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Speaker 1: About a decade ago. Back in the early days of crypto,

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Speaker 1: the industry was kind of like a wild West.

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Speaker 2: You had a lot of the sort of quirky characters,

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Speaker 2: very techy people involved.

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Speaker 1: That's oga Karif.

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Speaker 2: I ended up being the first person here at Bloomberg

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Speaker 2: to cover bitcoin and crypto, and I got sucked in.

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Speaker 1: It was an easy beat to get sucked into. This

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Speaker 1: was an industry full of big personalities, basically passionate nerds

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Speaker 1: who believed in the power of cryptocurrency as a way

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Speaker 1: to manage their money beyond government oversight, but who didn't

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Speaker 1: know a ton about business.

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Speaker 2: For instance, there was Charlie Shrem who started bit Instant

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Speaker 2: in his early twenties. It was a way to use

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Speaker 2: bitcoin for payments at merchant locations, and eventually he ended

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Speaker 2: up going to prison because he didn't register it as

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Speaker 2: a money transmission business. That was also Raja Or, one

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Speaker 2: of the first investors into the bitcoin ecosystem. He was

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Speaker 2: called Bitcoin Jesus because he kept carrying on about bitcoin

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Speaker 2: at various barbecues and parties everywhere he went, prosplytizing exactly right.

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Speaker 2: And so this were people who wore T shirts and

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Speaker 2: baseball hats with bitcoin logos on them. This was a

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Speaker 2: very sort of tight knit community that really really believed

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Speaker 2: in bitcoin and crypto.

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Speaker 1: In twenty nineteen, one of those T shirt wearing guys

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Speaker 1: named Sam Bankman Freed launched an exchange platform dedicated to crypto.

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Speaker 1: It was called FTX, and it took off. The media

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Speaker 1: gushed over SBF like a kind of celebrity.

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Speaker 2: One of the most successful entrepreneurs in the world of

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Speaker 2: cryptocurrency is Sam Bankman Free.

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Speaker 1: The Michael Jordan of crypto if you will.

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Speaker 2: Twenty nine years old, SBF is the youngest billionaire in

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Speaker 2: the US and the quickest to reach the fortune four

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Speaker 2: hundred less.

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Speaker 1: And then in late twenty twenty two, it all changed

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Speaker 1: and those commentators changed their tones. Bateman Fried and his

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Speaker 1: co conspirator still billions of dollars from FTX customers. Authorities

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Speaker 1: arrested him last night after US prosecutors filed eight criminal charges.

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Speaker 1: Lots of FTX has sent shockwaves across the cryptocurrency industry.

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Speaker 1: A lot of people watched FTX crumble and saw it

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Speaker 1: as the beginning of the end of crypto. Plenty of

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Speaker 1: retail investors said, I don't want to touch a digital

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Speaker 1: coin with a ten foot poll. But interestingly Wall Street

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Speaker 1: is taking a different approach. Today on the show, I

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Speaker 1: sit down with Bloomberg's Olga Karif, a senior reporter on crypto.

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Speaker 1: We talk about the banks that are embracing the tech

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Speaker 1: that underpins cryptocurrency and what it means for the rest

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Speaker 1: of the industry. This is big take from Bloomberg News.

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Speaker 1: I'm your host, Sarah Holder.

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Speaker 2: It's a big change of guard I think is happening

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Speaker 2: in crypto. Where in the early days you saw all

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Speaker 2: these people in T shirts and baseball caps, you know,

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Speaker 2: true believers in bitcoins potential to change the world. Whereas

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Speaker 2: now you see people in business suits, people who used

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Speaker 2: to work at Goldman, people who used to work at

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Speaker 2: JP Morgan, and they're either leading this efforts at those

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Speaker 2: same firms or they went into some crypto companies in

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Speaker 2: their leading charge there.

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Speaker 1: Did their entrances come after the collapse of FDx or

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Speaker 1: have they been in the game the whole time.

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Speaker 2: A lot of these companies have been dabbling in blockchain

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Speaker 2: or crypto for years, like Franklin Templeton, for instance, has

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Speaker 2: been working on this for over seven years. By now

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Speaker 2: we have JP Morgan is exploring deposit tokens that would

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Speaker 2: represent customer deposits on blockchain. We have Goldman involved in

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Speaker 2: a variety of ways. We have a bunch of companies

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Speaker 2: involved stable coins which basically represent FIAD, So for instance, Kanter, Fitzgerald, BNY, Melon,

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Speaker 2: and Blackrock. So a lot of these companies. You know,

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Speaker 2: I don't think FTX changed things for them that much.

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Speaker 2: But I think what FTX did change for a lot

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Speaker 2: of retail investors is their belief that a crypto native

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Speaker 2: new company is maybe less trustworthy or less stable than

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Speaker 2: somebody like you know, Blackrock or Goldman, or somebody with

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Speaker 2: experience in the traditional financial world, somebody who adheres to regulation,

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Speaker 2: somebody who's been around for many, many years.

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Speaker 1: Are all the big banks getting into this or have

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Speaker 1: some of them remained more cautious when it comes to crypto.

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Speaker 2: You know, it is not all I think it's fair

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Speaker 2: to say that a lot of them are dabbling and

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Speaker 2: experimenting with this, but they're waiting for more clarity from

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Speaker 2: US regulators as to, you know, what they're allowed and

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Speaker 2: not allowed to do. Like for instance, JP Morgan is

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Speaker 2: exploring these deposit tokens, but it will need an okay,

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Speaker 2: from baying regulators to launch something like this. We are

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Speaker 2: still waiting for legislation clarifying stable coins and what they

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Speaker 2: are and how they are to be regulated. So there's

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Speaker 2: still a lot of regulatory uncertainty in the US market.

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Speaker 1: And what happened last month in January that accelerated this trend.

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Speaker 2: Oh my gosh, it was a huge month in crypto.

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Speaker 2: This is when exchange traded funds that invest directly into

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Speaker 2: bitcoin finally launched. This has been tried for over ten years.

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Speaker 2: You know, many companies filed applications with the Securities and

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Speaker 2: Exchange Commission trying to get this approved, and they all

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Speaker 2: got rejected. And then black Rock submitted its application last summer,

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Speaker 2: and then Fidelity followed suit and a lot of other

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Speaker 2: traditional financial firms, and so finally the SEC approved the

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Speaker 2: spot bitcoin ETFs in January, and they've already attracted several

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Speaker 2: billion of inflows. So it's basically considered to be a

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Speaker 2: pivotal moment that signaling mainstream adoption of bitcoin and possibly crypto.

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Speaker 1: After the break, we dig into exactly what this ETF

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Speaker 1: means and how it might reshape the way we all

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Speaker 1: think about crypto. We're back with Oga Karif, a Bloomberg

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Speaker 1: senior reporter on crypto Olga, what did it mean that

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Speaker 1: the SEC approved the first bitcoin ETF in January?

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Speaker 2: So what it meant was that anybody with a brokerage

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Speaker 2: account can go in there and the same way they

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Speaker 2: can buy stocks or bonds, you could also invest into

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Speaker 2: a spot bitcoin ATF. So basically this removed a lot

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Speaker 2: of the hustles off investing into bitcoin. So previously you

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Speaker 2: had to open an account on a crypto exchange, get verified,

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Speaker 2: It took a while, and then you had to figure

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Speaker 2: out how to buy bitcoin and how to store it

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Speaker 2: so it doesn't get stolen. This is like a big

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Speaker 2: issue in crypto. You know, you want to keep your

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Speaker 2: coin safe and how do you do it? And it

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Speaker 2: can be complicated. And so now you can invest into

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Speaker 2: this bitcoin ETF through your brokerage and it's as easy

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Speaker 2: as buying shares in a company. And so this essentially

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Speaker 2: opens up crypto to your typical not tech savvy, you know,

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Speaker 2: just normal every day user.

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Speaker 1: And what does all this mean for the crypto industry

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Speaker 1: of the future.

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Speaker 2: So I think this means that once this regulatory stuff

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Speaker 2: gets clarified, I think crypto is just going to be

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Speaker 2: your typical part of your financial system. I think we're

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Speaker 2: not gonna view bitcoin as an emerging, quirky technology that

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Speaker 2: only speculators invest in. I think it's going to impact

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Speaker 2: Bitcoin's volatility. Possibly, it's going to be perhaps a more

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Speaker 2: stodgy place versus something that's very volatile, very cutting edge.

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Speaker 1: Today the baseball caps have turned into suits, as you

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Speaker 1: said exactly, does that undermine any of the early spirit

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Speaker 1: of crypto.

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Speaker 2: I think that undermines it the great deal because the

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Speaker 2: early adapters of this technology, they wanted to have money

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Speaker 2: that the government cannot touch, that it doesn't have oversight off.

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Speaker 2: And what it turned out to be is that the

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Speaker 2: government does want oversight of this money and very much

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Speaker 2: oversees it. We've seen a lot of enforcement actions from

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Speaker 2: the SEC, from the CFTC, from the Department of Justice.

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Speaker 2: This goes completely against the grain of what the early

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Speaker 2: adopters believe and wanted. But I think at the same time,

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Speaker 2: this technology and this coins they would have been very

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Speaker 2: niche If that continued to be the case, they wouldn't

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Speaker 2: be the same kind of mass adoption that we are

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Speaker 2: starting to see now.

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Speaker 1: Olga curieve Thank you so much.

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Speaker 2: Thank you, it was my pleasure.

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Speaker 1: Thanks for listening to Big Take from Bloomberg News. I'm

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Speaker 1: Sarah Holder. This episode was produced by Julia Press. It

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Speaker 1: was edited by Mike Reagan. It was mixed by Alex Uhia,

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Speaker 1: fact checked by Tiffany Choi. Our senior producers are Naomi

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Speaker 1: Shavin and Jilda Di Carli. We get editorial direction from

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Speaker 1: Elizabeth Ponso. Nicole Beemster Borr is our executive producer. Sage

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Speaker 1: Bauman is our head of podcasts. Thanks for tuning in.

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Speaker 1: We'll be back tomorrow.