Speaker 1: This is Bloomberg Crypto, a daily Bloomberg I Heard podcast,
Speaker 1: and I'm Stacy Marie Ishmael, Managing editor of Crypto for
Speaker 1: Bloomberg News. It's Friday, January. There's a common saying among
Speaker 1: folks who work in crypto, and by that I mean
Speaker 1: there's a common saying on my team that a week
Speaker 1: often feels like a year in this asset class, and
Speaker 1: as we wrap up the second week of three, sometimes
Speaker 1: we really feel like it might actually be the week
Speaker 1: and feel like a decade. So what are some of
Speaker 1: the things that happened this week. Well, we saw more
Speaker 1: evidence of the distress facing crypto. There is an emerging
Speaker 1: fight and a pretty ugly emerging fight between Gemini, which
Speaker 1: is a crypto exchange that's owned by the Winklevoss twins,
Speaker 1: and a company called Jen Assists, which was one of
Speaker 1: the biggest crypto lenders in the world. We also had
Speaker 1: some updates as it relates to ft X, including confusingly
Speaker 1: or not why Tom Brady, Giselle Bunch, and Bob Kraft
Speaker 1: their names are popping up in bankruptcy filing statements coming
Speaker 1: out from f t X, And of course this week
Speaker 1: we will be tackling some of the biggest questions that
Speaker 1: you had for us. So thank you to everybody who's
Speaker 1: sent in questions for our three survey. Joining me to
Speaker 1: help answer those questions today will be Dave Lita, Senior
Speaker 1: editor at Bloomberg. Everybody talks about it, whether you're covering
Speaker 1: the bond market or the stock market, there's always some
Speaker 1: talk about what the influence of crypto is on any
Speaker 1: given time. Dave, Welcome back to the podcast. Another week
Speaker 1: in Crypto. Some stuff has been happening as usual. I
Speaker 1: have to admit I was not expecting to start the
Speaker 1: week with Tom Brady so much. Why are we talking
Speaker 1: about Tom Brady in this context? What happened this week, Well,
Speaker 1: besides the football playoffs, it's also f t X reckoning
Speaker 1: time for those who decided to jump on board and
Speaker 1: in this case through Tom Brady as advertising and spokespersons.
Speaker 1: And it's an interesting We got an insight into what
Speaker 1: they actually received, what was equity in ft X, and
Speaker 1: how the various stakes were handed out, whether it was him,
Speaker 1: his former wife or his former boss Bob Craft who
Speaker 1: stole into the New England Patriots. So this is the
Speaker 1: sort of difference between folks who had like money on
Speaker 1: the ft X platform, and then folks like the Celebtis
Speaker 1: that you mentioned Giselle, Tom Brady, Bob Kraft who were
Speaker 1: investors in ft X. Is that correct? Sure, you can
Speaker 1: almost use an analogy like since there are celebrities of
Speaker 1: movie actors when they get a stake in the movie, Um,
Speaker 1: the smart ones instead of getting straight houry will take
Speaker 1: a percentage of the movie and if it does well,
Speaker 1: you're gonna do very well. Right. But there are other
Speaker 1: exchanges that are I mean, I think the word troubled
Speaker 1: is fair fair to apply. And one of them has
Speaker 1: I would say, like reasonably well known and cool founders
Speaker 1: as well, the Winklevoss Twins. Sure, it's been a fascinating story.
Speaker 1: They've been caught up in the broader implosion of the
Speaker 1: market going back to the springtime, and basically they used
Speaker 1: their exchange to let customers put the money in a
Speaker 1: product that's called Urn that was really more of a
Speaker 1: pass through device on their platform that went into Genesis,
Speaker 1: which was one of the biggest lenders, if not the
Speaker 1: biggest lender in the crypto market before it imploded, and
Speaker 1: now their customers are about a billion dollars um out
Speaker 1: of luck over you know, the holiday period. At the
Speaker 1: end of two, we asked folks to send in what
Speaker 1: some of their burning questions were about crypto. But I
Speaker 1: wanted to start with someone who acknowledged I'll use the
Speaker 1: quote that for somebody who came into crypto with a
Speaker 1: lot of enthusiasm and maybe a bit of a starry
Speaker 1: eyed approach, it was pretty heartbreaking for them in two
Speaker 1: just looking at the direction of prices right where it was.
Speaker 1: At the end of one, you had these all time
Speaker 1: high is going too you still had a lot of enthusiasm.
Speaker 1: The end of two, you're like, not so good. What
Speaker 1: would you tell this person about you know, what to
Speaker 1: expect next in the depths of this crypto winter that
Speaker 1: we're in. Sure, but they have to kind of figure
Speaker 1: out why they're there first. If you believe the argument
Speaker 1: that this is the cutting edge of money, you can
Speaker 1: write it out, or you're there to make money quickly,
Speaker 1: And it really comes down to that. And if people
Speaker 1: the industry will take the former and say we're here
Speaker 1: to build you here, that a lot becomes a catch
Speaker 1: time to build, Yes, but it's been building with other
Speaker 1: people's money for the most part, and and honestly, speculation
Speaker 1: has been the number one use case. It's the beginning.
Speaker 1: Our colleagues on Bloomberg Intelligence, which is sort of our
Speaker 1: in house research service, you know, did um some analysis
Speaker 1: where they found that the use of bitcoin, specifically bitcoin
Speaker 1: as a means of exchange like for transactions hit almost
Speaker 1: record lose in two So to your point, so much
Speaker 1: of the utility that people were getting was mostly speculation,
Speaker 1: frankly true, and it questions the original argument for bitcoin
Speaker 1: and other cryptocurrencies. If you're going to be a currency,
Speaker 1: you have to be a means of exchange, and it
Speaker 1: really hasn't been. It's been a means of speculation. And
Speaker 1: this is something that the industry still struggled with one
Speaker 1: that a dozen years later. But there are absolutely still
Speaker 1: you know, the kind of the original die hards who
Speaker 1: have a much more philosophical take on the utility of
Speaker 1: bit points specifically and for some of them crypto more broadly.
Speaker 1: What is that like and how are those folks reacting
Speaker 1: to the current crisis? Sure, well, the the core group
Speaker 1: goes back to the post financial crisis of two thousand
Speaker 1: and eight, and he had a libertarian undercurrent where government
Speaker 1: basically does no good staut of our way and we
Speaker 1: can go independent. We can do this better. That had
Speaker 1: been a major selling point for crypto and still is
Speaker 1: since the beginning, and since the various crashes and this
Speaker 1: one that what they call the maxis the maximal lists
Speaker 1: are now pointing this is what it should be. Honest,
Speaker 1: it shouldn't be about this. We told you back then,
Speaker 1: stay away because they basically blame a lot of it
Speaker 1: on government spending, changed the FED, that type of thing.
Speaker 1: We'll be right back to answer the questions sent in
Speaker 1: by you, our listeners, and you'll hear more from Bloomberg
Speaker 1: Senior editor Dave Litka. Another thing we fully expect and
Speaker 1: we're all frankly already seeing, is even more regulatory scrutiny
Speaker 1: than was the case last year. And I think one
Speaker 1: of the things that's been interesting so far if some
Speaker 1: of it has been aimed at non crypto native financial
Speaker 1: institutions who have been playing in crypto or who want
Speaker 1: to play in crypto. This is especially timely when you
Speaker 1: look at circumstances like what happened to Silver Gates exactly.
Speaker 1: Silver Gates great example. It's a regulated bank that basically
Speaker 1: had a bank run and they were able to tap
Speaker 1: into the traditional federal government system this time that the
Speaker 1: home loan bank system and borrow money from then and
Speaker 1: this time as the tune of over four billion dollars.
Speaker 1: That is a lot of money on it, and the
Speaker 1: amount of banks that have been involved in crypto are
Speaker 1: very limited kind of on your hand, at least yours banks.
Speaker 1: One of the other trends that we may or may
Speaker 1: not see this is one of those too soon to
Speaker 1: tell questions, is what it means for kind of global coordination.
Speaker 1: The holy grail for a lot of folks when they
Speaker 1: think about crypto regulation is you could set up in
Speaker 1: any country and you would have the same things apply
Speaker 1: to you if you're a crypto exchange or you're a
Speaker 1: crypto customer. Our colleagues on regulation tell us that that
Speaker 1: doesn't seem to be in the cards. Have you, in
Speaker 1: your sort of history of covering financial markets, ever seen
Speaker 1: coordinates a global financial regulation for like anything? Really? Oh sure?
Speaker 1: I mean you could point back to the post global
Speaker 1: financial crisis example, and you still see it. I mean,
Speaker 1: you could see central banks move lockstep and interest rates
Speaker 1: and things like that. But in terms of regulatory oversight,
Speaker 1: on markets like this, I would expect more to be
Speaker 1: in unison, just because of the nature of this market
Speaker 1: being so fluid, all the regulatory arbitrage that has gone
Speaker 1: on over the years on it basically firms bouncing from
Speaker 1: one island to another wherever they get the most advantageous help.
Speaker 1: And some of the you can actually look in the
Speaker 1: the examples of the relationship right now between the US
Speaker 1: and the Bahamas and dealing with m f t X.
Speaker 1: Bahamas were very pro crypto from a very economic development perspective.
Speaker 1: It seemed like a good thing on it, and some
Speaker 1: of those moves appeared to maybe coming back to bite
Speaker 1: them a little bit. And there's been a lot of
Speaker 1: tension between regulations in the US and uh in the Bahamas.
Speaker 1: And it was actually a big deal a couple of
Speaker 1: weeks ago when the Bohemian regulators came to an agreement
Speaker 1: with you know, the US based Liquid Data's on winding
Speaker 1: ft X over here, and they were like, okay, fine,
Speaker 1: Like we agree that what we're trying to do is
Speaker 1: make the creditors to ft X as whole as possible,
Speaker 1: and we don't want to get caught up in the
Speaker 1: jurisdictional fight but you know, to your point, the financial
Speaker 1: crisis was a huge event. It had absolutely global consequences
Speaker 1: and reverberations, and there were very real fairs that potentially
Speaker 1: hundreds of millions of people around the world could be
Speaker 1: seriously negatively affected. One of the challenges facing the momentum
Speaker 1: for regulation of cryptota global scale is we cover it
Speaker 1: all day long, but the as you say, like the
Speaker 1: number of people and entities involved is like relatively small
Speaker 1: compared to people who are say, exposed to the stock
Speaker 1: market exactly, but it's become so prominent in ourselves, the media,
Speaker 1: and just the general markets in general. I mean, everybody
Speaker 1: talks about it, whether you're covering the bond market or
Speaker 1: the stock market. There's always some talk about what the
Speaker 1: influence of crypto is on any given time. And just
Speaker 1: as a kind of a final closing point to that
Speaker 1: note on influence, certainly one of the things that we
Speaker 1: started seeing in twenty one but especially was kind of
Speaker 1: the crossover with crypto and other industries. Right, so, like
Speaker 1: non fungible tokens and art or crypto mining, bitcoin mining
Speaker 1: and environmental considerations or energy considerations. Are there any like
Speaker 1: emerging trends or themes that we're seeing where it's like, oh,
Speaker 1: tech companies are really paying attention over here, or financial
Speaker 1: services firms are trying to figure out if they should
Speaker 1: do crypto mortgages. Like those sorts of intersections in anything
Speaker 1: you've seen so far, this interesting. Yeah, they've been percolating
Speaker 1: for a while, but I still think it's gonna be
Speaker 1: The biggest area to watch, in my opinion, is going
Speaker 1: to be what the mainstream banks do. The Wall Street firms,
Speaker 1: they're very good at compartmentalizing businesses on and and we
Speaker 1: live in a world really where money is electronic, and
Speaker 1: if some of the guiding principles of kind of removing
Speaker 1: some of the friction and speeding up the guardrails, they
Speaker 1: see it as a benefit on us. I think they're
Speaker 1: the ones that aren't gonna walk away. You may see
Speaker 1: the trading outfits pulled back, whether they're associated proprietarry shops
Speaker 1: or things like that, but um, I think they're still
Speaker 1: going to get the guys in the back room working
Speaker 1: on this. Money will be made somewhere in other Thank you, Dave,
Speaker 1: pleasure having you in the show. Happy that was Bloomberg
Speaker 1: Senior editor Dave Litka, You can find more of Dave's
Speaker 1: work on the Bloomberg terminal or on Bloomberg dot com.
Speaker 1: And once again, thanks to everyone who submitted questions and
Speaker 1: participated in our survey. We always welcome your input and
Speaker 1: feel free to email us anytime at Crypto at Bloomberg
Speaker 1: dot net. This is Bloomberg Crypto, a daily podcast from
Speaker 1: Bloomberg and I Heart Radio. For more shows from I
Speaker 1: Heart Radio, visit the I Heart Radio app, Apple Podcasts,
Speaker 1: or wherever you get your podcasts. Send us your comments, questions,
Speaker 1: or suggestions for the show to Crypto at Bloomberg dot net.
Speaker 1: The supervising producer of Bloomberg Crypto is Vicky Vergelina. Our
Speaker 1: senior producer is Janet Babin. Our producers are Mohammed Faruke
Speaker 1: and Sharon Berriro. Our associate producers are Ty Butler and
Speaker 1: Moses on Them. Desta wonder At is our engineer. Original
Speaker 1: me Sick by Leo Sidrin. I'm Stacy, Marie Ishmael. Have
Speaker 1: a great weekend.