WEBVTT - Crypto Goes to Congress 0:00:12.960 --> 0:00:16.560 Hello, and welcome to What Goes Up, a weekly markets podcast. 0:00:16.640 --> 0:00:18.960 My name is Mike Reagan. I'm a senior editor at 0:00:18.960 --> 0:00:23.040 Bloomberg and I'm Baldanna hired across Acid Report at Bloomberg. 0:00:23.400 --> 0:00:26.079 And this week on the show, we'll talk about a 0:00:26.160 --> 0:00:29.640 big milestone for cryptocurrencies this week when some of the 0:00:29.720 --> 0:00:32.920 leading players in the industry went to Congress to answer 0:00:32.960 --> 0:00:35.559 some good questions and let's be honest, some not so 0:00:35.600 --> 0:00:39.680 good questions. But it's all about how digital assets should 0:00:39.760 --> 0:00:43.159 be regulated by the government. We're gonna talk to one 0:00:43.200 --> 0:00:46.320 of the executives who testified, as well as his colleague 0:00:46.360 --> 0:00:48.720 about some of the big issues that came up, as 0:00:48.760 --> 0:00:52.800 well as about what a wild year it was in crypto. 0:00:53.200 --> 0:00:55.360 But first of all, Donna, I have to tell you, you 0:00:55.080 --> 0:00:57.959 you know, I was watching this hearing yesterday and as 0:00:58.000 --> 0:01:00.520 you know, you give me a hard time for asking 0:01:00.640 --> 0:01:04.760 very long, convoluted questions. And after watching this hearing, I 0:01:04.760 --> 0:01:07.240 had an epiphany. I think I should run for Congress. 0:01:07.520 --> 0:01:10.720 I think I would fit in Oh wow, yeah, honestly 0:01:10.760 --> 0:01:12.280 you might. I have the same thought when I was 0:01:12.319 --> 0:01:16.120 watching the hearings. And if you do, all I want 0:01:16.120 --> 0:01:19.640 to ask you is that I be your campaign manager, 0:01:19.880 --> 0:01:22.880 because I don't think that your jokes might they might 0:01:22.880 --> 0:01:25.800 not be good enough for you to actually run for Congress. 0:01:26.280 --> 0:01:30.520 Really really sorry to break that to you. Yeah, well, 0:01:30.560 --> 0:01:32.080 I you know, I think the problem is you have 0:01:32.200 --> 0:01:36.200 questionable taste and jokes sexually, but you have excellent taste 0:01:36.240 --> 0:01:40.240 in podcast guests. And I'm super excited about the two 0:01:40.360 --> 0:01:42.280 that you talked and joining us this week. What a 0:01:42.440 --> 0:01:45.640 what great timing, Vilda. Timing is everything in in markets 0:01:45.680 --> 0:01:47.760 in podcast, and you've got us two great guests for 0:01:47.760 --> 0:01:50.120 this week, So uh, tell the listeners who they are 0:01:50.360 --> 0:01:53.080 and bring them into the show here. Yeah, I'm as 0:01:53.200 --> 0:01:55.440 excited as you are about the two guests we have. 0:01:55.520 --> 0:01:58.920 We have the chief executive officer of FTX that's Sam 0:01:58.920 --> 0:02:01.640 BANKMNT Freed, and we have f t x u S 0:02:01.680 --> 0:02:04.360 President Brett Harrison. They're both joining us, and I want 0:02:04.360 --> 0:02:08.240 to welcome you both to the podcast. Thanks for having us. Yeah, 0:02:08.240 --> 0:02:10.800 thank you. Yes, Sam, I've got a lot of questions 0:02:10.840 --> 0:02:13.800 about you know, sort of f t x's goals and 0:02:14.160 --> 0:02:17.600 the cryptocurrency world in general. First, though, I think a 0:02:17.680 --> 0:02:21.040 question that's on a lot of listeners minds outside of 0:02:21.040 --> 0:02:22.720 that space is I know you're in touch with Tom 0:02:22.720 --> 0:02:26.000 Brady from time to time, and I want to ask 0:02:26.080 --> 0:02:29.359 on behalf of all NFL fans other than the Tampa 0:02:29.400 --> 0:02:32.480 Bay Buccaneers, is this guy ever going to retire? I 0:02:32.480 --> 0:02:35.720 I hope not. I will see, but I'm I'm expecting 0:02:35.760 --> 0:02:38.840 Steven d That's that's my my kind of betting line. 0:02:38.919 --> 0:02:41.040 Age seventy. Oh my gosh. All right, all right, that's 0:02:41.080 --> 0:02:42.600 not good news to the rest of the NFL. I 0:02:42.639 --> 0:02:45.680 think he'll still be uh, he'll still be winning games 0:02:45.680 --> 0:02:47.720 at age seventy. Maybe you can talk to Giselle. I 0:02:47.720 --> 0:02:51.839 don't know, I don't know. Yeah, she's uh. They're both 0:02:51.840 --> 0:02:54.000 doing pretty well. And it's it's bad news for me 0:02:54.120 --> 0:02:58.320 because my team, the Buffalo Bills, are playing Brady this weekend. 0:02:58.440 --> 0:03:00.639 So that's bad that is might not be a good 0:03:00.639 --> 0:03:02.680 weekend for me. Well, they've got a history of that. 0:03:03.720 --> 0:03:06.240 But Sam, if we can maybe just start with you. 0:03:06.440 --> 0:03:08.880 Mike mentioned the hearings that we had this week. I 0:03:08.919 --> 0:03:11.520 want to actually ask you about what the hearings were like, 0:03:11.880 --> 0:03:16.040 because it seemed like the quality of the questions was 0:03:16.160 --> 0:03:18.720 a little bit better than what we've seen in the past, 0:03:18.840 --> 0:03:21.920 or maybe what even a lot of people were expecting. Yeah, 0:03:22.000 --> 0:03:24.240 I totally agree with that, and I think the questions 0:03:24.280 --> 0:03:27.480 were better in more informed than I was expecting. I 0:03:27.520 --> 0:03:30.520 also think that they were more more balanced. I think 0:03:30.520 --> 0:03:34.480 that I was expecting I think, more grandstanding, and and 0:03:34.800 --> 0:03:37.600 I think I was just wasn't we surprised? In general? 0:03:37.640 --> 0:03:40.120 I think I think like to has done a really 0:03:40.160 --> 0:03:42.960 good job of starting to get you know, to speed 0:03:42.960 --> 0:03:44.920 on digital assets, and I think that they showed a 0:03:44.920 --> 0:03:48.960 lot of eagerness to continue learning. You know, Sam and 0:03:48.960 --> 0:03:51.520 and Brett you chime into if you have any thoughts, obviously, 0:03:51.600 --> 0:03:55.480 But what I think about sort of the where we 0:03:55.520 --> 0:03:57.880 are in the evolution of the cryptocurrency market. You know, 0:03:57.880 --> 0:04:00.560 I'm I'm an older gentleman, as listeners know, I've been 0:04:00.560 --> 0:04:03.360 covered markets for a long time, and I think back 0:04:03.400 --> 0:04:06.040 to like ten or fifteen years when the stock market 0:04:06.280 --> 0:04:08.520 was sort of stole in the adolescents phase when it 0:04:08.560 --> 0:04:13.520 comes to you know, electronic trading, algorithmic trading and computerized markets, 0:04:13.960 --> 0:04:17.120 and boy, there were all sorts of hiccups and flash crashes, 0:04:17.360 --> 0:04:20.720 and you know the famous night Trading debacle where a 0:04:21.360 --> 0:04:24.839 bad algorithm almost you know, wiped out the firm. Uh 0:04:25.080 --> 0:04:28.359 in a few minutes, and it seems to me like 0:04:28.400 --> 0:04:30.479 there's a lot of parallels now where crypto is in 0:04:30.600 --> 0:04:34.320 sort of that that adolescent stage where there's still stuff 0:04:34.360 --> 0:04:37.120 going wrong. And I want to give us an example. 0:04:37.440 --> 0:04:40.880 A few months ago, Wasn't on FTX, another exchange where 0:04:41.120 --> 0:04:44.040 the price of bitcoin I believe it's due to some 0:04:44.240 --> 0:04:47.559 error and an algorithm, someone sold bitcoin for like eighty 0:04:47.640 --> 0:04:51.640 seven percent below the market price. I wondered, how you 0:04:51.680 --> 0:04:56.160 guys look at the market now in the sort of 0:04:56.320 --> 0:04:59.279 respect to this idea of regulation and what needs to 0:04:59.279 --> 0:05:01.799 be done to to get more mature. Is that type 0:05:01.800 --> 0:05:04.479 of thing I described, Um, is that a problem that 0:05:04.520 --> 0:05:07.200 you think needs to be solved or is it more 0:05:07.400 --> 0:05:09.679 the type of thing that's like, well, thanks for playing guide, 0:05:09.680 --> 0:05:11.840 you know, better luck next time. Yeah, I mean, I 0:05:11.880 --> 0:05:14.000 think breast some thoughts on this, but you know, I 0:05:14.000 --> 0:05:17.599 think briefly, is there one of many examples of times 0:05:17.720 --> 0:05:20.120 where yeah, I think these are absolutely problems that need 0:05:20.200 --> 0:05:22.159 to be solved, but I think that they're pretty straightforward 0:05:22.240 --> 0:05:24.800 solutions to a lot of them. And like, you know, 0:05:24.839 --> 0:05:27.160 price bands are just sort of like you know, it's 0:05:27.200 --> 0:05:29.919 not like we put them on JEX. Is not that complex, 0:05:30.320 --> 0:05:32.520 and I think that in a lot of cases is like, yeah, 0:05:32.560 --> 0:05:34.840 there's definitely ways the market needs to grow, but it 0:05:34.839 --> 0:05:37.640 shouldn't be that hard to get there. Yeah. I think 0:05:37.760 --> 0:05:43.120 the fact that cryptocurrency exchanges came about much later in 0:05:43.160 --> 0:05:48.000 the technological development of the Internet and software and just 0:05:48.520 --> 0:05:51.080 how how easy it is to deploy software on a cloud, 0:05:51.160 --> 0:05:54.400 for example, means that the barrier to entry to making 0:05:54.400 --> 0:05:57.160 an exchange was super loud, which has its good parts 0:05:57.160 --> 0:05:59.440 and it's bad parts. Like if you want to, you know, 0:05:59.480 --> 0:06:02.080 write in your garage some code and try to deploy 0:06:02.080 --> 0:06:05.400 a new nastac tomorrow, you can't. There's way too many 0:06:05.400 --> 0:06:08.640 barriers centers of doing that. But there are literally thousands 0:06:08.680 --> 0:06:11.440 of exchanges where you can buy bitcoint I certainly can't 0:06:11.520 --> 0:06:13.440 name them all, and there's only a couple that really 0:06:13.440 --> 0:06:17.560 matter in terms of volume. But there are thousands of exchanges, 0:06:17.560 --> 0:06:21.039 which means not all of those players, absent of a 0:06:21.160 --> 0:06:24.640 clear regulatory framework in the US, are going to create 0:06:24.680 --> 0:06:27.800 the right rules to make sure that their exchange doesn't 0:06:27.800 --> 0:06:30.800 scribble a lot and print something way down or just 0:06:31.040 --> 0:06:34.520 break or you know, be halted for a long time. Uh. 0:06:34.600 --> 0:06:36.800 And so it's up to exchanges like FTX is just 0:06:36.839 --> 0:06:39.800 sort of put in the right rules. And you know, Sam, myself, 0:06:39.880 --> 0:06:42.400 we were at Change Street and other trading firms for 0:06:42.440 --> 0:06:44.479 a long time. We're used to how other exchanges work, 0:06:44.480 --> 0:06:46.000 and it's like, okay, well here's a common sense thing 0:06:46.000 --> 0:06:47.960 which has put some price bands in place. Not a 0:06:48.040 --> 0:06:50.320 very difficult thing. But if you haven't been, you know, 0:06:50.400 --> 0:06:52.279 growing up in that environment, you don't think to do 0:06:52.360 --> 0:06:55.440 this sort of stuff. So Sam, you said, just to 0:06:55.480 --> 0:06:57.279 follow up on that and just to expand it a 0:06:57.279 --> 0:06:59.400 little bit more. You said, there's there are ways for 0:06:59.480 --> 0:07:01.280 the market to grow. And I know my team has 0:07:01.279 --> 0:07:03.920 been thinking about this a lot, because what I hear 0:07:04.000 --> 0:07:06.640 from time to time is that was the year that 0:07:06.720 --> 0:07:11.120 crypto sort of grew up is typically the phrase that 0:07:11.160 --> 0:07:14.600 I hear. So in what ways does the market still 0:07:14.640 --> 0:07:18.440 have to evolve and in what ways can it grow? 0:07:18.480 --> 0:07:22.000 As you say, there are ways for it to do. Yeah, 0:07:22.040 --> 0:07:24.760 I mean, I think like one obvious place is frankly 0:07:24.800 --> 0:07:28.160 on the regulatory side, where you know, I think that 0:07:28.200 --> 0:07:30.800 there is a lot of messy parts of the regulatory 0:07:30.800 --> 0:07:33.840 eco system today. I think that agains some some fairly 0:07:33.880 --> 0:07:36.480 straight forwards things could help that a ton. I think 0:07:36.520 --> 0:07:40.080 just like regulation enforcing that stable points are fully reserved 0:07:40.640 --> 0:07:42.960 is like something that would address I think a lot 0:07:43.000 --> 0:07:45.240 of the current concerns around them. And I think that 0:07:45.480 --> 0:07:50.600 you know, having a feer markets framework for digital asset 0:07:50.720 --> 0:07:52.720 would be really work. Right now, there is a framework 0:07:52.760 --> 0:07:55.880 for modity future is, there's a framework for security spot. 0:07:56.840 --> 0:07:59.680 It's not clear what their framework is for commodity spot market. 0:08:00.360 --> 0:08:02.640 They're not all the same framework. It's not clear with 0:08:02.720 --> 0:08:07.320 their registration framework for a digital asset security token. And 0:08:07.360 --> 0:08:09.080 I think that these these are all things which I 0:08:09.080 --> 0:08:12.120 think have to be addressed. But again I'm optimistic is 0:08:12.160 --> 0:08:14.840 not that hard to address them within the current system 0:08:14.880 --> 0:08:17.800 and and to kind of get to a much more 0:08:17.920 --> 0:08:22.600 robust um and mature place from regulatory perspective, you know, 0:08:22.640 --> 0:08:25.200 I know coin Base has proposed an s r O 0:08:25.800 --> 0:08:29.160 self regulatory organization similar to what's in the in place 0:08:29.160 --> 0:08:31.840 in the stock market and other markets where it's really 0:08:32.400 --> 0:08:35.800 the you know, the industry is policing itself and not 0:08:35.960 --> 0:08:39.880 as reliant on sort of an outside regulator to sort 0:08:39.880 --> 0:08:43.240 of cover the day by day issues, uh that come up? 0:08:43.480 --> 0:08:45.160 Is that something you guys would get on board with. 0:08:45.200 --> 0:08:49.559 Two In general, we're on board with that, and I'm 0:08:49.600 --> 0:08:51.839 actually one of the exchanges that we own f t 0:08:51.960 --> 0:08:54.319 x C strivatives. It is an s r oh, it's 0:08:54.320 --> 0:08:56.800 a d s r O. But when you think about 0:08:56.880 --> 0:08:58.720 how it is in the equity markets with finn Red 0:08:58.800 --> 0:09:02.439 for example, Finra as we know it today was the 0:09:02.480 --> 0:09:07.360 evolution of decades of equity markets. In order to get 0:09:07.360 --> 0:09:09.520 to the point where we have the ideal s r 0:09:09.559 --> 0:09:11.599 O for crypto, this is not something that's going to 0:09:11.720 --> 0:09:14.040 happen in three months or six months or a year. 0:09:14.679 --> 0:09:17.280 And we are in the situation right now where there 0:09:17.360 --> 0:09:23.120 is unclear regulation, with many exchanges choosing to impose different 0:09:23.120 --> 0:09:26.880 policies upon themselves and thus adding confusion and regulatory risk. 0:09:27.520 --> 0:09:29.440 And there's a lot of common sense things that we 0:09:29.480 --> 0:09:32.320 could do with the existing regulatory frameworks without having to 0:09:32.360 --> 0:09:36.200 wait for building the perfect s r O for crypto. Yeah, 0:09:36.360 --> 0:09:38.480 and I basically agree with that. I think, you know, 0:09:38.520 --> 0:09:41.120 also saying that there should be s ROS and crypto 0:09:41.160 --> 0:09:43.960 doesn't mean there shouldn't be federal regulatory oversight as well. 0:09:44.400 --> 0:09:47.239 Like I think that you know, in addition to s ROS, 0:09:47.360 --> 0:09:49.640 you know, the SEC and the CFC and other regulars 0:09:49.640 --> 0:09:53.720 have important les to plan the crypto regulatory ecosystem. I guess, 0:09:53.800 --> 0:09:56.000 you know, the the issue that comes up a lot 0:09:56.160 --> 0:09:59.400 is that, you know, sort of the light hand of 0:09:59.440 --> 0:10:02.000 regulators is kind of what's attractive to a lot of 0:10:02.000 --> 0:10:04.960 people in the crypto world and the defied world. Does 0:10:05.200 --> 0:10:08.360 the US focusing on this and and sort of being 0:10:08.880 --> 0:10:11.760 trying to be the standard bear for regulation, does that 0:10:12.280 --> 0:10:14.040 Do you think that makes the US a more attractive 0:10:14.120 --> 0:10:17.480 or less attractive sort of the capital of the world 0:10:17.520 --> 0:10:20.760 for for cryptocurrencies or is there a risk that you know, 0:10:20.800 --> 0:10:25.480 everything goes to uh to some country where uh, you know, 0:10:25.720 --> 0:10:29.320 they're they're a little more hands off. I would change 0:10:29.360 --> 0:10:32.720 the but the tenses there a little bit. It has 0:10:32.800 --> 0:10:35.079 been something that I think has led to that. And 0:10:35.480 --> 0:10:39.080 you look today, you know, the United States is something 0:10:39.120 --> 0:10:42.120 like five to ten percent of global crypto volume, just 0:10:42.160 --> 0:10:46.760 tiny compared to it's kind of broader fraction of uh, 0:10:47.080 --> 0:10:50.200 you know, most markets. But but I'm optimistic that it 0:10:50.280 --> 0:10:53.760 could become that could go from a negative choy positive 0:10:54.440 --> 0:10:57.800 again without that much work by you know, getting in 0:10:57.800 --> 0:11:01.040 a more stable position than any worlds in the world. 0:11:01.040 --> 0:11:04.840 But yeah, Bright, interested in your thoughts on this. Do yeah, 0:11:04.880 --> 0:11:08.600 my take is that it's not regulation alone that drives 0:11:08.760 --> 0:11:12.960 the business away from the US, it's lack of clarity 0:11:13.000 --> 0:11:17.520 and therefore regulatory uncertainty. Being worried that if you make 0:11:17.559 --> 0:11:20.280 the wrong decision you might be hit with an enforcement 0:11:20.320 --> 0:11:23.319 action two years from now makes it a pretty unattractive 0:11:23.360 --> 0:11:27.520 place to try to be an entrepreneur. The derivatives markets 0:11:27.520 --> 0:11:29.800 in the US, for example, on the CFDC are some 0:11:29.880 --> 0:11:32.280 of the strictest in the world, but we also have 0:11:32.480 --> 0:11:35.120 most of the world's liquidity and derivatives. Think about the 0:11:35.240 --> 0:11:40.760 SMP future or the treasury bond futures or gold futures 0:11:40.840 --> 0:11:43.000 are some of the most liquid instruments in the world 0:11:43.160 --> 0:11:45.800 under one of the strictest derivatives regimes in the world. 0:11:46.080 --> 0:11:49.120 But it's a clear regulatory framework, and that makes it 0:11:49.160 --> 0:11:53.040 possible for people to innovative, to be able to create exchanges, 0:11:53.120 --> 0:11:56.160 to be able to either become fcms or dc ms, 0:11:56.440 --> 0:11:59.199 you know, exchanges or clearing members, and be able to 0:11:59.240 --> 0:12:02.880 provide liquidity that way. It's just lack of priority, this 0:12:03.040 --> 0:12:05.280 gray area that everyone's operating in that I think is 0:12:05.400 --> 0:12:18.079 driving the talent and the new operations off shore. Yes, 0:12:18.120 --> 0:12:20.880 some I wanted to get back to that idea of 0:12:21.000 --> 0:12:23.440 stable coins you mentioned, you know, your your proponent that 0:12:23.520 --> 0:12:28.240 stable coins should be back on to one uh per dollar. 0:12:28.360 --> 0:12:30.840 And for listeners who don't aren't too familiar with this 0:12:31.000 --> 0:12:34.680 space of stable coins basically a cryptocurrency that is designed 0:12:34.720 --> 0:12:37.559 to track the dollar one to one or or some 0:12:37.600 --> 0:12:42.319 other currency one to one. I wondered how to algorithmic 0:12:42.400 --> 0:12:45.000 backed stable coins fit in or should they be in 0:12:45.040 --> 0:12:47.760 a completely other bucket than sort of the sort of 0:12:47.800 --> 0:12:50.199 the tethers of the world that are actually backed by 0:12:50.360 --> 0:12:53.280 by US dollars. Yeah, I think they should be in 0:12:53.320 --> 0:12:56.040 any diet. I'm guessing you know an example of one 0:12:56.080 --> 0:12:58.880 that you're thinking about there, And I think the basic 0:12:58.920 --> 0:13:03.200 answer is again, I think clarity and transparency are are 0:13:03.000 --> 0:13:06.360 the key things here. You know, maybe there's a different 0:13:06.360 --> 0:13:09.000 word like maybe you have sort of like they were 0:13:09.080 --> 0:13:12.200 fully reserved stable poins, any of like algorithmics, stable points, 0:13:12.240 --> 0:13:13.680 or whatever words you want to use, but it should 0:13:13.720 --> 0:13:17.000 be clearly disclosed users that this isn't a stable point 0:13:17.040 --> 0:13:18.800 in the sense of being backed one to one by 0:13:18.840 --> 0:13:22.240 a stable lasset, right, It's an algorithmic thing which attempts 0:13:22.240 --> 0:13:25.320 to maintain a price pag but could fail and I 0:13:25.320 --> 0:13:27.400 think it's an interesting product. I think it's a different 0:13:27.440 --> 0:13:31.240 product then you know, something like USDC is. While we're 0:13:31.240 --> 0:13:34.120 talking about regulation, I wanted to bring up tether because 0:13:34.200 --> 0:13:38.479 that tends to come up during conversations of crypto and regulation, 0:13:38.600 --> 0:13:41.760 and a lot of regulators say that tether has gotten 0:13:41.840 --> 0:13:46.480 so large that if something were to go awry, it 0:13:46.520 --> 0:13:49.400 actually could post challenges to other areas of the market. 0:13:49.520 --> 0:13:53.240 So if we if we do see something go awry, 0:13:53.320 --> 0:13:56.360 what areas might you look to to sort of to 0:13:56.480 --> 0:14:00.760 see that happening in the first place. Yeah, I mean 0:14:00.840 --> 0:14:03.280 I think I'll say, like this is I think one 0:14:03.320 --> 0:14:05.280 of the reasons why it would be really valuable to 0:14:05.280 --> 0:14:08.600 move to a system where you know, there is a 0:14:08.600 --> 0:14:12.280 clear regulatory framework for transparency around the reserves of stable points. 0:14:12.679 --> 0:14:14.719 I think that would go a long way here for 0:14:14.840 --> 0:14:19.040 it's providing um, you know, concerned protection, systemic risk. UM. 0:14:19.080 --> 0:14:21.400 I don't think that it's currently at a place where 0:14:21.400 --> 0:14:23.720 it is threatening. I think what people are most worried 0:14:23.760 --> 0:14:26.000 about most things, they do think it is probably back 0:14:26.520 --> 0:14:30.160 right now by by sufficient assets. But that doesn't necessarily 0:14:30.160 --> 0:14:33.280 mean it always will be, and that doesn't necessarily mean 0:14:33.320 --> 0:14:37.720 that there's enough transparency around that it would be I 0:14:37.760 --> 0:14:40.640 think healthy to move to a framework where there is 0:14:40.680 --> 0:14:43.640 sort of more enforced transparency around that because they won 0:14:43.680 --> 0:14:46.680 and wants to take part in uh, you know, in 0:14:47.400 --> 0:14:50.360 U S scrypto markets. One think I wanted to and 0:14:50.400 --> 0:14:54.440 I do want to sort of talk about FTX specifically 0:14:54.680 --> 0:14:56.440 and what's next for you guys. But one more sort 0:14:56.480 --> 0:15:00.760 of regulatory based question. And I'm fascinating with the notion 0:15:00.800 --> 0:15:04.320 of anonymity in the crypto space. I mean, obviously the 0:15:04.320 --> 0:15:08.960 whole industry was born in anonymity with Satoshi uh No, 0:15:09.000 --> 0:15:11.640 one's I'm still quite sure who he is. Maybe Sam, 0:15:11.680 --> 0:15:13.080 if you know, you can break some news here, but 0:15:13.200 --> 0:15:17.320 I'm guessing not. But to me, the more scrutiny, the 0:15:17.360 --> 0:15:21.080 more sort of effects you have looking into this space, 0:15:21.440 --> 0:15:24.040 the more dangerous anonymity gets, you know, especially when you 0:15:24.080 --> 0:15:26.000 get into stuff with you know, n f T s 0:15:26.120 --> 0:15:29.240 and you see these stories about wash trades where you know, 0:15:29.240 --> 0:15:31.160 it looks like someone selling an n f T to 0:15:31.280 --> 0:15:34.000 themselves for a couple of thousand ether, you know, and 0:15:34.000 --> 0:15:36.880 and and that sort of thing. Does the scrutiny do 0:15:36.920 --> 0:15:39.920 you guys think, does it sort of make anonymity a 0:15:40.000 --> 0:15:43.480 dangerous thing, something that's going to be less of a 0:15:43.600 --> 0:15:47.880 key pillar of of the crypto world going forward. Yeah, personally, 0:15:47.920 --> 0:15:52.200 I think that the blockchain technology on its own can 0:15:52.240 --> 0:15:56.800 exist independently of whether or not you have a fully 0:15:56.840 --> 0:16:01.040 anonymous system that's using that distributed ledge of technology. You 0:16:01.040 --> 0:16:03.720 think about what f t X does. Not only is it, 0:16:03.960 --> 0:16:06.120 you know, non anonymous. I mean we don't publish who 0:16:06.240 --> 0:16:08.960 is doing the trays with each other, right, it's it's anonymous. 0:16:09.080 --> 0:16:11.040 That's the same way that a stock exchange is anonymous 0:16:11.080 --> 0:16:15.240 in that sense. But we are fully ky seeing our users. 0:16:15.440 --> 0:16:18.000 We need to know exactly that they're not from a 0:16:18.040 --> 0:16:21.280 sanction jurisdiction or they're a sanctioned individual. We need to 0:16:21.280 --> 0:16:23.120 know enough information about them so that we can do 0:16:23.200 --> 0:16:26.160 proper tax reporting. So it's almost a complete opposite of 0:16:26.160 --> 0:16:29.840 anonymity in that sense. And even for cases like uh, 0:16:30.440 --> 0:16:33.000 non custodial while it address which doesn't have a name 0:16:33.040 --> 0:16:37.160 associated with it, there are all these great technological tools 0:16:37.200 --> 0:16:41.480 like chain analysis and TRM labs that help you identify 0:16:41.960 --> 0:16:44.600 known while it addresses that maybe they're coming from an exchange, 0:16:44.840 --> 0:16:47.280 or maybe they're coming from North Korea, and you know, 0:16:47.400 --> 0:16:50.240 to ban all deposits and withdrawals to and from those addresses. 0:16:50.480 --> 0:16:52.640 So there's a lot that we know about the network 0:16:53.280 --> 0:16:57.720 that's participating in blockchain transactions that's fairly not anonymous. And 0:16:57.800 --> 0:17:00.800 of course there's different tools that people have built, different 0:17:00.840 --> 0:17:03.760 kinds of coins that would enable stuff like that. That's, 0:17:04.440 --> 0:17:07.119 you know, not necessarily something that we're hugely supportive of, 0:17:07.400 --> 0:17:10.199 but it's it's also independent of the question of, you know, 0:17:10.240 --> 0:17:14.040 how where this technology is heading. And then Mike mentioned 0:17:14.160 --> 0:17:15.720 n f T s and I know Bloomberg had a 0:17:15.760 --> 0:17:19.119 story earlier this week that showed a really small portion 0:17:19.240 --> 0:17:22.560 of participants tend to reap the greatest gains when it 0:17:22.600 --> 0:17:25.920 comes to selling n f T. So I'm wondering, Brett, 0:17:25.960 --> 0:17:28.360 maybe you can answer this question. Do you think that 0:17:28.520 --> 0:17:32.400 the n f T market is a manipulated market? And 0:17:33.040 --> 0:17:35.480 I want to know if you guys participate in these 0:17:35.520 --> 0:17:40.119 so called white lists where these you know, this tiny 0:17:40.160 --> 0:17:44.040 portion of participants does tend to reap these benefits. So 0:17:45.240 --> 0:17:48.560 what we're seeing is that there's not just a number 0:17:48.680 --> 0:17:51.639 a small number of people reaping the benefits. There's a 0:17:51.640 --> 0:17:55.360 small number of people interacting with the n f T ecosystem. Period, 0:17:56.320 --> 0:17:59.719 and I think that has less to do with you know, manipulation. 0:17:59.800 --> 0:18:02.439 Let's yeah, maybe there is. It's hard to know exactly 0:18:02.520 --> 0:18:05.600 what's going on in that market. I think what is 0:18:05.640 --> 0:18:09.440 true is that the barrier to entry for for example, 0:18:09.600 --> 0:18:14.720 n f T marketplaces is pretty high for the existing marketplaces. 0:18:14.720 --> 0:18:17.159 And that's because let's say you want to go buy 0:18:17.400 --> 0:18:20.320 an n f T on opency. What do you have 0:18:20.400 --> 0:18:22.160 to do? Okay, Well, first you have to create a 0:18:22.160 --> 0:18:25.040 meta mask wallet, which is something which you have to 0:18:25.080 --> 0:18:28.600 install a browser extension and create a secret key password. Okay, 0:18:28.600 --> 0:18:30.560 that you have to open an account maybe an f 0:18:30.680 --> 0:18:33.680 b X or coin base and or something like this, 0:18:33.760 --> 0:18:35.879 and buy some ethereum there. Oh, then you have to 0:18:35.920 --> 0:18:38.080 transfer it out to your meta mass wallet, and you 0:18:38.119 --> 0:18:39.800 have to connect to your meta mask wallet to open. 0:18:39.800 --> 0:18:42.760 See we're already six steps in and for the average person, 0:18:43.359 --> 0:18:46.800 you're introducing twenty new concepts and it's very difficult. And 0:18:46.960 --> 0:18:49.639 as long as the n f T world remains very 0:18:49.800 --> 0:18:52.760 very much a defied product, I think there's going to 0:18:52.760 --> 0:18:54.800 be a very high barrier to entry for people, and 0:18:54.800 --> 0:18:57.480 that's why there's so few people interacting with it. That 0:18:57.520 --> 0:19:00.000 plus the idea of spending six million dollars on an image. 0:19:00.080 --> 0:19:01.600 It's a little bit hard to swallow, I think for 0:19:01.640 --> 0:19:04.440 the average person getting into this business. But it's why 0:19:04.480 --> 0:19:06.159 we're pretty excited about n f t s in general, 0:19:06.240 --> 0:19:08.680 because you know, we we do most of the exchange 0:19:08.720 --> 0:19:11.960 that transactions off chain. It's all bundled with the exchange itself, 0:19:12.200 --> 0:19:14.080 and we hope that this is the extent that this 0:19:14.160 --> 0:19:15.960 is going to be a viable market, let's say, for 0:19:16.200 --> 0:19:21.359 things like blockchain gaming or direct to consumer artwork, that 0:19:21.560 --> 0:19:23.399 it can exist in a way that's just as easy 0:19:23.440 --> 0:19:26.280 as you know, buying bitcoin on fd X. Well, I 0:19:26.320 --> 0:19:28.919 gotta ask you guys about meme coins. You know, I'm 0:19:29.080 --> 0:19:32.720 fascinated when you know, you see something like Sheba, you know, 0:19:33.320 --> 0:19:35.919 do what it did? Or or dose coin, do what 0:19:36.000 --> 0:19:37.960 it it did? You know, all of a sudden, you're 0:19:37.960 --> 0:19:41.600 you're looking at a top ten cryptocurrency worth tens of 0:19:41.640 --> 0:19:44.479 billions of dollars. Sam, I can only imagine your Twitter 0:19:44.960 --> 0:19:49.480 mentions are filled with pictures of Sheba. You knows on 0:19:49.520 --> 0:19:52.520 a deli basis, you know, But walk us through how 0:19:52.560 --> 0:19:55.159 you guys, sort of what your methodology is when you 0:19:55.240 --> 0:19:58.320 decide whether or not you know, to allow one of 0:19:58.359 --> 0:20:01.159 these coins on your exchange? You know, is there is 0:20:01.200 --> 0:20:03.199 there sort of a hard and fast rules? Is it 0:20:03.240 --> 0:20:04.879 a case by case type of thing? How how do 0:20:04.920 --> 0:20:08.080 you decide? All right, let's let's let the let's let 0:20:08.119 --> 0:20:10.880 the meme point on. Yeah, I s I'll say that 0:20:10.920 --> 0:20:12.720 there's a lot of factors that go into this, right. 0:20:12.720 --> 0:20:16.040 One of these is regulatory understanding, the regulatory framework and 0:20:16.080 --> 0:20:18.720 jurisdiction of it. And this is different in different countries 0:20:18.760 --> 0:20:21.520 as well, you know, understanding, you know, is this the security? 0:20:22.119 --> 0:20:24.440 Is there one one piece of this? I think another 0:20:24.440 --> 0:20:26.720 thing is looking at what is the demand for this? Right? 0:20:26.840 --> 0:20:28.960 Is this what our users want? And in the end, 0:20:29.520 --> 0:20:32.960 you know, we don't try to make investment decisions for 0:20:33.040 --> 0:20:36.480 our users. Like we see our users as the ones 0:20:36.520 --> 0:20:39.320 who are taking charge of their financial future here and 0:20:39.480 --> 0:20:42.760 we want to enable that. Um And I think one 0:20:42.800 --> 0:20:45.720 of these is like is there broad risk or something 0:20:45.760 --> 0:20:47.680 like that from this? You know, I think I think 0:20:47.680 --> 0:20:50.320 those tend to be it's kind of the biggest factors 0:20:50.560 --> 0:20:52.919 UM that that at least I think I usually look 0:20:53.000 --> 0:20:56.560 at on that front. And I'm guessing your users are 0:20:57.560 --> 0:21:01.040 skewed have more heavily towards the professional all the institutions, 0:21:01.440 --> 0:21:05.960 uh n less towards the retails, that's not a safe bet. Yeah, 0:21:06.000 --> 0:21:08.480 certainly relative to the average exchange and I think, you know, 0:21:08.840 --> 0:21:11.800