On The Brink with Castle Island - Ryan Rabaglia (OSL) – Cryptodollars: the view from Hong Kong (EP.90)

Episode Date: June 15, 2020

Ryan Rabaglia has had a colorful career trading forex, equity, and oil before making his way into the cryptocurrency markets. He's witnessed crypto develop from a niche, uninvestable curiosity to a liquid and financialized global asset. Now Managing Director and Global Head of Trading at OSL, one of the largest digital asset brokerages in the world, Ryan has a unique view of crypto markets. We invited Ryan on the show to talk his personal journey to crypto, how he established himself at a leading digital asset platform in Hong Kong, and of course his market color on the dollarization of crypto markets, and how Tether is understood and used in Asia. In this episode:  Ryan's journey from commodity trading to Bitcoin Ryan's explanation for Tether's explosive growth since March How funds play the Tether arbitrage game The compression of margins in OTC desks Where Tether's accumulated credibility derives from Whether there is a perception that Tether would resist regulators if it came to a fight Whether cryptodollars are forcing out BTC as reserve collateral How March 12 was a catalyst for the growth of Tether The growth of alternative use cases for Tether outside of inter-exchange settlement Why traders prefer dollars, regardless of jurisdiction Follow Ryan on Twitter. About OSL: OSL is an Asia-based digital asset brokerage that provides a global counterpart network with a suite of institutional products and services. OSL's capabilities include industry-leading over-the-counter trading with access to large pools of liquidity, systematic RFQ, exchange and custody services for institutions and professional investors. OSL is part of BC Group, which is publicly traded in Hong Kong. Learn more about OSL at osl.com.

What's up, everyone? This is on the brink with Castle Island. I'm Nick Carter. This week, we've a very special guest. Ryan Robaglia was kind enough to come on the show. Ryan is the managing director and global head of trading at OSL, one of the largest digital asset brokerages in the world. They're based in Hong Kong. They're part of the BC group, which is publicly traded in Hong Kong. So you've heard a lot about Tether on this series. You've heard a lot about crypto-dollarization. We've had Palo from Bitfinex slash Tether. We've had academics explain how tether price formation occurs. I wanted to get one of the participants right at the nexus of the crypto dollar markets.

There have been a lot of those timing analyses which have determined that tether is mostly used in Asia. And who better to explain the role of tether in Asia than Ryan, who has an amazing purchase on them and pretty unparalleled insight into them. We talk about Ryan's journey from trading commodities and Forex to Bitcoin. how he's seen the financialization growth of the space. And of course, we talk about crypto dollars, the crypto-dollarization of the industry, what that means, where it's coming from, where it's going, and some of the really interesting use cases for Tether.

I think the Asian view of the Tether markets is pretty underappreciated out here in the West, so extremely valuable. For me, I learned a lot. Let's dive right into it. Brought down by bad mortgage investments, Lehman, which has 25,000 employees will be liquidated. The federal government loans,

American International Group, AIG, $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 into Britain's ailing economy with a new round of constituted 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 the Bitcoin.

Bitcoin. So today we have Ryan Rabaglia on the show. He is the global head of trading at OSL. OSL is Asia's leading digital asset platform with arms in brokerage exchange and custody. They're publicly traded in Hong Kong. Ryan, thanks so much for coming on the show. Thanks, Nick. Happy to be here. It's exactly, we're exactly 12 hours apart. So it's the morning there, even though. here. We are. I feel so close though. When we did our first call, you're hitting the links. You're on the golf course.

It was. I got slaughtered that day, though. Oh, yeah. I felt a little jealous. I haven't played golf in a long, long time. I don't know when the next time I'm going to, I don't even know if golf courses are open here. They actually are. Actually, I still got a big crew over there in New York. And they are, Westchester, Long Island, I believe. The courses are open with some pretty restrictive. the rules though. Well, I guess you can be distant by its very nature. It's a distant pro-distance sport. So I'm really pumped to have you on. I think hopefully we can cover some interesting ground today. For those who don't know you, could you give us a brief background on yourself,

on how you made your way to OSL and how you ended up in Hong Kong? Sure, I can do. appreciate that. Like I said, appreciate the invite and being here. So yeah, I mean, I've I'm born and raised in New York. I started my journey down the rabbit hole in financial trading quite some time ago. It started out prop trading, U.S. equities, NASDAQ, in Queens, New York, actually. And that sort of brought me in front of a few interesting characters along my journey. So essentially, we built out a team of 10 traders there in New York, New York City. Essentially doing sort of manual high frequency scalping or the rebate game,

which a lot of younger guys probably don't know of or maybe have forgotten at this point. But there's a huge scene back in the day trading equities, particularly very liquid NASDAQ stocks, some of them potentially on their way out at the time. But either or hundreds of millions of shares being traded every day. So rebate trading was scalping. It was primarily called. We built out a pretty solid group there. of about 10 of us.

We eventually gained some recognition doing that for a couple of years at a very small shop there. We raised a couple bucks, went out on our own, moved over to Broad Street downtown, and we sort of, you know, formalized our group there. I think that was around 2005 or six, continued to play that game. The sort of the high-frequency scalping game was sort of. still very profitable. We were responsible for doing up to sometimes 30 to 40% of a basket of stocks volume per day with about 7 to 10 traders. So pretty significant volume done. And of course, it was quite profitable back then. That's what sort of brought me over to Hong Kong. A lot of my

group were Chinese Americans. So I had a little bit of a close relationship to this part of the world early on. 2008, I decided to move out here and expand that company. It was sort of up and down. 2008, I think if everyone recalls, wasn't a great idea or time in the world to go spend money, especially for a small shop. So I sort of set foot down here in Hong Kong in early April 2008, and things sort of just fell apart right then and there.

Although our business is still good, everyone knows trading is sort of. of, you know, environment agnostic sometimes, although it's tough to raise capital in that environment as well. So did that for another few years. Eventually, you know, our growth plans sort of came to a halt and we sort of gave up on that, although New York was still very profitable. I eventually sold out of that and got into oil trading, got employed here in Hong Kong for a publicly listed oil company, multinational, Singapore and Hong Kong, where it's two headquarters physical done out of Singapore and paper done out of Hong Kong. So essentially, we traded loads of, we run a prop book there as well for one of the owners

and for the physical business. So Hong Kong being paper, we did a lot of crack spreads, one, two, three spreads, excuse me, 231 spreads, RBHO spreads, calendar spreads. essentially we were a spread desk and, you know, hedging physical supply into Singapore, into Houston, into all those other, that Gulf area, as well as in the Middle East. But if you really boil it down, it was a prop desk, and there was quite a bit of risk on a table in that role. So super exciting. So I went from equities, and I also did a bit of FX execution in New York and Hong Kong on that same equities desk.

So did from equities, which is exciting as a young trader. And then, you know, into oil futures and swaps, some of it being OTC as well, super volatile. Even the spread game is massively volatile. And we saw that unfold late this year with Corona and what it did to the oil market. So I sort of dialed up my guys and they're just shell-shocked. So equities over to oil futures, volatility on top of volatility. I sort of left that game in 2013, a few of us on the desk sort of as I was working my way out of there. We sort of we found Bitcoin.

So of course, Mount Cox was was the main exchange or the only exchange really to to get money in and out of. And I still do recall going down to going down to the Hang Sang Bank on DeVos Road in central Hong Kong here, filling out my form, you know, for 10 minutes, wiring my $10,000 U.S. dollars. Hopefully it arrives at Mount Gox on their shady site. A couple days later, I see it pop up. Bingo, I'm in. I'm buying crypto then. Not sure what it is, not sure how to hold it, although I did sort of, you know, get the bug and get the feeling that this was,

there was definitely something crazy happening here. Um, so, um, sort of as I'm, you know, tinkering around, punting around on, on Bitcoin, mostly holding, but, but doing some early, some early scalping type of stuff, which, which I had some pretty good experience with. Um, made my way out of the oil, oil markets. Um, one of my good friends here in Hong Kong, who I used to socialize with was, sort of approached me. Um, and I would see him out at the, you know, out at the nightlife scene. here in Hong Kong. This was, I guess this was mid-13 around there. He's like, hey, we're starting a Bitcoin exchange.

And I always, I always like to tell everyone it was a Bitcoin exchange because no one calls it really a Bitcoin exchange anymore. It was a crypto exchange. So essentially, you only listed Bitcoin.

And then when you listed Lightcoin, everyone wowed, or you had name coin or peer coin. Those were the big dogs, That was the good old days. So he's like, yeah, we're starting up a Bitcoin exchange. I'm like, man, I've been punted around on this stuff for the last, you know, four to six months. It's been pretty good to me.

I mean, it's small money. But the returns were fantastic at the time. He's like, I need someone to make markets on this thing because it's just going to be a bunch of dead orders flopping around on a book. He's like, I need something. So I went over there in late 13. And that exchange is called ANX. It's the first exchange created in Hong Kong. It was sort of lining up to compete with the mammoth neighboring exchanges north of us in the mainland.

And it was pretty much the only one that you could do USD or HKD Fiat in and out of at the time. So essentially, you know, started making markets there. I started doing even more arbitral. now because it was another liquidity source versus our friends to the north. And, you know, as you can imagine, some of the opportunities that existed back then. And I guess you could say they still exist now, but it was just a different time back then. And this was late 13, early 14. So, you know, that's sort of how I got into this. And sort of how we grew out. this company since then. And of course, a lot has changed, you know, from a, from a staffing

perspective, from a structural and organizational perspective as well. And just we've matured, you know, a hundred times since then. That's quite the story. So when you first, you know, started looking at Bitcoin, what asset that you traded did it remind you of? Like, or was it something like completely, completely new in terms of its characteristics? I mean, to be honest, like when I got into the oil markets, it was, you know, even just punting around on WTI futures is wild. You know, like, I mean, you're talking up back in the day, your markets approach $100 a barrel. You have massive swings. You have your Wednesday evenings here in Hong Kong, which is your 1030 a.m.

In New York on the EIA numbers, markets just go nuts. So, you know, and you could put this across a number of different products or distillates. So, you know, it didn't remind me of equities, that's for sure. And I didn't have a ton of experience in any other real products besides, you know, it's called energy futures. So I would say it definitely reminded me of, you know, my first couple days on the desk on that oil trading desk and sort of not really knowing what I was doing. and people sort of, you know, giving me the look over the shoulder just to make sure I'm not blowing the place up.

It sort of reminded me of that. And, of course, you know, working for a public company, a multinational company in an oil business, there's a lot of controls in place as well. Yeah. So it wasn't a cowboy environment, but the market itself did definitely remind me of,

or, you know, bring memories back when I was when I was punded around in Bitcoin. And when you first started trading it, was it just for curiosity's sake? Or did you get at the time that it was like potentially this very important, you know, idea about having this non-sovereign monetary asset? Nope. Not at all on the ladder. It was just purely, you know, getting into that Gok site, you know, checking, you know,

checking that pathetic little order pain, where you input the orders, the order tickets and the position, watching a position monitor and, you know, the terrible gooey, it was, it was essentially just,

it's like, you don't care what you paid either, right, at the time, just because you knew it was going to potentially do 40% or 300%. So, so no, my original thoughts,

and of course, you know, I've grown up a lot since then. And I've invested a lot, of course, financially, but emotionally and mentally into this space since then. So I've definitely done a lot of growing up. But, no, those early days, it was all just getting ready for that next punt. Did you have the Gawks, two-factor, physical two-factor key, the Gox branded one? I actually didn't.

I didn't have that, but a bunch of the guys, you know, who I eventually wound up working with, you know, six months later. So they did. And I honestly didn't even know what it was at the time. I love that they had those. It's like commitment to a really narrow genre of security, you know, and like complete, you know, indifference to like the actual, you know, genuine security processes. Absolutely. Absolutely.

Yeah. No, I guess I wish I would have had that. I'm curious if you could get anything for that. I don't know for any value these days. I'm sure you can. It's a collectible now. All right. Yeah, for sure.

So one thing I wanted to talk about with you today is the new phenomenon that's happening. So on the heels of this kind of dollarization phenomenon that is occurring in terms of the dollar just eating up other sovereign currencies, there's also a crypto dollarization happening. So primarily Tether, but also other stable coins are basically taking over, inventing, the block space for Ethereum, you know, Tron, Bitcoin. I would say Tether has now really entrenched itself as the de facto kind of base currency for crypto markets. And this accelerated massively in March of this year, as you know.

And so given, you know, your centrality when the, then this market and your expertise, I wanted to probe you on, you know, what you make of this growth of stable coins, Tether specifically since March, you know, Tether is tacked on about $5 billion, almost $5 billion in market cap and monetary base, which is just staggering. Absolutely. Yeah, curious to just hear your view on potential explanations on why you think that might be. Sure. So, you know, pretty much the core strength of our company, you know, is our brokerage business.

And rightfully so, you know, we've had this component of our company. our business for quite some time now. We essentially built out the first OTC trading desk in all of Asia. This is going back to about late 15. So, you know, I've listened to a few of your other podcasts. I know of some of the other OG guys who built out some desks in your part of the woods. And those stories sort of hit home for me. And, you know, the point I'm getting at is, you know, we've, you know, we've had a pretty good

you know, sort of window into, into how things operate in this space for quite some time now. You know, we've seen the wild things. We've, we've been forefront with, with a lot of these different arbitrage opportunities. We're probably the biggest beneficiary of the kimchi premium back in the day. And I know a lot of the U.S. guys like to take a stab at it, but no one was in the backyard like we were. Right. Except for maybe some potential small-time punters, but, you know, not not on a well-capitalized, desk perspective. So, so this does give us a bit of a, you know, an edge to sort of look into

things and to sort of, you know, sort of spread our wings and, you know, say that we've, you know, we've observed this, these changes for quite some time. So I think it does give us a bit of insight into this. So what I'm sort of getting at too is, you know, zooming out, not necessarily just for this March, you know, this March incident where we did see this ballooning in from a market cap perspective, you know, this USDT or tethered has been, it's been on the client for some time now, whether it be from a very visible perspective on a, on a coin market cap refresh, or if you're talking about OTC trading, which we all know, no one has true visibility into. Right. A lot of, a lot of, you know, players, whether, whether they, where they ask for OTC volumes,

or media requests or whatnot, you rarely see it, unless you get some inflated BS number from someone just to prop up their books and potentially get a good sale price, who knows. But, you know, this market has been evolving for quite some time now. I'd be confident to say we're probably one of the largest tether traders in Asia, for sure. Globally, we're up there as well.

And this is from a facilitation perspective, of course. just considering our brokerage business. So, you know, we've definitely seen a change in behavior, you know, over, I'd say, let's call it two years, maybe a year and a half or so, when this is really where we started to see more use cases start to kick in. And a lot of it has to do with arbitrage. And, you know, I think, you know, previous reports or previous, you know, traders or whatnot have commented, you know, on, you know, the BitFinnix versus, you know, let's call it other spot

exchanges, no need to pinpoint. And, you know, the availability of getting cash in and out quickly, of course, that's, that's the foundation. And, you know, specifically, you know, from, you know, Tether's, you know, exchange company and, you know, banking delays and whatnot, it's always been easier to get USDT in and out. And there's always been a demand for it. And if you have these arbitrage opportunities, of course, then there's going to be an inflation, an inflated component, you know, from a volume perspective. So there's, there's been this evolution for quite some time now. And only until recently, you know, as we sort of, you know, now zoom back in again, have we seen an expanded, you know, sort of, you know, let's call a list of items that people are sort of checking off when they say, how can I use Tether? So, you know, beyond pure arbitrage, you know, there, and I could sort of, I could dig even deeper just on the arbitrage perspective, you know, it's essentially, you know, we're talking, you know, if we want to talk about, too, about the focus of using it is sort of that, that base currency pair, you know, of course, for BTC, and of course, because no one wants to get into banks anymore, or the exchange they trade on doesn't, doesn't have banking.

or proper banking. And or, you know, alt coins, of course. And this may be a question you might get into. It might front run you a bit here. As far as, you know, using tether is that base currency pair rather than BTC, which is what pretty much everyone was doing for quite some time. So this has brought a ton of, a ton of more liquidity into the market and a ton of sort of more need potentially from a minting perspective as well.

So can dig a little bit deeper into the arbitrage, you know, straight up Arbs, you know, let's call it the USDT-USD pair. The market is massive for this. And I also see a lot of, I see a lot of, you know, comments and posts about, you know, on exchange, tether volumes are dropping. It's to me, it's meaningless. Of course, there's a play or there's a case to be made, you know, as far as, you know, Altcoin and, excuse me, Altcoin, you know, let's say attention being drawn to them. You know, all coin markets have been, haven't been amazing as of late, except for some spotty, some spotty trades. But, you know, there's, there hasn't been that much to go on, you know, from that space. It's pure from, it's purely been on an arbitrage from. from what I see and it's all OTC.

So whether divulging numbers or not, which you don't really see, many people do, like I said, unless they want to give themselves a little bit of a boost publicly. The market just for the USD to USD ARB has been massive. And it really kicked in, let's call it earlier this year. I'd say even before March, to be honest. So what do you mean by the USD-USD-RB? because when I'm thinking about Tether, it doesn't trade at that massive a premium to the underlying. Or I guess it did for, you know, a few weeks in March.

But it's close to par right now, right? You're right. It is. I mean, it's, we'd like to joke here too because, you know, we have differing opinions here about, about Tether within the office. But of course, everyone wants to make money in a, yeah, in a very, you know, risk. conscience way. The arbitrage opportunity is not great, but you'd be surprised what people would arb and the thin margins that we've sort of become accustomed to here in this space. And any other OTC desk will confirm this, of course, you know, just the complete, you know,

compression of margins, it's been astonishing, you know. Everyone sort of called, called for this to happen a year or two from now and it wound up taking six months. And of course, you know, the amount of desks that's opened in the last year or two has been astonishing as well. Some of them, you wonder why anyone would enter, you know, this compressing margin state that we're in, you know, with limited capital and, you know, and whatnot. But I guess as you, as you view opening a desk up, it seems simple enough, you know, you just punt around and you get some clients and you make some spreads, but of course those desks wind up closing eventually. Banking is near impossible to lock down if you're that smaller player.

Maybe in the U.S., not so much, but anywhere else in the world, it would be almost impossible to get banking and to keep facilitating trade 24-7. But that Arab, you would be surprised. You'd be very surprised how certain traders, particularly in this part of the world, have extreme faith in tether. Now, I know there's been plenty of papers written about it. Of course, there's been plenty of articles written about, you know, people not believing what it's backed by.

We don't need to go through that. But in this part of the world particularly, you know, the average trader has more faith in tether that potentially than they do in Bitcoin. So, you know, yes, it is that shocking. And I'll tell you the truth, to trade for a one or two or three BIP-Arb, they would do it in a heartbeat, essentially putting millions on the line as well. And with that that accumulated credibility, is that just a function of longevity or is it a function of Tether having returned to the peg after these various crises in its history? So like sort of an anti-fragility? Or is it just a confidence in the issuing organization in Bipfinex? That's a great question, actually. I sort of lean towards the anti-fragility angle, you know, because each time, you know, And time and time again, it's almost like every time the next little wave of news comes out around tethered, I'm like,

oh, here we go again. It's that time again. The market gets its shock. People start panicking. You know, it trades at a discount for an extended period of time. But, you know, that anti-fragility, and I love the way you coined that there, is, you know, it's a huge opportunity for those believers. Yeah. Right. So, you know, there's. because no one trades small in this in this in this pair. You know, unless, you know, they're running some sort of business off the back of it where they, where they need some stable corner, they're redeeming. This doesn't fall under the arbitrage umbrella. You know, when I'm talking arbitrage, you know, two, three, four million bucks minimum per trade, you know, up to five, ten, twenty.

and some of these guys can can barely scrape, scrape this money together. They go out, go out on a, on a ledge to get the two, three bips. So when you, when you,

when the, the pair sort of comes under pressure, and you have that exaggerated sell-off, you know, quote-unquote exaggerated, because there is a real fear that you could lose 30% on it, who knows. So,

and 3% would crush a lot of those guys. So I would say, you know, when that opportunity, you know, is given and you sort of have that faith, and unfortunately, I'm not sure you could build businesses on too much faith, it's an opportunity of a lifetime for some of them. And essentially, it's just a punt. And that's what we see here. And you start to see volumes increase. Of course, once you start trading outside of that band, you know, all bets are off. you know, more legitimate players, we're not riding it and wait to see it come right back up to the top. Absolutely not. You can't take that risk.

So counter trading the confidence crisis, this has been a successful trade historically. And I guess that has inculcated the faith in this asset. It has for sure. I mean, of course, you could look at it from a liquidity perspective too. I mean, like you said, we saw a massive bump up. I mean, previous even the March bump, you know, the market cap was extremely healthy. Yeah, it's recently, it even went to, absolutely. So, and you, you compare that against a USDC.

Let's just take that. I mean, the market cap is 700, 800, I believe. Yeah, it's around there. It's less than one-tenth of, of others. So, you know, as much faith as people have, like in the, let's call it, USC and the organizations behind it, of course. Rock solid, packs us as well. There's no opportunity, though.

Let's call those true stable coins. Right, right. And is there, in terms of the credibility, which is kind of a strange way to put it, but is there an element of believing that tether, the organization would, would resist regulators or kind of go to bat instead of just rolling over if there were requests to freeze the coin. Is that part of the reason people trust the thing or this notion of a lower likelihood of being frozen in like a case of jurors? I think that's a great question too. And I think it's sort of tough, tough to answer that one. You know, considering what we've seen,

you know, in the past. I think, you know, each time, and this is sort of my plan to the last question as well, as, you know, each time we've seen, you know, these situations of duress, it's particularly with, with Tether, you know, we've seen the resiliency, right? And we haven't, we haven't,

the organization behind it itself is, has been pretty, you know, pretty steadfast in their, you know, their belief, you know, in that, in what they're doing is right. And they haven't done anything, you know, in any correct manner. I would probably tend to believe that they would, you know, they would go to bat. They wouldn't roll over.

But who am I to say on that? I mean, that's a tough call. There's a lot of money. You know, fighting the U.S. is never, never an easy battle. As we've seen recently with some other projects, as large as they are, regardless of where they're located. there's the intimidation tactic as well which which is enough to make people roll over of course I mean and let's face it you know they've already made so much money you know over the last 10 7 8 years however long it's been yeah it is there could be a potential for that event to

happen where they do roll over but for some reason I just don't think they will yeah they um they seem to be going from from strength to strength. I guess well there's still this NYAG situation. So in terms of replacing BTC or substituting BTC as the base currency for the industry, we've seen this happen on exchanges. So all those pairs that used to be Alcoin BTC, it's now Alcoin Tether. We're seeing synthetic products being quoted in Tether. Is this like basically the end of Bitcoin is like the reserve asset for crypto? I mean, like, does Bitcoin have a role there anymore? Yeah, well, there's no way that I could answer that and say, this is the end Bitcoin as a reserve.

I just can't play along with that for sure. But I would say the data would go against us in that manner. So now, I would say no, it's not. of course, you know, there are there are some outstanding issues as we just spoke about with, with Tether, whether or not those, you know, sway left or right, that's, we'll see how that pans out. Until then, you know, I do think that we do continue to see, we do continue to see this trend. I do think the market cap of USDT continues to swell, considering the market that we view here every day and other use cases.

that we've course have come across. I don't believe that it is the end of the BTC as a potential reserve though. Absolutely not. I think there's you know I think there I think there's room for more than one but at the same time you know at this exact moment considering what's going on with you know all these different areb trades and the lack of sensitivity towards higher profit margins for these particular traders. I do believe that this trend continues as we see it, as long as, of course, there's no external forces that come into play. You know, I'd say, you know, the probably initial resistance from some of the more key, let's say, quote, unquote, traditional guys who've been in this space longer to actually deal in tether, to list tether on exchanges, I wouldn't doubt that that starts to fold as well. well. I wouldn't doubt that you start to see other exchanges start listing it and they start

pairing other of their main tokens up with it. And it goes beyond what we've seen already, you know, because currently we know Bitfinix. We know some of the more, you know, sort of, let's call it, more cowboy type of exchanges. They'll easily do things. They'll easily pair stuff up against Tether just because they know the volumes there. They know the liquidity there. They know the traders that trade on that exchange, they will come, they will deposit tether. I have a feeling that you're going to start to see some other exchanges, start listing, start doing it as well, ones that have been a little bit reluctant to do so as of today. Was there something about that March 12 event, which was like a trigger for this, you know, like this kind of normalization of

tether? Because like I've noticed the same phenomenon. It's like people that previously were super dismissive of the asset. I eventually just came around. maybe not wholeheartedly, but there's something in the resistance to Tether as like a valid asset which seems to have decreased recently. Sure, sure. I think it's a good point as well. You know, does it stem exactly from that data? It sort of seems like it has, you know.

Well, just by the numbers, right? I mean, like that was when Tether started printing $200, 300 million dollars a day in terms of new issuance. Definitely not a small amount. So like I'm trying to pinpoint like why that extreme volatility day would have you know caused more demand for Teler to materialize. Well I mean I think you know for myself probably if you zoom out a bit again is it's more of a stable coin play for in in my thoughts here. And I think a lot will agree with that too and that's a pretty common topic of know, you know, are stable coins, you know, going to be replacing or be a dollar substitute, which, of course, that's what they're intended to do and to make things easier on ourselves

and others in the industry for as far as, you know, transacting and moving funds around. But, you know, that particular date, was it the catalyst? Like you said, certainly seems so from a numbers perspective. You know, why tether in particular, though, is the main question, right? It's because we didn't see a massive ballooning in USDC or PACs. They grew, but, you know, not anywhere in as much. Exactly. So, you know, I think it, I think it plays into this, into this rhetoric that I've been sort of spitting here as well, too, is, you know, this, you know, this, this potential need for, for a more liquid U.S. dollar substitute that sort of reaches the masses.

And when I say masses, I mean, you know, who is the key contributors or traders in this space and where are they operating from? And in particular, and which one potentially gives you a potential capture some margin as well. And it is teller. And it always has been. And like I said, our volumes here on the desk have massively grown since, like I said, close to two years ago when we started really hammering away at it. it's it's definitely always been you know an attractive play for a number of our counterparts and like I said too and like you said it sits at par you know you you trade a premium you trade a discount from time to time so you know if indeed you do

have that you know that catalyst type of event that was speaking of combined with the potential opportunity to you know to play the angles along the way I think, you know, something like Tether actually fits both molds. You know, it gives you that USDA stability. It gives you that, it gives you that gateway into those other pairs. It gives you that potential ARB opportunity. And like I said, you don't need much of an ARB. You really don't, you know, when people are viewing it from afar,

and they're like, there's just not enough to play there. I'm telling you right now there is. And then, like in terms of like non-crypto use cases, is there, Have you seen any evidence to support the idea that Tether is actually being used in a transactional context outside of the crypto industry for regular like B2B payments? B2B payments, I think so. I think so too. I mean, you know, this not necessarily from our, from our desk's perspective, but there's a number of, a number of use cases we've taken note of. a few of them, one of them being, you know, of course, e-commerce where, you know, certain parts of the world call it our region here versus, I don't know, somewhere like South America. You know, there's obviously a lot of business that's done between those two regions. And of course, every other region in the world does a lot of business with this region.

But in particular, let's just point out those two. and there's a substantial amount of e-commerce being done and settlement in in crypto is extremely sort of running rampant. And, you know, I think this is something that we, for all of us who have been in the space for quite a while and the old adoption talk that everyone has and when is adoption coming, I think we've sort of given up on it. But, you know, we chat about it here and there. But, you know, this is true adoption.

whether or not, you know, you really want to, you know, raise the trophy and say, you know, we finally did it, boys. I wouldn't go that far. But, you know, this is true adoption. It is truly being used. And this is a very good use case for it. For another one that sort of has been surfacing for quite some time. And this is a little bit of a, I guess a little bit less spoken of. Use cases, you know, in online gaming as well.

You know, so we, you have Southeast Asian, call it a Southeast Asian gaming site. You know, they need funds in local currency onto the, onto their site. You have users in other parts of the region here, not necessarily in Southeast Asia. They want to partake in that site and, you know, use their services. They send USDT into that. that site that USDT is then converted back into that Southeast Asian currency, which, you know, helps facilitate the, the all-around flow for that, for that operator. It gets the user on onto the, onto the platform as well. So you actually have two sides. And all of this plays into the,

into the volume spike too. I like to say it plays into the whole, you know, extreme minting scenario as well, which, which I'm sure it does. But, you know, there's, there's plenty of tether on the streets as well. So, you know, this other use case, you know, where you actually see two sides of it. You know, you see the end user accumulating or obtaining tether. Then you actually have them, you know, the end user being the operator, cashing it out as well. So you actually have two sides of it in two different VR currencies. You have players in between.

You have a potential arbitrage opportunity there as well, even on an FACR. FX front. So you could see how this just keeps spiraling. Yeah. And it's interesting to see that like the distribution of sovereign currencies that stable coins are peg to is, I don't know what the percentage is, but $98% as opposed to any other sovereign currency. Sure. I don't know the number either, but I'm not surprised. It's just the overwhelming. There's some gold, you know, you got tether gold, packs gold now, which is kind of interesting. But it seems to be dollars. And, you know, I guess the dollar depreciates at a slower rate than other sovereign currencies. But I'm also kind of shocked that it doesn't mirror the kind of global distribution of sovereign currencies, you know?

Like people X. U.S. are still trying to get access to dollar denominated risk as opposed to any other sovereign currency even if it's a local one absolutely of course you know i think that you know viewing viewing the u.s from afar is always it's always a completely different picture you know me growing up there and living there my entire life and being here in asia for 12 plus years now completely different perspective on the world um and of course a lot of a lot of americans or or u.s based uh friends or or associates or whatnot, or ones that travel quite a bit versus ones that don't, or ones that have lived overseas versus ones that don't, you always see this massive divide in what people actually see from the outside. It's very interesting. Unfortunately, it's not always

very positive. When you actually get a real look under the hood and you start to talk to people who haven't grown up there or who haven't, you know, don't appreciate certain things. about it as well. And that gives you a look inside of, you know, just the control that the US has, you know, through exactly what you're talking about here. Through this, let's call it, this mechanism of, you know, this perpetuated, you know, I guess you could call it idea that, you know, that it's sort of needed, it's needed outside of, outside of the US. It's a blatant fact. I guess it's interesting that you have finally a way to to get exposure to dollars and all the benefits that entails without the control that's exerted

through the traditional banking system. So potentially the best of both worlds in this case. You can put it that way. So, Ryan, it's been a pleasure. Where can people follow you? You're on Twitter, I believe. Yep, I'm on Twitter. It's actually the only social media site I'm on at Markets, maven. Okay. All right. Well, thanks so much for coming on the show. Really appreciate it. It's been an education. All right. Thanks, Nick. It was great getting to know you as well.