Open Book with Anthony Scaramucci - People Should Be Excited About Crypto with Tony Edward

Episode Date: December 5, 2024

Author and founder of the Thinking Crypto podcast, Tony Edward, discusses his origin story and his journey into the world of cryptocurrency. He shares his eureka moment when he realized the potential of blockchain technology and the impact it could have on commerce and trust. Tony also discusses his diversified investment strategy, his views on Bitcoin as a store of value, and the potential for a Bitcoin standard. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Physically present in Ontario. Eligibility restrictions apply. See Golden Nugget Casino.com for details. Please play responsibly. Hello, I'm Anthony Scaramucci, and this is Open Book, where I talk with some of the brightest minds out there about everything surrounding the written word from authors and historians to figures and entertainment,

neuroscientists, political activists, and of course, Wall Street. Sorry, I can't resist. Before we get into today's episode, if you haven't already, please hit follow or subscribe, wherever you get your podcast, and leave us a review. We all love a review, even the bad ones. I want to hear the parts you're enjoying or how we can do better.

You know, I can roll with the punches, so let me know. Anyways, let's get to it. Okay, joining us now on Open Book, author and founder of the Thinking Crypto podcast. He is also the author of the book, Thinking Crypto. It's a great title. It's got a lot in there. Some of it causes me post-traumatic stress. Thinking Crypto, the crash of FTX, and the rise of safer, stronger digital assets. The remarkable Tony, Edward, it's great to have you on. Before I get into the book, the podcast, everything you're doing, I want you to tell us a little bit of your origin story.

How do we get to where we are now, Tony? Anthony, first and foremost, thank you for having me on. And it's kind of surreal, man, that you're interviewing me. It's usually vice versa. And I love speaking to you over the years. I'm a big fan of yours. So it's an honor to be interviewed by. you. Well, listen, you know, you got a, you got a great book that you've written. I like, I like

interviewing authors. You're a great interview anyway. So it's like a double whammy for me. I get to pick your brain. I get to tease and talk to you about your book. And you get some of the best crypto guests in the country, by the way. So I love, I love listening to your podcast. I want to ask you something that you've asked me, and I haven't had a chance to ask you yet, so I could do it here. what was the eureka moment? I can tell you mine. I was working in the White House. The Fed was talking about digitizing the U.S. dollar.

I said, okay, I don't understand what's going on in the blockchain. I got to get up to speed. Of course, I got fired immediately thereafter. So it gave me plenty of time to figure it out. What was your eureka moment? So I guess I'll give some context because I think my background is super important in the eureka moment. I grew up in the 90s. I was super into tech into the internet.

Anthony, I did some things, which, thank God, I'm still here where I could have gotten in big trouble. I was exploiting vulnerabilities in Web 1.0, you know, hacking some websites. I was part of AOL, IRC chat rooms. But it wasn't for nefarious reasons. It was, I was passionate about the internet and technology. And that passion, you know, grew. And I started my career in digital marketing and doing a lot of different things with website building and doing things with Google and so forth. And one friend of mine told me on a, I think it was a Friday night, we were at Buffalo Wild Wings, eating some wings, having some beer.

And he's like, hey, have you heard about this thing called Bitcoin and Ethereum? And I'm like, dude, what is? Don't talk to me about that. It looks like something like nonsense. However, he started making some money off of it. And he bought some really cool things. And then it really had my attention. I'm like, okay, tell me about it.

You know, everybody says, we come for the money, stay for the tech. And once he told me about it, I started doing my own research. And then I realized this was the next layer on top of the internet. And it's going to change the way we do commerce and trust each other. And Bitcoin absolutely made sense as a decentralized form of money on the internet. But I think what really clicked for me was Ethereum, smart contracts and the world of opportunities that would open up. And thinking of it as a baseline software that people can build all types of trustless, decentralized applications on. And so from there, I went down the rabbit hole and started investing in it, you know, started building with it.

And I've been successful so far. And I decided to start a podcast about it. So Bitcoin only, you got a couple other coins behind you there. So you branched out behind. You're not a Bitcoin maxi, though, right? No, I see this as, look, there's different flavors for everybody. There's different blockchains and different currencies that do different things. And I think this goes back to my enthusiasm about the internet and the dot-com boom.

There was Google, there was AOL, there was Yahoo, and there was different technologies, different marketplaces on the internet, different web applications. There wasn't one to rule them all. And even in a social network world, there's not just Facebook, there's Instagram, there's Twitter, and so on and so forth. So I see these things being software to do different things and serve different purposes. and I'm looking to participate in each of them and test them out and see which one functions the best and see what I can build on them. So I'm a holder of Bitcoin, Ethereum, Cardano, XRP, Salana.

You know, I'm diversified. I do tend to stay away from meme coins, though, Anthony. I don't know if you love meme coins by any chance. Okay, but your point is that there's plenty of room in this utility space for lots of. of different operating platforms. And of course, Bitcoin being the big goonup, I don't want to speak for you, but describe Bitcoin, store of value, or are we going to the Bitcoin standard? Where are you in the range of outcomes for Bitcoin? That's a great question, because I've thought a lot about this, and especially in the shower. That's how much you know I love crypto.

And sometimes I talk to it to my wife, and she's like, shut up. But, you know, Bitcoin, it's interesting because based on Satoshi's white paper, it's supposed to be the digital currency on the internet, but it does have its limitations as it relates to speed and transaction fees. However, as digital goal as a store of value, I absolutely believe in it as that. And I have it in my portfolio and there's some Bitcoin I will never sell and I have in a hardware wallet for my daughter. Like it's going to her. It's in the will. And then as far as currency, I'm very curious to see what folks are going to do with the Lightning Network and these layer two scaling solutions where I can go to Starbucks and use some

Bitcoin to buy some coffee. I don't think we're there yet. I think there are a lot of smart people who are working on that. But right now, my main thesis is that store of value digital goal. It's better than gold itself. And the demand is there. And in the scarcity aspect, you have this finite supply, which we've never seen in the history of the world. Okay. I want to go abruptly. I agree with you, by the way, but I want to go abrupt to the Sam Bankman-Fried Jerome Powell meeting. You know, it's funny. And I went to the D.C. blockchain summit a couple of weeks ago.

I met a few congressmen and went on the Capitol Hill, went to different people's offices like Chuck Schumer, Senator Christen Gillibrand. And I got to see a bit how the sausage is made. And you know very much, you know, I haven't been at the White House. And then I could see how those folks could have been influenced by Sam and from the crypto advocacy groups, folks that I've spoken to over the years, they said Sam was walking to halls a lot down there in D.C. And then, of course, he was making incredible donations to Democrats and Republicans. So he's building a lot of favorability and influence. And I think that got him these meetings with the Fed. And I spoke to Caitlin Long about this.

And she's like, how did he get that meeting, you know, to buy that small farming, farming state bank, I think it is. And it just shows money in politics, which maybe is the bigger problem. And we need to fix maybe with blockchain. I don't know. But clearly money talks. All right. So he made $50 plus million of campaign donations. They dropped those charges on him.

and it looks like those campaign donations are not getting paid back. Yeah. That's a tricky one. Now, the FTX funds, I know that's pretty much getting paid back, but how do you even claw back political contributions? I don't even know. And this goes back to maybe a blockchain model, which maybe it's 20 to 30 years away,

would help with things like this. Because bad actors appear in every market, every asset class, right? I like to tell people that Sandbag Mufreed is the Bernie Madoff of crypto and Bernie Madoff scam people in a regulated market. It wasn't like he was in the Bahamas hiding somewhere. So bad actors will appear over time, but to help mitigate somebody's fraud activities and catch these things early before they blow up, I think a blockchain model proper regulations would help. But I don't know, Anthony. How would we claw back those funds, especially if they're used already via campaign?

costs and things like that. I don't know if you can shed some light on that. Yeah, no, look, it's been very perplexing to me. I feel like the incentives are misaligned. The reason why people are so negative on our nation's political leaders is that they just feel that there's so much cynicism. You know, they can insider trade in the Congress. They take wild campaign donations into their packs.

They obviously Sam had. an embarrassing level of influence. And you make so many interesting comments in your book, but I want you to, I want you after reading your book, I had a reaction that I want to test on you and then get you to speak to my viewers and listeners about this. I sort of feel like the Gensler-Elizabeth Warren backlash on crypto

was a direct result of Sam's donation. I'm wondering how loud if they would have taken a more moderate approach, had they not been so embarrassed. Of course, Elizabeth Warren, Sam's mom had worked for her. He had met with her, donated to her campaign. Gary Gensler, he met with several times. He met with Jerome Powell. Do you think that the explosion of Sam and the exposure of his fraud left these people embarrassed

and caused them to be overaggressive on crypto? That's a great question. And I have two main theories or thoughts around these items. To your point, the first thought is that, yes, knee-jerk reaction to you embarrassing us. You making us look like fools. You're in D.C. walking the halls. We're taking photos with you, Maxine Waters, you know, giving Sandbeck three to hug, blowing a kiss and things like that. And then, you know, you pulled the rug out from under us and make us look like idiots.

So I think there is that layer where there's this knee-jerk. reaction. However, I think the second layer goes back to that thought of first, they ignore you, then they laugh at you, then they fight you, then you win. And I think that then they fight you phase was coming because in parallel to these crypto startups, whether you're a coin base or you're a blockchain project, you had JP Morgan. They're tokenizing on Fidelity's fund on on Onyx and they have JPM coin. So they have their own blockchain technology that they've been building and cultivating over the years while Jamie Diamond publicly tells you Bitcoin's a scam and a lie. And then of course, in the book, I cover the ETF race. Why all of a sudden did

Black Rock say, we're going to throw our hat in the ring? And then the rest of these big firms came and started, it started off the race. So I think it was twofold. One, the embarrassment, but also two, we got to slow these crypto startups so that we can catch up. The fact that banks and these investment firms are getting disrupted. They can't even hold it directly. And that was the sob one-to-one rule. And there's not proper regulations. And for the first time, I think, in history, retail front ran these large institutions, being able to buy the tokens directly, didn't have to go through the gatekeepers, didn't have to be accredited. I think those are significant items. And then capital started leaving, you know, these trad-fi investment funds going into crypto. So you just

look at the inflows and the things that have happened over the years where these smaller funds started, you know, making significant returns, exchanges, making billions of dollars every year. And then how could these two things be happening in parallel where I don't see BlackRock getting a Wells notice? I don't know if I'd be getting a Wells notice. But these startups and the crypto industry are getting attacked. So I think it's twofold. Okay. I think it's well I think is well said. Do you think that in the next cycle, meaning the next congressional term,

that we will make Bitcoin or Bitcoin blockchain digital assets a bipartisan issue, or will it still be shifted and slanted towards the Republicans in terms of their positive? Visit BetMDM Casino and check out the newest exclusive. The Price is Right Fortune Pick. BetMDM and Game 3. sense remind you to play responsibly.

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I think there's going to be a shift. I think it's going to become more balanced, and here's why I think so. One, I think Democrats overall, based on some data I've seen recently, are losing some of the younger vote. And the numbers, the demographic, showed that younger folks own crypto. And crypto is a way for people to create wealth and put themselves in a financially better place. Now, if you're against that, you're going to piss those people off. And I don't think if you're already losing that younger vote and you're adding crypto on top of that, you're going to be in a world of hurt come the elections. So that's one.

Two, I think the crypto industry finally woke up and said, hey, we've got to play a political game. We got to raise capital and we got to support pro-crypto candidates. So we've seen Fair Shake and some of these packs have been raising an incredible amount of money and donating accordingly, right, in addition to other issues. So that is a good sign, the crypto industry rallying together, donating accordingly. And three, we're seeing the younger voices in Congress. Congress, like a Richie Torres on the Democrat side, Roe Kana and so forth, who understand technology, who are pro-innovation, are starting to realize, hey, why am I going to die in this

hill when this is just a technology in an asset class? It can create jobs. It can help us to get incredible economic benefits the same way the dot-com boom did. So it's a weird place where I think you have some of the older folks are like, I don't understand this. I'm going to cyber Elizabeth Warren, because she has the loudest voice right now. And then you have the younger Democrats who are waking up saying, yeah, that's not the way to do things. So I think those three reasons we're going to see more of a balance, I think, moving forward. All right. I want you to be my fortune teller. I've got a big crystal ball here. It's 2009. So it's five years from today. What does the landscape look like for digital assets in America? I think by that time,

we will have absolute clarity for stable coins, digital assets, tokenized assets, crypto assets, and all different categories, including NFTs and so forth. And then entrepreneurs and innovators will be able to not have to look over their backs and they can focus on building and creating incredible technologies. And then I think more enterprises and individual investors will be able to invest more confidently that, okay, the SEC is not going to come sue this asset and is going to lose a billion. dollars in value overnight. There's going to be that clarity. And I think within the regulatory body of the SEC and the CFTC, there's going to be balanced. I think they're going to find some sort of

the middle of the road regulation where, for example, some of these tokens do start off as securities. However, as Hester Purse, SEC Commissioner has suggested, over time they become decentralized, and maybe then they go under the CFTC's jurisdiction. And I, I think there's going to be more standards, more balance as far as liquidity coming into the market from not just retail, but more enterprises. And I think we're starting to see that with the ETFs. And there's going to be more ETS aside from Bitcoin and the Ethereum ETF. So it's going to be Cardano, Salana, and so forth. So I think the market's going to grow incredibly.

Let me not to stop you, but sure. You know, the question people ask me, so I have to ask it of you. Salana has been deemed by the SECA security, but you still think you get an ETF out of it? I think so, because there hasn't been a formal lawsuit, for example, against the Salana Foundation. There has been a bunch of tokens thrown in these lawsuits against Coinbase and Cracking and so forth, but I feel that's the SEC throwing things at the wall to see what sticks. Now, the process we've seen so far is the futures markets gets created and then you eventually work your way to a spot ETF. So I think they will approve a future.

We've seen this. They'll approve short ETS, futures ETS because it allows people to short and do all kinds of things. But I think we can see a spot because what's happening too is those lawsuits are not really sticking. Coinbase is fighting back. Ripple is fighting back. Crackens fighting back. The SEC is getting sued left and right by the. industry, which I think is great. There's even startup exchanges, like one out of Texas called

Legilex, suing the SEC. Tell us what's a security and what's not. So all of these things don't bode well for the SEC, and they're losing in the courts. So I think Elizabeth Warren and Gary Genser have lost the narrative a bit that all of these things are securities and this and that and all kinds of the narratives that they tried to drum up. Yeah, make make sense. I agree with you. I think that you can't approve an Ethereum ETF and then call Solana a security. It doesn't make any sense. They've got a lot of egg on their face as it relates to their regulation. Let's go through some of the different sections of your book. If you don't mind, I want to get through as much as possible. We touched on this, but start with the Bitcoin ETF race. How has that asset class

evolved in the wake of the ETF introduction. Anthony, the day the SEC approved the ETFs and look, it took a court case to do that, right? The judges to call the SEC arbitrary and capricious. But anyway, that's another story in itself. I got so many calls like, hey, tell me about this Bitcoin thing. Hey, what's happening here? Right? It legitimized the asset class to the masses who were maybe on the fence looking at this, like,

I don't know about this. maybe I should invest. Maybe I shouldn't. I've heard bad stories. I heard Sam Beckman Fried stole all the bitcoins. I heard Bitcoin and crypto died from Time magazine. All of those narratives are out there, but it was like the ETF approvals pushed away to dark clouds. And then people couldn't even remember FTX or what happened. They were just like, whoa, BlackRock fidelity. They were seeing these big names, which really brought the validation. And I think is taking this asset class to higher Heights. It's incredible. I've seen such a major change from whether it be institutional investors and their thoughts, RIAs and people I've spoken to, and even just the average Joe and Jane,

I don't get that negative talk as much anymore. They're like, tell me how I can invest in this. What should I do? It's no longer, hey, is this a scam? Hey, Ray, I'm going to lose out my money. So it's an interesting point that you're making in the book. I'm going to test something on you. This is another thought I had when I read your book that weirdly Gary Gensler has helped the industry. And let me explain why. He should have, and the lawsuit that he lost more or less says this, he was arbitrary and capricious and denying, including Skybridge, my own application for a Bitcoin ETF because he had approved the futures ETF. And they're more or less the same thing. And so you can't be arbitrary and capricious.

but his political decision not to approve it allowed for the tide to go out. And at low tide, you could see everybody that was swimming naked. And you had the implosion of Celsius and three arrows and blockfi. And of course, the very infamous demise of FDX and Sam Bankman-Fried. Had Gary just approved that ETF, one in November and the next one in February, maybe we would still be living in a world that's loaded with that kind of fraud. And it's like the subtitle of your book, we're in a safer, stronger place today as a result of all of that stuff getting washed away

in that period of over-leverage and investment uncertainty. So weirdly, did Gary Gensler help the industry? He did, but, you know, scratching and clawing and crying and screaming on the way to doing it. Let me say it differently. Sure. Accidentally help the industry. You know, from a macro standpoint, and in hindsight, yes, you know, maybe his overreach, you know, it forced the, and I think we're seeing a bit about that now where Democrats are

citing with Republicans, he's like, they're like, wait, this gets Gensers guy's out of control. Like, what is he doing? Why are we being so crazy about this technology in that class? Let's get comprehensive regulations. Let's protect consumers, but also allow innovations. But to your point, by not doing his job with Celsius, FTX and so forth, and then starting to attack good actors like Coinbase and crackin and so forth, folks who have come into the SEC and try to register and try to work, I think he's kind of forcing the hand of Congress, if you want to look at the silver lining here, right, that they have to now take action because the SEC is getting embarrassed. and the industry is saying, hey, this is crazy. This is insane government overreach.

What are we doing here? And we need to update the laws. The 1930-40s how we test does not, it's not up to part to handle digital assets. So in a way, yes. But I still think Gary Genser is Elizabeth Warren's puppet. And he's just doing her bidding. And I was actually surprised by Jamie Diamond, you know, aligning in talking points with Elizabeth Warren a couple months ago.

a hearing yeah i mean a world may politics make strange betfellows okay i've got five words for you i'm going to say the word or the abbreviation you react to it okay ready mhm f tx i say fdx you say what disaster okay s cc corrupt regulation needed you see when i when i hear regulation i think partisan really they've really ruined it. They've not made it fair regulation anymore that's based on right or wrong. It's hard left regulation now, and I think it's a disaster. I say the word Bitcoin, you say what? Hmm. Can I use two words? Yeah, go ahead. Anything you want.

Paradigm shift. Yeah. I think hard money. I hear Bitcoin, I say hard money. But crypto, crypto's different than Bitcoin. I say the word crypto, you say what? The future. Well, it's incredible. It's an incredible book. The title of the book is Rethinking Crypto. The crash of FTX and the rise of safer, stronger digital assets is written by Tony Edward. Thank you so much for joining us today. And it's a great day for those of you listening in and not seeing the video. Behind Tony is his bit clock, which is just beaming beautiful, beautiful Bitcoin numbers. That's why I could talk to you all day. As long as Bitcoin State,

at that price or better, Tony. Talk to you all day. Thank you so much for joining us on OpenBook. Thank you so much for having me, Anthony. I appreciate you. I am Anthony Scaramucci, and that was Open Book. Thank you for listening. If you like what you hear, tell your friends

and make sure you hit follow or subscribe wherever you listen to your podcast. While you're there, please leave us a rating or review. If you want to connect with me or chat more about the discussions, it's at Scaramucci on Twitter or Instagram. I'd love to hear from you. I'll see you back here next week.

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