Bankless - We’re Still Early to The Institutional Crypto Cycle | Eric Peters, CIO Coinbase Asset Management

Episode Date: August 25, 2025

Eric Peters, CIO of Coinbase Asset Management joins Ryan to chart how crypto matured to today’s institutional market with deep liquidity, ETF rails, and stablecoin clarity. They unpack why Wall Street is leaning in, why the next wave is digitally native issuance of treasuries, bonds, and equities on Ethereum, and how macro tailwinds (fiscal dominance, Fed–Treasury convergence, AI-driven productivity) intersect with crypto’s reflexivity.  Risks and realities aren’t ignored—over-financialized “treasury companies,” security lapses, and policy whiplash—plus a 12–18 month roadmap of real on-chain use cases as pensions and sovereigns start arriving.  ------ 📣SPOTIFY PREMIUM RSS FEED | USE CODE: SPOTIFY24  https://bankless.cc/spotify-premium ------ BANKLESS SPONSOR TOOLS: 🪙FRAX | SELF SUFFICIENT DeFi https://bankless.cc/Frax 🦄UNISWAP | SWAP ON UNICHAIN https://bankless.cc/unichain 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle ------ TIMESTAMPS 0:00 Intro 5:55 Throwback to 2020 9:29 Institutional Infra: Before & After 11:47 Institutional Adoption: Before & After 15:57 TradFi ETF Incentives 19:07 Did Crypto Become Consensus? 22:45 Balancing Conviction & Change of Opinion 28:20 The Story of Money 33:19 Institutional Understanding 37:57 Is Crypto Too Big to be Shut Down? 43:44 Operation Chokepoint Takeaways 49:18 Crypto Regulation 180 56:13 Working with Different Jurisdictions 1:04:05 The Future of Tokenization 1:10:10 Crypto ETFs Aftermath 1:18:32 How High Can Crypto Go? 1:32:23 Treasury Companies 1:38:27 Eric’s Macro Trades 1:44:18 What Could Go Wrong? 1:48:04 Coinbase Asset Management 1:53:34 What’s Next? 1:54:52 Closing ------ RESOURCES Eric Peters https://www.linkedin.com/in/charlesericpeters/  Coinbase Asset Management https://www.cbassetmgmt.com/  One River Asset Management https://www.oneriveram.com/  Last Eric Peters interviews https://www.youtube.com/watch?v=z8oocKy3IwU  https://www.youtube.com/watch?v=NMPiGjxdH0E  Vitalik’s Interview https://www.youtube.com/watch?v=rNSnYIjoqOM  ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠

I do not think institutions are here in size at all. When I think of institution, I think of the large pension plans, the large endowments, insurance companies, sovereign wealth funds. And there, some of those flows have started for sure. So the type of institution that I have spent my career with mostly have still, like they haven't even scratched the surface. Really? Oh, not at all.

Not at all. Welcome to bankless, where we explore the frontier of internet money and internet finance. This is Ryan Sean Adams. Just me here today, David is out. So I am here to help you become more bankless. We've got Eric Peters on the podcast today. This is our third time talking. I consider Eric an absolute investing legend.

He was some of the first, some of the largest at the time. Institutional capital. Brave enough to buy crypto. Back before it was an institutional asset class, back before it was popular. Now, last time we checked in with Eric, it was back in 2023. So Bitcoin was in the 20K range at the time, if I remember, and Heath was in the thousands. We were in the midst of Operation Choke Point.

We were under a full frontal assault by Gary Gensler. We were still cleaning up the mess left by the SBF blowup. The institutions had largely left. They were gone. Many had thought they had left for good. We're in a completely different world right now. On bankless, this cycle, this crypto bull cycle, we've called the institutional cycle of crypto. And I wanted to get Eric's thoughts on this institutional cycle, how it would play out.

How does Wall Street actually view crypto in 2025? Why did Larry think change his mind? Who's left on Wall Street to convince and how far will this cycle actually take us, including from a price perspective for Bitcoin and Ether? We talk about Paul Tudor Jones and Ray Dalio, their crypto-convince, conversion, how ETFs fundamentally change crypto's market structure, and why Eric thinks in the wake of the Genius Act, all of Wall Street assets will become tokenized. And I think probably the most bullish thing that he said, the big institutional money isn't even here yet. Eric thinks it'll be

coming over the next five years or so, and they'll be buying our crypto assets at higher prices. He talks about why. This is one of my favorite episodes that we've recorded this year, so please enjoy it. It's a conversation with Eric Peters, and thanks to the sponsors who made it possible. In the wild west of Defi, stability and innovation are everything, which is why you should check out Frax Finance. The protocol revolutionizing stable coins, Defi, and Rolex. The core of Frax Finance is FraxUSD, which is backed by BlackRock's institutional biddle fund. Frax designed FraxUSD for besting class yields across Defi, T-bills, and carry trade returns all in one. Just head to Frax.com, then stake it to earn some of the best yields in DeFi. Want even more?

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Bank of the station, very excited to introduce you once again to Eric Peters. He is the CEO of Coinbase Asset Management. He's also the founder and CIO of One River Asset Management. I think we first met Eric Peters in 2021. That was our first bankless podcast with him. And at the time, he was one of the institutions, one of the few, maybe the first, that had actually entered crypto. So a lot to talk about today, a lot of things to catch up on. Eric Peters, how you doing?

Great, man. It's great to be back. It's good to see you again. Sorry, we're going to miss David today. But, yeah, it's great to see you. Yeah, okay. So for people who don't haven't listened to previous episodes, we did one with you, I think in 2021, another in 2023. Those are different environments, different climates. But you started with the story of you were one of the first institutional buyers of Bitcoin. And also, I think Ether.

And I recall the story you told us where you were trying to find a way to purchase at the time. What was that? $600 million worth of Bitcoin and Ether back in 2020. And you're trying to do this on on the quiet and realizing that as an institution, there was like very little institutional infrastructure to execute this trade. Take us back to that story because I want to contrast that with where we are today. So for people who haven't heard, what, like, what were you doing back in 2020? Why were you an institution actually bold enough to enter crypto? What the heck were you thinking? Yeah. So that was a really fun time. And it seems quaint, right? Like $600 million doesn't seem like that much money anymore, which is part of the story of crypto as well. It's just, you know, money illusion.

over time, money becomes worth less. Not worthless, but worth less. Yeah, so at the time, you know, we'd gotten through COVID, right? And I was running a macro firm called One River. Still am, in addition to Coinbase Asset Management. And we were searching around for interesting expressions for this monetary debasement theme that we saw in folding. Government, you know, borrowing insanely large amounts of money, essentially printing it.

And the question was, what were some of the ways that you could profit from that or just protect your wealth? And one of our largest clients, actually, UK clients, all public record. Their CIO's fellow Henry Maxi, true iconoclastic. Wait, Philip Henry Maxi? His last name is Maxi. His name is Henry Maxi. Yeah. Okay.

Well, that's fitting. Actually, that's so funny. I'd never even thought about that. We bought a lot more Bitcoin than Eats. So yeah, it's a good. Makes sense. So, yeah, so Henry is a client, and they ultimately made the plunge and just said, look, this is, this is going to be, this is going to be a really highly convex way to play this theme. So then the question was, well, how do you do it?

And there really, there were very few options, you know, there were some crypto financial firms, you know, great run by great people, great firms, but kind of not, not institutional in the classic sense. and we'd always done bespoke things together. And so we just set out to figure out how to make it happen and do it really quietly. Because at the time, and this is with Bitcoin at, you know, 15,000. And with E-s that, you know, we were buying around 400 or something like that. Oh, my God. Yeah. And there just wasn't that much volume.

So, like, we ended up working exclusively with Coinbase. We had a project called Project Acorn. and there were probably seven people within the whole firm that knew what we're doing. And I actually didn't even tell them the full amount that we were doing. I said, we're making some purchases. And I think they thought we were buying 50 million bucks, which was a lot. And every time we kept wiring more and more money. We were like, okay, well, now there's another hundred coming.

They're like, whoa, you know. But, yeah, that was a really exciting time. And wow, have we come a long way since then. Just in terms of infrastructure, in terms of trade size. Yeah. Just the ability to execute. And you guys were one of the first institutions to kind of like enter in this way, I believe. Now it's like, that's why I want to get to this cycle a little bit more because it seems

like this cycle of crypto is being defined by the institution. But going back to that, you know, $600 million execution Bitcoin, right? And that was maybe Bitcoin at 15K or something. So maybe you like 5x that or 6x that. And, you know, what's the equivalent of, say, a $5 billion entry into Bitcoin? Is that fairly easy to do today if you kind of like, you know, five to 10x the size compared to, you know, doing that back in 2020? Is the infrastructure, institutional infrastructure now set up to execute in that type of size? Or is that still kind of like a big amount of money?

It's a big amount of money, but like one of your boys just sold $8 billion worth, right? Yeah. So. That was a galaxy thing, right? Is that what you're referring to? Yeah. supposedly. This is probably an early Bitcoin type investor.

We don't know who this is. They did $8 billion in trade execution over the last couple of weeks of Bitcoin, I believe, right? Through Galaxy. And that sent waves into the market. Come on. Well, you know, we can't disclose these types of things. Of course.

But yeah. So, you know, you're starting to see really, you know, really large sums, trade hands without moving markets dramatically. You know, we're swinging around 5% or 7% or 3%. But yeah, I think the depth and liquidity this market now is, it's pretty remarkable. We really didn't move the market. I did that whole execution. I was working with the Coinbase team, I mean, literally around the clock using all their latest algos and all these things are more advanced now than they were back then, of course.

but they had clearly the best institutional type desk back then, and I think still do. But I mean, that took us five days to do it without moving the market 24-7. And now you could, you know, you could do that trade in a heartbeat. You could do an OTC trade and really not move the market materially. So that's one of the ways that things have changed are the last five years, is deeper liquidity, you know, ability to execute on major volume, Obviously, price has been a big change. I want to go through some of the other changes that you've seen over the last five years. It strikes me that back in 2020, what you were doing as kind of an institution,

a respected individual asset manager from Greenwich, Connecticut. And I said the name right this time, Eric. So we got it. We understand Tradify now a bit more in crypto. Okay, so that was career risk at the time. It strikes me for at least a lot of asset managers felt like buying this. this dark, money, sketchy internet thing called Bitcoin was career risk. Now you fast forward to 2025.

We've got Larry Fink talking about crypto, tokenization, Bitcoin ETFs. It feels very much like crypto has invaded Wall Street. And I'm not going to say it's become consensus, but it has certainly become accepted. What's happened over the last five years to move the dial so much, on that. Can you just describe what it's looked like from the belly of the beast? That's a really good question. The question of why is a really good question. I think we could probably spend a lot of time on that. I think I think BlackRock's entrance was a big deal.

And look, Larry Fink, if you think about his career, I mean, what an impressive entrepreneur. He took that firm and he really disrupted the mutual fund industry in just a massive way. made his fortune by doing that. Most people probably his age with the type of wealth that he's created, they probably, I want to say we've gotten fat and lazy, but they probably would have declared victory and gone home. And I think he rightly saw this technology as something that could potentially disrupt the ETF industry and made the fateful decision to just to lean into it.

And so I think certainly he's not the only one who deserves that credit. I think there were, you know, there were all sorts of luminaries in our industry in Tradfai finance who had similar views. I mean, Jamie Diamond certainly didn't, at least not outwardly. But, you know, Ray Dalio, who I have a tremendous amount of respect for, you know, came out fairly early and talked about that. You know, he is kind of a North Star for a lot of the large institutions. investors out there.

And when, you know, he says, look, something like this likely deserves a place in a portfolio that matters. Paul Jones is enormously respected throughout our industry. And, you know, and there certainly are others. No need to go through the whole list. But, you know, you just, you started to see people who I think are very savvy investors who saw this technology platform is likely being an important part of the foundation for financial infrastructure.

And if that was the case, it was like, well, stuff will probably get built on top of these things. And kind of like us, we looked at it and said, people really do not understand this technology. They kind of don't understand that you actually can store it securely. They don't understand that it's used for all sorts of things that are not drug dealing and all that. Like so many of the misconceptions that were rampant five years ago, if you look at, if you did real work on them, you're like, this is all BS, or most of it is. And you couldn't, it didn't take a genius to envision a future where it became more important. And then, and so you're like, okay, well, if there's something substantive to this and hardly anyone owns it, then the price is

probably going to be higher tomorrow relative to today. And so that, you know, that just draws financial players into, you know, into investments. And so I really think that's what's happened broadly. So you really think it's been a matter of, um, you just, hearts and minds have changed basically around this asset class and in some of these key opinion leaders, let's call it the Larry Fanks, the Paul Tudor Jones of the world, these have been sort of their hearts and minds have kind of changed. They've seen the investment potential. To what extent, I guess, Eric, do you think it's also because Wall Street now has something to sell, right? So like, let's take another kind of, maybe cynical take on it. It's not that cynical.

It's just kind of a profit motive, incentive-based take, which is, well, I mean, Larry Fink and BlackRock, they're going to change bullish now that they have an ETF to actually sell because then they can collect fees on that. Maybe that's a simple explainer to the story of why TradFi is bullish because they can tokenize things and they can launch treasury companies and they now have ETFs. To what extent is that an explainer? It is an explainer, but I think it's a good explainer. There's nothing to be shamed about there because I think there are a lot of things that you could, that you could quote unquote, do in the world, but it doesn't mean that they make sense to do. And I think if the traditional financial players didn't look at blockchain technology and

recognize that it could be, it could allow the financial system to transact faster and cheaper, potentially far more transparently, more securely, if they didn't see that as the underlying justification for doing something, then it wouldn't matter. But I think what is evident with people who have spent time looking at these technologies, what is evident is that if they get adopted at scale, they will make financial transactions faster, cheaper, more secure, more transparent. And everyone has a vested stake in that. Some of the reasons that we have had large financial crises have been because financial

transactions haven't been able to happen fast enough. Some of them have been because there's been a lack of transparency. 2008, there were all sorts of problems of over leverage, but one of the largest problems that compounded some of the more fundamental problems of just kind of over leverage and overvaluation was that there was so little transparency that if you faced, if you faced your counterparty, you didn't know if they actually were solving or bankrupt. You had no idea it was on their balance sheet. In fact, many of the companies themselves didn't even know,

really what was on their own balance sheet. And so blockchain technology, crypto can solve all these problems. So I think that the foundation is actually solid, which is why TradFi and people who've looked at this have been able to envision a future. Or if you look at like myself, 10 years hence, five years hence, and you go, this is going to be used everywhere. This is, again, the people who don't see it, they're just, it doesn't matter. Like, eventually they'll see it And there'll be the guys that pay more for the things that we're building are buying right now. So that's great. You know, not everyone has to see it all at once.

But that's what creates a, you know, a bull market and pulls people in. So would you say at this point in TradFi in Wall Street, crypto is now consensus? And maybe there's a way to pull that apart because there are different pieces of crypto, different use cases. Of course, you have the store of value use case, you know, something like a Bitcoin and many would argue, Ether kind of fits that as well. And then you also have, you know, stable coins, you have tokenization, and different subsets may or may, or defy, different subsets may or may

not be consensus versus contrarian. But on a whole, is it kind of broadly accepted that crypto's here to stay, it's going to be a big deal, and we have to adapt our financial firms to fit this accordingly. We have to have a crypto strategy. Is that now a consensus? I think that with quite a few people at large financial firms, it is, they would say it's obvious. I don't know that it's a, I don't know that it's fully a consensus. I think that one of the, one of the great things about crypto markets and, and also it's somewhat frustrating, is that, and Jay Clayton, who was, was one of our advisors, he was the one who really helped me see this. He was the former SEC chair before he joined us. And he said, crypto is the first financial innovation

that started basically on Main Street. It did not start on Wall Street. And the consequence of, which is a really simple statement, but I think actually quite profound. So if you think of all the frustrations and the misunderstandings, and quite frankly, a lot of the fraud and the bad actors that have really harmed this industry or at least set us back, it won't do lasting harm, but the San Bank of the world certainly set us back.

Yes. But if you look at kind of all of the things that have happened that the traditional financial players have just resented or pushed back on, I think it's because it started with, it started outside of their industry. So it was never regulated out of the start. Like if you think about mortgage bonds or CDOs or all sorts of derivatives or swaps, all of these things started within a financial industry. And this whole, you know, crypto started elsewhere. And as a result, we've just had a very, we've had a very different path. And the consequence of that is that most of the, most of the older people who have been at these financial firms that naturally are the most senior are probably the most conservative in general. They've just stayed away from crypto, but now they've missed this massive move.

And it's hard for people when they misunderstand something and miss something, and particularly when they're very successful people. it's hard for them to just be like, you know what, I was wrong. I moved on. Like, I've been wrong so many times in my life and career that doesn't really bother me that much. And you'll see the same thing with guys like Paul Jones. Like people who can flip, they can change their opinion three times in a day. Those are the, those are like that category of people are the ones that have really gotten on board. But these, these, you know, bankers that don't usually don't have to admit mistakes and things like that, it's been really hard for them to get on board. And yet, I think an increasing number of them are saying things to me like, yeah, obviously this is the future, but I still, you know,

my board's still not on board or, you know, maybe they invested in Celsius and I lost some money or, you know, whatever. There's still excuses for them to not fully embrace it right now, but it is so obviously coming. You said something there that I want to just drill into and just get your kind of, because one of the benefits I always enjoy talking to you, Eric, is you have this wealth of experience, just investing experience, right? But you said something like Paul Jones can kind of change his opinion three times in a day. Okay, so the importance of being able to change your opinion, look at your blind spots and say, okay, here I was wrong. That's important. And that caused many in traditional finance to miss out on crypto. How do you balance that? The idea that you want to

evaluate things, reevaluate things, change your opinion multiple times with the other thing that seems important around crypto or any investing in general, any asset class, which is conviction. I have trouble wrestling with this in my own head because sometimes I want to change my opinion on things. And yet sometimes I like, I reevaluate it so much that I can almost sigh up myself into selling assets that I truly do believe in just because a whole bunch of people don't. So how do you balance kind of the conviction element as an investor and actually being able to open your mind to new information and like not be a bag holder of things that are like obviously never, or maybe it's not obvious, are never going to return? How do you balance these things?

I guess that's what I'm asking. That's the art of investing and trading. And investors generally have a longer time horizon than traders. There are some people who are pretty good at both. But oftentimes you'll find that people who are really good at one are just not very good at the other. And really successful ones will admit that. I'd be like, I'm actually, you know, someone I'm going to say,

I'm actually a really good investor. I am a terrible trader. Like if you look at my decisions to get in or out of something, it is always at the low or it's always at the high. And if I change my investment thesis, I'm getting out the wrong time. And so I don't trust myself and therefore I kind of don't trade. But it's a, it's a very, very hard thing to do. I mean, look at you.

You, I mean, I wouldn't call you the most objective person in the world when it comes to East, right? Right. Not at all. Right? So you, you have incredibly high conviction. I've lived the Eith journey, you know, I was the, you were buying. before I was, but like I was a buyer at 400. I lived lived it all the way up to 4,800 and all the way down to,

you know, very low levels, I don't know, 1,500 or whatever. And, you know, here we are back again. And I think we probably go quite a bit higher. But I think it's a lot of the people who who can kind of do both credibly, I think do a good job of, of identifying the time horizon that they're focused on. Because it's it, much of it is about time horizon. And you can be a long term. bull on any asset, crypto assets, Bitcoin, Ethereum, whatever it may be. And you can be bearish in the short run. My wife jokes with me all the time. Like, I've called Eith a dog for so long. It has been, but like, but I, but by the way, it hasn't gotten me bearish on Heath over the long term because we're building things on Eath. Like I, you know, we can talk about

that later perhaps. But one of the things it was. exciting for me to sell One River Digital to Coinbase is that the things that we were building that were financial infrastructure, I thought would have a much higher probability of seeing the light of day and really scaling across the industry if we were part of the 800-pound gorilla. And that's actually starting to play out right now. So I've lived the journey of like building things on ETH for to five years at this stage. And now you're starting to see it's like, okay, the whole financial system is going to move, I believe, to Eath and, you know, as just a foundational layer. And so if you have that conviction and you kind of see things unfold,

you could, it's fine to be like, this thing is such a dog. And it was like everyone hates it. But you, you kind of knew that, or at least I did, that there is a future that's out. maybe it was like six months, maybe it's three months, maybe it's a year, two years where where things are being built on this are going to start to get announced and Wall Street's going to come to it. And then you're like, all right, well, I don't know what your valuation model is, but if people start really using this across the financial system, it's going to be, the price is going to be higher than it is today, particularly when everyone's so bearer. So, you know, you have to kind of weigh that your time horizon with some of the near-term frustrations you have,

and you have to be careful that you don't get yourself too over-levered because then, number one, you can get stopped out, but probably even more importantly, it throws your mindset off. Like if you're just, if you can hold out in your mind this longer term thesis, you can ride out those periods

where it goes against you. It's almost in a weird, it's like almost sick in a way, but it's almost fun because you just see people, like you see the people who are getting all bared up and they're like, this thing's going to zero or whatever. you know, just kind of stupid statements.

And they're like, okay, actually, this is, it's going to be fun to watch it on the other way. But you can't do that if you're not thinking objectively. And so, and if you oversize something or you're over leverage, then you won't. There will be a, markets do a great job of finding your pain thresholds. And so over leverage makes them closer to at the money, if that makes sense. It's so interesting, right? Because like I definitely have the longer term holder kind of orientation to me, investor, not a trader. And there's a unique type of pain that one feels, like the high conviction

hold pain, when the thesis that you think is not working out and everyone hates it and the price continues to dump and dump and dump. And I found at least for myself, maybe this is a bit sadistic here, or maybe it's an attribute of a high conviction holder that you have to have, you start to almost enjoy a little bit of the pain. You know what I mean? You're just like, ah, I know that feeling. I know that pain. Everyone else is wrong. You know, and I'm still going to hold because I'm using the asset, because I see the roadmap, because I see the potential.

And then the thing about high conviction holding is you, the worst mistakes I've made is getting out of the market because I've been doubtful. And then suddenly it hits and there's this step function change. And you don't have time to reenter. The high conviction holder doesn't have to worry about days where, you know, we get a double digit pump because they're always in the market. And that's a piece of it. Maybe getting back to Tradfai here for a second.

So you mentioned maybe some of the reason Tradfai didn't see crypto in the early days was this not invented here syndrome. I'm also wondering, because we've talked about this before in the podcast, was there also another element of it's been a long, long time since Tradfai last thought about base money? Like the concept of money. I mean, I went to business school. I did that whole training.

They teach you nothing about kind of like base money. The memetic side of what money actually is, it's all kind of assumed that we're in a dollar world, dollar-based system, and maybe there used to be a gold standard, but now we've evolved, and humanity has evolved, and now we're on the dollar, and they don't teach any of that stuff, I guess. So to what extent do you think the story of money

has had to permeate into TradFa, and they've had to reevaluate their assumptions and think about this? Maybe that's a reason they were partially blind for the first decade of this whole crypto thing. That's a really interesting way of looking at it. I think that there's probably truth in that. It's a little hard for me to distance myself from the industry in the sense that I've always thought about money. It's just been really interesting to me, not, you know, not money because I just love money for for months.

But just like the whole, the nature of like, what does it really mean? So, you know, I've read a lot of books about it and have, just kind of marveled at it. I think it's just because it's this, it's a really, the more time you think about it, it's like this really odd concept. It's just this collective faith in something that kind of doesn't mean anything.

And yet you look around the world and people exchange their life. Like literally, I mean, lawyers are the worst with that. Like, you're literally saying, how much money do I want to make in my life? This is how many billable hours I have, which is. And think about what you're,

spending. You're spending what, time with your kids, you know, things you could be doing elsewhere. You're spending units of your life, basically. You're spending your time, the most valuable thing you have in pursuit of this thing. Yeah. And then you can think about, you can think about money as this, it's almost a battery. It stores time. It stores time. Because, right, if you have, if you have a lot of it, if you accumulate it a lot of it, if you invest well and you compound it, then it equals time that you would have to spend making it or time that you didn't spend with your family or whatever it is that you value, you know, to do with your time. And some people value being able to work.

So, but it's, it's a really, it's a really interesting thing. I hadn't thought about that is maybe the reason why broad finance struggled with crypto, probably because I think about money so much. Yeah. What it, what it means. It's fascinating. I mean, it's one of the reasons that I have, I've loved crypto. And it kind of makes sense to me that I would have ended up being heavily involved here.

That's why I feel like Eric, like Ray Dalio was a good win onto the crypto side because Ray Dalio, from everything I've read from him, he is a traditional investor who deeply thinks about the subject of money. You know, what is, what is M1, what is M2? And these kind of cycles of how that switches and can become. you know, kind of switch back from a Fiat-based money system to a commodity money system. And so at some level, he'd always just been like, oh, gold is the thing. And now to see him start talking about crypto on the crypto train, it just feels like it fits

perfectly. Yeah. The other thing about money, though, you know, it doesn't, you don't have these big monetary shifts that happen frequently. And they seem to take time and then they accelerate and then they can happen really fast. Do they get it now, do you think? Do they get what this whole crypto thing is? is.

You know, it's not just like, because there was a time where we thought TradFi was getting it. This is back in like 2016, 20, it was like, but it was blockchain, not Bitcoin type era. And I was like, oh, Tradify is getting entirely wrong. They think this thing is just a database technology or something or it's an open ledger technology. It's far deeper than that. Do they now understand it in this kind of second wave of institutional adoption here? I think most people in TradFi are not thinking about crypto as money. I think that they're, I think one of the reasons that TradFi is finally wrapped there or begun to wrap their heads around it while you're seeing more and more interest in infrastructure like Circle being an infrastructure play, Coinbase being an infrastructure play, is that they're seeing, they're seeing stablecoin as being this killer app that is, you know, maybe it's a different version of like it's, it's blockchain versus, you know, Bitcoin.

And they're, I don't, I don't think that people in Tradfai think that the Bitcoin is going to take over the dollar or going to be the next payment system. I think they're just looking at it and like, okay, this is, this technology is faster, cheaper, more secure, more transparent. You can have programmable money. It's going to be dollar based or it's going to be R&B based or it's going to be Eurobased or it's going to be whatever, you know, whatever the sovereign currency is. And I think that's how people wrap their heads around it. There's just a very, very small portion of tradfied people who think Bitcoin's going to take over the world, for instance. And I think that that's healthy, incidentally, for this whole industry because at the, like, when I first saw Bitcoin, I actually, I actually thought it was way too big a threat for. I remember you saying this back when we first talked.

For the U.S. or for whatever sovereign system where one of the things that governments accumulate is power and they rarely, rarely shed it unless they're forced to. And so one of the great powers that they have is senior edge being able to essentially create money and for free, more or less. So it was like, how will they let something like this actually work? It's way too powerful an idea. And there was only a very narrow path that allowed. I think Bitcoin to break through.

But I still think that they have the tools to prevent Bitcoin from just taking over the dollar. And so now that like this technology, the industry, the smart people, then have kind of found that path for really wide integration across the financial system, which is dollar stable coin. And now that we have the Genius Act and Dollar Stablecoin is actually doing more transactions to say MasterCard or Visa, which is an amazing. statement because what is it doing? It's just all trading within this crypto economy. But now, like, imagine what's going to happen, which is that now that we have clarity around dollar stable coin, the question is, well, what will what will Trad 5 find to allow those dollar

stable coins to buy other than just crypto? And the answer is, and these are the things that we've been working on, you know, it's going to be bonds, it's going to be stocks, it's going to be all It's commodities, all sorts of, everything will get tokenized now and be, I shouldn't even say tokenized. We like to talk about is issued in digitally native form because we don't need to have two parallel. We don't need to have the old kind of paper database system that then has just a token attached to it. And so the infrastructure that we've been working on for four years is, you know, allows the

digitally native issuance of these trad-fi investments. That's what's all coming. And I think that's what's going to be built on on Ethereum. And that's super exciting. And you'll probably create global markets that will have different regulatory, you know, regimes that sit on top of them. And there'll be all sorts of things that have to be built to stitch together a global market. But you're now going to have a really consistent technology that's going to connect global

markets. And so I think when TradFi players are getting excited about this, it's not because Bitcoin is going to take over the dollar. It's because of that whole latter thing that I just described. So back, I do recall back in early days of talking about this, you did always see a risk, a threat of basically U.S. government or some government power squashing this whole crypto thing before it, you know, strangle it in the crib, that kind of thing, right? Do you think we're fully on the other side of that, right? So it does seem that the threat is no longer to the dollar. That's not just not on the radar. They're fine with some of these crypto assets being alternatives to gold.

because that's not particularly threatening to them at this moment. And then they see the big win, at least the U.S. has seen to see this big win in stable coins, which is just a net new buyer of treasuries, which is a huge win for the U.S. system. All of these things put together, right? Of course, we have the crypto favorable administration at this point in time. We have some good crypto regulation going forward. The Genius Act is the first. Are we over the hump?

Is this now, have we entrenched crypto so much in the global financial system, in particular, maybe the U.S. financial system, that even if there was a hostile administration at some point in the future, it's kind of too big to shut down or fully quash out. Have we fully crossed that hurdle to you? I'm still processing the image of strangling in the crib. That was just really. I think the honest answer is, I don't know.

I mean, and I say that because, At the end of the day, governments have enormous power. And so could I envision a hostile administration that came in and tried to strangle the baby in the group? Well, it wouldn't be a baby any longer. It would be, you know, you'd have to wrestle with a teenager or something like that. Maybe that's the right point. I think that we could have a much more hostile. We could have a much more hostile administration.

I think that we probably, I think this administration is. probably the only realistic hope that crypto has to be able to scale out in the U.S. A infrastructure that is open and permissionless, I sincerely doubt that we're ultimately going to see that out of Europe, certainly not China. Now, the big places that matter, I think that, you know, a lot of the spirit and even ethos of crypto, just being representing freedom, liberty. These are deeply held American values. And I know that I know some people think that some of those values are under threat.

I would say that in the last administration, they were under enormous threat. And so I think we now actually have an administration, which is, you know, kind of almost promoting this and recognizing, which is something that we had said all along when we were advocating with regulators and with policymakers, is that, like, crypto really and kind of private sector dollar stablecoin really represents these core U.S. beliefs and freedom and liberty. And why would we ever want to kind of chase China down this really dark path of, central bank digital currency where you can kind of where you can just turn people off financially. I think it's a very dark world. So wouldn't it be great if the U.S. kind of led and said,

you know what, with freedom and liberty, we're going to kind of promote this financial infrastructure that could effectively get exported throughout the world. Now, other governments could try to shut it down, make things illegal. But at least if they're, if like the most powerful country in the world is pushing this technology for citizens first, but then out into the world, we probably have a lot of influence over that. And that's, you know, in terms of supporting human liberty, if you have no financial liberty, you're screwed. You might think of all the liberty in the world. Like you saw this in Canada with that trucker strike. You know, when you start turning people off financially, you can destroy their lives, their livelihood,

their businesses. I mean, the amount, you don't even have to exert that control directly. Just the threat of it gives government, I think, an unhealthy amount of control. So I think we're really, I think we're moving in a great direction. And this is the opportunity in this administration to roll this out fast. Now, the good news is that the Tradfai players are now racing ahead. You know, the horse has left the stable and everyone's racing and running. And now you're going to see, you know, you're probably going to see companies trying to screw one another and, you know, that if you're a startup company, you're going to have tradfai saying, you know, advocating with regulators.

It's not that let X, Y, or Z company move as fast as they are because the race is really on right now. I think in over the next few years, so much will be accomplished that even a hostile administration can't roll things back to where it was, but they can, you know, governments can always make, you know, make life miserable or, and I should even say that. That's a value judgment. governments can exert enormous amount of control over individuals and industries. I think I love the direction that we're heading right now in this industry. I think it's great.

And I think we'll take a lot of ground over the next few years. And as that gets embedded within TradFi, it'll be really hard to change. We certainly have some tailwinds from government, from the U.S. government, which we've never had in crypto. And in the best of times previously, it's been neutral. But in some of the worst of times, it's actually been massive heads. headwinds. And we didn't talk during this dark period of, you know, 2023, 2024. I think we talked maybe once or something like that back in 2022. What were you thinking during the Operation

Chokepoint era things? And it wasn't just Operation Chokepoint of crypto getting kind of squeezed off from the banks. Of course, it was just a hostile executive branch, let's say, in the wake of San Bankman-Fried and all of these things, we had a very hostile SEC. We had a hostile FDIC, we had a hostile, you know, Treasury Department. All of that has shifted and shifted over the past year. But during 2023, 2024, in those dark days, were you kind of thinking, okay, this crypto thing, like, I'm not even going to put words in your mouth. What were you thinking at that time? The first statement is that, you know, show 0.2.0 is so real. You know, we got acquired by Coinbase and in pretty short order, we were trying to pull on all of our kind of best

relationships across TradFi to help figure out banking relationships and banking lines and all sorts of things that were really being denied. I mean, it was, that was government overreach in such an unethical, undemocratic way that the end of the day, I'm like, I'm a bit of a rage against the machine kind of person. So at my core, I'm like, maybe I'm a little bit too old to come across that way, but I, like, I, it pissed you off. Yeah, like inequity, government overreach, these things, they just, I see red. So, I mean, I guess the biggest thing is I never, I never sold into that.

And I, and I, I just kept building. And I, I felt my level of conviction was that, these technologies were ultimately going to replace traditional financial infrastructure, never wavered, because it's like when in human history have technological innovations just been stopped by politics. They just haven't. Now, you can you can make, you can find situations where maybe not the best technology of that category one. Yeah. but governments have not been able to hold back technological innovation. And so I figured that we would eventually get there.

It could be a really rough road. But career-wise, I've traveled a pretty rough road for a long period of time. And just as someone who's kind of principled about these things is like, we're going to win because the technology is on our side here, it might take longer than we expected. but it's such an obvious play. In other words, like relative to traditional financial infrastructure, building everything ultimately on Ethereum with layer twos and all sorts of things that we don't,

we seldom even know that we'll get built that will, I think be really exciting. Vitalik on your podcast was talking just about, you know, the importance of privacy. Like there are going to be so many things that I think end up getting built on this infrastructure where it's so much more reliable, anti-fragile.

And in a world of AI, I think we have this technology that is going to supply this source of truth, or at least the potential to access, like what is real, what is authentic, what is true. And so when you look at all those things, you're like, okay, so Elizabeth Warren is a nightmare. And to this day, I mean, I know a lot of people in D.C. and I know a lot of theories around, you know,

why the Biden administration was the way they were, why Elizabeth Warren was the way she was. It doesn't really matter at this stage. But 0.2.0 is very real. We got through it, and it'll be harder for that to kind of come back. But, yeah, as I lived through it, I was like, this is, it was, it was in a sick way.

It was like, this is really fascinating because, you know, if you're a lay person, which I am across pretty much every field, You know, you read, you pick up the newspaper and you read about, I don't know, biotech, or you read about what's happening in healthcare. You read about what's happening in defense. It's like you don't really know that much about it. And it's fun to be in something where you're like, okay, I'm right in the middle of it. And I see how government is really being awful here.

And I think there's no kind of freedom loving person anywhere in the world who, if they were subjected to this, wouldn't react. kind of the way that I am. I'm in the middle of it, so now I can see it. And it was a great learning experience. And it allows me to pick up the newspaper and read about other industries and hear about perhaps injustices or regulations that are overbearing and be like, okay, I have more knowledge and insight into that because of what I live through and what we live through. I completely agree with you.

Those are my takeaways as well. And it was surprising to me that the depth of sort of hostile. hostility that the U.S. government, you know, like had for crypto elements of the government during those dark times, but it's also been surprising how fast we've 180ed. And I want to talk about maybe the last 12 months or so. And you tell me, Eric, what is the most significant thing do you think that that's happened on the regulatory government front back to these tailwinds into crypto? We've had the genius bill signed. That was a big deal. We've had any choke point being unchoke pointed. So, you know, crypto companies are no longer being debanked. And even from a

rhetoric perspective, you get talk of, you know, the U.S. being the crypto capital of the world. So we've got all of that side of things. You've got a, what seems to be, a fantastic SEC right now under Paul Atkins and this whole project crypto, you know, with the brains and the intelligence, with Commissioner Hester Purst to actually pull it off where all of these fantastic ideas to tokenize things, It seems like so many good things are happening in the U.S. from a tailwind's perspective. What's the most significant to you? Well, for starters, I have to say, I love Hester. And I haven't even met her.

I just, man, I love her spirit. It's amazing. And I think this new SEC chair and Project Crypto are phenomenal. The notion that we now have room to have kind of a sand. box for innovation, super important. Like how the U.S. hasn't always had that is this kind of stunning to me. In fact, when, so when we started building out our infrastructure, we originally called it one bridge when it was at one river.

And the, so I'll tell you this little story about this because I think it plays into Genius Act and what's happening with Stablecoin. So when we first entered crypto, it was a macro trade, as I described earlier. And then I kind of like any macro trade, when you have a big position on, you pay a lot more attention to it. And so really kind of dove into the technology and said, okay, this is the future. And so what does that future look like? And I looked at all of the defy applications that had been built. And I felt like they probably wouldn't be what the future looked like.

They were really, and it was really cool technology, you know, exchange technology, lending technology. But there were a host of reasons that I thought it wouldn't really scale into the bigger markets. And so we just said, let's look at kind of what has been built and let's build out the ability to issue digitally native securities that would be compliant that we felt like regulators would accept. And so we started that out. So it was called one bridge, kind of.

bridging crypto and tradfi. And then it really kind of started growing. We had brought, as I mentioned, Jay Clayton, the former SAC chair on our board, Kevin Hassett, who's now part of the Trump administration, was on our board as well. And we really looked at it. And my instinct was, let's figure out how to create digitally native, really complex securities. And Jay was like, no, this is just, or actually what we did is we laid out the array of things that we could do. Really complex all the way to really simple, which is T-bills. And he's like, I thought we should go complex. And he's like, no, 100% T-pills.

Sounds like, they're still boring. I mean, there's these short-term discount notes. He's like, that's exactly what you need because the first thing needs to happen is we need to get clarity on stable coin so that we understand what digital dollars are, how they're regulated, how they kind of become part of the financial system. And then what you need to do is you need to figure out, well, how are they used to integrate with other traditional financial products? And you're going to start at the simplest, kind of highest velocity instruments. And then as you get confident, as the financial system

gets confidence with that and you see the benefits, then you'll move out to these really complex securities. So that's how we started building. And that's how we started building. And that's what we are doing at Coinbase now, which is super exciting. So it's like, how do you bring, how do you bring stocks and bonds really on-chained and all sorts of other financial instruments? And I think Coinbase is going to do that at the right pace, working closely with regulators and policymakers and is really going to do it right. And so it's fun to be part of that. Now, how does the Genius Act fit within that? The Genius Act is really the first most important step.

So Dollar Stablecoin had obviously become this killer app in crypto that had demonstrated that it can process, you know, $50 trillion worth of transactions a year, which is just like an absolutely stunning number. And so it happened without having that regulatory clarity. Now that we have that, this just invites all of traditional finance to say, okay, now we have this foundational, I'm saying an asset, this foundational, you know, currency clarity. And now we can start plugging everything else into it. So that is, in my opinion, by far the biggest thing. Why did that happen? I think it only happened because of the change in administration.

And I think that my personal opinion is that Trump administration felt like they were under siege by many of the same people that the crypto community felt under siege by. And so there was this, there was this alliance in a way that maybe not a formal alliance, but like just kind of a common view that that direction just is not good for the country, is certainly not good for this industry. And so I think this industry got a lot of support from that. And the political system has come around to that. And I think as you're seeing us move toward discussions like I just had there, relative to

Bitcoin or ETH or fart coin or whatever, then I think you really get traditional finance and you get politicians to just get behind it. So that was the Genius Act is super, super important. We always thought it would be. And I'm very proud for the advocacy that the Coinbase has had and that we've had over the years to try to move in the direction that we've ultimately gotten to. So, Eric, I'm wondering as you were talking about that, I'm curious to pick your brain on the roadmap here of how you think this happens with real world assets, maybe like a three

to five year type timeline or what we can get accomplished, you know, up until 2028, right? It seems like we are starting with the more boring assets, which is, and I'm talking in terms of like, quote unquote, real world assets, tokenizing real world assets. We're starting with dollars, right? It's a very simple use case. You have $275 billion or so. They're now on chain. The Secretary of Treasury thinks that's going to grow into the trillions in a few short years.

Okay, so that's happening. Next, most adjacent to that seems to be treasuries. And then maybe we get bonds of some sort or other types of bonds. And then we get into more equities and that sort of thing. Is that basically how it happens and how fast can this happen? I think it will, I think it'll start happening pretty quickly now. And we're, you know, we're in it. So like, if you think about what we, what we were building with one bridge that, you know, went to Project Hamilton, like when we renamed One Bridge, Project Hamilton, went to the Fed, went to the T-Back, the Treasury borrowing advisory committee, we presented everything that we did. This is during the last administration. And we encountered, in multiple meetings,

we encountered staffers and people there who were really intrigued by what we did. And yet it was apparent that we were facing and we were not welcome in the U.S. We actually went and looked globally for what we felt was the most credible regulatory agency or environment to go and build. to offshore because they're like, okay, we'll eventually come back onshore. I was sure of it, but we might have to wait another administration or two. I don't know how long it will be. Wow. But again, you can't stop technology from its assent. Just on that, Eric, was there another jurisdiction that was, you know, are there more friendly jurisdictions than, then I guess, you know, like glass administration, it's probably a low bar, but like what other jurisdictions

are friendly to crypto? We went, we went to UAE. We went to Abu-Babwe. And we entered ADGM, Abu Dhabi Global Markets, which is their kind of regulatory entity. And we had a very common vision for infrastructure should be built on public blockchains. And we, just like Vitalik had said on your recent interview with him, you know, he just said, like, if you, if you concentrate data and the control of data in any type of centralized. authority, you create fragility. And I think our view was that why use this technology if you're just going to kind of centralize it? And if you have the courage, which we felt the U.S. should have had to kind of open it up for,

you know, open software, public blockchain, you can put regulations on top of that. But if you start there, you're ultimately going to have a much more robust financial system. And, you know, AI has made that. even more important because God only knows how these centralized authorities can get hacked. Like, I don't know, how can J.P. Morgan get, how can any of these central nodes in our systems get hacked in the future? If you have everything built in an open way on public blockchain, I think those risks, you know, collapse. And so we had that view. We had written, we had sketched out in a white paper our view for this. We went to Abu Dhabi and they actually had,

they had sketched out something that was really similar. And we compared the papers and they're like, did you read what we wrote? And we had it dated in such a way that they could tell that it wasn't. And so they welcomed us in there. And so we built out, Coinbase is called a Project Diamond. We built out Project Diamond. We have issued and matured 200 discount notes under regulatory supervision. in Abu Dhabi global markets. Wow. And they are, you know, these are, it's really awesome. And I think their view was like, let's use the technology in the way it's intended to use it.

And what Abu Dhabi is trying to do really, at least in my opinion, is build out the Switzerland of this next century where a place where East can meet, can meet West, where you're bringing in new technologies and you're doing things, you know, that that maybe some of the other jurisdictions were reluctant to do, but you're doing them the right way. And so it's been a phenomenal experience for us because, to my knowledge, we're the only platform that has done things under that type of regulatory supervision. And that just means you're like with every one of our issuances and maturities, we're sending weekly reports to them, you know, and they will be excited to work with U.S. regulators, by the way. It's not like one is trying to beat the other. But I think credit to them for being, they were out ahead of any jurisdiction globally, in our opinion. So we were thrilled to work together with them.

But now is it, Eric, is it smooth sailing to bring everything that you've developed in Abu Dhabi or other jurisdictions like back to the U.S.? Do you feel like you have clear regulatory line of sight to go do that now? I think we're an active discussion with at Coinbase, with regulators and policymakers. And the short answer is yes. I think, you know, when you have an SEC chair that is that is, that is, advocating for the things that you just saw, you know, the five, those kind of main five points that he came up with, including Regatory Sandbox, and then you show up and you've built something,

you've built something that works, that scales, that is flexible, that's kind of general purpose technology that can allow for the digitally native issuance of equities and bonds, all sorts of bonds, not just discount notes. So a treasury is a discount note, commercial paper is a discount note, really simple. But then, you know, mortgage bonds, all sorts of different types of tradfai instruments that can be brought on chain through a platform like the one that we built. Yeah, it's exciting from a government and regulatory standpoint. And by the way, like the fact that we've already done it under regulatory supervision is a really big deal. It's just, you know, without any problems, any issues, any flaws, it's great.

So I think there's going to be a lot of acceptance of this. By the way, just as we talk to people about what we've been up to here, there's definitely FOMO in TradFi where people are like, they want to figure out how to do things with us on this type of platform. And there are all sorts of reasons why they want to do it. Some of them for publicity, some of them because it actually, they actually, actually recognize this is going to lower costs in their, you know, in their business model. So I think it will happen actually pretty quickly now. It better happen quickly because who knows,

maybe we get a different administration. So everyone's incentivized to move fast. And I think this administration is, as you can see, is moving very fast. And I do hope, Eric, we have the leadership. Like people like Hester Perth definitely give me hope because she is very deep in crypto. I mean, she just knows. She knows exactly. She knows what she's talking about. She's been in this space for a long time. And what I'm kind of hopeful is that we get a kind of a synthesis between the best of crypto and also the best of tradfai. I was going down the traditional finance track a little bit, looking at some of these treasury companies recently, in particular these eth treasury companies. And that causes you to go navigate SEC filings, right? And it's like there's so much documentation there.

And so what I do is I'll go and I'll download all of the SEC filings. I'll put them into an LLM, you know, and get it to spit out some information for me. And what's fascinating to me is like a lot of these disclosures are pretty useful. Like I'm glad that I know some of the investors and, you know, how they're compensated and, you know, how much of a share and what the fees have been. Like some of this information is very good and some of this information I don't get in the tokenized world. And I wish I did. And yet at the same time, I also see it's like, I mean, there's a time lag in terms of when I receive this data. I have to sort through all of this paperwork.

I look at the legal fees to go list one of these treasury companies on the NASDAQ or on the New York Stock Exchange. And it's tens of millions of dollars, just in documentation and listing fees and investment banker fees and all of this. And I'm like, we could just do this with smart contracts, basically. Right? Like we could file this all digitally and the investor can keep the transparency that they have with existing SEC disclosures, but use the technology and reduce costs of cryptocurrency. I guess what I'm saying is I'm hopeful that we get a best of breed type world of we get disclosures, but we also get like reduced legal fees, smart contracts doing it, digital assets doing it.

And we don't get this world of, oh, now we have like legal paperwork just with a, you know, an IOU on the blockchain. Do you think that this type of world is possible, what I'm describing? And like, what do you think about that? I definitely think so. I think that's where we're going. And I think that the, you know, players that. that are trying to create that digital IOU on the blockchain, I think, you know, I guess good for them for just trying to move quickly.

I think our approach at Coinbase has always been to just try to do things the right way. I say that I recognize we got sued by the ACC at the same time. At the same time, I think that that is why Coinbase is the 800-pound gorilla. I think we've really always tried to do the right thing. And I think the world that you just described, the marriage of what, what crypto and blockchain technologies can offer and what, you know, all the sorts of disclosures and the things that have allowed American capital markets to be the deepest, most liquid in the world. And like, let's not take that for granted. That is an, it's incredibly valuable asset that the U.S. has. people, companies, investors from all over the world, they generally come to U.S.

capital markets to come and meet and, you know, I'm going to say meet in person. I mean, like, if you're a, if you have money and you want to invest, if you need to borrow money and, you know, you're someone who wants to lend, they come to the U.S. capital markets. There's why it's just, it's so dominant. But that requires really great regulatory framework. marks that give people the confidence that the government's not just going to take their money, that if they get screwed in some way, but there's a watchdog that will help resolve that matter and that they've got, you know, they've got good courts where, you know, disagreements can get

litigated. If you don't have all of those things come together and probably five other things that I haven't mentioned, you're, you cannot have deep liquid capital markets like we have. And so I think crypto is just going to, it's not going to do, it's not, I certainly hope that people in our industry, and it's definitely not the case of point. Like, we're not looking to dispense with any of that. I'm just saying that there's a more efficient way of bringing these things together. You shouldn't have to pay tens of millions of dollars to do the type of transaction that you just described. Like, obviously you shouldn't. And I don't think that we will in the future. I think it will, it will, it will, and, you know, the concept of smart contract is just a, It's like magic from a financial structuring perspective. And you can attach all of those disclosures and everything can kind of be saved down into that smart contract or linked to it in ways where maybe it uses less compute. So it's like and storage. So I think that that's the future that we're going to get to.

And I think the other thing is that, yes, there will be certain there will be law firms that aren't thrilled about that. because they're going to make less fees. But when you look at the history of the financial industry, there is no other industry that has spent the amount of money on technology that financial services has. And I know that that might seem odd to people, but it is a fact. And as like Wall Street traditional finance has thrown tech at,

at its industry for many, many decades. And what has happened? It's like the speed of transaction has gone up. The costs have just been in this inexorable decline. Crypto is just the latest technology that is going to, you know, take it all to the next level. So I think it's a much better future for finance. And it'll look like the one that you described. I really do.

I think it'd be amazing. I mean, can you imagine a world where basically, you know, a smaller company or some path to some sort of IPO, a tokenized digital asset type IPO, where instead of contracting with these lawyers, you basically, you have an AI, right, that just generates, you define exactly what you want, and it generates basically the smart contract code, legal code, to go execute this on chain, that type of thing. I mean, maybe the lawyers won't like it, but why are we allocating our society's cost to all of these legal fees anyway? There's more efficient uses for this. I want to talk about the marriage of, you know, two products that have been very successful,

it seems like between tradfine crypto, and that is the ETF. So January, 2024, we got the Bitcoin ETF. And that was amazing. Ben, I believe, the most successful BlackRock ETF ever. I think some of the volumes around this have blown minds. Not too long after that, we actually got an Ethereum ETF, was not expecting that that would happen. And that happened under the Gensler regime. I have no idea what type of phone call was given to him to have the SEC change their mind there, but we got the Ethereum ETF in the summer of 2024. These ETF products are now consuming a tremendous amount of both Bitcoin and Ether supply. I think Bitcoin is something like 6%. Ether is going right up there too. It's like 4 or 5% at the time we're recording.

So can you talk about the transformation that crypto-native ETFs have actually had in traditional finance markets? So some have said that, well, this actually dampens volatility across Bitcoin. because now we have institutional, large institutional purchases, and since the Bitcoin ETFs have come out, we've seen less volatility in Bitcoin as an asset itself. Just these large U.S. institutional capital flows, what effect is that having on the crypto markets and what effect are the ETFs having on traditional finance?

Incredibly successful products, which is ironic because they kind of fly in the face of crypto ethos from a custody perspective. at centralization perspective. And they're huge. Yeah, I think Bitcoin is 7% now, the Bitcoin UTS. It's just they're massive numbers. They naturally, as you draw more players into a market, in general, the volatility will decline.

Ironically, at times, as you bring leverage into market, volatility can decline as well until something goes wrong, in which case the volatility explodes. So there, but those, the dynamics that you described, I think are in play right now. I still, from my vantage point, I do not think institutions are here in size at all. So, you know, the definition of institution is, you know, can vary quite a bit. So I think when I think of institution, I think of the large pension plans, the large endowments. insurance companies, sovereign wealth funds.

And there, some of those flows have started for sure. I think when a lot of other people talk about institutions, they talk about hedge funds, you know, large investment funds of different sorts, corporates. So the type of institution that I have spent my career with mostly have still like they haven't even scratched the surface. Really? Oh, not at all.

Not at all. No, as I said, these are the guys that have just gotten, they kind of got left behind. And it was pretty much a nightmare. I mean, the amount of brain damage that I think has happened across the institutional landscape is severe. So it's like in 2021, there were multiple, like largest institutions across the world, there were digital asset working groups that were, you. had anywhere from like five to 15 people on them, they were, you know, exploring whether to get involved, how to get involved. And then it was like, okay, we're going to get involved. But now we have

to change our investment policy statement, our asset allocation. And in a lot of cases, they needed approval by the internal board and then also the external board. And then you had this big bear market. And then you had FTCS and you had all these, you know, all these issues. And you drove Bitcoin from, you know, all the way down to back down to 15,000, basically. And they stopped all efforts. And they just stopped, you know, they're like, there were so many different controversies and problems and the SEC was, you know, suing everyone. And some of them had policies that they just couldn't, you know, they couldn't deal with

any group that was being sued. And they just, they kind of shut down. And the people who had formed the digital asset working groups, it was kind of their part-time job because they didn't get hired to do that. And so they just went back to what they were doing. And then, you know, and then obviously crypto's back over 100,000 or is at new highs, you know, up over 100,000.

And it happens so fast that they didn't get the position on. So it's like if you're a, if you're a professional investor, which all of these people are, and you put all this work in the digital asset working group, and then you didn't buy the, And you said, this is something that we really want to do, even if it's just, you know, a starting position. And then you got a whatever it was, you know, 70% decline. And you bought nothing.

And then it's back to new highs. There's a lot of brain damage there. Yeah. It's really hard to be like, okay, you know, now we're going to let's crank up the digital asset working group again. So I think, I think what's happened is it's not illogical. what's happened is the first step that they're trying to make is to say, well, we don't have to buy the coins themselves. Let's invest in the infrastructure. And so that's one of the reasons I think that you see something like a Circle IPO that goes absolutely bananas.

You've got these large pools of capital that look around and say, well, God, am I really going to buy, you know, Bitcoin at $100,000 or $110 or $115 or $120. And even if it goes back to 85, it's like, they can't, they just can't, they haven't been able to do it. But they can go out and buy a stock. They, you know, and, and so that's the type of thing that I think you're seeing. They've put money into VCs, but they haven't really come in. So I think that they, you know, that they will. But this, to me, this is exciting. It's like, this is.

That is exciting. You want to market where you're, where you can look out a couple years and say, yeah, I know who's going to be buying this stuff from me. And, you know, in, in a few years time. at what I think will be substantially higher prices. You want to know who that is. If the answer is you don't really know, you should probably be thinking about selling right now, you know.

But there are plenty of people who I think will be buying at higher prices. But they'll first make bigger and bigger investments in infrastructure. And maybe in the end, maybe they won't hold huge amounts of these tokens. I think that they, at least some of them well. And it's, it is possible that crypto, to a degree, becomes part of some new monetary standard, not that Bitcoin takes over the dollar, but that it's possible, you know, you see the U.S. talking about a strategic digital asset or Bitcoin reserve, and there certainly are countries around the world in the Middle East who've made

large investments that are probably bigger than the ones that they've disclosed. And so it's possible that there even do become some monetary standards that are at least in part backed by crypto, just like they might be backed by gold or other commodities. And so there could be narratives out there. I think there probably will be narratives that will ultimately suck some of these big players in at higher prices. So you're saying the real institutions, the big, big institutional money is not here. That's like pensions, that's sovereign wealth funds. That's, you know, some of the, like, I guess, biggest capital allocators in the world. And they're actually not here. And it's funny to me that you say they got shaken out by another four-year cycle, right?

Like crypto cycle, boom-bust cycle, because like that's our expected. That's what being in crypto, that's what we expect. And every time it just shakes them out because probably they're not used to that type of a cadence, boom-bust cadence in the traditional markets. But I guess maybe that begs the question, like, how high do you think these crypto assets can actually go? So something like Bitcoin or something like ether. or so, I mean, we're above $2 trillion on Bitcoin right now. And you're saying that's without the big

pensions and sovereign wealth funds and the big institutions entering. We're at above $500 billion or so on ether at the time of recording. Of course, we don't know how the cycles will play out, but what do you think is the ultimate size of this opportunity for those top two crypto-native assets, sort of the quote-unquote store of value type of crypto assets? here. Are we, like, how far are we in that journey? Let me tell a story first and then then get to that. So when I entered this space, I kind of arbitrary in in late 2020, I arbitrarily said this is going to be 10 year trade for me at the time. Now, maybe it won't end up being that. But that was, I was like, I think it's going to take that long for all the misconceptions that

people have about these assets to more or less be answered, stability of storage, you know, use in for nefarious purposes. Like all the things that people just kind of got wrong about these things, you know, why could these go up? Aren't they just, isn't it just technology? Couldn't you create, you know, a million different Bitcoin protocols? And like all these things, it's like, it's going to take 10 years for most people who don't pay much attention to this stuff to finally understand it, and for the infrastructure to be built so that there really are no frictions

from an accessibility standpoint. And I figured, you know, in 10 years, they'll probably be valued like a lot of other assets in the economy, which doesn't mean that it has to go down from there. It's just they'll probably be fully valued. So for instance, U.S. economy's $30 trillion GDP right now, roughly,

gold market cap is $23 trillion. It's big, right? It's like all the gold in the world is at this price worth not a full U.S. economy from an annual GDP perspective. And Bitcoin is $2.3 trillion. So Bitcoin is one-tenth of gold. And then, as you said, ETH is kind of half a trillion-ish. you know, I know you had Tom Lee on recently, and he was talking about, well, you know,

Eth to 100 X from here and be worth. I think it's a 40 trillion guy, yeah. Yeah. So it's like, you know, you think of numbers like that. Is Eith going to be, like, I don't think that's going to happen, honestly. But I think my mind is open to, I try to stay open to everything. And then just think in probabilistic terms. So the story, so I think we're kind of halfway through my 10 year.

that original. So you still like that 10 year. I'm kind of sticking to that. I think that it's playing out roughly how I hoped. And now we have the stable coin legislation. We talked about how like that leads to all these next steps. I think that it's playing out that way. And yet so I was speaking with someone who, you know,

close kind of colleague friend who essentially leads investments for one of the largest pension plans in it's not a pension plan it's a it's a good basically kind of a 401k money it's in a foreign country okay in kind of Asia Pacific it's one of the largest in the world and so their underlying clients are pensioners in their country and this guy is a very forward looking investor he's been invested in crypto for years he finally got an approval this is in the past year finally got an approval to put in a very small allocation to Bitcoin. And they got to a point where the regulators were going to force them to disclose that. Okay. And so they called, they were really worried about, you know, what are our clients,

our pensioners going to think about this. And so they called up and they contracted with a crisis PR firm. And they said, okay, well, this is going to be announced. We're worried that we're going to get influx of people saying, what are you doing with my money? You know, why is it in Bitcoin? This is my retirement savings. So they had everything mapped out. They make the announcement and they do get inundated with calls.

And the calls were, could we, can I put all of my money into that product? Oh, my God. And it wasn't a product. But like they, so the, the reason that I say that is because I think in, I don't think in terms of price per se. Sure. Like, I want to know where relative values are. So the U.S. GDP is 30 trillion. Is Tom right that Heath could be 40 trillion? I don't think so. But I don't know. Maybe US GDP ends up being 100, well, it will someday, you know, 100 trillion because there's a whole bunch of inflation over the next 10 years.

And then maybe ETH at 40 trillion makes sense. I don't know. But I don't really think in terms of those price targets. I think that prices move because they're more buyers than sellers or they're more sellers than buyers. And when I look around the world and I hear a story like the one that I just described, where you have this absolutely massive pension pool and they get inundated with calls because people want more exposure, but they don't have it. That is still a structural friction in the system. Trump just had a, he just signed an executive order that made

crypto essentially eligible for more 401K plans, also private equity and other things. But the point is that I think that we still have a multi-year play where the frictions for buyers to be able to put money into these assets, those frictions are going to decline. And as they decline, I think that more money will flow into them and prices will go higher. and it's a super reflexive, it's a super reflexive market, meaning one of the, this goes back to the nature of money. One of the wild things about crypto to me is that if you look, if you just look at Bitcoin, for instance, like it could be worth anything. There's no, ETH almost the same in the sense that if you have someone on who tells you that they have this great valuation model,

I will tell you just it's I don't I don't believe I don't believe that there is one at this stage. I think there may be in the future as these assets become more integrated across finance. But like there really isn't a good valuation model, which means by the way, that's a blessing and a curse. It means the price could go down a long way and you'd be like, I don't know, Bitcoin of 3000. It made sense not that long ago. Bitcoin at $123,000. Yeah, it makes sense.

It feels a little cheap now that it's trading down. at 115, it feels really cheap at 85. 85, you go back, however many years, seemed really crazy expensive. But there's no real valuation model. Like people try to say, oh, network effects and everything. I think there will be a valuation model at some point. When there really is, I will probably be out of my, you know,

there'll probably be, there's still be all sorts of things to do and trading. But like, we're still in that stage right now where the value could be anything. And so as long as you believe that there are going to be more buyers than some, sellers, which I do. And you have a market that's reflexive that isn't bound by a valuation model. You can't look at Bitcoin at $200,000 and say, it's wildly overvalued. You're like, what valuation metric are using? And you're like, I actually don't have one. So you're like, well, okay, it could be that value. It's fine. I think that the confluence of the different themes right now. So like one of the themes I think is that is going to drive valuation is this

flow of 401K money. I think that. that income inequality is actually a big driver of this because there's so many younger people that don't feel like they can make it. And they have guys like Michael Saylor or Tom Lee talking about 100x and like, hell, man, I could put my money into some, you know, crappy stock index fund and earn, you know, on average 7% a year. Or I could make 100x. Like, I'm going to put a bunch of money in that. So I think like income inequality and some of the frictions between youth and older people that have a lot of money are going to drive flows into this.

I think the use cases are going to obviously drive flows. But AI is another, like, I think we're starting to see this convergence between crypto, which doesn't have great valuation models, and AI, which ignites people's imagination in wild ways. You're seeing this convergence where AI is going to make it so that we don't know what's real and what's unreal. And crypto can help solve that. Like you can,

you'll be able to authenticate video and everything using blockchain. So I think, but I think you'll also see this AI agentic economy where you're going to have AI agents transacting with one another. And they need to move money and do all sorts of financial services between them at light speed, that JP Morgan or these other firms are not going to be able to do. So you're going to, you're seeing this AI theme with this like inequality youth versus versus, you know, young people

theme, this kind of movement of all these baby boomers that are giving money to their younger people. That's kind of kind of drive this, this new technology. So they're like all these different themes that are coming together. I think that over the next five years, you could, you could see, like, sorry, to go back to valuation or price. I think. in terms of probabilities. I think that there's a 25% probability. And by the way, that is,

like for what I'm about to say is like huge of my opinion of something that, you know, that is like the South Sea bubble type move where you get these, these frictions decline, these passive flows increase in into cryptos where there really isn't a supply response.

It's like everything. else that humans have ever invested in, if the price goes up, you create more of it. You don't create more Bitcoin. The only way you get more Bitcoin, I mean, you're creating a little bit, but, but like there's no big supply response. The rate of mining creation is not going up because the price doubles or triples or quadruple. It just doesn't go up. You have to just get people who currently own it to sell it at a higher price. So you could, you could see some type of, you know, massive move. I assigned a 25% probability to that. I think there's a 25% or there's probably 50% probability that say with Bitcoin that we're over the next five years, we're like between

50 to 75,000 and 250,000 and we're just like we swing around. And those are still big numbers. Again, if you kind of compare Bitcoin to US GDP and gold, I And then there's a 25% probability that were kind of lower than that. But it's probably not even a 25% probability over the next five years. I mean, eventually maybe it could get there. I don't know. It would probably be hostile administration. It would be, I don't know, some things really went wrong that we can't foresee,

that I can't foresee right now. But there's always a probability that the thesis is wrong. But like some of the high numbers could be really high. And I think for ETH, I think ETH is more of a trade, by the way. just because the thing about, and that's not a bad thing, by the way, but the higher ETH becomes, the more expensive it is to transact on it, which I think will invite more innovation to increase speed throughput, et cetera, and you will kind of tend to bring that price down.

So it could be more subject to boom, bus. And, you know, Bitcoin, I think is really will become a dominance of value and over time, probably overtakes gold over the very long term. But, you know, next three to five years, I could see some colossal upside if you get this, you know, this real reflexive mad rush in. What do you think about these treasury companies? So you mentioned one of the things is friction sovereign wealth funds, for instance. I was just reading this morning about Norway sovereign wealth fund. And there was a report that they increased their Bitcoin holdings by 80% this year, right? And it's just a very small number. So 80%

increase. But when I looked into it, it was actually Bitcoin holdings were via strategy, micro strategy. They didn't actually hold Bitcoin. They held a Michael Saylor's proxy stock of micro strategy, which demonstrates, I think, the friction case. But we've seen micro strategy, of course, over the last four or five years. Now we've seen these ETH treasury companies popping up. You just mentioned Tom Lee, but there's a slew of them. And they're really like tracking. I mean, I think it's like close to three percent or two to three percent. of all ETH right now in treasury companies, and this is just in the past couple of months.

And these act as kind of shelling points for the narrative as well when you have people like Tom Lee on CNBC saying like, we could 100x here, you know, genie spells stable coins. Stable coins are on Ethereum. ETH, you know, number go up, all of these things. Do you think this is healthy for the market,

unhealthy? Do you worry about it? Do you think it's positive? What's your take on this whole move? I think it's ultimately unhealthy, but it's still early. it's still it's still too early for them to be maturely unhealthy and the reason I think that ultimately unhealthy is well I thought Fatalic's answer when you asked him about that I think it was perfect like I don't know that guy I have a real soft spot for him I he's such an innovator and I think

he's he's just he just calls it as he says it he's like yeah these these companies I guess they're kind of creating something between an option and a derivative of these assets. Then you can just tell the way he answers it. Like he doesn't, that's just not what he's in it for. You know, he's more of a purity guy around what this could do for financial services in society broadly. And so it's like creating derivatives and options on the underlying asset. It's like, why are you doing that, man?

I feel like that that was kind of that was a spirit with which he answered that that question. I'm having spent my career in financial services and around Wall Street, even though I only worked at Wall Street Bank for like five or six years. And I saw enough. You know, I kind of wanted it and need it out. But I think Wall Street has a tendency to take everything and financialize it, leverage it, amplify it, and there are all sorts of tools that are being used with these tertiary companies to do those things now. And they, and by the way, they're working. And, but I think now that you're

seeing this proliferation of them, they'll probably, like anything, like any kind of array of startups in a new category, there'll be some that, that do really well. Microstrategy is clearly the, you know, the dominant one. But it's MNAV was just like at 3.4x at one point. It was 2x, not too long ago. 1.6x right now. I just saw that they, you know, that they, they kind of issued renewed guidance or new guidance on kind of when they'll be issuing equity.

And I get, it feels like the market's doing what it typically does, which is if, if you get an MNAV that's trading above one for any protracted period of time with these companies, where the value of the company is, you know,

well above its underlying holdings, of course, you're going to get financial players that are like, well, hell, I'll do that too. I like free, who doesn't like free money? So I'll do that too. And so I think the market will supply that, just like in dot com, you know, all these companies that made no money were trading at crazy valuations. And so the market, you know, in its infinite wisdom, just created more companies until the value pushed down and then you realized hardly any of them are worth anything and then they collapse. I don't think that same thing. I don't think it's actually the right

proxy for these treasury companies because they actually do do something. They just own the underlying asset. It's not like they have no business. They're kind of leveraged, financialized ways to own these assets. And so I think in time, it's likely that Wall Street ends up creating at least a class of them that embed all sorts of leverage into them. They probably suck a lot of fees out from their investors for the management companies, which I don't think is healthy.

But I don't think they'll destroy the markets. I just think they'll create volatility at some point. and they're not super interesting from my perspective. Like, I wouldn't buy them. I saw that, what was it? The Norwegian sovereign wealth fund, they added a, maybe they doubled their microstripe position. And maybe that's the one that you were talking about.

Yeah, that's what I was talking about. Okay, that's the one you were talking about. Yeah. It's like, they did that. I'm like, I wonder why. I mean, they're very smart investors. Like, why are they paying a premium for underlying? It's probably friction.

It was probably somebody in the, do you think in their hierarchy of the investment committee, whatever, who just... Yeah. And, you know, I sent a note around to, you know, five or six guys that are, that I turn to with a question like that. And no one had a really good answer. It was like, well, maybe it's such a big portion of whatever the index is that they're

tracking, that they're forced to buy it now. Like, it's probably something like that. I don't think that they're, these are smart guys that aren't in the habit of buying things that are multiples of underlying valuations. So, but again, there are all sorts of frictions in finance. Some of them make a lot of sense. Some of them make less sense. I don't think like when the story of crypto is over,

I don't think these companies will feature prominently. I think they'll just be like, you know, something along the edges. So Eric, going back to your 10-year crypto trade, we're five years in. So we got five more years to play out, right? And part of that was as you mentioned, a macro trade basically. And so I'm wondering if you could kind of forecast the next five years of macro. There's all sorts of details we could get in. What's Powell going to do? Blah, blah, blah, blah,

blah. I'm talking about the things that you feel like we can bank on over the next five years that you can bet on. So, like, I don't know if it's debasement, if that's a theme, fiscal dominance, if that's a theme. I don't know what you think about U.S.'s position in the world, but what are the things that you're basically banking on that fuel your crypto investment when it comes to macro over the next five years. Okay. I think some things that you can bank on that we're seeing directionally unfold here that are supportive of crypto.

Because we can talk about macro all day long, but let's talk about the things that I think really will impact crypto. Yeah. I think that you're seeing a convergence between, you're seeing a more transparent and overt convergence between Treasury and Fed. Okay. It's that Ray Dalio thing? Yeah.

It's just, it, it's, I think he's written a lot about it. It's like what you see in much longer cycles. When you have this much debt and the debt, the interest payments on the debt are driven by a policy that the Fed is in charge of, it's the temptation to kind of merge those two entities is extremely high. And I would have said that once the Fed balance sheet got big enough, which it did over the last, you know, 10, 15 years, whether you admitted it or not, the two really were kind of locked at the hip. And I think there's some political tensions

that are going on right now. But I think that those things will converge. I think that that will be good for crypto because what will happen. And I think it's a very logical thing for the government to do. If you and I were running the government, I think we would converge on this policy, which is that we have a lot of debt.

in the world. And so we need to grow the economy really fast and we need to keep interest rates really low. And that is, you know, that's kind of like fiscal dominance, basically. You're basically, the government is saying, look, we have so much debt in the world. We can either default on it, which they're not going to do, or we can kind of inflate it away, inflating it away in a constructive way, which I think is what they're trying to do and probably will pull off, is just running the economy super hot, but then keeping interest rates really low. And so the people who want to hold government debt and they basically don't want to take any risk, they're just like, I want to make sure I get my money back.

Well, it's like, great, you can get your money back, but you're not going to make very much money with it. And maybe you make negative money. Like on a real basis, maybe you lose money, but you don't lose a ton of money. And so it's like it's like taxing the savers. Okay. So I think that that is happening. And as that happens, essentially real interest rates decline, that's great for crypto or it traditionally has been. And I think it will continue to be.

So I think that that's something that you can really bank on. You're seeing that playing out right now with some of the tension between Besson and Powell and Trump. And maybe there's not tension between Besson and Powell, really. Like Besson is a super, super smart guy and operator and knows markets well. And so he like anyone in his seat would say we could just kick this problem to the next administration or we could deal with it. And I think he's really trying to deal with it. Now, I think it comes at a wonderful time in economic history because for the first time really in my, well, in the last 25 years of my career, let's say post post.com and internet, which is a really exciting time for the economy in terms of innovation. Like, AI has the potential to allow productivity in the U.S. economy and globally to the extent that people adopt it, it has the potential to allow that productivity to increase significantly.

And if you do that, if you increase the productivity of the U.S. economy, it allows you to run it at a much higher rate of GDP growth. And if you do that at the same time that you're holding interest rates down, we could be in years, we can be in a place where people are, where there has been essentially debasement of the dollar because you've held interest rates low. And so as a result, you know, the people that have just kind of been in hiding in safe spaces, they have less money than they did before. But you could be in a much better place from debt dynamic perspective. And I actually think that there's a really good chance that that's where we end up. But that AI theme for the reasons we described

earlier, I think that that AI theme will fuel crypto adoption and usage at potentially a wild scale. And I think because AI is this wild new technology, it also ignites people's imaginations. And so when you have, you know, crypto that has no great valuation model attached to it, which means it could be value to anything combined with AI, which will kind of conflate with that theme. I think that that'll be a really powerful thing over the next five years that can really drive these markets. So I think those are those are the big things. I think we'll get widespread adoption. The Genius Act was the first part of that that will continue on. So those will be the big themes. What throws a wrench in this? Like what could go wrong here? It always seems like when we've got it

figured out, you know, like, because everything that you're saying, this is sort of what, you know, we've converged on what I've converged on, right? It's just like, you know, fiscal dominance, continued debasement. You want to have these store value assets. Plus, you get this upside of, you know, AI, all of the tech that's being built in crypto and real world assets, all of this stuff, right? But it just, at some level, it just seems too obvious and too simple. And maybe we're not thinking about enough about what could go wrong.

What could still go wrong? Trump could lose the midterms and you get a real political backlash. That could happen that would. It would be damaging. I don't think it would, I think it would create a material correction, but I don't think it would. I don't think anything's going to derail these markets entirely. To go back to your Vitalik interview,

I think he expressed concern about these treasury companies, which I think, again, is I don't think they're big enough yet for this to be the case, but he was, you know, he was like, look, if you get, if you get them big enough and over leveraged enough in some way that a 30% correction creates a mass liquidation event that gets down to 50 that gets to 70, it gets to 90, then you dent the credibility of the underlying assets. And I think that's true. I don't think that that's not a today problem. But it could be, depending on what happens with these treasury companies, we'll see, could be a problem in two years, three years. You've got to keep an

eye on that. I'll definitely keep an eye on it. Whenever you have a leveraged player that gets big enough, that person will get stopped out. I can assure you. I've never, I've never seen in my career that not be the case. That happened in the VIX ETNs in 2018. I don't know if you remember those things. But yeah, you know, I started in the commodity pit. Anytime there's someone with a big levered position, they get stopped out. So, but that's not a today or tomorrow problem.

So, I mean, there could, you know, I don't think that we're going to have a big wide, wide scale fraud. I think that the industry's cleaned up from that. There could be some type of massive hack as TradFi kind of, kind of gets involved. And if they don't get their security right, I mean, these are bare assets, like there could be problems there.

I think that's a big, I think that's one of the big plays for Coinbase is like, crypto is a service. I mean, Coinbase is the 800 pound gorilla that is going to supply the infrastructure services to traditional finance as these guys all get on board. Some of them maybe JP Morgan or maybe Goldman will build some of their infrastructure.

But I think, you know, Coinbase will be done. in that space, but you could get some lesser players that, you know, try to do things on their own and just mess it up. I think that would harm the industry, you know, big thefts or people feel insecure with their assets. Those are the things that I kind of think about, you know, whenever, like, what really moves markets is fear and greed, is people's imaginations running wild on the upside and but also on the downside. And so, you know, things that destroy people's faith in these underlying assets. So it could be a hack. It could be, you know, something with,

with, you know, encryption that goes wrong due to quantum computing. But like, when we've really looked into that, I don't think that's going to be a real issue. It's like, but it's the type of thing that it could scare people. But I'm not worried about at this stage in the cycle, I'm not worried about like catastrophic downside. Not. I mean, there's downside, of course. There's always like 30% downside in any market. You're crazy if you think there isn't, but I'm not worried about the catastrophic downside right now. Eric, this has been so good. And as we start to close this out, I am curious, for a lot of listeners, you've mentioned Coinbase throughout this episode. You've also mentioned One River. You're still running One River asset management as well, but it was also acquired

by Coinbase, I think back in 2023. This is not the Coinbase kind of maybe exchange that everyone's thinking of it. It still is part of Coinbase, but it's also its own separate thing. And I'm wondering if you can kind of describe what your side of Coinbase is. So what is Coinbase asset management? What are you guys doing over there? Yeah. So thanks for asking that, by the way. But yeah, so I started One River. We created One River Digital as a subsidiary. Coinbase acquired that and left me running both firms. And the kind of the industrial logic behind that was we all agree that Tradfying Crypto are going to converge and having someone in my seat who can kind of speak both languages, who's out in front of many of the largest institutional

investors in the world all the time speaking with them. I've been able to be a good translator and an educator, quite frankly, particularly in the kind of the dark, bare market crypto winter. When people weren't doing a whole lot, it's like these big players were not going to call up some crypto-native person and say, hey, could you come in and explain how the blockchain works? But I would be there and they, and, you know, we'd be talking about macro and be like, okay, I'd say 30% of every conversation was about crypto and where this is leading. And so hopefully we, you know, we've done collectively our service as a firm to, you know, help people understand that.

So Coinbase acquired One River Digital and that turned into Coinbase asset management. So we're wholly owned by Coinbase. Got it. There are all sorts of information barriers because we are on asset management. We don't get to see what people are doing on the exchange or anything. Very thick barriers. We're an SEC registered investment advisor. Nice.

And where we see the greatest opportunity right now, like we've built out indices. We're doing some things in defy with capital. The big opportunity that we see right now is that there are over $2 trillion of Bitcoin that people hold in the world. And most of that Bitcoin earns, it's incredible collateral, most of it earns. most of it earns no return, you know, no, no yield. And so we've, we've been developing quite secure and interesting ways to help our clients who are sitting on a lot of Bitcoin earn an incremental yield that can be three, five,

you know, eight percent depending on the amount of risk tolerance they have, could be even more than that. And Eric, when people hear that, right, so some people in crypto were burned by that whole, you know, 2022 thing, where it was like, you know, block phi and sell something. and they promised yield on Bitcoin and other assets. And of course, it turned out that they didn't actually have the assets. They were doing risky things. They got blown out on the DBDC trade and all of that.

Are you guys doing things differently? Totally. And I would tell you that we, I think one of the reasons that Coinbase acquired us when they decided to just go in, all in on asset management is we, you know, we didn't touch FTX Celsius block. None of these. Like we literally are our yield products back then. returned 100% of their capital because we were fully collateralized.

And it's just, you know, I've made my career really capitalizing some great opportunities, but also being a very good risk manager. And so we have some of the smartest investors in the world that asked the same question that you just did. And we walk them through how we're generating yield. And they're like, okay, that's secure. And that's great. And the only reason that we're generating the kind of yields that we are is because

TradFi has not come full force into this space. And so we'll build out a great business around helping our clients that are longer-term holders or long-term holders of Bitcoin earn yield in Bitcoin. So they basically can kind of continue to build their stack. And then also, you know, there are more and more dollars in stablecoin that are earning no yield. And so we are developing yield products for those stable coin holders as well. So they don't have to leave the crypto economy and they can earn substantial yields. And so, you know, I think that we'll probably end up seeing dollar stable coin be like,

kind of like the checking account of the future. And then we're building out essentially the savings account. And you'll be able to kind of sweep money into that savings account and earn, you know, earn very nice yields. Again, depending on the amount of risk tolerance that you have. We're never like, we're not taking catastrophic risk. But like, of course there are risks. If you're going to receive any reward, there are some risks.

But we don't, you know, I'm totally uninterested in taking any type of catastrophic risk. These are just risks of higher or lower yields or those sorts of things. Is that open to retail now or is like the asset management stuff you're doing or is it all accreditor investor? Yeah, it's open retail yet. But, you know, obviously I think some of the industrial logic of bringing an asset manager into Coinbase is a lot of, a lot of retail customers and high net worth customers. And so I think someday, of course, like how could you know. not have really high quality asset management services provided to retail. Of course, that will be the case, but we're not there yet. Eric, this has been amazing. Last question, just to close us out,

what do you think we're going to see? Just summarize all of this and TradFi institutional kind of entering crypto. What do you think we're going to see in crypto for the next 12 to 18 months? What should people be looking for? I think we're going to see a lot of really exciting announcements that are showing real use cases, which everyone's been asking for. But it's like, and hard to do because of regulatory issues. And as those get cleared, I think some really great things are going to start happening with, it kind of bringing bonds and equities on chain. And I think Coinbase will be leader in that space. And I think that'll get people super excited. I think this convergence between treasury and Fed and monetary dominance, you know, I think it was like these

things will unfold. And I think these assets will, you know, will continue to do well. So I think a lot of really good things are happening that are foundational that will, you know, that will then help people, like their imaginations will start more easily seeing a future where everything's built on blockchain in financial services. So that's the world that we're kind of playing for. And infrastructure will be really great investments in that world. But I think crypto will be good investment as well. Exciting times. Eric Peters, thank you. much last time we had you on. I think Bitcoin was 22K, Eith was about 1.5K. So we've come a long way since then. Hopefully we'll see a similar

price appreciation the next time we chat too. Well, keep up the good work. I love the content that you guys produce and your thoughtful questions and your engagement in the space is really wonderful. Thanks. And it's fantastic. You're doing a ton of education. People wouldn't listen to bank lists, listen to Eric Peters. So you're doing God's work there on the back end. So got to let you No, of course, bankless nation. Crypto is risky. You could lose what you put in. But we're headed west.

This is the frontier. Not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.