On The Brink with Castle Island - FactSet + CoinMetrics on Institutional Crypto Data (EP.425)

Episode Date: May 17, 2023

Chris Ellis, Head of Strategic Initiatives at FactSet and Tim Rice, founder of Coin Metrics join the show. In this episode we discuss: The partnership between FactSet and Coin Metrics how the companies are jointly going to market. How FactSet thinks about partnerships and how digital assets has evolved as an area of focus at the company. The features and functionality that FactSet users are asking for as it relates to crypto/digital asset data. The future of asset tokenization and the regulatory landscape in the United States. On-chain data and how Coin Metrics sees this category evolving. To learn more about the FactSet/Coin Metrics partnership visit: https://investor.factset.com/news-releases/news-release-details/factset-and-coin-metrics-collaborate-deliver-digital-assets-data To learn more about Coin Metrics visit www.coinmetrics.io  

Today on the podcast, I sat down with Chris Ellis, the head of strategic initiatives at FACSET, and Tim Rice, the founder and CEO of CoinMetrics. Coin Metrics and FACSETT recently announced a partnership that brings crypto data to a lot more institutions. Now is something that I wanted to cover on the podcast today. We also talked about the state of the market, some of the catalyst for growth, particularly on the regulatory front, and also just the digital asset industry writ large and where it's going. So without further ado, here's my conversation with Chris Ellis and Tim Rice. Matt Walsh and Nick Carter are partners at Castle Island Ventures. All of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions

of Castle Island Ventures. Guests and host may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of their personal opinion. This podcast is for informational purposes only. Brought down by bad mortgage investments, Lehman, which has 25,000 employees will be liquidated. The federal government loans American International Group, A, IG $85 billion. This is a different kind of market, and the Fed is asleep.

The federal government is stepping it to stabilize Fannie Mae and Freddie Mac, the two mortgage giants that have been threatened by the housing crisis. The Bank of England has pumped 75 billion pounds more to Britain's ailing economy for the new round of quantitative easing. You print a couple trillion dollars, and all of a sudden, people start to worry. So out of this worry, we have something called a Bitcoin. Bitcoin. So Tim and Chris, thank you for joining us today on the podcast. Excited to have you guys on. Great to be here.

Thanks for having us, Matt. Tim, so why don't we start with you and Coin Metrics? It's been a long time since you've been on this podcast. So I guess sorry and welcome back. Thank you for sponsoring, by the way. No, that's great. We love the Metric Minute and the support that you guys give us on that. It has been a long time.

That's a great thing, right? So shows longevity of the business we decided to try and build together with your support in the super early days and our work with Nick. But, you know, over the past, it's going on four and a half years since we've we kicked this thing off as a commercial enterprise, and over that journey, we've really expanded the business. Our original thesis was organizing the relevant content to understand the economic significance of public blockchains, and then gather exposure from the major exchanges and liquidity pools to look at volumes, transaction activities, and other things. And so we continue to a

really good job building the organization and building the content set and aggregating everything in one place. We think it's important for traditional financial institutions across the globe to start to come into crypto and to ingest. The way we went in and thinking about the business was we had a long-term view that this was going to be something where it was important for large financial institutions along the way to come in. And we recognized that that journey was going to take some time and it was going to have some ups and down. as we went along, but we have seen success in getting folks involved from the traditional financial perspective. As I said, we think that's important capital to flow in and to gather

understanding amongst those types of investors and banks and others as the journey goes along. So, you know, I think we've done a really great job as a, and Chris will probably touch on it. We do a good job organizing the crypto content. When you're starting to engage with large financial institutions, you need to meet them where they operate the rest of their business from. And so we push to try and get clients to program or integrate with our content directly, and we were successful to a certain extent, but we recognize the value of founding large partnerships like the one we've been able to establish with FACSET, where folks who aren't completely in and doing everything in crypto, but want to see a balance against their existing

portfolios, can see the content, can work with the content and start to do some things that Chris will share about. So, then, you know, really exciting fortuitous journey for me, a lot of serendipity when it comes to how we've built the company. We've got a really great set of investors across the board from both the VC category as well as crypto natives and then the traditional financial institutions. So I think we've been very fortunate in the ups and downs of the market. And, you know, we're really excited to discuss the partnership we've been working on with Chris and the team over at FACSET. Well, it's exciting. I've definitely, want to talk a little bit more about the products, maybe after we talk about FACSET.

But yeah, you guys are building through the bear market. You've got an air hockey table and everything in that office now. Yeah, well, a little bit of influence from affinities of the CEO rather than the Fooz, but they said Foozball table. I was like, no, we're doing table hockey. Yeah, we're going to where the puck is going to be. We're not going to where the puck was. And that's the theme that I press across the entire organization.

Nice. Well, Chris, it's great. have you on. FACSET is just an amazing company and great products. We'd love to hear a little bit about your background and then maybe dovetail that into how you even met these coin metrics guys. Sure. Appreciate it, Matt. Great to be here with you today. I'm going to try to rise up to Tim's level and find a Gretzky quote. I can work into this. But starting out, my role at Baxett as a global head of strategic initiatives, what I do is I spend almost all of my time talking to our clients about where does FACSET need to go to be the partner that they need us to be.

The difference between where we are today and where we need to evolve into. And then once we kind of form a thesis on that, then I really try to figure out with the leadership team in FACS that do we build, do we buy or do we partner? We've got about 12,000 employees worldwide, got a lot of capacity to build things. We've done about 28 to 30 or so acquisitions over the lifespan of FACSET. And then we literally have potentially, you know, depending on how you count the math, a thousand partners at FACSET today. So we've got a lot of different tools to figure that out.

In the case of crypto and how we got to digital assets, it was really part of the overarching thesis that FACSET had to be more multi-asset. When I started at FACSET in 1994, we were equity, equity, and more equity. And that was pretty much just U.S. equity, right? So we expanded the scope of FACS. set to global equity, options, derivatives, long short, moved into high-yield bonds, moved into investment-grade bonds, added CDS, CDX, fixed-income derivatives, then moved to private capital to integrate that into the totality. of facts that, and then the latest chapter, which is what we announced and what we released

in January with Tim and the Coin Metrics team is really the addition of digital assets. So it's all part of that sort of macro trend to cover the asset classes that our clients care about and really to build on what Tim was saying about the places they want to do it. Clients do not want to have their process for these different asset classes be completely idiosyncratic and separate and unconnected to the rest of their workflows. They want to be able to bring this together. They want to have more continuity. You can't have perfect continuity because you got to appreciate the nuance and the difference, but it doesn't mean it has to be completely different either. Right. And so how do you find the right blend? How do you find the right balance there is really

what drove us to the integration, if that makes sense? That does make sense. Yeah. I mean, so the thing that I really like about the product and the integration, I'm curious if this is the most popular part, but the Excel integration is great. And so the ability to plot the data into office, what exactly do you see as kind of the uptick here? What are people using digital asset data for, just broadly speaking? I mean, it starts in research, right? If you think of sort of the core thesis of fact set as do I want to invest in Honda versus Hyundai versus Ford versus Daimler versus Jaguar, right? Like that core question. Or do I want to invest in the Walmart 27 bond versus the target, 27 bond? You're doing the same analysis on Bitcoin versus Ethereum

versus other digital assets, but then also looking at it at an asset class level, lifting it up a level, and saying, I'm looking at my asset allocation for my target wealth portfolio and if I think of it as 60-40 equity fix the most traditional model, does it make sense to take that 40% fix, which is going to get a 4 to 5% yield in the face of 5 and a half to 6% inflation and take 1% out of that and put that in crypto or put that in digital assets and go 60-39-1. Now that entire analysis has been reshaped in the last couple of years by the flood into private capital, right? Private capital that really blew up that traditional 6040 model, but the same thesis, the same idea extends to such an uncorrelated asset class like

digital assets, right, in that context. So that research question, it's at the security level, it comes up to the asset class level. Our users want to do that in different places. Certainly, if you're on the banking side, if you're on the research side, if you're doing equity research, if you're doing core security research, Microsoft Office is critical to how you use FACSET, right? And so you want that data accessible in office. If you're doing performance attribution, if you're doing an asset allocation model, then you probably don't want it in Excel as much because it's cross-sectional time series heavy data. You want it more in the two. You want it more in the tools. But the idea is you've got different users at the organization who want the flexibility

to do it in the two different places, right? And that's core to fact said for all those other classes, other asset classes that we talked about. We need that same capability and model for the digital assets. Now, that said, the coin metrics data is perfect for that, right? Because what coin metrics does that we loved that drew us to coin metrics was the scope of data items. Most providers of digital asset data don't have a fraction of the scope of data that coin metrics has. So when you take that scope and you put it into facts that and we can bring it into the analysis, you create a much more well-rounded, much more holistic analysis with the different on-chain and off-chain analytics that Tim and the team have best.

And that's just jet fuel that just powers the analysis inside of fact set or inside of office. That makes a ton of sense. Tim, one of the really cool things about being on this journey with you has been just seeing the evolution of institutional adoption of digital assets. People always say, when are the institutions coming? The reality is they've been here. They're just not evenly distributed. So it's been interesting to see research groups kind of start to kick the tires on some of this

stuff and then evolve. to maybe start trading the asset proprietarily and then eventually launch their own full-blown custody businesses. So you see this sort of evolution maybe just in your customer set where you have a bunch of minnows that graduate to being whales. Where are we, I guess, just as an industry in terms of that evolution, in terms of institutions playing here? Yeah. So when we look at our footprint within the institutions that we have directly as customers today, our thesis was to become the trusted data provider of one data set and then to move on the journey into the crypto asset investigation. So like Chris said, it's important to start with some base. And so most of the traditional financial institutions

understand market data. So they know what to do with it. They know how to play it. They know what they're trying to build when they see that market data side of things. And then when they get more curious, usually generated by the research team starting to discuss the on-chain side of things, then they'll lean into the on-chain side of the experience, and then they get really kind of jazzed up over understanding active addresses, what are we seeing for the size of holders within a particular asset class? You know, what are we seeing during up and down trends? Are we seeing speculative holders who have just held or bought in at the beginning of an uptrend? Did they stay or did they leave? And the pattern matching that you can see by looking at

the blockchain gives you, you just a lot of the blockchain, gives you. tremendous visibility into what you're seeing for long-term holders. And we continue to see those trends where there's large holdings that are strong diamond-fisted holders who aren't doing this up and down. So you see that happen. As far as the journey goes, you've got a large asset manager here in North America who's way advanced from everything else. You can now trade Bitcoin and eth on their retail platform and get that kind of an exposure. We are seeing other asset managers who are starting to make Bollies into the category. So that'll be a great opportunity.

You know, I think the macro hedge funds, they started coming in a couple of years ago. They were trading proprietary capital. They were probably trading somewhere in a derivatives venue. Now we're seeing more exposure, more of them taking client exposure to spot markets. So, you know, watching the kind of movement in the hedge funds are usually the first movers. The fidelities of the world are definitely on the leading edge of things and then some of the large banks. So, you know, we always have this inning conversation, right? And, you know, maybe a year ago this time, I would have said maybe we're in the third inning and maybe, you know, we had a long

third inning and we continue to have a long third inning. But the encouraging thing for us is we are continuing to see conversations going on with large asset managers. And, you know, we're this relationship with facts that has really helped out is it's not a large financial commitment for an asset manager who's not completely getting exposure to crypto to come into but it's a resource intent. So code up to our APIs and ingest that content and then take that orphan data set and try and bring it back in is a lot of heavy lifting from a technology resourcing perspective. So, you know, we had some pretty quick inbound from folks that we've been talking to for a long, long time when we announced the partnership with FACSET.

I think that journey hopefully speeds up the opportunity as a result of this partnership. So, again, a lot of really good conversations. I think as we're hearing in the kind of broader environment, there's definitely a view that Europe, Middle East and Asia are adopting more crypto-friendly regulatory frameworks and other things. And, you know, the U.S. is, there's a lot of, I think, 70 plus percent of our revenue today, comes from North America, where, you know, we can continue to grow that. But I think that's a good kind of indicator for us that there's a solid footing here in the U.S. that's just waiting for some

clarity over the next 18 months or so. And then, you know, we'll continue to see uptics here, provided we get the right regulatory framework. One of the places where I think this partnership gets really exciting from a customer perspective is on the on-chain data. And so, you know, it's one thing to look at Bitcoin and Eath addresses and who holds what. But I think we all probably share the view that this is going to be multiples of the types of assets that exist today. We will have real world securities represented on blockchains. We will have different types of instruments that are registered with the proper authorities and that are traded on venues that have integrations with blockchains. So you don't really have to squint too hard to imagine a world where this

on-chain data gives you real-time visibility into who owns what. and who's moving what, where. And you don't need to rely on quarterly filings with the SEC to actually know that hedge fund X, Y, or Z has started to build a huge position in an asset, or that this company might be getting ready to offload certain assets. So kind of just the alpha that could be there from having a good handle on on-chain data to me is really powerful. Tim, I'm curious how you think about that in terms of building the on-chain piece of your business. And then maybe we can hop into what exists on FACCET after that. Yeah, well, and as you know intimately, from the beginning, that's what we think is the huge

opportunities, the on-chain intelligence that you can generate from this. And we always felt that alpha was something that would come out in the wash. Fortunately, right now, there's so much alpha between exchanges and market opportunities that we don't have a lot of people looking hard at it. But we've seen recent events where people are looking at on-chain data and they're getting false signaling that a Mount Gox wallet twitched that the government has held. And that's the kind of early alpha that folks are looking for, which was movement of on-chain hot wallets and other things like that. And our experience over the past four or five years now allows us to understand

when it's a legitimate movement and when it's an illegitimate movement, it's a wallet shuffle by an exchange or other things. And I think the other thing that you can see over time is just the absorption capability of the market now. A couple years ago of a couple thousand Bitcoin came into a hot wallet, the market would kind of overreact and think this was a huge sell-off coming. Now, a couple thousand Bitcoin coming into the market is showing that, okay, there's kind of a normal pattern going on here. And that learning is important for folks to focus on. I think the other thing that we think will be super important is kind of counterparty due diligence going forward, right? So our experience in the forensic examination of what happened at

F-TX, set aside the overall thing and whatever you think about that situation. But if you would have asked for the correct disclosures, similar disclosures to what you might have get if you're getting a banking relationship with anybody, tell me your largest holdings, tell me your affiliated entities over which you own more than 50% of, and then you were able to use the on-chain abilities to watch those addresses and see the normal behaviors, not between those addresses, but how they're moving, you can really start to create a really robust counterparty due diligence framework and examination of how that works. I think that's not sexy, but it's super important for folks to understand that we could have done a lot more. And Chris and I have talked before is no longer is

ignorance is not an excuse in this category. This data is very, very transparent. It's very accessible. Chris probably knows this. But in the fixed income world, we built databases on top of databases to show the holders of what corporate bonds. So you could develop a trading relationship with that particular corporate bond holder. You knew to go there. And what I think blockchains will give people is a really good handle on how to move capital around how to develop trading relationships with other counterparties and provide you that transparency to mitigate the risk on that side of things. I think those are just some really important things that will help transition. Then as far as on-chain activity goes, there's just so many different things

that will come out of that, whether it's related to what, not the NFT, art NFT, but that contract in and up self in creating a unique kind of economic entity and tracking what that entity does over time, whether that's producing royalties back to the original creator or they were doing bonds through that similar kind of things, you'll be able to very transparently track what's going on where that lives. As it generating any kind of yield, what is it throwing off? And what we're doing with FACSet and Chris can share a little bit about what we've got on there today gets people the taste of what's going on. And I think then they dive in and they go, wow, there's really a lot here that we can consume that gets us much more comfortable with a very transparent asset class.

Yeah, Chris, maybe talk a little bit about that. I mean, me a lot of these primitives are like having a real-time Edgar database to some degree. So the first thing is, as Tim talks about the nuance of what happens in the space and around these trades, that's exactly the reason why from facts outside, the partnership starts out being a partnership. And the first thing we look for in a partner where we're so happy, and I say that wholeheartedly with the partnership with coin metrics is the expertise and the experience that they bring to the space and to digital assets. And their understanding of the nuance is an incredible asset for our clients and is reflective

in the data that we're making available together to our clients. It's just incredibly important at the end of the day. The other part of that question, Matt, is, as I think about what you guys were saying, we generally put it into the separation between the digital assets themselves and the distributed ledger technology. And I would say our perspective on that emanates most closely from portware. So as some of the folks listening to this podcast may know, Facts that owns portware,

portware is generally considered to be the award-winning, leading by-side execution management system. So I talked at the beginning about how I spent so much time talking to clients. every conversation I have with clients who are the heavy most sophisticated portware clients is about where are you right now, where do you see distributed ledger, the technology going, how do you think it affects your trading? What's your sense of kind of the when on that? I don't think it's so much an if.

It's more of a question of when. And so we're trying to make sure that we are out front there. but not too far out front there. And we're staying in sync with our clients. But the promise of the technology is almost too strong to think of it as an if question and to focus on the when question. I think that's exactly right. I mean, if you want to use the internet analogy here, it was really the Telecommunications Act of 96 that opened up the commercial web as we know it today. There's sort of this parallel universe where the phone companies would have controlled the internet. and we probably wouldn't be speaking on a platform like this, if that's how that ended up happening.

To me, the analogy for digital assets would be some sort of a market structure bill, something that gives clarity to banks and broker dealers around what it takes to hold one of these assets, what that market structure ought to look like. Should the exchange be attached to a proprietary market-making firm that's based in Bahamas? Probably not. So to me, it's that clarity that really just catapults this. And at that point, it's sort of off to the races in terms of bigger institutions that are actually doing things in the space. Chris, to your point, tokenizing other types of assets and using the underlying DLT tech. I'm curious if you guys have a point of view on A, if you agree with that, and B, kind of where we are from just a overall market

structure perspective towards that future. Maybe Tim, start with you. Yeah, I mean, we definitely need some clarity, right? And I think this morning I was reading somewhere that there's some pushback going against SEC's overreach on the fact that you have to maintain your assets within a qualified custodian, which was eliminating the access to the wealth manager in order to trade, right? So you actually couldn't trade because it had to be in custody and how was this going on. That to me is an example of a bad diagnosis of market structure. Like in digital assets, we live in a qualified custodian. We have to go on chain or into some ability to move that asset.

We can't do it just on a, you know, when you trade in equity, you're trading a book. My shares of Apple are, I don't know whether they're at fidelity or where they actually are, but I know I can go in and trade that today, whether they're in a qualified custodian or not. So the overreach on this commentary was difficult. And I talked to a number of firms on both sides of, you know, the qualified custodians are like, we don't know how to react to this. We don't know what we're going to do. And then on the trading side of things, they were like, oh, we're jammed up. And so then the wealth managers are having, to figure out how they can generate revenue for their businesses based on the commercial

model that we have within crypto. And so I think somebody outlining how to get that working is super important. In talking to one of the larger wealth managers who's key into the space, I think his concern has always been, if I'm going to do something for my client initially, I'm going to have to set them up their account on Coinbase, but then how do I receive fees? associated that. How do I do that billing? And they're not quite ready in the wealth management world to go to a concierge model yet. So they were still trying to go with the old model. So I think market structure will be important. I think that pushback that I saw this morning that

was going across feels like the right pushback. And what I think the industry is doing a better job of is instead of just whining, we're articulating what we need. You know, they've kind of given us that guardrail so we don't like this. And now we're able to go back and say, this is what it needs to look like. Let us explain the technology better to you on how it works so you understand that. And if we can get that messaging across, I think then we unlock a lot of opportunity for the marketplace. Chris, when I look at your business naively from the outside, it would seem to me that some sort of market structure clarity or regulatory clarity here is the type of thing that would 10x a digital asset type of business within FACSET. How do you think about just that?

that regulatory clarity that's potentially on the horizon? Yeah, I mean, I think from our perspective, we don't have an opinion on what the regulatory clarity is. We just hope there's some regulatory clarity. So FACSET has a head of government affairs who's based in Washington. And she is very focused on understanding where it's going and who's leading it between Representative McKinney and Senator Brown and some of the different political forces or groups that are going to influence it. We don't have an opinion on where it goes. We're not trying to influence it one way or the other. But to your point, Matt, we think that any greater clarity, any greater regulation is a step in the right direction from where we are

today. So we're hopeful and we're watching it closely, but we don't have a skin in the game on that. We just want things to move that direction. Yeah. So I think the follow up on that one is getting a broader community involved in seeing the content gets potentially more voices at the table, right? There's a lot of people just sitting back saying, well, how do we get clarity? And then if folks in facts that are starting to look at that 60, 40 portfolio with a 2% allocation into digital assets, and they're like, and it's a pro forma portfolio, and they're like, wow, I'm missing out on this yield enhancing asset within my portfolio. let me double click a little more and see what I need to do that versus us kind of pounding the pavement to sell more clients directly. I think that's where you start to get a better kind of thinking around

clients pushing from their policy people in Washington, not just faxas policy people, but you get some of the asset managers saying, we're really missing out on something that's a non-correlated asset that has yield enhancement across our portfolio against things. Like you've got to do something here because, as I said, You know, my dear friend Rick Edelman was arguing that we're in a yield stunted environment, and these digital assets are one of those things in the world that we think is going to help as we all are able to age into older and older years. We need something to enhance yield and not getting kind of jerked around by the latest federal policies and how that's going to impact us.

Chris, is that example kind of a typical customer query and maybe building on that? I'm curious what you're seeing just in your customer base in terms of how people are using digital asset data now. Yeah, so there's a lot of questions around this asset allocation question. You even see it more on the wealth side than you do on the institutional side. And some of the institutions, Tim mentioned Fidelity earlier, are leading on digital assets. Others aren't comfortable yet. And that comes back to your regulatory point, Matt. But when you're the wealth manager and I'm the client, you're trying to position portfolios and investment decisions and recommendations that are going to help me achieve my overall financial goals. So even if I don't own the digital assets

through you, it's kind of like the concept of holdings held away, right? Where you're going to take into account what I own, which could be the legacy business because I'm a small business owner and you monetize that and you think about that as a long-term investment, or it could be the outside of wallet digital assets that I own, and you try to put together the holistic view of what my portfolio is today compared to what the recommendation is and how the recommendation gets me as the investor to achieve more of my financial goals in the long run. And so you have to model digital assets into that if the client owns that, even if they're not

owning that directly with you, because that's still part of the measure of are they reaching their overall goals? That's funny. You say held away. I've often thought about that in the context of self-custody and why that's so important. It's almost a below-the-line type of a concept that you'd be a wealth manager and you'd have a customer that holds Bitcoin, but maybe they hold it in a multi-sig where. the wealth manager has a key and a lawyer has a key. I actually think that concept resonates with me.

I think that will come to other types of assets as well. So you guys are getting to the fact that the on-chain public key is just really critical here. And so being able to track these assets on chain is kind of vital to that world existing. I mean, the battle, the fight for the wealth manager is to be more institutional, to be more customized to really be able to articulate, better and better to the investor, how trusting me and working with me is going to help you achieve your long-term financial goals. And so you need the complete picture. You need the complete set of tools, and you need to be able to show that quantitatively at the beginning and then be able to along the journey, right? You say, in the next 20 years, we're going to do this and we're going to achieve this,

and then to be able to adapt and understand and know when to change the course and know when to stay steady with what we agreed to do and forge that long-term relationship to help your client, to help the investor achieve the results that they need for themselves, right? And that's where the tools come into play. And you can't, you know, coming back to what Tim said at the beginning, ignorance is not bliss. you cannot know what the client holds and part of what they hold and just compartmentalize it off into a corner and say, I'm not going to talk about that or we're not going to incorporate that into the result because that's not an excuse if the client doesn't achieve their goals. Yeah, that's exactly right. Tim, I wanted to get your view on just what it's been like to build a company through this bear market. It's obviously not your first crypto bear market,

but you guys have been adding some amazing talent. What's it like? to just coach people during this type of landscape? There's what's going on in crypto and then there's what's going on before. We were one of those interesting companies who had a long weekend a couple weeks back with our banking relationship. So you're kind of learning a lot of different things along the way. And you know, you're kind of learning that communication is the most important thing and to be direct with the people that you're bringing on board.

In the past month, as you know, we've brought on a new CTO, a new head of sales. and they don't have too many questions about crypto winter, whatever they think is going on in crypto winter. They're committed. They believe this is a big opportunity and it's transformational going forward. And what they're just looking for is like an appreciation for the approach and not an oversell, right? It's not like we see a large opportunity down the line, but it's not six months.

It's not 18 months. It's not whatever. It's like we're on this journey. And I go back to many of the companies, you know, Chris has been a lot of. effect since 1994, you know, and in fact, that was around a little bit before that. So journey's in this category for us, in particular, who are building kind of this long-term play in the data space right now, it's part of the game. There's new competitors. There's new opportunities. You know, we've gone back and forth, as you know, are we going to invest more in DFI research and

defy data? And there's ebbs and flows on that. And, you know, is that ready for our institutional client yet. So we've got tremendous optionality. I think when it comes to our approach to these market opportunities, but the best thing that I think we do really, really well at coin metrics for our team internally and how we manage it with our clients is on full transparency and great communications about what we're doing. It's not trying to oversell through what is a difficult time, whether it's macroeconomic crypto, winter, whatever it is. But data companies are, Facts that knows this as well. We're not impacted as much by the ebbs and flows of trading volumes. People always want a reason to continue to believe in something that they're there or not believe

and validate the fact that they need to move out of that position into something else. So, you know, I view us as things continue to adopt as being anticyclical. Like it's that nice, normal pattern, providing great services to your clients. And we don't have to get too worried about other things. It's unfortunate with some of the things that's happened to the crypto industry. But as we build the company and do that work, it's all about just direct communication. Chris, I remember in the early days I was talking to Tim, and he would make a lot of comparisons to the evolution of the credit default swap market for data. And there are some analogies there.

I'm curious as you look towards crypto and blockchain-based assets, if it rhymes with anything else that you've done partnerships with over the years in terms of other asset classes and how you see it evolving. From our perspective, we're not so much making a belief or a bet on crypto and digital assets. We're thinking of it as being responsive to our clients and where do our clients want to go. So it's not a, in that sense, we're not so much trying to see where we think the puck is going. Certainly on the distributed ledger piece, we are. But on the assets themselves, on the digital assets, less so and more focused, on just being hyper-focused on the client, right?

And just understanding where our clients need us to go and where they need us to be to be the best possible partner. And then once we know what they want and how they want that to fit, then going out and finding the right partner who can help us where they can say, yep, you understood what we wanted. And this is exactly the kind of things we're trying to do. Look, we bought at FACSET and I was core to this, so it's not something of, you know, it's a little tough. We bought Derrude Solutions in 2007, 2008, when their focus was on the structured product space.

And at the time, structured products was about 35% of at that time the Lehman Ag and just going up, up. Our timing on that, or, you know, my timing on that was somewhat epically. bad. But the core thesis of where clients needed us to be on structured products to have a more holistic understanding of that portfolio. Not that I'm saying that digital assets are going to follow the trajectory there. I don't know. And it's to some degree I don't care, right? I just know that where clients are going. We need to have the asset class coverage to meet their needs. Tim, how about from your end? I mean, what went into the calculus of doing this partnership with FACSET? So, you know, Chris covered some numbers at the beginning when we kicked off

about the number of companies they've acquired and the number of companies that they partner with in the data set. And having run a large business at Reuters in the day, recognizing that, you know, you're kind of putting your career at risk when you say, hey, give me $56 million dollars to invest in crypto data and I'll turn it into something interesting. And that's challenging, right? And I think what FACSET has represented to me over my career being at other companies in the space is a true partner for a small company like Coin Metrics who's trying to get a toehold into things. Some other firms are far, far more aggressive when it comes to just any number of different ways they deal with their small partners. Whereas FACSET appreciates us,

they acknowledge our capabilities and our skill set and they provide us a venue to show our chops and then it's up to us to deliver. They do what they do. They integrate the content the way that they need to. But then it's important for us to live up to that. At the top end, it's a super consolidated business around four or five major vendors in space. And by far the relationships that I've seen in other companies that have with FACSET and how it works, it's just a much more important relationship in the way that they nurture companies like coin metrics to grow into what I think we can be along with that partnership. I wanted to say that because it's really, really important to me about why we did this and not just because it's the three of us on this

thing. I could say other things about other partners who I wouldn't have chosen, but this is the one we wanted. That's a great place to leave it. Chris, where can we send people that want to learn more about the product and get hooked up to faxat? So a couple things. One, if you have faxed today, if you're a FACSET client, you've got access to a base level of the coin metrics data in all of the applications that you're used to using in FACSET, be it individual company security analysis, be it in portfolio analytics, in returns-based analytics in asset allocation.

We've taken a core set of about 20 metrics and made those available to all users in the workstation. If you don't know FACSET, if you don't use FACSIT today, definitely go to www.faxit.com or do a Google search. We did a press release at the start of January. Tim and I recorded a webcast towards the end of January, and there's a recording on there that gives you sort of a high-level update to kind of get you started.

If you're either a client or not a client and you're in the New York area, we're going to do a joint event on June 8th. In fact, it's New York office about two blocks south of Grand Central. We're starting to promote that right now. and would love to have folks come and learn a little bit about why we're working together, but we're also going to have a fireside chat with our head of government affairs on where we see the near-term regulatory climate. Oh, interesting.

We could have done a whole half hour on the regulatory affairs. Tim, and I'd be remiss if I didn't give you the chance to plug some of the newsletters and content that you guys are putting out. So where can we send people to learn more about coin metrics? Yeah. And as Chris said, we would love you to experience coin metrics through FACSET for a more intimate kind of approach. You can come to coinmetrics.io. There's a ton of data available out there as well.

State of the network comes out every Tuesday. You can subscribe to that. And I think our state of the market newsletter on Thursdays is a broader, kind of higher level view of the market. It one's really, really cool in gaining some traction. And then you can also on Friday mornings hear the coverage of the metric on the brink. We're happy to be a sponsor there. Good plug. All right, guys.

Well, this was a lot of fun. Thanks for coming on the podcast today. Great. Thanks a lot. Thanks, Matt. Thanks for listening to another episode of On the Brink with Castle Island. To find out more about Castle Island, visit castle island. To listen to all of our podcast episodes, please go to On the Brink dashpodcast.com

or just click on the tab in our website. Thanks for listening.