WEBVTT - Gemini/Genesis Battle; Your Questions Answered 0:00:03.600 --> 0:00:06.680 This is Bloomberg Crypto, a daily Bloomberg I Heard podcast, 0:00:06.800 --> 0:00:09.600 and I'm Stacy Marie Ishmael, Managing editor of Crypto for 0:00:09.640 --> 0:00:27.280 Bloomberg News. It's Friday, January. There's a common saying among 0:00:27.320 --> 0:00:29.200 folks who work in crypto, and by that I mean 0:00:29.280 --> 0:00:31.960 there's a common saying on my team that a week 0:00:32.200 --> 0:00:35.239 often feels like a year in this asset class, and 0:00:35.240 --> 0:00:38.800 as we wrap up the second week of three, sometimes 0:00:38.840 --> 0:00:40.599 we really feel like it might actually be the week 0:00:40.680 --> 0:00:42.879 and feel like a decade. So what are some of 0:00:42.880 --> 0:00:46.200 the things that happened this week. Well, we saw more 0:00:46.280 --> 0:00:50.240 evidence of the distress facing crypto. There is an emerging 0:00:50.440 --> 0:00:55.040 fight and a pretty ugly emerging fight between Gemini, which 0:00:55.080 --> 0:00:58.120 is a crypto exchange that's owned by the Winklevoss twins, 0:00:58.600 --> 0:01:00.880 and a company called Jen Assists, which was one of 0:01:00.960 --> 0:01:04.640 the biggest crypto lenders in the world. We also had 0:01:04.680 --> 0:01:08.360 some updates as it relates to ft X, including confusingly 0:01:08.480 --> 0:01:12.319 or not why Tom Brady, Giselle Bunch, and Bob Kraft 0:01:12.520 --> 0:01:16.160 their names are popping up in bankruptcy filing statements coming 0:01:16.160 --> 0:01:19.720 out from f t X, And of course this week 0:01:19.760 --> 0:01:22.160 we will be tackling some of the biggest questions that 0:01:22.280 --> 0:01:24.280 you had for us. So thank you to everybody who's 0:01:24.240 --> 0:01:27.679 sent in questions for our three survey. Joining me to 0:01:27.680 --> 0:01:30.080 help answer those questions today will be Dave Lita, Senior 0:01:30.200 --> 0:01:34.080 editor at Bloomberg. Everybody talks about it, whether you're covering 0:01:34.120 --> 0:01:37.520 the bond market or the stock market, there's always some 0:01:37.600 --> 0:01:40.640 talk about what the influence of crypto is on any 0:01:40.680 --> 0:01:53.440 given time. Dave, Welcome back to the podcast. Another week 0:01:53.480 --> 0:01:56.200 in Crypto. Some stuff has been happening as usual. I 0:01:56.240 --> 0:01:59.160 have to admit I was not expecting to start the 0:01:59.240 --> 0:02:03.200 week with Tom Brady so much. Why are we talking 0:02:03.200 --> 0:02:05.880 about Tom Brady in this context? What happened this week, Well, 0:02:06.040 --> 0:02:11.000 besides the football playoffs, it's also f t X reckoning 0:02:11.040 --> 0:02:15.240 time for those who decided to jump on board and 0:02:15.280 --> 0:02:20.000 in this case through Tom Brady as advertising and spokespersons. 0:02:20.080 --> 0:02:23.040 And it's an interesting We got an insight into what 0:02:23.080 --> 0:02:27.160 they actually received, what was equity in ft X, and 0:02:27.200 --> 0:02:30.600 how the various stakes were handed out, whether it was him, 0:02:30.720 --> 0:02:34.680 his former wife or his former boss Bob Craft who 0:02:34.760 --> 0:02:37.360 stole into the New England Patriots. So this is the 0:02:37.360 --> 0:02:41.800 sort of difference between folks who had like money on 0:02:41.960 --> 0:02:45.280 the ft X platform, and then folks like the Celebtis 0:02:45.360 --> 0:02:48.600 that you mentioned Giselle, Tom Brady, Bob Kraft who were 0:02:48.680 --> 0:02:51.720 investors in ft X. Is that correct? Sure, you can 0:02:51.760 --> 0:02:54.600 almost use an analogy like since there are celebrities of 0:02:55.000 --> 0:02:57.960 movie actors when they get a stake in the movie, Um, 0:02:58.000 --> 0:03:00.680 the smart ones instead of getting straight houry will take 0:03:00.680 --> 0:03:03.760 a percentage of the movie and if it does well, 0:03:03.919 --> 0:03:07.200 you're gonna do very well. Right. But there are other 0:03:07.280 --> 0:03:10.679 exchanges that are I mean, I think the word troubled 0:03:10.800 --> 0:03:13.880 is fair fair to apply. And one of them has 0:03:14.200 --> 0:03:16.880 I would say, like reasonably well known and cool founders 0:03:16.880 --> 0:03:21.160 as well, the Winklevoss Twins. Sure, it's been a fascinating story. 0:03:21.200 --> 0:03:26.040 They've been caught up in the broader implosion of the 0:03:26.080 --> 0:03:30.480 market going back to the springtime, and basically they used 0:03:30.480 --> 0:03:34.600 their exchange to let customers put the money in a 0:03:34.639 --> 0:03:37.840 product that's called Urn that was really more of a 0:03:37.880 --> 0:03:42.880 pass through device on their platform that went into Genesis, 0:03:42.920 --> 0:03:45.000 which was one of the biggest lenders, if not the 0:03:45.000 --> 0:03:47.840 biggest lender in the crypto market before it imploded, and 0:03:47.920 --> 0:03:51.320 now their customers are about a billion dollars um out 0:03:51.320 --> 0:03:54.760 of luck over you know, the holiday period. At the 0:03:54.800 --> 0:03:58.640 end of two, we asked folks to send in what 0:03:58.800 --> 0:04:06.560 some of their burning questions were about crypto. But I 0:04:06.640 --> 0:04:10.800 wanted to start with someone who acknowledged I'll use the 0:04:10.880 --> 0:04:13.440 quote that for somebody who came into crypto with a 0:04:13.480 --> 0:04:15.800 lot of enthusiasm and maybe a bit of a starry 0:04:15.840 --> 0:04:20.200 eyed approach, it was pretty heartbreaking for them in two 0:04:20.320 --> 0:04:24.520 just looking at the direction of prices right where it was. 0:04:25.120 --> 0:04:27.200 At the end of one, you had these all time 0:04:27.279 --> 0:04:30.039 high is going too you still had a lot of enthusiasm. 0:04:30.400 --> 0:04:33.680 The end of two, you're like, not so good. What 0:04:33.760 --> 0:04:36.279 would you tell this person about you know, what to 0:04:36.400 --> 0:04:39.200 expect next in the depths of this crypto winter that 0:04:39.240 --> 0:04:42.000 we're in. Sure, but they have to kind of figure 0:04:42.040 --> 0:04:45.960 out why they're there first. If you believe the argument 0:04:46.040 --> 0:04:47.960 that this is the cutting edge of money, you can 0:04:48.000 --> 0:04:51.200 write it out, or you're there to make money quickly, 0:04:51.520 --> 0:04:54.200 And it really comes down to that. And if people 0:04:54.200 --> 0:04:57.720 the industry will take the former and say we're here 0:04:57.760 --> 0:04:59.560 to build you here, that a lot becomes a catch 0:04:59.640 --> 0:05:02.120 time to build, Yes, but it's been building with other 0:05:02.120 --> 0:05:05.440 people's money for the most part, and and honestly, speculation 0:05:05.520 --> 0:05:07.839 has been the number one use case. It's the beginning. 0:05:08.000 --> 0:05:10.720 Our colleagues on Bloomberg Intelligence, which is sort of our 0:05:10.760 --> 0:05:15.120 in house research service, you know, did um some analysis 0:05:15.120 --> 0:05:19.920 where they found that the use of bitcoin, specifically bitcoin 0:05:20.040 --> 0:05:24.680 as a means of exchange like for transactions hit almost 0:05:24.839 --> 0:05:28.479 record lose in two So to your point, so much 0:05:28.480 --> 0:05:31.680 of the utility that people were getting was mostly speculation, 0:05:31.760 --> 0:05:36.120 frankly true, and it questions the original argument for bitcoin 0:05:36.160 --> 0:05:38.640 and other cryptocurrencies. If you're going to be a currency, 0:05:38.760 --> 0:05:41.159 you have to be a means of exchange, and it 0:05:41.240 --> 0:05:44.600 really hasn't been. It's been a means of speculation. And 0:05:44.680 --> 0:05:47.400 this is something that the industry still struggled with one 0:05:47.440 --> 0:05:52.400 that a dozen years later. But there are absolutely still 0:05:52.600 --> 0:05:54.600 you know, the kind of the original die hards who 0:05:54.640 --> 0:05:59.320 have a much more philosophical take on the utility of 0:05:59.680 --> 0:06:02.560 bit points specifically and for some of them crypto more broadly. 0:06:03.040 --> 0:06:05.479 What is that like and how are those folks reacting 0:06:05.480 --> 0:06:08.400 to the current crisis? Sure, well, the the core group 0:06:08.520 --> 0:06:11.480 goes back to the post financial crisis of two thousand 0:06:11.480 --> 0:06:16.640 and eight, and he had a libertarian undercurrent where government 0:06:16.680 --> 0:06:19.640 basically does no good staut of our way and we 0:06:19.720 --> 0:06:22.719 can go independent. We can do this better. That had 0:06:22.839 --> 0:06:26.320 been a major selling point for crypto and still is 0:06:26.320 --> 0:06:29.480 since the beginning, and since the various crashes and this 0:06:29.520 --> 0:06:33.040 one that what they call the maxis the maximal lists 0:06:33.040 --> 0:06:35.520 are now pointing this is what it should be. Honest, 0:06:35.680 --> 0:06:38.159 it shouldn't be about this. We told you back then, 0:06:38.480 --> 0:06:41.239 stay away because they basically blame a lot of it 0:06:41.800 --> 0:06:45.160 on government spending, changed the FED, that type of thing. 0:06:46.800 --> 0:06:48.680 We'll be right back to answer the questions sent in 0:06:48.760 --> 0:06:51.680 by you, our listeners, and you'll hear more from Bloomberg 0:06:51.760 --> 0:07:06.440 Senior editor Dave Litka. Another thing we fully expect and 0:07:06.480 --> 0:07:12.320 we're all frankly already seeing, is even more regulatory scrutiny 0:07:12.440 --> 0:07:15.000 than was the case last year. And I think one 0:07:15.040 --> 0:07:17.640 of the things that's been interesting so far if some 0:07:17.800 --> 0:07:22.520 of it has been aimed at non crypto native financial 0:07:22.560 --> 0:07:26.040 institutions who have been playing in crypto or who want 0:07:26.080 --> 0:07:28.960 to play in crypto. This is especially timely when you 0:07:28.960 --> 0:07:33.200 look at circumstances like what happened to Silver Gates exactly. 0:07:33.240 --> 0:07:37.520 Silver Gates great example. It's a regulated bank that basically 0:07:37.560 --> 0:07:40.400 had a bank run and they were able to tap 0:07:40.640 --> 0:07:46.120 into the traditional federal government system this time that the 0:07:46.120 --> 0:07:49.680 home loan bank system and borrow money from then and 0:07:50.000 --> 0:07:52.000 this time as the tune of over four billion dollars. 0:07:52.160 --> 0:07:54.360 That is a lot of money on it, and the 0:07:54.360 --> 0:07:56.680 amount of banks that have been involved in crypto are 0:07:56.800 --> 0:07:59.600 very limited kind of on your hand, at least yours banks. 0:08:00.040 --> 0:08:02.240 One of the other trends that we may or may 0:08:02.240 --> 0:08:04.000 not see this is one of those too soon to 0:08:04.040 --> 0:08:08.400 tell questions, is what it means for kind of global coordination. 0:08:08.760 --> 0:08:10.680 The holy grail for a lot of folks when they 0:08:10.680 --> 0:08:12.960 think about crypto regulation is you could set up in 0:08:13.000 --> 0:08:15.559 any country and you would have the same things apply 0:08:15.720 --> 0:08:18.160 to you if you're a crypto exchange or you're a 0:08:18.160 --> 0:08:21.040 crypto customer. Our colleagues on regulation tell us that that 0:08:21.120 --> 0:08:24.760 doesn't seem to be in the cards. Have you, in 0:08:24.800 --> 0:08:27.320 your sort of history of covering financial markets, ever seen 0:08:27.440 --> 0:08:31.320 coordinates a global financial regulation for like anything? Really? Oh sure? 0:08:31.360 --> 0:08:33.560 I mean you could point back to the post global 0:08:33.559 --> 0:08:36.360 financial crisis example, and you still see it. I mean, 0:08:36.520 --> 0:08:39.720 you could see central banks move lockstep and interest rates 0:08:39.760 --> 0:08:43.280 and things like that. But in terms of regulatory oversight, 0:08:43.360 --> 0:08:46.200 on markets like this, I would expect more to be 0:08:46.360 --> 0:08:48.960 in unison, just because of the nature of this market 0:08:49.040 --> 0:08:53.720 being so fluid, all the regulatory arbitrage that has gone 0:08:53.720 --> 0:08:56.920 on over the years on it basically firms bouncing from 0:08:56.960 --> 0:09:00.480 one island to another wherever they get the most advantageous help. 0:09:01.040 --> 0:09:04.000 And some of the you can actually look in the 0:09:04.000 --> 0:09:07.120 the examples of the relationship right now between the US 0:09:07.160 --> 0:09:09.640 and the Bahamas and dealing with m f t X. 0:09:09.760 --> 0:09:15.119 Bahamas were very pro crypto from a very economic development perspective. 0:09:15.240 --> 0:09:17.520 It seemed like a good thing on it, and some 0:09:17.679 --> 0:09:21.480 of those moves appeared to maybe coming back to bite 0:09:21.480 --> 0:09:23.240 them a little bit. And there's been a lot of 0:09:23.240 --> 0:09:27.720 tension between regulations in the US and uh in the Bahamas. 0:09:27.760 --> 0:09:29.960 And it was actually a big deal a couple of 0:09:29.960 --> 0:09:36.280 weeks ago when the Bohemian regulators came to an agreement 0:09:36.559 --> 0:09:39.680 with you know, the US based Liquid Data's on winding 0:09:39.720 --> 0:09:42.559 ft X over here, and they were like, okay, fine, 0:09:43.160 --> 0:09:45.200 Like we agree that what we're trying to do is 0:09:45.240 --> 0:09:47.640 make the creditors to ft X as whole as possible, 0:09:47.640 --> 0:09:48.760 and we don't want to get caught up in the 0:09:48.840 --> 0:09:52.079 jurisdictional fight but you know, to your point, the financial 0:09:52.120 --> 0:09:56.800 crisis was a huge event. It had absolutely global consequences 0:09:56.800 --> 0:10:01.079 and reverberations, and there were very real fairs that potentially 0:10:01.160 --> 0:10:03.320 hundreds of millions of people around the world could be 0:10:03.360 --> 0:10:07.679 seriously negatively affected. One of the challenges facing the momentum 0:10:07.679 --> 0:10:11.480 for regulation of cryptota global scale is we cover it 0:10:11.520 --> 0:10:14.720 all day long, but the as you say, like the 0:10:14.840 --> 0:10:18.439 number of people and entities involved is like relatively small 0:10:18.800 --> 0:10:21.000 compared to people who are say, exposed to the stock 0:10:21.040 --> 0:10:25.880 market exactly, but it's become so prominent in ourselves, the media, 0:10:26.400 --> 0:10:29.079 and just the general markets in general. I mean, everybody 0:10:29.440 --> 0:10:32.880 talks about it, whether you're covering the bond market or 0:10:32.920 --> 0:10:36.000 the stock market. There's always some talk about what the 0:10:36.040 --> 0:10:42.400 influence of crypto is on any given time. And just 0:10:42.440 --> 0:10:44.440 as a kind of a final closing point to that 0:10:44.800 --> 0:10:47.839 note on influence, certainly one of the things that we 0:10:47.840 --> 0:10:52.920 started seeing in twenty one but especially was kind of 0:10:52.960 --> 0:10:55.880 the crossover with crypto and other industries. Right, so, like 0:10:56.040 --> 0:11:01.040 non fungible tokens and art or crypto mining, bitcoin mining 0:11:01.200 --> 0:11:05.679 and environmental considerations or energy considerations. Are there any like 0:11:05.760 --> 0:11:08.959 emerging trends or themes that we're seeing where it's like, oh, 0:11:09.040 --> 0:11:11.800 tech companies are really paying attention over here, or financial 0:11:11.800 --> 0:11:13.600 services firms are trying to figure out if they should 0:11:13.600 --> 0:11:17.360 do crypto mortgages. Like those sorts of intersections in anything 0:11:17.360 --> 0:11:19.840 you've seen so far, this interesting. Yeah, they've been percolating 0:11:19.920 --> 0:11:22.160 for a while, but I still think it's gonna be 0:11:22.240 --> 0:11:25.280 The biggest area to watch, in my opinion, is going 0:11:25.360 --> 0:11:29.559 to be what the mainstream banks do. The Wall Street firms, 0:11:29.800 --> 0:11:34.080 they're very good at compartmentalizing businesses on and and we 0:11:34.200 --> 0:11:37.080 live in a world really where money is electronic, and 0:11:37.240 --> 0:11:40.720 if some of the guiding principles of kind of removing 0:11:40.760 --> 0:11:43.480 some of the friction and speeding up the guardrails, they 0:11:43.800 --> 0:11:45.920 see it as a benefit on us. I think they're 0:11:45.960 --> 0:11:48.280 the ones that aren't gonna walk away. You may see 0:11:48.280 --> 0:11:53.440 the trading outfits pulled back, whether they're associated proprietarry shops 0:11:53.520 --> 0:11:56.040 or things like that, but um, I think they're still 0:11:56.080 --> 0:11:57.640 going to get the guys in the back room working 0:11:57.760 --> 0:12:01.120 on this. Money will be made somewhere in other Thank you, Dave, 0:12:01.240 --> 0:12:05.120 pleasure having you in the show. Happy that was Bloomberg 0:12:05.160 --> 0:12:07.720 Senior editor Dave Litka, You can find more of Dave's 0:12:07.720 --> 0:12:10.239 work on the Bloomberg terminal or on Bloomberg dot com. 0:12:10.240 --> 0:12:12.600 And once again, thanks to everyone who submitted questions and 0:12:12.640 --> 0:12:15.760 participated in our survey. We always welcome your input and 0:12:15.760 --> 0:12:18.679 feel free to email us anytime at Crypto at Bloomberg 0:12:18.720 --> 0:12:27.640 dot net. This is Bloomberg Crypto, a daily podcast from 0:12:27.640 --> 0:12:30.680 Bloomberg and I Heart Radio. For more shows from I 0:12:30.760 --> 0:12:34.040 Heart Radio, visit the I Heart Radio app, Apple Podcasts, 0:12:34.200 --> 0:12:38.120 or wherever you get your podcasts. Send us your comments, questions, 0:12:38.200 --> 0:12:41.280 or suggestions for the show to Crypto at Bloomberg dot net. 0:12:44.480 --> 0:12:48.160 The supervising producer of Bloomberg Crypto is Vicky Vergelina. Our 0:12:48.240 --> 0:12:52.040 senior producer is Janet Babin. Our producers are Mohammed Faruke 0:12:52.120 --> 0:12:55.520 and Sharon Berriro. Our associate producers are Ty Butler and 0:12:55.559 --> 0:12:59.800 Moses on Them. Desta wonder At is our engineer. Original 0:12:59.840 --> 0:13:04.480 me Sick by Leo Sidrin. I'm Stacy, Marie Ishmael. Have 0:13:04.559 --> 0:13:05.240 a great weekend.