On The Brink with Castle Island - Sunayna Tuteja (TD Ameritrade) on crafting an institutional digital asset strategy (EP.45)

Episode Date: February 24, 2020

Sunayna Tuteja, the Head of Digital Assets and DLT at TD Ameritrade, appears on the show. On this episode we discuss: - What guides TD's decision making in this asset class - How they think about blockchain/DLT versus Bitcoin - Crypto ideology versus crypto agnosticism - Her career trajectory to date - Lessons from being a pilot

What's up, everyone. This is On the Brink with Castle Island, and I'm Nick Carter. We often talk about bridging the gap between the wild west of the crypto industry and the world of traditional finance on this podcast. Matt and I have experienced this firsthand, and we try to surface guests who are working on the inside of some of these highly regulated financial institutions and are trying to balance crypto evangelism with the standard demands for rigor and compliance that they might be subject to. So our guest today is Sunaina Tutteja, who is the head of digital assets and DLT at Td Ameritrade and is no stranger to these questions. So TD Ameritrade is a business that's been on the front lines of democratizing finance, so to speak, as one of the first discount brokerages. TD was also

one of the first major brokers to offer investors access to the CBO Bitcoin Futures product in December 2017. So in this episode, we get a chance to learn about how Sinana thinks about digital assets, how they fit into TD's business, and what Bitcoin means to her. I'm very grateful to Sanana for appearing on the show, and I hope you enjoyed as well. 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 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. Welcome back to On the Brink with Castle Island. I'm Nick Carter and I'm sitting here with Sunaina Tutteja, who is the head of digital assets. and DLT at TD Ameritrade. Thanks so much for coming on. Welcome to the show. Thank you, Nick.

I'm delighted to be here. I'm a fan of your pod, as you call it. I'm so glad we get you on. This is really exciting. I've wanted to have you on for a while. And we have a lot to talk about. I think a lot of people in the crypto space are not even aware that TD has a presence in crypto.

I think there's a lot to cover today. First of all, maybe we could just start up with your professional journey, kind of classic hackneyed question, what your particular path was to wend your way into being the head of digital assets at TD? Yeah. So previous to this role at TD Ameritrade, I was our global head of strategic partnerships in emerging technologies. And the mandate within that role was, how do you tap into the power of nascent, yet fastly adopted technology? but in a way to commercialize them and to solve problems that continue to persist that keep consumers away from capital markets. So our thesis was very, you know, rigid in the sense that, you know, we were focused on commercializing and not at all interested in innovation petting zoo or innovation theater of any sort.

And the guiding principle really was the way consumers' behaviors are evolving, given new technologies, are going to transcend into the way they manage their finances. or want to invest and save and trade. So how do we use new technologies to continue to remove those points of friction and essentially break down barriers? So it makes it more convenient and simple and fast for our US consumers, but also our growing footprint in Asia to access capital markets in a well-informed manner.

And as part of that, was fortunate to build an amazing team. They used to call us the Tiger Team. It was something our CEO started calling us and kind of stuck. And then we embraced it. And, you know, we worked with tech firms, a global in size, everything from Apple and Tencent in Asia to the startup ecosystem. And then really looked at the portfolio of technologies ranging from artificial intelligence to machine learning, to even AR and VR.

And blockchain was a subset of that portfolio. So, you know, we had been. looking at ways to experiment, but also commercialize this technology, I would say, since 2015, 2016, in different ways, working with our head of operations to figure out how we can use this technology to further modernize and automate and bring efficiency to, you know, traditional markets, which still need a lot of that. Also looking at it from a payments angle, you know, when Bitcoin was in its nascenty and people were trying to figure out, is this a way to modernized money movement, which is a big part of our business. And then that led to really

looking at the emergence of the asset class, right? I'm very proud to work at an organization that took a progressive view that, yes, we love blockchain, but we also love Bitcoin. You know, for us, it was, you know, not one or the other, but actually the power was inherent in exploring both. So your title kind of reflects that digital assets and DLT. crypto, quay, the asset class, and then the sort of quino-go underlying technology as well. Exactly. And, you know, it was an evolution, not a revolution, as nothing in our categories it is. And, you know, from being a subset of my overarching portfolio, as we start to realize and lobby that, you know, there was a massive impact to be made in this category. But also, we felt

that we could make a meaningful dent, you know, given our history, if you think about it, the TD Ameritrade for over 40 years has been in the business of bringing Wall Street to Main Street, which is how do you break down barriers that empowers everyday consumers to access capital markets to take care of their financial well-being, right? In this case, we're doing the same thing, but with a twist, we're bringing something that's a Main Street product and taking it to Wall Street. So, you know, I just felt that we had to give it its full focus. And, you know, again, fortunate that I work in an organization where our leaders and our constituents agreed. And I would say the last thing that drove us to kind of really put that much effort and attention were our clients.

And, you know, happy to double-click into kind of how we're guided by that voice of the customer and all the decisions that we make. Yeah, it's not every day you have a new asset class. So I think it's safe to call it that, which is retail driven as opposed to, you know, created by, you know, in the back office, by financial engineers, you know, on Wall Street or something. I'm trying to think of historical analogs, but crypto seems to be a very much retail-driven phenomenon. I would agree. And I think the other thing about the space that allures me is how this is also the first time that it's not just about a technology, that it's multi-disciplinary.

in its DNA that in order to engage with this technology or this asset class, you're actually looking at those multiple prongs of studying the technology, looking at from economics model, there's the ideology, you know, there's the movement. So it's really intriguing. I don't think we've seen a technology. I mean, in my previous role, I did a lot of work around AI and machine learning, both here and in Asia, you're really focused on the technology element. Whereas when you come to crypto, it's this amazing and confusing.

tapestry of, you know, different disciplines, which I think just, you know, makes it much more exciting and challenging. So you've had a really interesting and varied career. Do you want to tell us a little bit about your, the different roles you've had and how you, you know, found your way into this position? Yeah, I was doing this exercise over the holidays. I don't know why. Just cataloging the different assignments. I've had the privilege to lead and work. not just in the US, but starting my career in Canada and having worked globally in Europe and Asia.

And I think by my count 90% of the roles that I've had, I was the first to have them. So either it means I'm not qualified to do any other traditional roles within finance or without knowing I've kind of leaned into some of the, you know, some of the assignments that are more towards the edge and really finding a way to normalize them. So I started my career in Canada and had the benefit of really through rotations, experiencing everything from the eye banking and security side of things to commercial banking to retail banking and then into online brokerage and then also having geographical experience, having worked not just in North America but also Asia and EU. know, one of the, I don't know that I use this at my litmus test, but I think maybe somewhere along the way I must have, you know, absorbed it by osmosis, but one of my very early mentors said to me, you know, throughout your career, chase competencies and experiences, and, you know, the title and the money and, you know, the status will kind of take care of itself, right? And that's been a very important anchor for me, you know, given the choice between a traditional path, and, you know,

in finance, and I'm sure through these tradeoffs I could have been somewhere else in my career, versus taking a more non-traditional and trying different things. But I would say always anchored in the notion of working at the intersection of finance and technology and really guided by the ethos of how do you break down barriers. So access to banking, access to capital markets, access to investing can be made more mainstream. So everyday consumers can take advantage of it and not just the few. So it's interesting because, you know, TD, you might want to get into the history of this a little bit, but TD has a history of taking, you know, equity trading, really, and kind of liberalizing it, you know,

making it accessible to normal folks. You know, you used to have to, I guess, call your broker up and pay something preposterous in terms of transaction fees to make a trade. And then online brokerage really changed a lot of that. So that is genuinely democratizing. investment. And then in crypto in, you know, from 2016 to kind of 2018, we saw this language co-opted a little bit with really the ICO boom, which was sold in part as, you know, access to capital markets or access to venture style investments on the part of retail investors, you know, globally without restriction, which, you know, was pretty much maybe a bad

idea in hindsight, or we at least got a lot of malinvestment, a lot of people lost money. there's a lot of fraud and misbehavior. I don't know if I have a question, but I guess there must be boundaries to democratizing investment. It has to be done responsibly with guardrails, I guess, right? Definitely. Listen, I live in the heart of Silicon Valley and I often get chided about why we can't just move fast and break things and figure things out, not just in the world of crypto, but even in some of my previous rules. And speed is definitely important. What is that saying, the difference between the winner of being an incumbent or a startup is, you know, will an incumbent find innovation before the startup finds distribution, right? And that's why our approach has kind of

been three-pronged, which is, you know, what core competencies and experiences do we have that we can lead with and make a dent? And that leads to what products and experience will we kind of curate and build ourselves, right? But the second and equally important part of our strategy is, the whole notion of partnerships and investments in co-creating, right? And, you know, who can we work with that maybe, you know, can bring their strengths and, you know, we can combine, you know, kind of become a force multiplier versus trying to do something that may not be in our core competency, right? Like, defy is very exciting to me, but that would be an illogical place for TD Ameritrade

to take the lead. But we may say, hey, maybe there are some projects that intrigue us, excite us, and we may want to lean into it by partnering with somebody or co-creating with somebody, right? I think that was a big part of our thesis behind one of our publicly disclosed investments with Aresax, right? You know, really a believer in what that team is building in terms of a regulated exchange and clearing from day one.

And, you know, while it sounds quaint in the Silicon Valley context, and I think, you know, there's a lot of maturity there now too is when you have the privilege and the responsibility of surveying over 10 million retail clients, and 10,000 RIAs, you can't be glib about this, right? A, you're playing a long game, and two, there's a great degree of prudence that comes with it, and it's your reputation, right? And, you know, it may sound quaint, but I'm okay being in the business of, you know,

asking for permission versus forgiveness. Yeah, you know, it's very, it's been very interesting to see the kind of Silicon Valley disruption mentality clash with financial services, which is highly regulated. industry and really rightly so. You know, a couple weeks ago or last week, we had Jake Trevinsky on the podcast, who is the General Counsel of Compound, which is a defy company. Yeah. But Jake is also extremely, you know, honest about the fact that capital markets need rules

to operate. And, you know, I think sometimes Bitcoiners need reminding that, like, securities and equity markets, they're kind of institutions which require a rulemaker and a referee in order for them to operate. Otherwise, anarchic markets, you know, they, you have lots of misbehavior, basically. And, you know, the reason we have the, you know, the current securities laws that characterize their equity markets was because there was all this malfeasance in the 20s, you know, all of this malinvestment. So that was a reaction to anarchy, basically. basically. And the U.S. has the most vibrant capital markets in the world, I would say really

because of the governance regime that exists here. I would agree. And I think the reference that you made about TD Ameritrates history, I think that has been a huge competitive advantage. And one of the reasons that, you know, people like me and teams and projects like we're working on here thrive in the TD Ameritrade environment is that innovation is in the DNA, right? This is a company that led the way not just creating the category of online investing, but also using the technology if it's time to further democratize it, as you said, whether it was the first online trade or the first mobile trade. And having that in your DNA, I think, is important. But what it also reminds me of is, I hate to quote my dad, but he often says there's nothing new under the sun. And sometimes it

feels that way. I was sharing with you offline. I was on a bit of a biography binge during the holidays and, you know, just partly out of curiosity and just wanting to better understand the history of our industry and our companies, two of the biographies I read were Charles Schwab's new biography invested and Joe Ricketts's biography, the harder you work, the luckier you get. And again, these guys don't need my help pitching their books. But the reason I bring it up was if you were to remove reference to online brokerage from their biographies and just followed the storyline of what it took to give birth to this industry, which actually is not that old, about 40 years. You would think they were talking about digital assets and, you know, crypto markets, right?

The equity brokerage industry? Yeah, like it was phenomenal, like the residents, you know, and the mistake. For example, you know, we, you referenced the alt-coin phenomena, you know, we'll call a phenomenon and leave it at that. You know, they, the birth of the online brokerage led to this whole penny broker scheme and pump and dumb. And these guys had to go get no action letters from the SEC because they were operating in a somewhat, you know, regulatory ambiguous environment.

There was no infrastructure. the way they leveraged technology to build something that didn't exist. And one of my favorite anecdotes from their stories was how the incumbents of that time, really the banks and the wirehouses, which realized they were going to lose these rich commissions, started to reference these new players as discount, but more as a pejorative in order to tell their clients, you don't want to be dealing with the discount brokerage. And kudos to these founders, they actually embrace that terminology. But it's, you know, those are some subtle examples.

But I would encourage people in our industry to go read those biographies. It's just a great reflection of the history. And I think there's a lot we can learn from what they did. And maybe there's some things we're like, hey, we want to do it different from day one. That's, there's a line that Matt Levine, the Bloomberg columnist, always says that Bitcoiners are just re-learning all the lessons of financial history in an accelerated way. I think that's very well said, as Matt Levine always has a way with words. It's very true. And you look at Bitcoin or crypto solved this problem of settlement risk, you know,

by having final essentially physical settlement for each transaction. And then that reintroduced a whole new class of problems, which is efficiency. And then so then we invented deferred settlement schemes, like side chains, liquid would be an example. And I would argue that lightning is basically a form of, deferred settlement. And then all of a sudden you have a settlement risk, it reintroduced into the process. And it's like, huh, so maybe there's a reason that settlement exists in these traditional systems in the first place. I always find it so funny that we've come full circle

in this industry. It is fascinating, indeed. Although, you know, you might say, well, it's not just a naive recreation of like finance. There's like a reason that we, it might be worth doing even if there's pitfalls because the asset underlying all these things, you know, has desirable properties. And I think each time we do, the outcome gets better and better. You know, I, you know, I often say there's a lot that's been built in terms of infrastructure in traditional markets that we ought to and we are leveraging from a crypto perspective, right? But there's a lot of new work that's coming into play to design crypto markets which have unique variables, which I believe we should and we will port back to traditional markets, right? The traditional markets

by no means are perfect in every way. There's a lot of room to grow, a lot of room to modernize and automate and bring efficiencies to bear. So I I kind of get turned off with the this versus that debate. I'm more of, you know, take the best from each and kind of, you know, create that force multiplier kind of mindset, you know, and I think that pays off in the long run. And ultimately, you know, we'll double click into it. Every innovation that we've leaned into, you know, and it's, you know, what's that saying at the beginning of all that begat, it looked weird or something, right?

I'm not doing it justice, I'm sure. but we willingly decided to lean in because we're guided by, you know, the voice of the client, right? So for me, the final litmus test is, you know, it doesn't matter if I'm building or if I'm co-creating with somebody, if it's traditional market infrastructure, crypto market infrastructure. At the end of the day, does it make things better for that everyday consumer and help them realize their financial futures? And I think if that's the anchor of your mission, the rest just is noise. That's interesting that you mentioned client demand as a driver of your strategy on this topic. Was there kind of a critical moment where you realized, oh, like, it's time to take digital assets or crypto seriously?

Are there metrics that you pay particular attention to to track the growth of the industry? Yeah, I think a big part of why within quote-unquote traditional Wall Street, we've taken the view that we like blockchain and Bitcoin, which I'm surprised is still a minority view, is largely guided by our clients. You know, we hear from them and we continue to hear from them. You know, we take millions and millions of calls every day. You know, there's no better way to stay connected. with your end consumer and know if you're doing anything value at it or where kind of you're missing the gap. You know, the request and the questions and just the desire to learn through calls, through emails. You know, we decided to put a little button on some of our platforms, just asking a benign question, are you interested in digital assets? Are you trading digital assets?

Do you want to learn about them? Thinking if 10 people tap on it, you know, great, you know, further codifies, you know, my pitch. Wow. Like hundreds and hundreds and hundreds of responses consistently every day. Now, obviously, you see it, you know, ebb and flow just based on some of the market dynamics, but that consistent demand has really been, you know, the tailwind behind our strategy to say, in every innovation that we've undertaken at TD Ameritrade has really been guided by that mission of, you know, client-focused innovation. As I said earlier, I'm not interested in innovation petting zoo or definitely not interested in blockchain theater. My team jokes, you know, I'm usually the most ruthless when it comes to saying no to all the projects I mean.

And they're like, shouldn't you be the one biased to say yes, given your role? I'm like, no, because when we say yes, we're sticking our credibility to it. And we have to know that they're actually solving a meaningful problem. And there is a value. you add to the end client and other constituents in the variable. So, you know, that's really important. So I think with digital asset, it really, again, just like the asset itself, our need and desire to lean into it is spurred by retail clients and our advisors, you know, which I think is the best way to do something.

It's not a top down. I thought of something sitting in my corner office in an. ivory tower, I don't know if those still exist. I'm usually on a plane, but, you know, but I think having, you know, having that come from your consumers keeps you honest, keeps you accountable, but it also gives you credibility internally within your organization when you're trying to lobby for something that may be outside the realm of what you do every day. One of the interesting, maybe more critical paradoxes in this industry is, you know, its collision with the world of regulated financial services, in particular, you know,

custodial institutions like custodians, obviously brokers, exchanges, you know, crypto started as a total wild west trading on, you know, really sketchy exchanges and then underwent this migration, you know, where now. it's being custody by some more traditional Wall Street institutions. And some of these exchanges, conventional exchanges, are lending at their credibility by listing Bitcoin products. But some Bitcoiners rebel against this. They, you know, they see a paradox there.

They think, well, you know, wasn't the whole purpose of this asset to have self-custody. You know, why should we even bother with third-party custody? You know, what about self-sovereignty? But then if you look at the data, you can kind of do some reasonable estimates. Probably about 20% of all Bitcoins that have ever been mined exist in a custodial manner. There's a huge amount in GBDC. There's some in the coin shares products. Obviously, there's a coin base is between about 900,000 and a million bitcoins.

So anyway, Bitcoiners see a bit of a paradox there. However, you know, I guess your view is that you can harmonize the nature of digital assets themselves and this idea of intermediation. Do you see attention there? We are guided again by who are the clients that we're catering to. And that defines how we think about the products we develop, the experiences we render, and everything in between, right? So you're right. I think for folks, including myself, I mean, I consider myself pretty early, 2011, 2012, you know, there was, I would say, a stronger leaning in from an ideological

perspective that maybe drew us in, right? As I talk to and I hear from a lot of the consumers that are now tapping into this asset class, I would say those viewpoints are perhaps more pragmatic, right? The thinking is, you know, I want to learn about this or I've invested in it or I want to invest in it because it's great from an asset allocation, diversification perspective. It is potentially uncorrelated alpha. It is potentially a safe haven asset, right? I think those are the traits that are drawing in the next wave and the wave after and the wave after of consumers. I don't believe it is my purge to pontificate or to apply a chivalis, as you know, you once elegantly wrote about, you know, your intention of, you know, engaging with this asset class, right? I see our role twofold.

One is, and this is an area where we've spent majority of our time thus far and really proud of it is around. building and delivering a rich repository of education, right? So even if you're coming in for pragmatic reasons and you may not be the one inclined to spending your time, you know, reading the white paper or all the rich blogs and following every commentary on Twitter, we believe you ought to have, you know, the right level of information and education and also credibility. I also don't want you to go watch some charlatan-created video in some place and, you know, get yourself in trouble. So we've taken a lot of time in designing a cohesive education approach

that starts with basic content to intermediary, to sophisticated, so we can meet you based on where you're coming at it from. And I think that's important. I really do believe education is a silver bullet. And then you, you know, I'm not going to tell you what to do, but I'm going to give you the right facts and information. And then the end consumer is going to make the decision that's best for themselves. And then the second, you know, arena is really around thinking very hard about the usability, right? We forget that buying a Bitcoin just a few years ago was a very torturous experience.

We've actually come a very long way. I think I bought my first coins on a Bitcoin ATM, which was certainly a challenge. Yeah, I will tell you stories offline. Back in the day, you had to use, like, Bid Instant. We had Dan Matashevsky, who's formerly of Circle on the podcast. He said his first Bitcoin purchase was he bought it with cash at a convenience store. Yeah, I can relate to any of those.

But I think we were willing to jump through the hoops because there was something that drew us in, right? Consumers today, and especially consumers, so I think of my clients. If the Nirvana experience is one day Nick logs onto our platform and on one side is his Fiat portfolio and every which way that he can tap into traditional markets ranging from index funds, all the way to sophisticated instruments like options, futures, Forex, you name it, right? I would love that in parallel, you have your crypto portfolio and all the same choices

and instruments through which you can tap into the digital asset marketplace. Obviously, there's a lot of work to be done within the ecosystem to get there, but my point being, when a consumer that we catered, it comes in who has a finite amount of investable assets, if the experience for engaging with digital asset is just a little bit harder or not as easy or cleaner, they're going to be turned off

because they have this built-in expectation from engaging with traditional markets for best acts, you know, frictionless UI. They don't have to worry about all the 50 things that happen in the background to, you know, fill their order. And, you know, they're going to have a lot less patience for any of that additional friction in the crypto experience. It's so far. funny to contrast equity markets with with crypto markets. When you buy a stock, you have, you don't care where it's where the trade actually occurs and you don't care about the custodianship or the final settlement of the stock certificate. It just happens without you, without you looking at it. And then in crypto by contrast, you often have to take physical custody

of the asset. You have to get membership on an exchange, which is so, funny. Imagine, you know, me trying to go to NYAC and trying to sign up for an account as an individual. So, so this, we're still, we're still in the primitive era. I think it's also a choice. I think with crypto, the difference is there are people, regardless of how much we simplify this experience, will want to self-custody, right? And that's okay. You know, I think I go back to, there are a variety of different instruments and on-ramps that through which you can engage with this asset class, right? I'm not going to, you know, I may have my own preference, but I'm not going to be the one to dictate it to my consumers or to people in the ecosystem. And I think

people will start to self-select, you know, which brand caters to their level of experience. Like even today, given the massive rise of discount brokerage, you know, we do have people who choose to work with an RIA. We do have people who choose to work with private bankers, right? We still do have managed products, right? So, you know, where I, you know, where I, get a little bit, you know, turned off is when we start to dictate choices, you know, wasn't, again, it wasn't one of the ethos of Bitcoin and thereby, you know, crypto, that we want to be a big tent. We want to offer that, that on-ramp to everybody who otherwise seems to be left out by traditional Wall Street, given the unnecessary complexity and opacity. So sometimes I'm like,

why are we adding those layers and, you know, adding that shibola test, you know, to each their own as long, you know, you're not doing anything unethical or amoral. Yeah. Yeah. And it's interesting to see that, you know, the financial rails, the U.S. controls have been co-opted in a certain way. They're used for strategic, even military objectives by the U.S. The banking system itself has also become politicized, you know, who has access to payment

processors and we've seen social media mobs, you know, depriving certain pariah organizations of access to banking, which is really that kind of is an effective way to choke off a functional organization. So to me, Bitcoin is as much a reaction of that, the politicization of standard financial rails, which makes it something which is only unevenly available to people. I guess the point I was making was that in crypto we still have bundled brokerage execution and custody, whereas in capital markets those are done by specialist organizations. So I don't even know if many of us foreseen unbundling occurring. There's that expression. There's only two ways to make money by bundling and unbundling.

I was thinking the same thing. Yeah, Jim Marksdale, I think. So we're maybe on the cusp of the unbundling stage where potentially some specialists, you know, realize, okay, well, I'm great at being a custodian. I'm not so good at being a broker. Or I'm great at being in exchange. I'm not good at the other stuff. That's definitely the direction I see this going. I would agree.

And I think scale is going to dictate a lot of that, right? And again, I sound like a broken record here, if that's still a thing, is consumer preference, right? Does you consume, I mean, the reason we bundle, unbundle, bundle, bundle, is largely based on consumer behavior, consumer preferences. So I think, you know, the scale and what consumers want is going to dictate that. And maybe we'll have fragments where it's a bundled experience for certain type of consumers and a more unbundled, you know, the responsibility lies with the end consumer versus an institution-type experience. And I think we'll see different brands cater to that.

I think we're very conscientious and purposeful about the lane in which, you know, we believe that we can make a dent, given our core competencies and give her the consumers that we have the privilege of serving. And I think it's important that, you know, that kind of be your maniacal focus. So if you look at the exchange landscape, you touched on this earlier, I would say there's kind of three broad categories of exchanges. You have the fully regulated exchanges which have gone for those licensing requirements, you know, stuff like the New York Trust license, various licenses with the CFTC, you know, like backed AirSX, which you mentioned. Then you have the kind of intermediate exchanges. Some of them are, you know, they've been around for a long time and they went and got the state-by-state money transmitter licenses. maybe they have an MSB, maybe they don't have a trust license. And then you have the, you know, call them the cowboy exchanges,

which are just kind of like free agents and roam around the world looking for a friendly jurisdiction in which to post-up operations. And in fact, a really large fraction of crypto market volumes go through this third category of exchange, which is kind of an interesting state of affairs. Do you feel that this exchange environment, is going to shift? I mean, can it be stable where half of the liquidity is going through basically offshore exchanges? You know, what is the role for the exchanges like the Eris X,

which have gone for that kind of regulatory rapprochamala? I think so. I mean, I think the volumes will start to balance out, but I think it will again be dictated by the consumers that are onboarding into digital assets, right? I mean, we've come a long way, but we forget it's 10, 12 years into the journey, and there's still, you know, we've attracted very small segment of consumers into this asset class, right? I think as we start to, you know, expand into new markets, into new consumer DNA, I think that will start to dictate kind of how those volumes start to shift. And again, that really was part of our thesis, you know, in our partnership and investment with ERISX. And I think the other thing I would say from a corporate lens is when you are taking the lead in terms of commercializing or bringing a abstract concept to life within your organization and a concept that's still nascent and information in the marketplace, you know, there's always that balance of,

you know, the delight of your experience versus the security of your experience, right? And for us, as a starting gate, I'm quite okay with my experience being more conservative in order to make sure that from a security, from a regulatory perspective, you know, everything is as buttoned up as it can be, right? Because then the more you learn, then you can say, okay, you know, we can change these risk parameters or certain things are, you know, are codified, AML, KYC, we're in that business, and those are the clients we will cater to. But, you know, there are certain other elements that, you know, maybe you start to build in a little bit more flexibility as you learn from your,

you know, client experience, right? Just as, you know, if you think of the evolution of the futures market, just even in the United States. And so I think part of that is applying that prudence. I mean, it surprises a lot of people, but I'll say, again, I'm very, you know, fortunate that I work in an organization where one of the biggest champions for launching digital assets in various form to our consumers is my chief risk officer, right? Wow. You know, and, you know, how many... It's not normally that way. Exactly. And, you know, Spiro is one of the most progressive leaders when it comes to risk compliance legal, but he also balances it in terms of thinking about it, you know, as a business leader. So, you know,

So you start to put those different variables together and, you know, you start, I mean, you know, sorry to use my pilot language, but you start to throttle as you take flight, you know, how much, you know, what to apply to what degree at which stage of the evolution of your mandate. You know, when we launched our futures product, we were the first to launch Bitcoin Futures in 2017 with CBO and then now in partnership with CME, you know, we did it in the most conservative man. or we could because, A, we were writing the playbook, and we were kind of taking the lead, and as we've learned more from a risk compliance monitoring perspective internally, from our consumer behavior, from the feedback of our clients, the maturity of the market, you know, we can add more flexibility, right, in order to spur more growth. But, you know, I'm okay playing the game of inches. So those futures products went live to retail investors on your platform?

in 2017. 2017. And, you know, a lot of people are like, well, why start with something that's a more complex product, like Futures versus Spa? And a couple of reasons. One, I think we were at an inflection point within the organization. As I said, we are taking a lot of time, you know, kind of exploring not just the technology, but the asset class, really spending a lot of time educating our leaders and our constituents.

And then with the rise of that market and with credible players coming in like Cebo and CME, it kind of gave us a, okay, now is the time. time to go. And then from a future's perspective, as you know, CFTC has probably been the most progressive regulator in terms of codifying the do's and don't, which gives somebody like me, along with, you know, my legal risk teams, kind of the nice blue checkmark to say, okay, you know, we can kind of forge into this and learn as we go. And it's actually been interesting, you know, I have a list of myths that, you know, I love to dispel when people bring up about digital assets, It's everything from it's just for the kids.

It's not regulated and all that. Other stuff that we've heard, I think you've got the dice thing going. We have some right there. You can have one. I'm going to need one. I'll give you one of each edition. Maybe, I don't know if you already have this, but one of the myths, and I was guilty for kind of, you know, projecting this at one point, which is, you know, this is really going to cater to our younger clients. We have to do this because, you know, as our client demographics shift, as you think of the trillions of dollars, you know, in wealth transfer that's going to happen.

we have to be ready for it. But when we launched the futures product, well, yes, it's a lot of the millennial clients. I don't know how young millennials are anymore, because I think some of them are hitting 40 plus, but it was also our clients, 55 and older. So we were like, oh, wait, this actually is starting to cut across demographics because it also nicely coincided with the emergence

of that new rhetoric of Bitcoin being digital gold, right? So we learned, and that actually helped define the experience and the sequence of my future roadmap. So, you know, this is kind of why, you know, I always tell everything we do is in perpetual beta, even when I think I've got it figured out and my team and I are, you know, we've got all the facts and data to back us up.

We always have to remember. There's something new that we're going to learn and, you know, iterate. So that mindset of perpetual beta, I think, is critical. Yeah, you brought up the CFTC, and it has been interesting to see the, the divergent ways, the regulators have tangled with the asset class.

You know, ex-chairman, Giancarlo, if anything, is like one of the biggest digital asset enthusiasts out there now. He's lobbying to create the digital dollar. The digital dollar. My nomenclature critique of that is that most dollars are already digital. I think he means, you know, something slightly different. And I always felt that calling them digital assets was to do them almost, almost not to do them justice. I agree.

But I haven't figured out an alternative term that really captures the essence of what's being done here. You know, because I was looking at the prehistory of Bitcoin to look at some of the prior attempts of creating quote unquote digital cash, looking at Egold, Liberty Reserve. and their objective was to take essentially, you know, fiat currency and to wrap it in a way that made it easily transmissible, transmissible without restriction. So there's some core element of what we're doing here, which involves like maybe lifting regulation or just making these assets more, you know, just transmissible in a general sense. But, Yeah, I've never found a term that encompasses that sufficiently.

I feel like this industry has lots of nomenclature and taxonomy problems. I do agree. I think storytelling is one of perhaps our Achilles heel. The one thing I'll say, and, you know, there was a lot of pontification around, you know, people's, you know, what's going to happen in 2020 predictions. That's the word I'm looking for, for 2020 and beyond. I was guilty of making a few. Yeah, I threw in a couple there too, which I'm sure will be.

proven wrong, but one of the things that I would say excites me and why I remain bullish about this category is talent. You want to know where an industry is going, you follow the talent. And, you know, I think just like with the first few waves of consumers that were drawn to crypto, I would say the first few waves of talent that were drawn to crypto, where perhaps, you know, driven by ideology or the technologists, and more and more I'm seeing, you know, operators, communicators, service providers. And I think that is a, I look at it as a bullish sign for our industry because they're going to bring the discipline and hygiene and the know-how, you know, from the normal world and hopefully, you know, instituted into crypto where it's much more normalized. And, you know, we can

solve some of the issues around nomenclature and, you know, just storytelling. And that's a big part of education we design is we're very purposeful in making sure we're getting across the salient points, but doing it in a way that it's kitchen English. There's no need to show off all the big things you know, just get to the point. And then I think the other thing is rendering it through different modalities, right? If somebody wants to sit down and read a white paper, great. But if somebody wants to watch, you know, a series or they want to binge on a series of, you know, 10, three-minute videos while they're on the go, that's great. If somebody wants to talk to one of our coaches or come to one of our live events and have that conversation, great. It's kind of, you know,

meeting your consumer, you know, where they are through the modality that they're most comfortable with. So I just looked up your prediction from the Token Daily Crystal Wall. Yeah. So we actually both made a prediction in this piece. So yours was, I liked yours, it's very optimistic. Mine was kind of really dark and sort of apocalyptic. I have been told that, you know, I am guilty of over optimism, but I don't know what the opposite was. Well, the optimists always win. Did that? Okay. The optimists always win, especially in crypto. So you said there will be an emergence of startups slash projects that shift the mindset from a tech first product development to consumer-focused product

development. With a keen eye on the voice of the customer, we'll see big strides in project solving for simplicity and seamless user experience. I think that's great. I hope it happens. I think there's kind of a fundamental difficulty in terms of the fact that we're dealing with kind of digital bearer assets. I know some people might quibble with the language there, but really we're talking about encoding value in strings of information, and then we're telling folks, you have to keep this information secret. You can't store it in a digital format because you're going to get sim swapped or someone's going to get access to your iCloud or whatever, you know, your Gmail. So there's kind of these like fundamental user hostile processes that happen in the crypto industry

so much. And then we wonder why more people aren't rolling into it. Yeah. I mean, I think the reason, you know, I have this thesis that the reason people don't use crypto for payments isn't. just the tax issue, which is totally unresolved. And it's also not even the quote unquote scalability issue. I think it's really just the fact that using a bearer style asset for payments is like excessively, you know, challenging for users. And I think even in we we can talk a little about, I think we all went through our journey of when we first quote unquote encounter Bitcoin. and, you know, and I see that in my own journey, but I always find it fascinating,

watching somebody new who's learning about Bitcoin go through a similar journey, and I'm oversimplifying it, but I always think it's equal parts quixotic, Socratic, and pragmatic. Like, when you first start to learn about it, there's an element of suspension of disbelief. It's like you've got it.

It's almost like you have to push up, against everything you've known to be true to start to understand it. You know, it's like Don Quixote, you're right, tilting at the windmills, right? I felt that way when I was first starting to, you know, digest what I was reading in the white paper. And then I think, you know, everybody at some point moves into that Socratic exercise of really having this internal quarrel between their existing beliefs and they're trying to reconcile it with the beliefs of digital assets and specifically to Bitcoin.

And then I think at some point, hopefully we land. and on this pragmatic mental model. Okay, now what do I do with this, right? Like, do I let it go? Do I keep learning? Do I, you know, as we've seen some great founders and, you know, investors and operators like you and others lean into it full time? You know, again, I might be oversimplifying,

but I feel like as I hear other people's stories and watch some of the newbies entering, it seems they kind of go through that journey over and over and over again, which I just think is kind of really. cool. It's a fun journey. One thing that really sticks out in the memories when Fidelity started experimenting with Bitcoin, they gave Fidelity executives, Bitcoin wallets, and had them go around the city of Boston, this is in 2014, to various stores that ostensibly accepted Bitcoin. And half the time the store clerk was like, what is Bitcoin? Like, we don't accept Bitcoin. And then the

rest of the time, like, they couldn't get bread wallet to work, you know, kind of thing. So it's always fun to actually try these things out. But I do think we're, we've finally awakened or, you know, there's dawning awakening of this idea that maybe retail brick and mortar payments are not where this technology is optimized form, not in its current form at least. And, you know, the tech is still new. So we're still basically learning what it's actually going to be good for. For now, you know, it seems to be decent for like large cross-border payments where there's some difficulty in using, you know, the financial rails that might exist. And listen, we and I'm part of it.

You know, we all bemoan often the price movements of Bitcoin or, you know, it hasn't lived up to the promise as a payment vehicle or, you know, one of the many arguments that, you know, we as a community continue to have, which I think is a good thing. You know, we continue to struggle through them. And if we're easy, it would have been figured out. But again, I, you know, go back. to think of all the things Bitcoin has overcome and continues to survive. Like, it boggles my mind.

You know, I know, you know, not to turn into philosophy podcast, but, you know, there's a beautiful Aristotelian quote about, you know, a probable impossibility is preferred to an improbable possibility. And again, it goes back to that suspension of disbelief. And wow, like Thursdays, we're like, wow, we've actually come this far. Like, think of all the things that have happened. And this is, I mean, we've got the chairman of the Federal Reserve in a Senate testimony saying, yeah, we consider Bitcoin to be digital gold. We've got every regulator in the U.S. and across the world leaning in and educating themselves.

And maybe not as fast as we would like it, but starting to offer guidance around it to something that we still don't know who the creator is, right? And I think that's pretty extraordinary. Again, maybe that's me being overly optimistic. No, I think it's absolutely extraordinary. And, you know, if you happen to believe in this, like, you know, many possible worlds theory, not to get into metaphysics or anything. That's okay. We've already gotten into philosophy.

You know, I think if you think of all the possible permutations that could have happened from 2009 to present, it's only probably a small minority of them where Bitcoin actually was successful. in its initial form and thrived and survived the bugs and catastrophes and so on and somehow made it this large. I mean, you look at the other attempts of digital cash, they were total failures. They didn't achieve anywhere near the scale of Bitcoin. I was just running the numbers the other night because I became obsessed with the prehistory of Bitcoin. And Liberty Reserve and Egold were two of the biggest pre-Bitcoin digital cash, you know, projects. and at their peak, they were doing one to two billion dollars a year in kind of transaction value.

It seems like a lot. It's really not that much, you know. So Bitcoin will do, depending on how you count, there's a bit of imposition, maybe $600 billion worth of transactions a year. If you don't do those adjustments, it's in the trillions. So, you know, we went from zero to that in the space of a decade, which is extraordinary. And I think we, I think that historical context and historical humility is so important because at the end of the day, I mean, that adage of we stand on the shoulders of giants that came before us. And, you know, when people get into arguments about the limitations of Bitcoin, who knows? Maybe there will be something better that comes long. But it's going to stand on the shoulders of everything Bitcoin's achieved. And, you know, maybe Nick's going to cut this out of the podcast. But I've been telling Nick he needs to write a book, chronicling the history because I just think it's so important. So everybody should tweet at Nick. Oh, okay. All right. No pressure. No pressure. I have a day job. I don't know if I have time to write books.

Although funny that you mentioned that, I did do a history of Alcoins with Peter McCormack. Right. So you've got all the pieces in play, make it a Cambrian explosion. That'll be out before this one comes out. So now the history is all messed up. Okay, so I've had you for a while. One thing I want to talk about is people don't know about you is that you are a pilot. I am indeed. And in fact, you're telling me before you wanted to be a pilot as a career. Yes, since the tender age of nine or ten, when I decided I was going to be a commercial pilot in the nerd that I was. My childhood bedrooms had posters, not of celebrities and rock stars, but of Lufthansa flight pads around the world.

and I'd go around picking, you know, which flight path I would fly as though that were going to be my decision. So, yeah, flying's been a big component. I say my childhood was overly defined by books by Ein Rand and Amelia Earhart. So make of it what you wish. A good pair. So, you know, it definitely planted a very strong independence DNA. No, it's just, I wanted to be a pilot. The big joke in our family was I had my very first basic flying license before I had my driver's license.

So I needed my parents to drive me to the airport, but then from there I could fly a little Cessna around until my parents, when I turn 16, I'm like, okay, you got to learn how to drive. And to this day, I'm a way better pilot than I am a driver. Well, there's nothing to crush into up there, I guess. Exactly. Except the ground. Yeah, just one minor detail. Yeah, it's just I wanted to pursue it commercially, but for,

unanticipated halt reasons, wasn't able to pursue that. So decided, okay, I better find a job I really like and am actually qualified for. They can also pay for my, you know, hobby as a pilot. And I think it's probably the most consistent thing I've done in my entire life is flying. So to this day, I fly a little Cessna 152 and it's one of the, it's maybe the only cool thing about me. And is that for just for pleasure or can you commute in a sessna? It's mostly for pleasure just given the range of a sessna and not being, you know, it would take me weeks trying to fly from SFO to Newark. So, you know, I think I'm stuck with United for a while. Oh, because you'd have to do it the little bunny hops. Yes. I think the biggest cross-country flight I did, I grew up in Edmonton and, you know, we had to do a huge ramp up of

hours. This was when I was still trying to pursue flying commercially. And there was six of us. We took three little Cessna's and we tried to fly from Edmonton all the way to Mexico and it took us like weeks and weeks and we never made it to work Mexico. So you did like a relay style. Yes. Yeah. So, you know, it was fun, you know, things you get to do in your teens. Have there, has there been anything from flying? Have you taken any lessons and applied that to your career or do you consider them totally distinct? Um, no. I, you know, I mean, in hindsight, everything, you know, all the building blocks seems to connect. But I think some of the things you learn as a pilot are definitely transferable. And upon reflection, I can definitely see myself applying that muscle memory or mental model even

without knowing. I think two things that probably predicate from all the time I've spent as a pilot. I think one is just this inherent curiosity. You know, people don't realize being a pilot or flying is actually one of the most multidisciplinary fields, just as crypto is, right? You know, when you learn, when you're learning to become a pilot, even if it's a basic private pilot, you know, you have to learn navigation, you have to learn meteorology, you have to learn how to fix your plane and the avionics. So, you know, it takes you in all of these different directions. So I think following that curiosity gene probably comes from there. And then I think the other thing that you learn is a pilot.

that I feel like I apply more and more in my crypto job is compartmentalizing, right? When things get chaotic or turbulent in the air without realizing you kind of fall back into this chill mode and just exercise your checklist and your muscle memory. And I see this in my own personal and professional life when things are chaotic,

like suddenly I'm the calm one in the room and if you were to otherwise meet me, I don't usually am the calm one. So there's something about kind of calm in crisis that in compartmentalizing things that I definitely credit back to flying. Something that I learned recently, I've become obsessed with the history of military aviation in the U.S., as one does, is that the U-2 pilots in the 50s that were overflying the Soviet Union, they didn't have access to radio for large amounts of those flights.

So they didn't have any connection to the ground. They had to navigate with sextants, like the instruments that sailors used. to use. And if they, you know, they only had just the precise amount of fuel required to do that loop, you know. And so if they got something wrong, they were basically screwed on the other end. It's fascinating. So you talk about a blend of skills, you know, flying a spy plane and trying to navigate based on the, the horror. I don't even know how to use a sextant. I wouldn't, I wouldn't know how to use one if I had to. You don't? Really? I know. Unbelievable. Unbelievable. Unbelievable. Get on with it. Now, and again, this is not a book recommendation podcast, but some of the

that we've discussed, I think, you know, the Wright Brothers book, you know, by David McCullough, you were saying. I think, again, the point that you brought up earlier, you know, the fact that we take for granted, you know, these transatlantic flights. And, you know, you're riding around in a tin can, 30,000 feet, jetting across the sky and 500 miles an hour. And suddenly the most important thing that you're troubleshooting is your Wi-Fi needs and just forgetting that, you know, this shouldn't be possible.

for a lot of reasons and yet it is and what that biography chronicles is how quickly we went from taking our first flight to the emergence of you know Transatlantic you know Boeing jets or you know and I think I don't know maybe I'm applying too many things back to crypto but I think there's a lesson to be learned Well a lot of bit corners are fond of reasoning about the relationship between monetary policy and innovation There you go I kind of buy it a little bit. You You know, the fastest and highest flying regular propulsion, regular engine plane we ever built was the SR71 Blackbird, which was designed and built in the 60s. You know, and then it had a long career stretching into the 90s. You know, we designed that thing with slide rules. We didn't really use computers to design it back then.

And there's been an argument certainly that since, you know, the failure of the gold standard and the new breadth of in Woods and Fed system we have, that maybe innovation happens a little bit slower. I don't know how true that is, but Bitcoin is then connected to these ideas about time preference and, and, you know, loose money regimes and so on. So, Sinaiena, this has been a pleasure. Thanks so much for coming on. Where can people follow you and follow your work? Yeah.

From a TD Ameritrade perspective, a lot of the education material that I talked about is on all of our, you know, online platforms and digital platforms. As I mentioned, voice of the client is critical. So if you are a client of TD Ameritrade or hopefully you will be a client of TD Ameritrade, we'd love to hear your views on, you know, how we should be thinking about our roadmap. So reach out to us. And personally, you can find me on LinkedIn and on Twitter at Senana. All righty. Well, thanks so much. It's been great. Absolutely. Thank you.