --> 00:13:05,240 Speaker 1: a great weekend.