WEBVTT - What Will Crypto’s Market Structure Look Like? 0:00:09.880 --> 0:00:13.720 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:13.800 --> 0:00:18.080 I'm Joe Wisenthal and I'm Tracy Allowait. Tracy, did you 0:00:18.120 --> 0:00:21.239 like it the other day when you tweeted something and 0:00:21.239 --> 0:00:23.280 then I just stole your idea and wrote about it 0:00:23.320 --> 0:00:29.240 in a newsletter. I wasn't actually trying to insinuate that, Joe. 0:00:29.320 --> 0:00:30.840 I just thought it was funny. I thought it was 0:00:30.880 --> 0:00:35.160 a mind meld from like three thousand miles away. I'm 0:00:35.159 --> 0:00:37.839 not that arrogant that I would have assumed that you 0:00:37.920 --> 0:00:40.400 had actually read my tweet, given that I think I 0:00:40.440 --> 0:00:43.160 tweeted it at like midnight your time in New York. 0:00:43.440 --> 0:00:46.320 I do miss a lot of your tweets because we're 0:00:46.320 --> 0:00:49.040 on such a different time zones. But for those who 0:00:49.040 --> 0:00:52.120 are listening and don't know the context behind it, it 0:00:52.240 --> 0:00:54.800 was a very interesting story in the crypto world this 0:00:54.880 --> 0:01:00.280 week where a major exchange, major crypto exchange called ben Aunts, 0:01:00.560 --> 0:01:03.320 they delisted a coin, causing the price of that coin 0:01:03.400 --> 0:01:06.679 to fall, and it raises all kinds of questions about 0:01:06.680 --> 0:01:09.800 who really holds power in the crypto world and questions 0:01:09.800 --> 0:01:16.120 about decentralization and centralized because how decentralized can any anything be? 0:01:16.360 --> 0:01:19.240 If one exchange can come along and say no, we're 0:01:19.240 --> 0:01:22.640 not trading you anymore, and then the price plummets. Anyway, 0:01:22.680 --> 0:01:26.280 Tracy tweeted about this conundrum. I had written about it 0:01:26.319 --> 0:01:29.040 in a newsletter, and I swear I didn't. I hadn't 0:01:29.040 --> 0:01:32.520 seen Tracy's tweet, but she called me out for stealing 0:01:32.520 --> 0:01:36.400 her ideas. No, I didn't call you out. I complimented 0:01:36.440 --> 0:01:40.160 you on having the exact same idea as me. No. Look, 0:01:40.200 --> 0:01:43.039 I think the reason why I was actually thinking about 0:01:43.120 --> 0:01:45.880 it was because it reminded me of an old Odd 0:01:45.880 --> 0:01:48.480 Thoughts episode, And I think it was actually the episode 0:01:48.480 --> 0:01:52.600 where you were talking about your experience inventing a cryptocurrency 0:01:52.680 --> 0:01:56.240 and what you learned from that whole uh saga, I guess. 0:01:56.600 --> 0:01:58.400 And one of the things that you pointed out then 0:01:58.920 --> 0:02:01.920 was you thought one of the reasons that the cryptocurrency 0:02:01.920 --> 0:02:04.480 didn't actually take off was because it didn't get picked 0:02:04.560 --> 0:02:08.760 up by any major exchanges, and without exchange participation, you 0:02:08.760 --> 0:02:12.000 couldn't have pricing transparency and no one could really get 0:02:12.040 --> 0:02:14.520 on board with it. So over and over and over again, 0:02:14.560 --> 0:02:18.240 I think we've really seen the importance of exchanges when 0:02:18.240 --> 0:02:21.760 it comes to crypto. For what is worth. My cryptocurrency 0:02:21.880 --> 0:02:25.320 that I started with a friend several years ago failed 0:02:25.360 --> 0:02:29.080 for many more reasons. Uh that just that many more, 0:02:29.520 --> 0:02:31.640 including the fact that we never really took the project 0:02:31.639 --> 0:02:33.280 that seriously to begin with, and it was kind of 0:02:33.280 --> 0:02:37.600 a joke. Nonetheless, that was one of numerous issues that 0:02:37.639 --> 0:02:40.880 we faced anyway, the power of exchanges. It just one 0:02:40.960 --> 0:02:45.600 of obviously many interesting questions that arise in market structure, 0:02:45.639 --> 0:02:48.240 and we've been talking a lot about market structure on 0:02:48.440 --> 0:02:55.080 the show recently. We recently did one about bond market structure. Obviously, 0:02:55.240 --> 0:02:58.320 crypto market structure just like crypto itself in its very 0:02:58.320 --> 0:03:01.440 early days. Nonetheless, people are trying to figure out what 0:03:01.560 --> 0:03:03.760 it's going to look like. So I think this should 0:03:03.800 --> 0:03:07.640 be an interesting conversation today because we are going to 0:03:07.680 --> 0:03:10.800 be talking to someone in that field who's trying to 0:03:10.840 --> 0:03:14.760 figure out and maybe we'll learn something about where the structure, 0:03:14.960 --> 0:03:17.600 how market structure works today and then ultimately where it's 0:03:17.639 --> 0:03:20.040 going in this space. All Right, I'm intrigued. Who do 0:03:20.120 --> 0:03:22.640 we have today? We're going to be talking to Alex 0:03:22.720 --> 0:03:26.799 Gordon Brander. He's the founder of Omega one. He's formerly 0:03:26.800 --> 0:03:30.720 of Bridgewater. He's building a dark pool for crypto. So, Alex, 0:03:30.960 --> 0:03:33.320 thank you very much for joining us, Good morning, thanks 0:03:33.360 --> 0:03:36.480 for having me here today. What is Omega one and 0:03:36.680 --> 0:03:39.680 how did you decide to launch it or what did 0:03:39.680 --> 0:03:43.280 you see as the opportunity So Omega one, our first 0:03:43.640 --> 0:03:47.600 offering is Omega Dock, which is a regulated institutional dock 0:03:47.720 --> 0:03:50.520 pool for digital as steps. So let me just break 0:03:50.560 --> 0:03:54.280 that down digital ass sets, meaning initially crypto and bitcoin, 0:03:54.360 --> 0:03:56.960 but we also have our eye on the future where 0:03:57.000 --> 0:04:00.560 we see stock spawns, real estate and currencies all moving 0:04:00.600 --> 0:04:04.280 over into this digital environment. Dark pool we can talk 0:04:04.280 --> 0:04:06.720 a bit more about for your listeners that don't know, 0:04:06.800 --> 0:04:10.840 but as a particular kind of market microstructure or trading 0:04:10.920 --> 0:04:14.280 venue that allows large orders to be placed in volatile 0:04:14.320 --> 0:04:17.679 markets without moving the markets and brings stability to market 0:04:17.760 --> 0:04:21.679 places and then regulated obviously we'll talk about what that means. 0:04:21.760 --> 0:04:26.479 So how did I come about doing this? So when 0:04:26.480 --> 0:04:30.159 I was at Bridgewater, I had the job of figuring 0:04:30.160 --> 0:04:34.760 out how to build a next generation trading platform that 0:04:34.800 --> 0:04:39.000 allowed very very large volumes of f X to get 0:04:39.000 --> 0:04:41.600 traded in a way they didn't push the market around. 0:04:42.200 --> 0:04:46.039 When I started first really getting deep into crypto in 0:04:48.880 --> 0:04:52.080 and made small, little trades of a few thousand dollars 0:04:52.080 --> 0:04:54.640 on exchanges. I was shocked to see the same kind 0:04:54.640 --> 0:04:56.799 of behavior that I was seeing when we were moving 0:04:56.800 --> 0:05:00.520 around billions of dollars in FX and allies that the 0:05:00.520 --> 0:05:04.440 market microstructures in crypto needed a lot of help to 0:05:04.560 --> 0:05:06.840 be able to build the kind of liquidity that was 0:05:06.880 --> 0:05:09.839 required to then have this sort of flow of money 0:05:09.960 --> 0:05:12.520 from the old world into the new. So that that's 0:05:12.560 --> 0:05:15.440 what got me going. So, Alex, can you talk to 0:05:15.560 --> 0:05:19.159 us a little bit more about why the crypto market 0:05:19.279 --> 0:05:23.880 in its current existence or its current form is actually 0:05:23.960 --> 0:05:27.400 a liquid because we hear all these stories about, you know, 0:05:27.760 --> 0:05:30.839 even small trades having an outsized impact on the market, 0:05:30.880 --> 0:05:34.599 But we also hear a lot about bitcoin whales, people 0:05:34.640 --> 0:05:37.600 with big positions or who make big trades who are 0:05:37.640 --> 0:05:40.920 able to really really move the market. Why is does 0:05:41.000 --> 0:05:44.080 this seem to be such a problem in crypto? So 0:05:44.160 --> 0:05:49.840 I think there's probably three different causes root causes behind that. 0:05:50.279 --> 0:05:55.320 One is simply immaturity that you know, markets are ecosystems, 0:05:55.560 --> 0:05:58.720 and if you leave the ecosystem for a while, different 0:05:58.800 --> 0:06:02.719 kinds of sort of herbivores and carnivores and different kinds 0:06:02.720 --> 0:06:06.040 of beasts enter the ecosystem and end up creating this 0:06:06.200 --> 0:06:10.479 sort of efficient landscape of trading, and in crypto, they 0:06:10.560 --> 0:06:14.760 just hasn't been that long for you know, the agency 0:06:14.839 --> 0:06:17.719 brokers and market makers and OTC desk and all these 0:06:17.800 --> 0:06:22.440 to really develop the tight web of inter relationships that 0:06:22.480 --> 0:06:24.440 they have in other markets. So there's a there's an 0:06:24.440 --> 0:06:28.560 immaturity piece. There's also, i think a more interesting thing, 0:06:28.640 --> 0:06:31.560 which is crypto as a market that started off in 0:06:31.640 --> 0:06:34.560 the retail world, and most of all the other asset 0:06:34.720 --> 0:06:38.479 classes that we know started institutional and moved retail, and 0:06:38.520 --> 0:06:41.360 this thing started retail and at a time when there's 0:06:41.360 --> 0:06:45.719 a really low barrier to entry for creating exchanges and 0:06:45.720 --> 0:06:49.400 platforms that also never existed in previous asset classes. And 0:06:49.440 --> 0:06:51.760 you have a lot of people who made a bunch 0:06:51.800 --> 0:06:56.520 of money from being early adopters who then had, you know, 0:06:56.600 --> 0:06:59.440 the confidence to start up venues. So you have a 0:06:59.560 --> 0:07:03.080 very road set of people coming from very different places 0:07:03.640 --> 0:07:07.679 entering in and becoming players in this market. Again, so 0:07:08.120 --> 0:07:11.320 that's just a different kind of starting point than in 0:07:11.440 --> 0:07:14.040 than in traditional assets. And the third main thing is 0:07:14.080 --> 0:07:17.160 regulation and compliance, which is what causes a lot of 0:07:17.200 --> 0:07:22.160 harmonization in the other markets. So here's what my initial thought. 0:07:22.320 --> 0:07:26.320 And obviously we can't talk about Omega one and specifically 0:07:26.360 --> 0:07:29.280 how you're trying to solve this problem. But when I 0:07:29.400 --> 0:07:32.080 hear like about, okay, there's going to be a dark 0:07:32.120 --> 0:07:36.800 pool for crypto, my first thought is, isn't this kind 0:07:36.840 --> 0:07:40.160 of premature because have we still even gotten to the 0:07:40.160 --> 0:07:43.680 stage where we know institutions actually have any interest in 0:07:43.720 --> 0:07:47.360 this at all, let alone some sort of like sophisticated 0:07:47.720 --> 0:07:51.560 modern trading environment that we think is applicable to much 0:07:51.560 --> 0:07:54.560 bigger markets. I would turn that around and say that 0:07:54.600 --> 0:07:57.160 a lot of the larger institutions that we talked to 0:07:57.640 --> 0:08:01.040 have a great deal of interest and entering the markets, 0:08:01.120 --> 0:08:04.960 and then are held back by the lack of regulatory, compliant, 0:08:05.520 --> 0:08:10.240 secure and liquid solutions to trade on. So it's a 0:08:10.240 --> 0:08:12.960 little bit of a chicken egg problem here. It's also 0:08:13.080 --> 0:08:16.440 the case that although everyone says price action doesn't matter, 0:08:17.000 --> 0:08:19.080 you know, there are a lot of people who were 0:08:19.120 --> 0:08:23.239 pushing into the marketplace who at least probably held back 0:08:23.360 --> 0:08:27.160 on pushing their bosses and compliance departments for approval while 0:08:27.200 --> 0:08:29.800 the while the price was falling like a knife last year. 0:08:30.120 --> 0:08:32.320 And I feel like we've hit the floor, and we're 0:08:32.320 --> 0:08:34.440 turning on that front, and that is going to make 0:08:34.480 --> 0:08:37.960 a difference to institutional interest because you know, the institutions 0:08:37.960 --> 0:08:41.640 are primarily driven by the family offices and you know 0:08:41.760 --> 0:08:45.040 an asset owners who are seeing the price rises and 0:08:45.080 --> 0:08:48.200 now again wanting to get back into the asset class. 0:08:48.240 --> 0:08:50.920 So when I hear dark pool for crypto, I have 0:08:51.440 --> 0:08:55.640 a slightly different initial reaction, which is if you think 0:08:55.679 --> 0:08:57.640 that one of the issues are one of the major 0:08:57.679 --> 0:09:00.440 criticisms of the crypto market as it exists right now 0:09:00.559 --> 0:09:03.680 is a lack of transparency. You know, people talk about 0:09:03.720 --> 0:09:07.680 the sort of murky world of crypto trading and various 0:09:07.679 --> 0:09:13.480 exchanges um that possibly engage in uh sort of sketchy practices, 0:09:13.640 --> 0:09:16.400 maybe order inflation, that sort of thing. And then you 0:09:16.400 --> 0:09:19.480 think about dark pools, which you know it's died down 0:09:19.480 --> 0:09:21.800 a little bit, but at one point a few years ago, 0:09:21.960 --> 0:09:25.559 dark pools had a terrible reputation and we're sort of 0:09:25.640 --> 0:09:29.640 viewed again as these murky private exchanges where no one 0:09:29.720 --> 0:09:31.240 knew what was going on and there was all this 0:09:31.280 --> 0:09:36.080 predatory pricing. Michael Lewis basically wrote an entire book about this. 0:09:36.920 --> 0:09:41.320 How are dark pools going to benefit the crypto market, 0:09:41.800 --> 0:09:44.560 given that one of the major criticisms has actually been 0:09:44.600 --> 0:09:47.800 a lack of transparency. That's a great question, and I 0:09:47.840 --> 0:09:49.880 think what we need to do to answer that is 0:09:50.320 --> 0:09:53.200 look at what he is dark and what isn't. So 0:09:53.800 --> 0:09:56.040 there's you know, it's it's a little bit cheesy, but 0:09:56.440 --> 0:09:58.400 we use the phrase we're bringing dark pools into the 0:09:58.520 --> 0:10:03.080 light because what we're actually doing is, on the one hand, 0:10:03.080 --> 0:10:06.440 we're bringing dark pools into the crypto asset class. On 0:10:06.520 --> 0:10:09.840 the other hand, we're bringing some technologies from crypto and 0:10:09.880 --> 0:10:14.319 blockchain into dark pools that actually increase the transparency. So 0:10:15.000 --> 0:10:19.079 what we see in you know, the actual blockchain transactions 0:10:19.080 --> 0:10:21.400 and more transparent than anything else. We can all see 0:10:21.440 --> 0:10:24.560 what all of the bitcoin transactions are. It's what's going 0:10:24.600 --> 0:10:27.400 on off chain in the sort of the murky world 0:10:27.520 --> 0:10:30.600 of the exchanges and bots, which agree is, you know, 0:10:30.640 --> 0:10:34.800 there are some real issues there. So we have one 0:10:34.920 --> 0:10:38.880 major innovation that we have that no dark pool inequities has, 0:10:39.160 --> 0:10:41.920 which is that the pricing of access to liquidity on 0:10:41.960 --> 0:10:45.000 the dark pool is going to be mediated by a 0:10:45.080 --> 0:10:50.280 token that is public, clear and transparent. So Bart Chiltern, 0:10:50.320 --> 0:10:52.800 who's one of our Advisors has been one of the 0:10:52.840 --> 0:10:55.839 guys who's railed against the sort of h f T 0:10:56.800 --> 0:11:00.360 dark pool alliances where you know, there's these under the 0:11:00.360 --> 0:11:03.679 table contracts where high frequency trading firms get their own 0:11:03.760 --> 0:11:06.840 order types and essentially get to predate on other clients 0:11:06.880 --> 0:11:09.720 the dark pools in a non transparent way. All of 0:11:09.720 --> 0:11:14.679 our market microstructure is public, transparent, is going to be audited. 0:11:15.320 --> 0:11:18.880 We're working on a big four audit contracts, so actually 0:11:19.200 --> 0:11:23.160 the pricing, the mechanics, and then even the trades afterwards 0:11:23.160 --> 0:11:24.959 are going to be printed onto a blockchain. So we're 0:11:24.960 --> 0:11:28.160 bringing a lot of transparency. So what is the ent 0:11:28.400 --> 0:11:31.679 what's the dark part? So the dark part is if 0:11:31.720 --> 0:11:34.360 you right now want to buy ten million dollars a 0:11:34.360 --> 0:11:38.240 bitcoin and you announce that intention to the marketplace, you're 0:11:38.240 --> 0:11:40.720 going to have your face ripped off because you go 0:11:40.760 --> 0:11:43.080 and you put that on an order and put that 0:11:43.160 --> 0:11:45.960 order on exchange and just rest everyone's going to see 0:11:45.960 --> 0:11:47.720 that order and the price is going to move away 0:11:47.760 --> 0:11:50.120 from you. God help you actually try to buy that 0:11:50.200 --> 0:11:53.160 ten million dollars a bitcoin on the marketplace, you're going 0:11:53.200 --> 0:11:55.839 to eat up liquidity that's going to move the market. 0:11:55.880 --> 0:11:57.720 Then all the bots are going to get freaked out, 0:11:57.920 --> 0:11:59.960 and by the time you bought your ten million dollars, 0:12:00.200 --> 0:12:03.959 the prices move like five seven percent. You've paid basically 0:12:04.040 --> 0:12:06.680 three or four percent in slippage costs, and the fact 0:12:06.679 --> 0:12:09.079 that you paid ten basis points or twenty basis points 0:12:09.080 --> 0:12:12.120 and fees on the exchange, you're paying eighty times that 0:12:12.240 --> 0:12:14.760 much in terms of how much you're moving the market. 0:12:15.160 --> 0:12:18.040 So that's the key thing. But a dark pool changes 0:12:18.559 --> 0:12:20.680 is it allows you to put that ten million dollar 0:12:20.880 --> 0:12:23.719 ordering in a discrete way and it gets done at 0:12:23.760 --> 0:12:26.480 the market mid price, and every trade gets done at 0:12:26.520 --> 0:12:29.600 the mid rather than moving out. No I mean, I mean, 0:12:29.640 --> 0:12:32.480 you're you're plausing because people at home can't see it. 0:12:32.520 --> 0:12:35.440 But I'm making a weird of making like a skeptical phase. 0:12:36.200 --> 0:12:40.920 I'm just still trying to figure out how fundamentally the 0:12:41.000 --> 0:12:44.000 ten million dollar purchase of let's say it's a bitcoin, 0:12:44.440 --> 0:12:47.120 even if done on a dark pool or in a 0:12:47.200 --> 0:12:50.440 dark pool, doesn't have the same issue run into the 0:12:50.480 --> 0:12:54.480 same issue of eating up the existing liquidity because in 0:12:54.520 --> 0:12:57.200 the end, you know, there's only so much people at 0:12:57.240 --> 0:13:01.440 any given moment are selling it x Right, maybe this 0:13:01.520 --> 0:13:04.640 is a dumb guy I'm just like, if everyone is 0:13:04.679 --> 0:13:09.080 buying and nobody is selling, a dark pool isn't going 0:13:09.120 --> 0:13:13.760 to magically create sellers. But if there are people who 0:13:13.760 --> 0:13:16.800 have buying intentions that they don't want to reveal because 0:13:16.800 --> 0:13:18.880 they're afraid they'll move the market away from them, and 0:13:18.880 --> 0:13:21.600 people have selling intentions they don't want to reveal, and 0:13:21.640 --> 0:13:24.679 they're both nibbling around the edges, and we give an 0:13:24.679 --> 0:13:27.080 opportunity for them to meet because they know they're going 0:13:27.120 --> 0:13:30.200 to meet at the fair market mid price, that enables 0:13:30.200 --> 0:13:33.079 both of them to come out. Now, if twice as 0:13:33.080 --> 0:13:36.240 many people are buying as are selling, the price is 0:13:36.280 --> 0:13:39.600 still going to be moving up in the marketplace, and 0:13:40.200 --> 0:13:42.160 you know, the sellers are all going to get fed 0:13:42.240 --> 0:13:44.360 on on our side, and the buyers are still gonna 0:13:44.360 --> 0:13:47.920 be waiting for more sellers. But it's a it still 0:13:47.960 --> 0:13:52.240 has a stabilizing action on the market compared to just 0:13:52.280 --> 0:13:55.840 putting that order on analytics change. There's a key concept here, 0:13:55.880 --> 0:13:58.240 which is when I say the mid price, what do 0:13:58.280 --> 0:14:01.520 we mean by that? Who's mid price? So any dark 0:14:01.559 --> 0:14:07.319 pool needs to have an external price reference set because 0:14:07.360 --> 0:14:10.800 it's not doing the price discovery with the lit orders, 0:14:10.880 --> 0:14:14.439 So you know where do we get that external price from? 0:14:14.520 --> 0:14:18.080 And that's a that's a really interesting question to dig into. 0:14:18.520 --> 0:14:22.960 Now we've looked at what the top fifty exchanges. We 0:14:23.040 --> 0:14:26.040 looked at that bit wise report about how much of 0:14:26.120 --> 0:14:28.600 the exchange volume was faked, and that was roughly in 0:14:28.680 --> 0:14:31.600 line with our own analysis on this. So when you 0:14:31.640 --> 0:14:34.840 look at the vast wealth of lit exchanges, you say, 0:14:34.840 --> 0:14:37.400 where can we actually get a trustable price from. There's 0:14:37.400 --> 0:14:40.920 actually only a few of those LIT exchanges that you know, 0:14:41.000 --> 0:14:44.360 we feel are trustable for providing a mid price. So 0:14:44.760 --> 0:14:48.920 what we're doing is actually UM working with a partner 0:14:49.000 --> 0:14:52.440 to get pricing from all of the OTC in the 0:14:52.480 --> 0:14:55.320 market maker desks, so we have a true price that 0:14:55.360 --> 0:14:59.880 represents the broad set of liquidity in the whole bitcoin market. 0:15:00.360 --> 0:15:04.800 And once that price is clear and being sort of 0:15:04.800 --> 0:15:08.400 communicated out on the exchange and just inviting people to 0:15:08.480 --> 0:15:13.040 meet at that midpoint, that will have an anchoring, stabilizing 0:15:13.040 --> 0:15:18.320 effect on the overall marketplace. That's really interesting out of curiosity, 0:15:18.400 --> 0:15:22.080 how different is that sort of true mid price to 0:15:22.520 --> 0:15:25.360 some of the prices being reported on the exchanges, Like 0:15:25.440 --> 0:15:27.520 how much of a gap is there between the two 0:15:27.600 --> 0:15:29.720 that you've seen so far. Yeah, I mean that's a 0:15:29.760 --> 0:15:33.240 great question. If you look at the equity dark pools, 0:15:33.280 --> 0:15:36.200 it's really simple. There's a national best bid, there's a 0:15:36.280 --> 0:15:39.680 national best offer, and the dark pool goes and mids 0:15:39.760 --> 0:15:42.520 between the two of those, and there's you know, fiber 0:15:42.600 --> 0:15:45.880 optic pipes and microwaves wiring everything together and it's all 0:15:45.960 --> 0:15:51.040 clean and in crypto. You can see fifty dollar differences 0:15:51.120 --> 0:15:53.760 between the mid of the order books on some of 0:15:53.800 --> 0:15:59.440 these exchanges, and so you occasionally have definitely edged discrepancies 0:15:59.720 --> 0:16:02.160 with wanted to exchanges that can be as much as 0:16:02.200 --> 0:16:05.320 fifty or hundred bucks from what is sort of the 0:16:05.360 --> 0:16:09.280 true weighted mid price. Those often don't tend to be 0:16:09.400 --> 0:16:12.280 really there if you try to trade those orders, or 0:16:12.360 --> 0:16:15.000 there's just kind of a few dollars there and everything fades. 0:16:15.600 --> 0:16:19.400 But the data field, the market data field, is much 0:16:19.440 --> 0:16:39.960 fuzzier and crypto than it is in FX or equities. So, 0:16:40.040 --> 0:16:44.120 as you mentioned um and really with all kinds of networks, 0:16:44.160 --> 0:16:46.920 but there's a chicken and egg problem with all this stuff. 0:16:47.200 --> 0:16:50.160 How do you you know, ultimately you can have great technology, 0:16:50.240 --> 0:16:52.960 but if nobody shows up to your exchange, then there 0:16:53.000 --> 0:16:55.200 isn't going to be a whole lot of liquidity, even 0:16:55.240 --> 0:16:58.200 in the best scenarios. So how do you plan to 0:16:58.280 --> 0:17:01.520 solve that? Because there's a lot of people out there 0:17:01.560 --> 0:17:06.600 trying to work on the institutional aspect of crypto in 0:17:06.720 --> 0:17:10.680 one way or another, whether it's on custodio solutions or exchanges, 0:17:10.840 --> 0:17:14.760 and you have the legacy it's funny to call them legacy, 0:17:14.920 --> 0:17:17.960 but you know the the legacy players like coin base, 0:17:18.119 --> 0:17:23.160 so they're trying to make a big push into institutional trading. 0:17:23.640 --> 0:17:26.320 How do you plan it can only it can only 0:17:26.359 --> 0:17:31.119 be so fragmented before there's no liquidity anywhere, Someone or 0:17:31.160 --> 0:17:33.800 a few players have to really dominate. So how do 0:17:33.880 --> 0:17:39.359 you convince different entities of which there still aren't very many, 0:17:39.440 --> 0:17:44.800 to coalesce around your platform. Number One, there's a minimum 0:17:44.840 --> 0:17:49.280 ba of the regulatory and security and all of those 0:17:49.320 --> 0:17:51.520 things the one needs to have to be entering into 0:17:51.600 --> 0:17:55.560 that conversation. And once you actually really look away that 0:17:55.600 --> 0:17:59.080 minimum barries, you've cut yourself down to a handful of players, 0:17:59.440 --> 0:18:01.800 most of you don't even have product out that can 0:18:01.840 --> 0:18:05.200 operate at that level. And then from that point onwards, 0:18:05.240 --> 0:18:08.000 there's two things, at least from how we look at it. 0:18:08.280 --> 0:18:10.639 One is we have a unique offering that is not 0:18:10.760 --> 0:18:13.800 actually competitive to the likes of a coin base or 0:18:13.840 --> 0:18:15.960 a backed or an aeros x or an el max. 0:18:16.359 --> 0:18:21.200 We're actually talking to those parties because each of them 0:18:21.560 --> 0:18:25.520 will have excess beard or awful liquidity, and they may 0:18:25.560 --> 0:18:29.720 have market making operations or OTC desks that will want 0:18:29.720 --> 0:18:34.240 to have the opportunity to access mid price liquidity through 0:18:34.359 --> 0:18:38.320 through our platform. So one having a different offering that 0:18:38.440 --> 0:18:41.440 actually offers something to all of those players as well 0:18:41.480 --> 0:18:44.800 as to the end institutions. Two by kind of being 0:18:44.840 --> 0:18:47.840 adults and professionals, and that filters things down some I 0:18:47.880 --> 0:18:49.679 hate to say, although not as much as it used to. 0:18:50.240 --> 0:18:52.840 And then thirdly, and this is where it's a it's 0:18:52.840 --> 0:18:57.040 a little bit more creative. We are. We have a 0:18:57.040 --> 0:19:01.720 cryptocurrency token ourselves, and that token is something that we've 0:19:01.760 --> 0:19:06.119 designed to um build the network effects on the platform, 0:19:06.200 --> 0:19:10.360 to reward people for early participation, and to kind of 0:19:10.440 --> 0:19:15.199 price the access to liquidity on the platform. So you know, 0:19:15.320 --> 0:19:19.320 this is something that the business isn't sort of built 0:19:19.359 --> 0:19:22.439 around it. A lot of crypto tokens rely on the 0:19:22.440 --> 0:19:25.280 token itself to create the network effects, but it's kind 0:19:25.280 --> 0:19:29.119 of an accelerant for those network effects. So, Alex, I'm 0:19:29.160 --> 0:19:34.159 curious how you make decisions about which cryptocurrencies or assets 0:19:34.240 --> 0:19:38.439 to actually provide trading for on your platform. And this 0:19:38.520 --> 0:19:42.320 sort of touches a little bit on Joe's totally original 0:19:42.359 --> 0:19:47.920 observation about Bitcoin SV, this sort of offshoot of bitcoin 0:19:48.040 --> 0:19:53.359 cash um that Finance decided to delist recently. You know, 0:19:53.720 --> 0:19:57.359 they said they weren't comfortable with the cryptocurrency for various reasons. 0:19:57.520 --> 0:20:00.119 And again, I wonder like what sort of factor as 0:20:00.160 --> 0:20:03.880 would go into your decision making process about which crypto 0:20:04.040 --> 0:20:06.679 or what type of crypto trading to provide. So the 0:20:06.720 --> 0:20:09.960 first thing is, we're only going to be offering where 0:20:09.960 --> 0:20:14.840 there's already sufficient liquidity in the marketplace for our offering 0:20:14.880 --> 0:20:18.000 to make sense. So you know, we're starting off with 0:20:18.119 --> 0:20:20.320 bitcoin only when we launch, and we're going to be 0:20:20.359 --> 0:20:25.439 doing probably not more than the top ten cryptos for 0:20:25.800 --> 0:20:29.000 the foreseeable future. You know, we're not the folks who 0:20:29.040 --> 0:20:33.159 list two hundred and fifty four hundred different coins. Secondly, 0:20:33.680 --> 0:20:36.439 the Bermuda Monetary Authority, it is probably a good moment 0:20:36.520 --> 0:20:40.240 to just talk about Bermuda here. So the Bermuda Montory 0:20:40.280 --> 0:20:44.240 Authority is and our view the leading jurisdiction for regulating 0:20:44.280 --> 0:20:48.520 digital assets, and they have a pretty clear framework for 0:20:48.600 --> 0:20:53.000 looking at what coins can be listed on a registered exchange. 0:20:53.040 --> 0:20:57.400 For instance, we're steering clear privacy coins because that makes 0:20:57.440 --> 0:20:59.280 it very hard for us to do the A M 0:20:59.400 --> 0:21:01.959 L K ye see that we need to do. You know, 0:21:02.000 --> 0:21:04.919 there are there are coins which have reputational issues that 0:21:04.960 --> 0:21:06.840 we talked to the to the b m A about. 0:21:07.560 --> 0:21:09.760 Uh so where do you see this all going? And 0:21:10.680 --> 0:21:12.760 you mentioned at the beginning that you're gonna start with 0:21:12.800 --> 0:21:16.400 sort of what we know is cryptocurrencies, bitcoin and so on, 0:21:16.800 --> 0:21:20.240 but then you also mentioned like other types of assets 0:21:20.240 --> 0:21:23.679 that will be like traded as digital currencies. And I 0:21:23.720 --> 0:21:26.080 hear people talk about this stuff and the idea of 0:21:26.119 --> 0:21:30.960 like token izing equity or token izing bons or real 0:21:31.119 --> 0:21:34.199 estate and being some sort of crypto token, and I 0:21:34.200 --> 0:21:38.879 still don't understand why that is an improvement or why 0:21:38.920 --> 0:21:42.479 that is a why that would represent an innovation. So 0:21:42.760 --> 0:21:45.359 I'm curious in your view, like what the roadmap for 0:21:45.400 --> 0:21:47.960 all this in terms of what actually is going to 0:21:48.000 --> 0:21:52.320 be traded in this way. So yes, I do think 0:21:52.400 --> 0:21:55.400 that all asset classes are going to be traded on 0:21:55.440 --> 0:21:59.640 a blockchain, as digital assets, and that the efficiency gains 0:21:59.680 --> 0:22:03.520 of near immediate settlement and all of the interoperability of 0:22:03.560 --> 0:22:06.760 blockchains will make a difference. They're not making enough of 0:22:06.800 --> 0:22:11.320 the difference today to overwhelm the liquidity barriers and other issues. 0:22:11.359 --> 0:22:13.720 But where is it gonna go? Like, I just want 0:22:13.720 --> 0:22:15.800 to push it back or my my when you say 0:22:15.840 --> 0:22:19.359 that these efficiency gains, because we've had several discussions with people, 0:22:19.880 --> 0:22:22.800 and one of the consistent themes when we talk about 0:22:23.119 --> 0:22:27.080 crypto currencies or blockchain whatever is that it's not efficient, 0:22:27.160 --> 0:22:33.199 that's actually highly inefficient, and that traditional databases are far faster, 0:22:33.640 --> 0:22:37.080 are far less computationally intensive, are far less energy intensive, 0:22:37.720 --> 0:22:44.200 and that blockchains are basically these very clugi costly systems 0:22:44.240 --> 0:22:47.160 that are good for a narrow purpose. So you when 0:22:47.160 --> 0:22:51.080 you talk about efficiency gains and those efficiency gains driving 0:22:51.080 --> 0:22:53.960 more assets to be traded in this manner, that's like 0:22:54.000 --> 0:22:57.760 the part I'm struggling to understand. So the efficiency is 0:22:57.840 --> 0:23:02.280 absolutely not but it's more computationally efficient than doing things 0:23:02.400 --> 0:23:05.600 in a centralized way. The efficiency comes from the one 0:23:05.760 --> 0:23:09.959 thing that blockchains are good at, which is giving everybody 0:23:10.000 --> 0:23:13.119 around the world or everybody in the network the same 0:23:13.240 --> 0:23:17.560 picture of what's going on consistently and coherently across the 0:23:17.560 --> 0:23:21.119 whole network. So when you look at equity trading, for instance, 0:23:21.440 --> 0:23:26.160 that the nanosecond level trading of equities is highly efficient. 0:23:26.160 --> 0:23:28.680 You're not going to replace that by making it be 0:23:28.720 --> 0:23:31.199 traded on a blockchain. But the back end of that 0:23:31.240 --> 0:23:36.720 equity trading there's still you know, stock certificates in dtc C. 0:23:37.280 --> 0:23:40.200 There are cases you see where companies have a hundred 0:23:40.240 --> 0:23:43.639 and five percent proxies because nobody is adding up the 0:23:44.280 --> 0:23:47.720 shareholding of the companies. There's a huge amount of inefficiency 0:23:47.800 --> 0:23:51.160 in the layers underneath trading, which is why it still 0:23:51.160 --> 0:23:54.920 takes two or three days to even settle transactions, even 0:23:54.920 --> 0:23:58.040