Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Earlier this month, President Donald Trump invited some of the
Speaker 2: biggest names in crypto to the White House.
Speaker 3: Welcome to the first ever White House Digital Assas Summit.
Speaker 2: Venture capitalist David Sachs was there. Trump has made him
Speaker 2: the White House. AI and Cryptos are.
Speaker 3: Like to have you say a few words, David.
Speaker 4: Thank you, mister President. We're all here today because of
Speaker 4: your leadership, your vision, and your generosity.
Speaker 2: The Winklevoss twins were also on the invite list, Cameron
Speaker 2: and Tyler, who run the crypto exchange Gemini.
Speaker 4: Cameron, I think you said something earlier that I thought
Speaker 4: was really profound. You said that a year ago, you
Speaker 4: thought it would be more likely that you'd end up
Speaker 4: in jail at the White House. Not to put you
Speaker 4: on the spot because you didn't do anything wrong, but
Speaker 4: that was the environment a year ago. So you guys
Speaker 4: want to say something either one of you.
Speaker 1: Sure that was actually Tyler you said that, but sorry,
Speaker 1: I still get good stuff.
Speaker 2: Crypto optimism soared as President Biden left office. Under his administration,
Speaker 2: the regulators had been something of a thorn in the
Speaker 2: side of the crypto industry. They brought lawsuits and undertook investigations,
Speaker 2: but under President Trump, the Securities and Exchange Commission has
Speaker 2: paused or walked back many of those actions. Trump, a
Speaker 2: former crypto skeptic, is now a crypto booster an investor.
Speaker 2: Bitcoin hid an all time high just shy of one
Speaker 2: hundred and ten thousand dollars the day of his inauguration,
Speaker 2: but it's been on something of a roller coaster ride
Speaker 2: since then, at one point down as much as twenty
Speaker 2: eight percent from its January peak. A general risk off
Speaker 2: feeling in the markets lately has dampened some of the
Speaker 2: initial enthusiasm for crypto and other risky assets, but some
Speaker 2: Republicans have promised to pass crypto friendly legislation in the
Speaker 2: first one hundred days of the Trump presidency. The broader
Speaker 2: finance industry is watching all of this very closely, and
Speaker 2: once a year every March, there's this get together in
Speaker 2: South Florida called Boca, the International Futures Industry Conference.
Speaker 5: The minute that the dates come out for this conference site,
Speaker 5: I sign up right away.
Speaker 2: That's Catherine Doherty. She covers banks and market structure for
Speaker 2: Bloomberg and she made the trip to the conference.
Speaker 5: It's quite a nerdy crowd. I would say it's a
Speaker 5: bunch of market structure geeks. These are the guys that
Speaker 5: are in charge of the plumbing of the futures industry.
Speaker 5: But it really has expanded beyond just futures. So a
Speaker 5: lot of the exchanges are here, the trading firms, some
Speaker 5: of the clearing firms, which gets into post trade, like
Speaker 5: it goes from the very start of a trade when
Speaker 5: it's being entered, to a trade finishing and being processed.
Speaker 5: All of the people that are in charge of that
Speaker 5: system working are here down in Florida, and most notably
Speaker 5: in the last few years, crypto has made its way
Speaker 5: down here.
Speaker 2: I'm David Gura, and this is the big take from
Speaker 2: Bloomberg News Today. On the show, we catch up with
Speaker 2: Catherine and Boca, where the crypto crowd was basking in
Speaker 2: the South Florida sun, and this time around, the dynamics
Speaker 2: have changed. It's a lot less Old Wall Street versus
Speaker 2: the new crypto crowd, and there's a surge of interest
Speaker 2: in how those two groups can find ways to work together.
Speaker 2: I caught up with Bloomberg's Catherine Doherty last week as
Speaker 2: the International Futures Industry Conference was wrapping up. She was
Speaker 2: in a gilded ballroom in the Boca Ratone resort where
Speaker 2: workers were starting to pack up.
Speaker 6: This place is so large.
Speaker 5: To get from one end of the resort to the other,
Speaker 5: it takes about fifteen to twenty minutes to walk, So
Speaker 5: actually you have to take that into account when you're
Speaker 5: going to meet someone.
Speaker 2: We sent her down to Florida with a microphone and
Speaker 2: asked her for a crypto vibe check.
Speaker 6: All right, I'm just trucking levels.
Speaker 5: So if you would introduce you, and then I'd love
Speaker 5: to hear how many Bocas you have been to.
Speaker 7: My name is Walt Luken. I'm the CEO of FIA
Speaker 7: and this is my twenty third Boca.
Speaker 2: FIA is the trade group for the derivatives market.
Speaker 5: So Walt, what would you say is the big theme
Speaker 5: that you're picking up on talking to the participants of
Speaker 5: this conference.
Speaker 7: Well, a couple things. I think there is this super
Speaker 7: trend that's happening about regulatory simplification. I think some of
Speaker 7: the catalysts is the Trump administration, but you're seeing that
Speaker 7: theme throughout the globe in Europe as well. I would
Speaker 7: say the second is just the conflation of traditional finance
Speaker 7: with new innovators that are coming into the space from
Speaker 7: the crypto industry, from prediction markets. Those two things are
Speaker 7: coming together. And I think everyone knows that crypto legislation
Speaker 7: is going to happen this year in the US. So
Speaker 7: how does that impact traditional finance and how can we
Speaker 7: find the best market structure that may satisfy both.
Speaker 2: What is it about this conference that keeps you coming back?
Speaker 2: And I wonder how different the conference is this time
Speaker 2: versus the ones you've been to in the past.
Speaker 5: So this is my fourth year at BOCA my first
Speaker 5: four years. Twenty twenty two was my first, and it
Speaker 5: was a noteworthy one. This was the year that Sam
Speaker 5: Bankman Freed was a keynote speaker, and he was the
Speaker 5: king of the conference.
Speaker 6: He was up and coming.
Speaker 5: He at this point had been an established player in
Speaker 5: the crypto industry, and Sam remember had come from a
Speaker 5: trading firm, and because of that, he had a lot
Speaker 5: of ideas that were starting to encroach in on the
Speaker 5: traditional financial industry. So at this conference four years ago,
Speaker 5: he was walking around the halls. He had his T shirt,
Speaker 5: shorts and sneakers, and he had a lot of the
Speaker 5: other FDx folks with him that were also in T shirts,
Speaker 5: and everyone wanted a meeting.
Speaker 6: But there were also some TIFFs.
Speaker 5: Quite a noteworthy brawl, I would say, at the hotel
Speaker 5: bar between the CEO of CME, which is the largest
Speaker 5: and oldest US derivatives exchange based out of Chicago, and
Speaker 5: the CEO of that company.
Speaker 6: He confronted Sam.
Speaker 2: That CEO is Terry Duffy, who's been on the board
Speaker 2: of CME for thirty years. Later, in twenty twenty two,
Speaker 2: Duffy would describe that moment on the On the Tape
Speaker 2: podcast from Risk Reversal Media.
Speaker 3: I had a meeting with Sam Bankman free for the
Speaker 3: first time in March this past year. I never met
Speaker 3: the man he asked to meet with me at a conference.
Speaker 2: The conversation reportedly lasted for more than an hour.
Speaker 3: I said to him, I said, you know what, You're
Speaker 3: a fraud. You're an absolute fraud. You're supposedly worth twenty
Speaker 3: six billion dollars and you're an altist. And I said,
Speaker 3: if you're an altist at twenty six billion, how come
Speaker 3: does that not a ten billion dollar donation going to
Speaker 3: somebody right this moment in time? How about a fifteen
Speaker 3: billion dollar donation. I said, you know what, I said,
Speaker 3: my networth doesn't start with any bees. I'll give you
Speaker 3: three to one that I have more money than you.
Speaker 3: I said, I'll tell you what.
Speaker 2: That blow up between Terry Duffy and Sam Bankman Free
Speaker 2: happened in March of twenty twenty two. By November of
Speaker 2: that year, FTX had collapsed.
Speaker 5: So it wasn't actually very long after Sam made his
Speaker 5: debut at this conference that his exchange ended up having
Speaker 5: to file for bankruptcy, and the subsequent years crypto has
Speaker 5: been quite absent.
Speaker 2: The implosion of FTX had a ripple effect. Other crypto
Speaker 2: companies collapsed, and it triggered a mass exodus of capital
Speaker 2: from the industry and prompted a regulatory crackdown that's only
Speaker 2: now loosening in Trump's second term. So far, Republicans have
Speaker 2: introduced a bill to regulate stable coins that type of
Speaker 2: crypto peg to another asset, say the dollar, gold, but
Speaker 2: the scope of the bill is fairly limited and wouldn't
Speaker 2: regulate most forms of crypto, and outside of legislation, there's
Speaker 2: still an open question over which agency would be responsible
Speaker 2: for crypto regulation. That the conference participants were trying to
Speaker 2: gain amount, what any forthcoming regulation could look like.
Speaker 5: How do we plan if there is regulation and we
Speaker 5: can start to enter this market as US financial markets
Speaker 5: and embrace crypto in a way, what does that look like?
Speaker 5: And it's a lot of wait and see. But if
Speaker 5: you wait too long and you're not in the planning process,
Speaker 5: you might be left on the sidelines. I would describe
Speaker 5: this year it feels like Kumboya.
Speaker 6: There's this sense of how do we work together?
Speaker 5: Four years ago, as I mentioned the crypto bros, we're
Speaker 5: walking around these hallways. A lot of them were hosting
Speaker 5: their booths and giving out swag, and you could tell
Speaker 5: there was a difference between the old guard and the
Speaker 5: newer digital asset blockchain developers, and you could quite literally
Speaker 5: see it in their outfits. Now everyone is back to suits.
Speaker 5: In many ways, they are embracing in the old guard.
Speaker 5: They're wearing suits, maybe not a tie, and the old
Speaker 5: guard is embracing them. And I think that image, that
Speaker 5: visual is how I see the industry evolving.
Speaker 6: It's this not us and them, but us together.
Speaker 2: After the break, Catherine catches up with the guy who
Speaker 2: confronted Sam Bankman freed. Catherine, you've described this confluence of
Speaker 2: the Old Guard and the New Guard. And I know
Speaker 2: that while you've been down there, you've been trying to
Speaker 2: talk to people from both camps. Let's start with the
Speaker 2: old Guard.
Speaker 5: The best representation of the Old Guard is none other
Speaker 5: than Terry Duffy, the CEO of CME.
Speaker 2: So this is the guy who got into the fight
Speaker 2: with Sam begman Freed.
Speaker 5: He is the one that had the tiff with Sam
Speaker 5: bankman Fried at the bar, and so Duffy is back.
Speaker 3: How many bocas have I been to? Let's see, nineteen
Speaker 3: ninety five was my first one, and I I don't
Speaker 3: believe I missed any outside of the pandemic when they
Speaker 3: held off. So let's add up those years and it
Speaker 3: seems to be quite a few, so probably close to
Speaker 3: thirty plus book as I've been to.
Speaker 5: He's still running CME, and they offer crypto futures.
Speaker 3: I think that crypto. From our standpoint, we haven't deviated
Speaker 3: much from what we did in twenty seventeen. So we
Speaker 3: listed bitcoin as you know, then we listed ether. Now
Speaker 3: we just announced we're going to list Solana specifically.
Speaker 2: CME has derivative products that allow its customers to speculate
Speaker 2: on the price of all these coins without actually owning
Speaker 2: the underlying cryptocurrencies.
Speaker 5: So they've found a way to do this in a
Speaker 5: regulated manner. They are a regulated exchange in the US,
Speaker 5: and there's by no means of resistance. In many ways,
Speaker 5: it's an embrace of the crypto industry. But Terry has
Speaker 5: a lot to reflect on.
Speaker 3: I think what's really important as we're into this new
Speaker 3: administration of President Trump and his cabinet is to see
Speaker 3: how they feel about the regulatory process of this cause
Speaker 3: one of the things I can understand is when regulators
Speaker 3: aren't quite sure if it should be approved or not approved,
Speaker 3: so they do nothing, and then the horse runs out
Speaker 3: of the barn. Then they got to put the horseback
Speaker 3: in the barn.
Speaker 2: So that's Terry, So he represents the old guard. How
Speaker 2: about the new guard? Who did you talk to from
Speaker 2: that group?
Speaker 6: Yeah?
Speaker 5: One of the other leaders of a firm called Digital Asset.
Speaker 1: My name is Vall Russ. I'm the co founder and
Speaker 1: CEO of Digital Asset, coming from New York and probably
Speaker 1: Boca number eight for me.
Speaker 5: His company has built a blockchain network, and a lot
Speaker 5: of the conversation down here has been around market efficiency,
Speaker 5: and someone like you've all talks about how blockchain as
Speaker 5: a technology can be a use case for improving upon
Speaker 5: that existing technology.
Speaker 2: You've all also said that his customers are responding to
Speaker 2: the Trump Administration's new more positive stance toward crypto.
Speaker 1: I would say that under this administration, we are seeing
Speaker 1: our customers having much more willingness to test this new technology,
Speaker 1: where the lack of certainty around the regulatory framework before
Speaker 1: created quite a lot of fear even to try to
Speaker 1: innovate with this technology.
Speaker 2: So you're looking at this conference as kind of a
Speaker 2: microcosm for the broader industry's acceptance of crypto today. Are
Speaker 2: there skeptics in the mix? Is this kind of emblematic
Speaker 2: of a sea change that's taken place?
Speaker 6: There are skeptics.
Speaker 5: I think the big question mark that needs to be
Speaker 5: answered is if the expectation is this is a friendlier
Speaker 5: regulatory environment, which I think that's a pretty obvious statement
Speaker 5: or something that everyone agrees on. The question then becomes
Speaker 5: what does the regulation actually look like?
Speaker 6: And it's quite hard for these.
Speaker 5: Companies to plan in a way that they can start
Speaker 5: taking action without that regulatory.
Speaker 6: Roadmap in front of them.
Speaker 5: So I think that's the skepticism that I hear here
Speaker 5: is all right. I think there's a path, but that
Speaker 5: path is still murky, so we got to be careful.
Speaker 2: So you're seeing this embrace take place at this at
Speaker 2: this important conference. How long is it going to take
Speaker 2: to see whether or not this sticks if it becomes
Speaker 2: something that, yes, is happening in microcosm there at this
Speaker 2: conference in Boca, but finds its way to the broader industry.
Speaker 6: The future of how this evolves, I think so much
Speaker 6: of it.
Speaker 5: If it was just up to the industry, it would
Speaker 5: happen a lot faster, but it's not. The industry has
Speaker 5: to work with regulators and the rules have to be
Speaker 5: established in order for the action to then take place.
Speaker 5: So I'd imagine it's going to happen faster than the
Speaker 5: previous administration, but it's not, again, all up to these
Speaker 5: business leaders.
Speaker 2: What would that mean for the financial system in the
Speaker 2: US and around the world. What does it look like?
Speaker 2: How does it stand to change if this goes forward?
Speaker 5: So I think that many participants describe it in two ways.
Speaker 5: There's crypto trading, and we've already started to see that
Speaker 5: infiltrate institutional finance with the introduction of crypto ETFs and
Speaker 5: now we're seeing crypto options, and then you have the
Speaker 5: conversation around blockchain and the use case of how do
Speaker 5: you create these networks that many would just jump to
Speaker 5: you and say this is tied to crypto or digital assets,
Speaker 5: but blockchain specifically gets referenced by many of the banks
Speaker 5: that I talked to bank leaders down here and the exchanges.
Speaker 5: That's more of the use case and less of the
Speaker 5: trading of an asset. And so I think that those
Speaker 5: are the two buckets that folks are exploring down here
Speaker 5: of what does the future look like? And I think
Speaker 5: that there's going to be an evolution for both.
Speaker 2: Catherine, it's great to talk to you. Thank you very much.
Speaker 6: Thank you.
Speaker 2: This is the Big Take from Bloomberg News. I'm David Gura.
Speaker 2: This episode is produced by Alex tie. It was edited
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