Odd Lots - A Top Crypto Exchange CEO Explains Why The 2020 Boom Is Different

Episode Date: September 21, 2020

Crypto is hot this year again. In 2020, we've not only seen a substantial rally across a lot of different coins, there's been an emergency of new experiments, categories, and protocols. Is it more sustainable this time around, or is it going to fizzle like it did last time? On this episode, we speak with Catherine Coley, the CEO of Binance US about trends in this market, why she left the traditional finance world to go crypto, and where all of this new activity is actually going. See omnystudio.com/listener for privacy information.

I'm June Grasso, inviting you to join me for the Bloomberg Law podcast. Every weekday, we help you make sense of the legal stories that shape the nation and the world. Listen for complete analysis of the biggest court cases, the latest actions from Congress and regulators, and the legal moves driving the markets, from corporate law to constitutional law, and from state courts to the Supreme Court. At Bloomberg Law, we go beyond the day's headlines. We speak with top attorneys, judges, scholars and policy experts to break down what the rulings really mean. We do this every weekday,

then bring you the best conversations in our daily podcast. Search for Bloomberg Law on YouTube, Apple, Spotify, or anywhere else you listen. On the East Coast, listen as you start your day, and on the West Coast, catch up in the evening. That's the Bloomberg Law podcast with me, June Grosso. Subscribe today wherever you get your podcast. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthall. And unfortunately, this week, my co-host Tracy Alloway is off, so she's not going to be joining us. And I swear or she swears that it's not just because we're going to be talking about cryptocurrencies.

Today, she really couldn't make it. But in fact, we are doing another crypto episode. and I'm really excited about our guest today, a very important player in the industry. Of course, over the last several months, along with everything else, everything is going to the moon these days, stocks, gold, bonds, you name it. Cryptocurrencies are no exception, and it feels like there is certainly the most amount of enthusiasm that we've seen in crypto, probably since the boom in 2017. and still the questions are remain and there's still plenty of skeptics. What's it for? Where is this all going?

Is this just another bubble that will burst like last time? So we're going to dig into some of these questions today. Very excited to bring in our guest, Catherine Coley. She is the CEO of Binance, U.S., a cryptocurrency exchange. In the U.S., a wholly owned subsidiary of finance, which is one of the biggest cryptocurrency exchanges in the world. Catherine, thank you very much for joining us. Thank you so much, Joe. Really excited to be on.

So I do remember last time during the last boom, 2017, we did see the emergence of Binance, which is the company that owns you. Just what is the structure and relationship of Binance and Binance U.S.? I hate to come out of the gates correcting you on a couple things, but I'm going to. Okay, that's fine, that's fine. So Binance.com, it's a global ecosystem that really has been around for about last three years, really expanding the access around the world for people to engage with digital assets. And around last year in the summertime, I joined to become the CEO of Finance US,

which is actually an independent entity, entirely run out of the United States with the ability to license the technology that Finance.com has. So you think about the matching engine, the tech stack that's really there, we're able to really bring that into the U.S. as well as customize it entirely for an American audience. So when you think about a crypto-global platform, so many things are so different in the United States, via on-ramps, ACH, debit cards, wires, all of the dollar components. So everything has to be custom fit and made specifically to the U.S. So that's really where Binance U.S. comes in.

The other components are the U.S. regulation. So in terms of Viance, U.S., we're registered with FinCEN. We are regulated by the state level with the money transmitter licenses, fully operating in 38 states with the newest state being Florida. And so everything we're doing is in line with the U.S. regulation, as well as catered to an American user. Got it. Okay, with that out of the way, and I appreciate you clarifying it, and I want people to understand what the exact structure is. Let me start with what I see as sort of one of the issues or problems with the cryptocurrency industry writ large as a market. And I'm sure you'll-air it out. I want to hear.

I'm sure you'll disagree with me. But this is this is something that I think about a lot. So late 2017 or, you know, people started getting like super into Bitcoin, also Ethereum and maybe a couple of others. And then by like November, and December of that year. Suddenly the market was just flooded with supply. And suddenly it's like, and now here, buy some Bitcoin cash. And then here buy like eight more hard forks of Bitcoin cash. Oh, and there's like 50 other ICOs.

And so basically you have this thing, which kind of started off essentially as Bitcoin and Bitcoin alone. And one of the big selling points was the fact that it's unique, that there's a fixed supply of it. But then the industry strikes me as manufacturing. manufacturing so many new asset to capture the demand for crypto. And so suddenly exchanges become, in my mind, flooded with new coins, new project very fast. The incentive for new players is not to jump on a project that, say, has already gone up 10,000 percent, but to start a new project that could itself go up 10,000 percent. And so then eventually it all sort of comes crumbling down because

the investor, the end buyer is just sort of choked with so much supply. And so, hey, I'm curious if you think that phenomenon is real. It seems like that way to me. And are we seeing it again this time with the sort of numerous, the hundreds of new coins that seem to be emerging out to the ecosystem every day? You hit the nail on the head. So when Satoshi Nakamoto came out with his imagination for a peer-to-peer network with this scarce asset. You realized that this would be absolutely possible assuming no other coin was manufactured, no other supply came in to dilute it, and this was the only way that would be. But you forget that humans have a competitive need. And so we really can't take people away

from building something that can be better, faster, stronger, or better marketed, or cater to a different audience. And so you're going to always see people try to riff on it or a fork as the industry says along when you're using the same elements of a blockchain and just rebranding it. And so with that, I agree with you that it does seem like, oh, no, I can't, I can't really see which one I'm going to be involved in. But that's really the element that we face in all things in life. You know, it wasn't that Coca-Cola was the only carbonated beverage that was out there. You are always going to see something come up new, something that was going to either be capturing a new market audience or something that was going to be delivering a different need. So that's really where I see the human need for competition continuing, and we have to accept that.

The best part about that is you get innovation up. So where there's things like the birth of Ethereum, which then has let us see items as humorous as crypto kitties and then as impactful as stable coins, you're also seeing it change. change the way we're seeking yields now. So you've got different components that are letting people really evaluate how this industry can change the game. And I'm all for it. Okay. So your comparison to Coca-Cola and then, you know, Pepsi emerged and there's other sodas. That kind of makes sense to me. It's like, right, that's capitalism, that's human nature. We're going to compete, ingenuity, innovate, so forth. Coca-Cola is still around, but people have other options. That being said, it's one thing to have a new competitor to Coca-Cola on the market.

It's another thing for the listed exchanges to capitalize on the hype for COLA and suddenly list every new COLA project as something that trade. So, okay, you have Coke shares, but what if, you know, over the next few months there was a boom in Coke, suddenly all kinds of new Cola startups existed primarily to, well, quench investor thirst for soda-related asset. Soda-related financial assets. Doesn't this end up just sort of diluting and swamping the sort of supply demand effects that was pushing the original asset up in the first place? Consider it more of a marketplace.

I'm going to have Coca-Cola. I'm going to have Mountain Dew. I'm going to have. a Sprite, I'm going to have a variety of options because I know that my user base is going to be demanding it. So I'm going to make sure that what I'm serving isn't poison. I'm going to make sure that what I'm providing is in demand of the market. And I'm going to be possibly pushing the market into seeing if something is worthwhile keeping on our menu. So that's really how we view offering digital assets. There's going to be the majors, the ones that we see as having

the largest adoption so far, the ones that have either been there the longest when you think about it, or we're going to be providing things where the current market environment is both approval of it from a regulatory standpoint, as well as the market is demanding it, asking for it to be included in certain things because there's actual growth or team and a mission behind it that's going to be catered to a U.S. growth concept, or the idea of that. that we're going to be needing this from a utility perspective. So we've launched a series of coins. I mean, 46 of them in total today.

And we break them through with different, you can kind of put them in categories too. You've got your diet sodas. You've got your caffeine-free. You've got your fruity drinks. And you can kind of break them through in that where you see governance tokens being something as a need for people to understand

and want to be involved in. You see staking as something where people want to be involved in these proof of steak where if you park your deposits, you're able to earn, you know, rewards on top of that. So those are kind of the subcategories to which digital assets provide people different ways to interact with the markets. You don't have to be high-frequency trader in order to capitalize on digital assets. You could possibly be very involved in staking, having, you know, large deposits there. You could be involved in the governance of these defy or decentralized finance

protocols and so forth. So that's really how we break it down and offer people that variety, because being a gatekeeper in this industry is way too soon. This gets to something that, you know, you need to help educate me on. And during 2017, that boom, you know, I thought I was like pretty reasonably informed on various goings on in the crypto industry. And I'd like to think that in 2020, I would have been reasonably informed, except I don't know if you've noticed, but a bunch of other things that have happened in 2020. And so I have to admit that I haven't paid as close attention to all the developments as I did back then, because I've kind of been distracted with some of this other stuff that's

been happening this year. So to a sort of newbie in the space or someone who like isn't paying attention, how would you describe this world? I mean, all this stuff staking and stable coins and yield farming and governance tokens. Like, I actually have, I don't really understand it. So you were to like describe to someone what the big new things are in 2020. They were sort of characterized the ecosystem versus 2017. What's your sort of like, I don't know, elevator pitch for it all? Because I see these charts of like a million coins interacting with each other and I just

have to admit. I don't really get it. If you could have predicted 2020, I would have given you all my money in 2017. So there are certainly some components that none of us. this is all happening. But of those, I break it down into really the benefits of the freedom of digital assets. And that sounds like a big jarble of words. So I'll break it down.

I am currently trapped in my living room with a limited amount of exposure externally, unable to get most of my news or media except for online or Bloomberg TV. And the components to which I can interact with other persons, my team, a company, a business, all have to be digital. So when you look at a space that allows you to interact, access funds, invest, trade, 24-7 from a mobile device, you think about how that benefits us for whatever may come, unless we're all underwater and the internet is bad there.

But the components that we've currently faced in this pandemic, have all been suited for a resilient industry to take off. And that's really where digital assets has thrived, is the idea that anyone with an internet connection can access their funds in digital assets, and the digital assets can either be placed in highly volatile assets, staple assets pegged to the dollar, or ones that reward you for keeping it parked there and not trading it,

or ones that help you, you know, build on top of it and create different things, be it tokens or chips that are rewarded or things that unlock doors like a Chuckie Cheese or a gaming token. A lot of short daily news podcasts focus on just one story. But right now, you probably need more. On Up First from NPR, we bring you three of the world's top headlines every day in under 15 minutes because no one's story can capture all that's happening. in this big, crazy world of ours on any given morning.

Listen now to the Up First podcast from NPR. I'm actually really curious on the tokens that pay you for not doing anything. And so people collect yield. And this is something I still don't quite understand, but you can buy a token, stake it somewhere, which basically means kind of like it seems to me like putting it in a CD kind of, where you commit to locking it up for a certain amount of time. and then you get some yield, some above market yield. How does that whole world work?

And who is paying me that yield? So I get some sort of income from it, but who's the one, you know, spending that money that's becoming my income? There's a common word from every part of finance that you know before this that is not changing, and that's liquidity. So the need for a market to have enough supply to be able to meet the demands without fluctuating the price of the asset is still something that is a component in any marketplace. I only have one soda and I have 30 people that need it. That's going to be a very expensive soda. If I have an infinite supply of this soda or if people want to give me their sodas so that I can sell them for other people, I can lower that price, I can have a better market, I can have more users. So we think about it in ways where yield farming, which is this foreign word that comes up with the same thing as seeking yield, which is what you do in FX when you're deciding to go into the Aussie dollar.

But the components of being able to provide your supply of a token to a provider so that they can make markets with it allows you to then be rewarded for sacrificing the chance to buy low, sell high during those time. So because you are actively taking a stance that says, I'm not going to touch it. I'm not going to seek to trade this thing actively. I am sacrificing some element of the market that is out there currently so that this entire marketplace can have more supply to be able to make healthier markets. That's where you're getting this reward or this staking reward or the yield in return. So the yield payer in this case, I don't even know if that's bought. I'm not sure if I'm using the right term, but whoever is paying me, that's a market maker who is then using that coin to engage in a facilitate a more a liquid trading environment basis.

In our old world, in our centralized world, that is a market maker. In this new world, it is anyone. So that is the component that gets people, especially, you know, as a former banker gets them going confused, like, what about my counterparty? How do I know who they are? How am I familiar with this? And that's the feature, not the bug, that you're going to be able to give up your assets into an unknown pool that someone, anyone, can be able to use to then make markets on.

And so that is a huge benefit to people that are. not classified as the Susquehontas, the virtues of the world, that would naturally have that as a business. And you're able to see, you know, first time traders be able to pick up and learn about this as well as provide automated market making strategies and build this out and therefore take advantage of, not an bad advantage, but be able to capitalize on this ability to provide markets safely. So that's like the unusual component, but you can break it down into, I'm giving up my asset into a to a market maker and the market maker is paying me for that service. And then you have to flip it and say in decentralized finance, I'm giving that up to an unknown

entity and that unknown entity is then doing what they want with it, which is a benefit if you are democratizing the access to this capital. Right. Two questions. The first one is a very short one. So again, I'm assuming for a lot of listeners, this is like pretty new stuff, yield farming, locking up your coins, actually collecting an interest rate on a cryptocurrency. First question is, how big is this market? Or like, how big is this grown? This has grown astronomically in the last few weeks. That's so crypto.

With the astronomic being still under, you know, under $10 billion. We're talking about the stable coin industry inside of digital assets is $10 billion, but this component of yield farming and decentralized finance is now eclipsing these centralized exchanges. So for the first time ever you saw Uniswap's volume, daily volume, exceed coin bases. You know, as a company that's also working on eclipsing other people's market share, there's an ability to do this, but it's also just the differentiation of your feature or of, of, of your platform. So the excellence of these decentralized platforms is that they are allowing a global participation level, not just a regional. So I said I had two questions, but I'm going to ask a question in between. Again, for the purpose of listeners, you know, in 2017, the hot exchange was Coinbase. That's more or less a regulated bank in the sense that you can wire money

to them, put it on deposit, and then they hold something for you that they call a Bitcoin or some other coin that's really just their liability. And when you want to take it off, they'll send it to you. But it's like people in regulation. Something like Uniswap is just a protocol. There's no actual fiat money held. And it's a sort of purely digital algorithmic exchange on chain that essentially has no, there's no custodial aspect to it at all. Is that more or less right? Very accurate. I accept for the fact that I'm sure Coinbase and myself would both say we are bank-like, but definitely not. We do not have our banking licenses. It should be a chartered bank. So just to be, just for everyone out there listening, we have our money transmission licenses, but not the bank chart. An important distinction. Okay. So then this gets me to my other question, which is one of the common complaints of crypto, towards crypto from skeptics.

is like, yeah, okay, it's kind of interesting. Maybe the technology is interesting, but all it's used for basically is speculation and games and trading. And when we sort of look at the last three years and the, you know, I guess innovation that's taken place, there are a lot of new things that have been built, but it seems like still the only thing in the end is more speculation in trading. There's just sort of like a new layer.

It's a more sophisticated market. Maybe it's more liquid. Maybe there are more participants and more different ways to profit. But in the end, what's being built is yet another layer for a speculative game. Having been someone that's dedicated her entire career to speculative assets, and my first five years were with Morgan Stanley and foreign exchange, not that much is different. So to clarify, the past three years have been dedicated to crypto. So I have stayed busy.

I've stayed employed and I've constantly been learning. So for an industry to be able to provide that much opportunity, as well as give me the chance to hire and bring in new voices and names and give them careers in something, that is an added benefit any industry would hope to have. So the benefits of anything blossoming, whether it is for a speculative purpose or not, is that this is able to build a sustainable ecosystem. for enthusiasts as well as experts as well as the on-ramps into crypto are so much wider than the on-ramps into finance, into technology.

And with that, it's a global benefit of people's curiosity. So I see it as despite the skepticism, I've been able to stay off the streets because of crypto. And there's so much benefit in that that people underestimate. And for the ability to have, you know, a woman CEO of an American exchange, we only just got our first woman in banking as a CEO. So the changes we can make inside of the digital asset industry, whether it is seen as skeptical or, you know, concerning for folks is merely a birth of a new industry that is giving more people an opportunity to seek it out. I'm actually, like, how did you go crypto? Because, you know, over the years, there have been

story is like longtime banker makes the leap, but they jump into some new thing, they launched their own new thing, or like one of the exchanges will pluck a well-known exec from the legacy finance world. What's your story? Like, how did you decide to make the dive to leave Morgan Stanley, then you went to Ripple, then to finance US? But what was that like making that decision to sort of leave the warm embrace of traditional finance into this new world? Well, I definitely wouldn't call it a warm embrace. I've always wanted to be in front of the biggest wave out there. And so right after college, I threw myself into Hong Kong FX trading and saw a world that was wild. And it was, you know, while we were comparing ourselves with our New York and London colleagues, we were the Wild West.

We were, you know, Asian NDFs. We were these wild options on China. the components inside of the Asian market landscape were still wild, were still untamed, and had so many idiosyncratic features to them, it kept you captivated. And so when I moved to London with Morgan Stanley and was then just doing huge size of Euro and Sterling and nothing too exotic, you saw that kind of, this is where my future is headed. And so I leaned into the electronic trading side, being able to provide this for users to have that autonomy to be able to trade without me, which helped for A, human errors, be prioritization of my own personal time, and see better execution from a trading standpoint. They were able to use algos.

They were able to have trade cost analysis. It was much more of a transparent market. The other component while I was in digital as well, while I was in Wall Street, was this item. on Bloomberg that was it was popping up was DTCC. And it was the ability for you to see the trades when a client of yours traded away, which was, in my opinion, revolutionary because I could immediately call out my client for having a premium and on an option that was bullshit. So I could, I could look at that list and say, why in the world did they trade away on this? You know, we had a tighter price, we had a better deal there. Let me engage with that. And when I realized

that's exactly what blockchain was providing. Realized now that that was two years after I left Wall Street was when I really recognized what crypto could hold. But that was the connection point I saw, is that transactions that were able to be as transparent as Bitcoin transactions, where they were able to be found on a block explorer, which just is essentially DTCC on Bloomberg,

but provided to anyone with an internet connection, you're able to track and identify each transaction that takes place. And in my opinion, that's a frightening for certain things that don't want to be visible to the naked eye. But the counter to it is that you would be able to have a significantly higher amount of efficiency in a market if that was the component. So if we're moving from Hong Kong where I was feeling like the inefficiencies were so great that the margins were appropriate there, I witnessed them get decimated. I was trading Indonesia back at the time, and you could drive a bus through the spread that they were providing you onshore.

And now I think it's, you know, Pips, which you're just like, what? You know, there's no space there anymore because the market has moved so quickly, efficiently. And so when you're seeking out, where are the most inefficient markets that we can improve upon or acknowledge while they're still rich, that to me was what digital assets didn't have. Because it was birthed out of a computer science regime, it was missing the components of a natural trader mindset that came in understanding trader psychology,

supply and demand, arbitrage, all the components that a professional that is working to make a markets more efficient enjoys. So that to me is really where I saw the lights go off that said, I mean, well, at first, I mean, I'll admit it. And plenty of people listening probably may go, yeah, me too. When I heard about Bitcoin, it was from a client that had bought some as a joke, I think for his fantasy football league. He lost that season and had to buy Bitcoin. He ended up selling, I think, at $500 and bought his mom a house. So I was like, well, that's something. But the- He felt good. He probably felt good, about himself for like six months and then he and then he hated himself for the rest of his life. Oh, well, his mom has a house. So I hope he didn't hate himself. But the the components of Bitcoin when I heard about them sounded terrible. It's super slow to move. It's clunky. It's expensive. And you got to do work in order to earn it off out of thin air. And to me, I was like,

okay, well, this isn't going to beat FX because we're getting close to T plus two is our normal settlement. We have nearly efficient markets in terms of our pricing and or just bank's competition is forcing us to have no margins. So we're pricing everyone at market and taking losses because that's the only way to retain customers at that time. But the components of Bitcoin were not competitive, in my opinion, for replacing a currency that would be moved around the world, like payments, which payments are only one portion of it. You think about the FX markets, they have the corporate flow, the speculative flow, as well as just the natural course of business or travel, and then as well, the economic factors of countries creating their reserves in it.

And I was going, well, there's no way a country would build for their reserves in something like this unless it was going to be improved upon. And so that's really where when you say, like, why would you have more than Coca-Cola? In my opinion, I was like, this could be improved upon. There could be a better soda flavor out there, which made me look into the different digital assets at the time. And so this was about 2016 when I was leaving banking going into the new unknown for me. I moved to San Francisco saying, okay, I know the world of hedge funds. I know the world of global macro. I love it, but it feels one-dimensional at sometimes.

How does my generation and tech get involved in that component? And so I came over to San Francisco to try everything. And I remember all of my interviews with these great fintechs, I kept on asking them about their balance sheet and their FX risk, and I knew that I had a sickness, that I was just so focused on the inefficiencies that these companies were having, partially because they were VC-funded. But there are so many components that they were leaving chips on the table

because they weren't aware of how these markets were moving. And so I learned a little bit about XRP and said, well, this is faster, this is cheaper, this is, you know, seems to be more scalable, but definitely has the features that are also appealing to Bitcoin, not there, not present. So that self-sovereignty, that, you know, the entire supply being limited, some of those components with XRP were a little bit different because there were people working on it. And so I joined Ripple, and that was kind of my first foray, two feet in, just having been an observer, I was at Silicon Valley Bank for a hotbed,

observing how these startups were, as I said, leaving so many chips on the table because they weren't hedging their FX risks with their, you know, their Indian arms or their Chinese arms with their businesses. Sure enough, you know, it's three people in a garage. They're not going to be whipping out FX options to protect their, to protect their hedging their operational costs. So fair on them. They're growing.

They're probably all IPOed by now. but the components to me were I just had to learn more about it. And the way that I learn as an obvious statement to moving to Hong Kong to understand FX, I have to go in with all two feet. So I completely submerged myself into an industry in order to learn about it, in order to be a liaison translator to my peers, to people that are too intimidated to understand a space as obscure and frankly intimidating as crypto.

So where I can be the liaison or the translator for an industry, I'm all there. And so I did my tour of duty with foreign exchange, understanding how those markets worked. It's nearly page for page of Liar's Poker. But there's a new book to be written. And that's in crypto. And I want to make sure that that industry we can educate people on rather than intimidate. The news doesn't stop on the weekends. Context changes constantly.

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radio, and wherever you get your podcasts. I love that. I love your story because, I mean, I'm aware, you know, obviously there's always headlines about people leaving legacy finance for crypto, but I don't think I've ever really heard anyone sort of spell out the whole thought process like that. So that was really cool. And it also sort of gives me another question. And it gets back to the sort of what for question. What is crypto for? And it's interesting, you know, your comparison of Okay, by the end of your FX stint, you saw the incredible spread narrowing on, say, Indonesian rupee trading, and you realize there are like massive inefficiencies with,

or still, you know, huge spreads and massive inefficiencies left out there with digital assets and crypto assets. But it still gets to the question, okay, okay, maybe the trading can be improved, become more decentralized, it can become faster. spreads can be narrowed, but it still raises to me the question like, okay, what for? So let's say the market does get much more efficient and liquid and so forth. Then what do we do with those markets? What's done with that liquidity to actually sort of, I guess, bridge the gap between finance and the real world. Because when I think about finance, yes, you know, there's a lot of gambling and speculation. But at the end of where there's somewhere on a chain, someone gets the liquidity to buy a house. Or, someone gets the liquidity to make an M&A transaction. Somewhere, you know, there is sort of a real world corral area at the end that all this liquidity or liquidity transformation is serving some real world action.

And I don't yet really see that in the crypto space. So you mentioned those great kernels, and those are kind of the shining lights of why capital markets exist to get that, you know, to get the mortgage, to close the M&A deal, to be able to repatriate the revenues of a foreign, you know, foreign product overseas. And there's still so many limitations on when and who can get those. And that's really where digital assets comes in. So closing that M&A deal on a Friday night at 4.59 p.m. is no longer the deadline. You can close it on Saturday morning at 2 a.m.

You can close it on Sunday at 5 p.m. Digital assets are going to be trading, operating, transacting, and being able to be accessed 24-7. So what does that free up in terms of the ability for us to provide funds, remit payments, close books, be able to send transactions to close deals, by homes, by buildings, you name it. It's going to be freeing in that aspect that this can be done now without the time constraints that the current banking system has. The other components are the access. So when I think about my time in Wall Street,

my current status as a analyst and associate still limited me from being an accredited investor. Yet I was reading Bloomberg every day, talking to the world's largest hedge fund managers, and fully aware of financial products. So the current SEC, adjustments have benefited that, but only if I still was at a bank working, taking my licensing exams. So there's still so many components where people are prevented from taking steps in their

own financial futures that digital assets alleviates. And to me, that is a huge component and a shift that makes it less of this hard to attain. You can only get a mortgage if, you can only your credit score has to be this if, we are going to be able to free up capital and let people take control of their own capital in ways that may give them a better life. And that is the ability to work a nine to five job and still go home and invest, the ability to work night shifts and yet be able to send money to your parents anywhere around the world at any time that you need to. Is that the revolution? Because I mean, it does, it is annoying. that when, say, I need to wire my rent check to a landlord that, you know, I can't do it on certain days, or, you know, it would be very annoying to have to wait until Monday to close an M&A deal.

Fixing that doesn't exactly sound revolutionary to me. It sounds like, yeah, that should just be something that they fix and finance. Is it that sort of universal access part that, in your view, is sort of the potential revolution with crypto? In my opinion, it's a huge component. I was an early adopter of globalization, which was a huge burden looking back. I have two 401Ks around the world that I can only access when I'm 65, and they're not even 401Ks. They're a UK pension and a Hong Kong pension. So when you think about, giving people this opportunity to grow their own lives, we're telling people, by the ways that our infrastructure is built. And by the way that banking is built, stay home. Don't talk to anybody. Get your local bank and grow. We're discouraging people from taking risks to go outside of their

own boundaries, to be able to build businesses overseas, to be able to build businesses in the United States that reach overseas audiences or take components and funding from others. And that, to me is still so stifling that I'm not sure the world is that courageous to be able to continue to push that forward. Yet there are an insane amount of benefits from looking outside of your own neighborhood. And so that universal access is a huge component. The ability to reduce the fees that you get at every turn of an international transaction and give that back to the user are some of the huge ways to unlock this and allow people to actually get a lot from it. You think about if you're running a foreign company, you basically have to have a huge balance sheet in order to

accommodate the FXP&L loss that you're going to be having. You think about every earnings call where there's a drop down that from these largest companies in the world and there's always like, yeah, we acknowledge our FXPNL wasn't that good this year. So there are huge losses taken that only benefit those that come with the cash already to be able to afford. to take on this style of business that can be drastically reduced by having something that is universally accepted at any corner. The other component of that is truly the access to it. If it is internet-based, we are moving to a world, and the world is actually caught up faster than America in terms of mobile banking. And so if we're moving to a world where phones are the

new wallet, and that component allows people to really transact in ways that are significantly better for business. You are not going to have the same style of burden that people face when even small mom and pop shops don't want to be running an Amex. Before we wrap up, you know, one of the things that strikes me is the space is that there's sort of this spectrum of projects out there. And I think, you know, I'm sure it's always in a sense going to be like that due to the zero barriers to entry, really. Anyone can launch a new coin in theory and maybe trade it on one of these decentralized exchanges, as long as they meet some technical requirements. There are obviously some projects that are pretty interesting and take it pretty seriously.

Then there are projects that I think probably everyone would agree are blatant, egregious scams. And then there's probably projects that are in the middle, which are not really scams per se, but they're also like, are they a joke? You get these like weird ones. You mentioned CryptoKitties earlier. I don't think that was a scam, but like it was difficult. to tell how seriously to take the whole thing. This year is like all these new random coins and things with names like sushi and yam.

And it's like I can't tell if it's performance art when people talk about this is like a serious new experiment in monetary governance or is it just a get rich someone's get rich quick scheme. Like I can't tell. And so I'm curious how much of a challenge that is for the space, for education, for regulators, for legacy investors that would like to have an allocation to crypto, the difficulty in discerning what is a sort of serious, legit project that people are going to nurture and build on for a while versus either a joke or a scam that was like pumped in some telegram room

that we're not part of. Right. You mentioned a couple of things of like not being able to tell if a trend is worthwhile or not. and I still am worried about Capri Pants in that way too. But the crypto industry continues to fight against bad apples. And because of the inclusivity of the space, the ability for anyone to be involved,

you are going to face that need to educate the customers and the community about more components than you do in the traditional world because the barriers to entry are just so high, people don't even get involved. So around internet security, around how to protect yourselves and your privacy, those are those are kind of items that we have to remain vigilant about from educating people that are first stepping into these waters. That's kind of the 101 of entering crypto. You need to be aware of how your privacy and your data and your crypto is being protected, and that is being protected by yourself. So we take those components to educate people there.

The next components to really educate people on are really just showing how traceable and transparent these are so that you can do your research and be able to see all of the components that you need in order to make a decision. And that is one of the unique things about digital assets is that the college courses and the financial degrees and the PhDs are all available online to anyone. the components of education in this space are wildly available and made available. And as our purpose of our platform, we continue to produce content that helps people get educated specifically on this to make better decisions. The third component is understanding the risks. And this is something that I think everyone needs to understand and also needs to be aware of that you can take risks.

You don't always have to just be afraid of them. So understanding that is your balance that you're going to be taking. there is the trade-off between, am I engaging in something that is highly volatile? Does this help and benefit the long-term benefits that I hope to seek? Or is this something that I'm a believer in the technology as a changing component as the world needs something that needs to be more inclusive, more digitally accessible, and more transparent? And I'm here for the long haul. So we see we see regulation coming in in ways that are helping curb the near-term volatility, which confuses the long-term benefits. In these short-term gains and this kind of hyper-cycles,

definitely depreciates the long-term value of building an ecosystem that is increasingly inclusive, providing financial freedom and access to everyone with the shadow of scammers and those kind of components. So what we can do in our mission to build out in mainstream cryptocurrencies is building that education component as a required layer to feel comfortable about this space and make sure that as you're accessing these digital assets, you're fully aware of, one, the privacy and the protection needed on your information, as well as the risks inherent in investing and trading into an asset class as volatile as this one. And then understanding the fundamentals or the economics in supply and

demand, which I think is one of the fascinating things that we've seen accelerated by digital assets, unlike finance before, is that this is an entire industry that is reaching a significantly different audience than finance. And yet every single day, the conversation topic is money. Money has been a taboo table conversation for so long. Finally, we've had an industry that makes it digestible for people, interesting for folks, and they're beginning to learn the components. There have been more people in the last two months that now understand what a basis trade is, not because they've been following the interest rate markets. They've been following crypto. Oh, I thought it was because they were listening to odd lots.

They are listening to odd lots. But also because of the explosion of crypto. Right. But much like odd lots, you have been democratizing the way for people to get information and educate them through digital means, which is a huge component of how we're seeing this world take a turn. And I think that's, you know, one of the fascinating things is, for the first time ever, students online are attending their Econ 101 courses, and they're already familiar with the supply and demand model because they have Bitcoin. So final question, real quickly, if we revisit, if we do a follow-up interview in five years,

by then, would you predict that by then, cryptocurrency in some form will have this sort of real-world corollary where the market infrastructure that you're building is actually helping people engage in what recognizably commerce, whether it's investing in new businesses, doing M&A deals, mortgages, things like that are recognizably uses of money beyond speculation. Will that happen in five years? Absolutely. Okay.

If you're building a company in the next five years and you do not consider digital assets as a component, you are going into this in an ignorant way. All right. So it is a trend that is picking up. It is an adoption case that is pandemic resilient. And if you are planning on any business model going forward, I would sure hope that you make it pandemic resilient as well. All right. Well, September 2nd, 2025. I'm looking forward to our, that's been recording this, September 2nd, 2020.

September 2nd, 2025. Looking forward to our follow-up. Catherine Coley, thank you so much for joining us. Fascinating conversation. Thank you. I hope to not be in my living room by then. Yeah, I hope so, too. Good luck. Thank you, too. Well, that was Catherine Coley. If Tracy were here, which she's not, we would banter for a little while. But, you know, I'll just say my one observation is, and it really does seem to me like there is, to some extent, and this is actually even true of Bitcoin as well, how the sort of random. people on the internet got into it before Wall Street. So much of crypto is backward to me. And I don't actually mean that in a negative or judgmental way.

I mean that in a literal sense, crypto or Bitcoin started off with sort of random people on the outside. And then it sort of invaded legacy finance. Crypto in general seems to be this thing where they're building all of these sort of liquidity and market infrastructure first prior to actual it being used in sort of recognizable finance. It feels like very much the opposite of the history of finance where you probably had loans and, you know, joint stock companies early on. And then people developed more sophisticated infrastructure to trade loans and stocks.

So it'll be interesting to see if that continues to develop whether all this infrastructure, much of its speculative, does then become the sort of facilitating platform for more recognizable uses of money. But that'll be the question. And then like I said, we'll follow up in five years. So this has been another episode of the Oddlods podcast. I'm Joe Wisenthall. You can follow me on Twitter at the stalwart. Follow my co-host on Twitter even though she wasn't here. Tracy Allaway at Tracy Alloy.

Follow Catherine Coley on Twitter. Her handle is at Crypto Coley. Follow our producer, Laura Carlson at Laura M. Carlson. Follow the Bloomberg head of podcast, Francesca Levy, at Francesca today. And check out all of our podcasts under the handle. at podcast. Thanks for listening. You can get the news whenever you want it with Bloomberg News Now. I'm Amy Morris. And I'm Karen Moscow here to tell you about our new on-demand news report delivered

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