The Pomp Podcast - #1374 Annelise Osborne | Why Wall Street Is All-In On Crypto

Episode Date: June 21, 2024

Annelise Osborne is the author of a brand new book, “From Hoodies to Suits: Innovating Digital Assets for Traditional Finance.” She also is the Chief Business Officer at Kadena. In this conversation, we talk about a brand new trend where Wall Street is starting to interface with the hoodies, what the suits are interested in, where they are putting their money, what the hoodies are doing, banks vs. bitcoin, and more.  ======================= Introducing Espresso - the world’s most interactive portable display. They have a portable screen that is incredibly light, comes with a nice stand, and the user interface is very easy. Anyone who listens to this podcast can go to ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠us.espres.so/pomp⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. They have a brand new offer waiting for you.  ======================= CrossFi is the Apple Pay for Crypto. For the first time in history, anyone with a web 3 wallet like Metamask can spend crypto through a physical or virtual visa cards anywhere in the world where Visa is accepted. Be one of the first to get your hands on a CrossFi card and a prize pool of $3 Million Dollars by joining and participating in their testnet today: ⁠⁠https://xfi.foundation/users⁠⁠ ======================= Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/ ======================= View 10k+ open startup jobs: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. All right, guys, today's a fantastic episode. I have Annalise Osborne with us. She is the author of a brand new book, From Hoodies to Suits, Innovating Digital Assets for Traditional

Finance. She also is the chief business officer at Kadena. In this conversation, we talk about a brand new trend where we're having Wall Street, aka the suits, starting to interface with the hoodies, all the technologies that were innovating and creating this $2.6 trillion asset class. In this conversation, you're going to hear what are the suits really interested in? Where are they putting their money? How are they going to make money? What are they being attracted to? And then you're also going to hear what exactly are all the hoodies doing? Are they interested in just making money? Are they more idealistic? We get into all of it. This book is great. And this conversation is even better. So please go check out the book. And here's my conversation

with Annalise Osborne. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Today's episode is brought to you by Espresso, the maker of the world's thinnest portable display.

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I've got Annalise here with me. I thought a great place to start the conversation is there's tons of innovation obviously happening in crypto and how the tip of the spear of that innovation is, uh, all the things that are happening in the corners of crypto. It is really like done by the hoodies, by the young people. Um, and that's been really exciting. It's created tons of value, trillions of dollars of value. Uh, but now the adults are moving in the room, the suits are moving in the room. Uh, the people who are interested in saying, Hey, wait a second, can we take this novel, innovative technology that all these people have created? And can we now start to commercialize it and use it inside of

Wall Street or these large financial institutions? You literally wrote a book on this, which we'll get to in a second. But talk a little bit as to like, where is Wall Street maybe like attracted to most, right? If crypto is a magnet, where's Wall Street being sucked into in the industry? Sure. Well, first, I'm excited that Wall Street is being sucked in. I started in the space back in 18, recognizing the benefits of what this technology can do for finance and it was not cool because crypto was very cool then um but what was interesting to me it was the ico boom that it was this whole global world of investors that were looking for alternative assets and they missed the tech boom and then this is what this was their opportunity

and so i think that kind of has caught the attention as well of of the banks and the asset managers i think a lot of opportunities are them looking for um looking for new clients how can they expand their assets under management? And I think the way to do that is really to hit the retail segment. And we can go back to numbers. I appreciate numbers. A lot of people in the space don't throw out numbers. But 51% of the wealth right now is in the retail hand. So it's in yours and mine. And then 49% is in the companies. And so a lot of these asset managers are looking to increase their assets under management, but everybody goes to the same pool of investors. So they're going to endowments, they're going to sovereigns, they're going to insurance companies,

and other like um and they're not increasing their allocations but where the opportunity is is to hit the retail segment so i feel like um the tokenization of funds and money market funds is over a billion dollars and the experience that these asset managers are having like blackrock didn't want to be a leader but and they've just tokenized a fund um kkr tokenized a fund hamilton lane tokenized funds private equity funds both of them um and one of the opportunities there is it you can bring more people in from that retail sector because the buy-in is lower right so instead of a million to five million dollar initial buy-in um you can have a it's like 100 or 250 depending on which fund but it's still a lower buy-in so it attracts more people

so i feel like you're one of the big steps of wall street is opening up their their investment opportunities to a bigger crowd i think there's also um digital currency is going to be a big step which is going to affect us as well um as also banks um if you look at what jp morgan has created with jp morgan coin they reported to save 20 million dollars last year generally on repo transactions for their jp morgan coin which is only done inside the bank um and explain a little bit like what is jp morgan coin because they've been talking about this for a long time i think many people thought it was defunct and it wasn't working but they are using it yes and so um you You know, Jamie Dimon goes out and says, hey, Bitcoin's garbage, crypto's garbage.

You're saying, hey, wait a second, they're using this. They're saving $20 million internally. So what are they doing? So it was interesting, kind of on one hand, crypto is it's a pet rock. It's a fraud. But then on the same side, blockchain, oh, we're using this to move money. We're using it to move information. So JP Morgan created their own internal blockchain called Onyx.

For that, they've also created their own internal stablecoin. So the stablecoin, it's backed by depository receipts of JP Morgan. So it's really more of a cash, internal cash flow, collateral management, treasury management tool for them. So it can't leave the bank. So if I'm a big insurance company, I can look in my account and I can see the dollars in my account. But from them moving or balancing between banks or countries or countries, I'm sure they're, you know, they deal with legalities, but they're able to immediately transfer and save money. So one of the ways they have saved money as well on this JP Morgan coin, which, again, is only within JP Morgan, is on treasuries, because if you think the way the the repos, if you think the way the repo market, it's trillions of dollars are transacting every day in repo and you can decrease the time. It's not a 24 hour interest period. You can decrease it to hours to minutes. And that's something that in time, I think blockchain will do for the fixed income markets and the bond markets is just real. So you're not paying monthly interest, you're paying say hourly interest, you'll have information. But I think that's how the majority of the money has been saved. So JP Morgan's got JPM coin.

Do any of the other banks say like, oh, that sounds smart. You said 20 million, we want to say 20 million. Let's go build out our own internal coin, our own internal blockchain. I think a lot of people are looking at that. A lot of people are looking at, a lot of both banks and asset managers are looking to build their own internal blockchains. A lot of them are private chains. I'm a big believer in the public versus private as like the internet and the intranet.

So when the internet, you know, rules rolled out, companies were concerned about the people having access to their information. And the intranet was like a bulletin board for company employees. And then they recognize the power of a decentralized internet, which think of all the companies. I mean, think of a company that doesn't have an internet site. And there's companies that get most of the revenue off of internet or some all. So I feel like the blockchain private and public is going to get there. That said, banks are heavily regulated.

there's got to be privacy around um around cash flows and accounts um but yes they banks are looking at doing that there are some consortiums that are looking at doing that as well there's also some companies that are offering similar services to create that but i do think that's a big i think that's a big win for banks and they should be touching it there is regulations that if you're touching anything a bank wants to touch anything crypto oriented it has they have to get approval. So I think we need a little more clarity for regulation. Also, some banks are looking at generating revenue instead of saving expenses. And I think those are the two benefits that this technology can provide. This is a very interesting part to me of these larger

organizations, right? If you look at, I don't know, macro hedge fund managers, you look at venture capitalists, they are known as good investors. They are trying to drive outsized returns. Most of the people I've talked with inside of these large financial institutions, they're not trying to drive outsized returns. What they're trying to do is create products or revenue streams for the bank. And what they really want is, hey, we have a lot of money, so if we can drive revenue off of that

and do it in a repeatable, scalable way, that's much, much more interesting to us than, hey, we came up with some novel investing strategy where we're going to clip 200, 300 basis points of outperformance. And so is that your experience? And what are some of those revenue streams that they're trying to create?

Sure, revenue is much more sexy than cutting expenses, for sure. I think part of the revenue is finding alternative investments that are attractive to retail clients i think that we're going to see a big boom in that there's been a big shift in there's a big shift in the investing strategy i think if you look at um blackstone did a study for ultra high net worth and they're investing 60 40 not in stocks and bonds but in traditional and alternative investments so 40 and alternative investments

which have outperformed the market of publics and publics there's half as many companies as there was at y2k uh so there's less opportunities to invest there but i think with more being in the private and alternative markets if they can create more private and alternatives there's a demand for that and if they can spread that demand outside of the ultra high net worth are the only ones really investing in alternative assets now um i'm a big push also for the changing generations and dynamics right if you look at the like from a macro and a micro push of where the money is coming from and where it's going so millennials and gen z which are half the workforce and they are going to have a majority of the world's capital because the baby boomers, which was the

best performing over time for markets who have amassed the most money, is going to pass down to baby boomers in Gen Z. No, I'm sorry, to millennials in Gen Z. Millennials are turning 40, so they're also starting to run the companies, trying to run groups. They were born with a supercomputer in their hand. They're very digital in nature. Look at what happened with GameStop, right? It's a different idea of approaching investments. I think that that will happen again i think dogecoin will happen again it's them using social media and also showing how they're investing they're investing in something they believe in or they feel um looking at there was a study done in the uk that 85 percent of gen zers get their financial information from fin

influencers which is social media all online before parents and so i feel like that that wall street needs to come up with new products that will be attractive to this millennial and gen z crowd because they're the they're the future of the investors right there they look at things differently um my we live in connecticut and my son was going to weekend classes at yale and he came back and told his brothers it's just as old inside as it is outside who would ever want to go there very very different from how i grew up and the whole push of academics and it's not that it's not that he's not academic it's that it's a the idea of things being new and not understand not appreciating the legacy and tradition associated i think but i think that

highlights the ideas of a lot of millennials and gen z right they want to do something different they look at the world differently so i think wall street's going to have to recognize giving them new opportunities to invest is it that they're also losing trust in the institutions like if you are an institution then maybe they think that you're full of shit i i it's the okay boomer right they're old they don't know what they're talking about i could do it so much faster myself but that's not new right like for a long time people have definitely said oh the older people they don't know this is new here's this thing they don't understand vice versa right the older generation said hey these people are young and dumb wait till they get some experience and

then they'll see it our way um but it does feel like across the economy uh and society trust institution you can see in the data right is falling from news organizations to colleges to you know name the organization um and i wonder how much of it is you know the internet kind of took like a sledgehammer to education it was like hey now this stuff's free online um you can make a lot of money working for yourself yeah finance is the same way right where now all of a sudden hey maybe you don't have to work as at the bank like you can literally just open a brokerage account get started um so like accessibility became a huge uh kind of tailwind for for this generation um but at the same time there is still a lot of value in experience in that institutional

knowledge absolutely and so it's this very weird dynamic where like the world is changing but maybe actually the people who are younger should understand history to kind of better position themselves so it's like you want the best of both worlds not either or absolutely i totally agree um i will point out also robin hood right robin hood 80 of their user base is under the age of 35 that's huge the average age is 31 it's a different dynamic and they they didn't charge fees now nobody is charging fees for a kind of online brokerages i'm also if if um the idea of this is kind of the hoodies and the suits too right it's the it's the younger inexperienced but more idealistic and then that's the recognition of um tradition and having been through cycles and

investing and i really think that you need both but i also wonder if that generation is going to stick with their you know parents wealth management right if i'm in the private wealth group at this bank they need to really focus on that next generation who thinks differently who invests who has robin hood accounts that they i forget how many times they check a day but it's ridiculous I was surprised the number was so high, checking your investment count all the time. So there is a demand for investments and the number of people that hold crypto is an alternative asset. Or even I was talking to a 14-year-old that buys sneakers off eBay and sells them. So there's definitely a mind towards making money, I think, but it's not necessarily the same old school ways. Yeah. And I do wonder how many of those people who are going to step into this transfer of wealth, whether they're inheriting a company, whether they're inheriting actual assets, they think differently. But how much are you willing to express it in the market? Right. I always kind of think about it from the perspective of let's say that you're a kid and your parents give you a stock portfolio that's worth a million bucks. How many kids really are going to go sell the million dollar stock portfolio and go buy a meme coin or even buy Bitcoin or whatever?

Some will. But is it a really high percentage or not? And I think that's kind of the open question is how much does the capital allocation change once this generation steps into it? Because what we're seeing on the company side is actually that big transfer of, oh, the older people are going to leave their companies are going to pass them off to their kids. From what I see, most of the kids don't want the company. That's true. So what they end up doing is there's a sale, but it doesn't stay within the family. Instead, what's happening is it's going there's trading hands, private equities, buying it up, you know, all these things. And so if you take that same mechanism where you're like, yes, there is a transfer, death is coming, right? There's a certain portion of the population is getting older, they're gonna have to pass their assets on. when it's a company, I don't know the exact numbers, but it feels like anecdotally, it's not all going to the kids like it used to, or maybe it's high of a percentage. So on the finance side, when this money gets passed down, does it change its allocation or not? You got to imagine some of it will. But if you're inside this bank, are you basically betting on the fact, hey, I'm a financial advisor. I just don't think the kids are going to change

the allocation. They're going to keep it right here in these accounts. It's really hard to transfer the money out, right? You got to get on the phone. They don't like to get on the phone. like you know do they have to get on the phone you know i just opened an account yesterday for like i i recently had to move money from from one uh uh platform to another and literally it was call us do this um you know i called it was a holiday uh so they're closed like i wait for the next day i mean it was it was the classic you know 10 years ago type experience um and so when you look at that you're like okay maybe the financial advisors are actually just betting on uh what's not going to change in the world which is like people are lazy um which is a which is a

big chunk i think you know it's easy people not everyone thinks about their investments in their mind but if you go and then you look at wall street you say to yourself okay uh they're looking for new revenue opportunities crypto seems to be an area that has a lot of potential new revenue opportunities you see with the etfs again they're very low fees but you get 50 billion 100 billion dollars of assets into one of those funds you're gonna start making some money because you don't have to do a lot you don't do anything right and then you start looking at okay what else can we do And so there's the JPM coins and stuff kind of internally, but it does feel like the innovation around products is coming.

And so like, I think it's Franklin Templeton recently announced this like on-chain funds. Maybe you can talk a little bit like what is that type of innovation? And is that something, again, you'll see it kind of exported across Wall Street, or is that unique to one organization? No, I think Franklin Templeton is very forward thinking and almost like a family office, even though they're a public company because they're generally owned by the Johnson family. um so they have uh jenny johnson who's the ceo and president of franklin templeton has reported she believes all etfs and all money market funds will be tokenized because they have tokenized

funds and they have shown such efficiency and decrease in and decrease in costs that it that they believe that this is the wave of the future so much so that blackrock has similarly tokenized a fund their first step is money market fund so they're doing a lot of in essence u.s treasuries There's a demand for tokenized treasuries. There's also alternate use cases that haven't really come across yet, but they can be used as collateral on different things in time. But there's definitely been a boom there. So I feel that that and that's over a billion dollars has been tokenized in money market funds. And so that's the first step.

And when you say tokenizing a fund, just for people who are listening or watching this, what exactly does that mean? uh that so it it's u.s treasuries that are in a typical fund structure and the shares of that fund structure have been created as a digital token um that you can buy and sell similar to a cryptocurrency except for that it is a security and so it is whitelisted uh and you have kyc aml which is know your customer anti-money laundering so you have to be which is once you've been approved and passed that then you're technically on the whitelist so you can buy or sell that security. Got it. So if I want to be an investor in this fund, I basically have to go through all these steps. They got to know I'm a good person. I'm not involved in any bad business. I get

approved. Now I'm kind of like in the ecosystem or on the platform. And then I can buy and sell shares of this as much as I want, but I'm doing it with a digital token rather than traditional electronic Q-SIPS. Absolutely. And so also you have intermediaries generally with funds and what they're finding is it can decrease intermediaries and that the blockchain serves. Franklin Templeton has found that the blockchain is an excellent transfer agent, such that you're still required to have them with the SEC. But Franklin Templeton has proved out the transfer agent case. So I have shares. Let's say I'm balling. I got $100 million of this fund. Do I hold the tokens in my own self-custody wallet? And if somebody hacks me, the tokens are gone? Or how does it

work in terms of securing the actual assets? Am I using a custodian? What are people doing? So most people are using custodians. I don't know anyone that, I'm not sure people are doing self-custody, to be honest. There's also kind of, I used to run a broker dealer. You can leave them at the broker dealer. But also when you have a security and it's whitelisted, you know exactly who owns that security. So even if it were to be hacked, you could actually burn that token and mint a new one. So there's an extra layer of, since it is not, it's fungible in the sense that multiple tokens but that that additional layer of permission and the white listing actually is people know who owns it so it's not it can't be hacked such that they're going to get your

interest if that makes sense yeah that makes a makes a ton of sense and so um will they eventually just do every fund like are we just going to see anything that is public private every fund will be tokenized and trade on these blockchains or do you think there's some that it's more applicable and kind of valuable i think that um not i think first of all blockchain will be blockchain will be behind the scenes right and it's not going to be as noticed um i think that a lot will be tokenized i'm not sure everything will be tokenized if there's not a liquidity aspect to it as well there's definitely an efficiency right there's an efficiency because so much more can be digitized and programmed in and automated i mean really what this technology brings is is smart money

or smart contracts that can be programmable um but i do think in general yes right so much even from a corporate perspective if things are tokenized the transfer is so much faster um than waiting i you know waiting for securities there's that float in between versus this is automatic right i cashed a check the other day it took five days to close so that money is floating similar when you have t plus two if i can actually or if i'm a company or if i'm a person i would rather put my own money to work right away that day than wait for two to five days until i can actually access my capital. So I think it's much more efficient. Now, from the bank's perspective, they're going to lose that revenue line of the float. But I think they also have to recognize

that this is coming because if they're not going to do it, someone else and this is the whole like blockbuster or Kodak moments, right? You have to recognize where change is coming. I think we need to look to five and 10 years in the future and plan for that. All right. So you wrote this book from hoodies to suits, innovating digital assets for traditional finance. And it's a great book. people should go get it if uh if they haven't yet um but what's interesting is you're essentially pitting kind of the early adopters innovators technologists versus more of like a finance kind of adult in the room you know type audience um are they on the same team or are they actually working against each other right and maybe like the bitcoin etf is like the first uh collision

point where bitcoin was created in the wake of 2008 financial crisis it's got all these ethos it's, you know, libertarian to a degree. Occupy Wall Street. People will, yeah, people will talk about, you know, separate state and money, do all the stuff. And then like Larry Fink and BlackRock got more Bitcoin than anyone, right? And they're pulling it into the system. And so are they on the same team or no? So I will say Bitcoin was developed as kind of anti-establishment to not, you know, I don't trust the banks. I'd like to keep it myself. And there are some that are very strong that way still. I think that the world of DeFi and traditional finance will merge. So I I think there are benefits that have been developed within this technology for decentralized

finance. But yes, I think there's a huge use case for actual traditional finance. I think the hoodies and suits need to work together. And I think it will benefit both those that want to work outside the institutions from an innovation and a money flow perspective, because more will be tokenized. And I feel like once traditional structures are tokenized, it's hard to change the technology and the structure at the same time. So if we can tokenize traditional structures, once those are tokenized, think of all the derivatives and more complicated structures that could come out of that. And so I feel that will help kind of the hoodies in the more complicated worlds.

However, I think hoodies and suits need to work together. The hoodies are, I look at hoodies as being the idealists, the technologists, the entrepreneurs that created this $2.6 trillion industry, right? Without the suits for the most part. And so now I'm recognizing for that to be institutionalized, which is what kind of Wall Street capital markets and even Main Street, it makes a lot of sense to do that. They need to work together. It's hard to create innovation inside of a corporation just because it's generally

very, not straight-laced, but it's very structured, right? I think a lot of times it's a freer thinker that you can create innovation with, but I think they need to work together in the sense that the suits are bringing together the fiduciary knowledge, the understanding of regulation, the fact that markets change, checks and balances. I think we can learn from crypto's mistakes about some younger generations of people who had a lot of money and were acting as fiduciaries without the experience and of recognizing that we're working on securities and we go to jail if we do this wrong. So I really think that you need to work together. I also think diversity of thought helps. One of the things that's interesting to me is when I go to events, I see a lot of the

quote unquote suits, the people on Wall Street trying to dress down and appeal to kind of the crypto folks. I actually think it's a huge mistake. I'm sitting here in a suit and tie right now. And I think that the world should be moving the opposite direction. So as we become less serious, uh, more problems get introduced and maybe what we should try to be trying to do is take the less serious folks and make them more serious. Um, and if you look at, uh, the trajectory of many of the great technologists and kind of, uh, business leaders, um, they're, that's a normal trajectory for them to take, you know, uh, it's kind of like you live long enough, you become the man, you know, Bill Gates used to be in the garage. Now he's, you know, some circles considered

kind of this evil billionaire. Um, and that is a maturation process that I think the industry overall is going through. Um, what is interesting to me is there is crypto native revenue and kind of crypto native business, uh, um, opportunities. And then there is kind of the true commercial, very large opportunities. And what I continue to remind people is, um, you get credit for being early but being early doesn't mean that you actually win and what's so interesting is like you know again blackrock has more bitcoin than you yeah you were early they got more bitcoin who actually is going to get the big win and so larger pools of capital can wait longer right um they actually want it to be de-risked because they want to have a high probability

batting average versus a slugging percentage um and so one of the risks that i see for the kind of hoodie crowd is they take their foot off the gas i was early look how smart i am and here come all these other people um and they're going to catch up pretty quick but i do think they need those hoodies to continue to innovate as well but i understand what you're saying i feel like you know first in like look at aol yahoo and uh google right i feel like there's so you're not always the first um but i do feel that they're still bringing a lot to the table there's still with you know with zero knowledge proofs that are coming out there's still innovation with artificial like ai that's going to be kind of pulled in um and i don't know that the the

institutions have a lot of money to throw behind it so yes they can hire their own hire their own hoodies but i still feel like there's still hoodies within them that are helping it's just them working together correct but i look at like the tech industry microsoft is one of the most innovative companies in america which sounds insane right when you think about like innovation you think of like people in a garage writing code doing all the stuff microsoft is the leader in AI out of companies, you know, uh, when it comes to, um, this whole trend investment, but, but you're right. But, but I mean, look, Satya Nadell, right. When the open AI fired a Sam Altman, he wrote an email to stakeholders that eventually lead. And he said, we are above

them. We are below them. We are all around them. They can't do anything without us. Right. And so if you think about that, it was a large company that is actually gaining most of the economic benefit especially because open ai is supposed to be this non-profit thing whatever and so it breaks the mold right like like it took me a while to be like well that's really counterintuitive wait microsoft is the leader in ai i you would expect it to be some new company that nobody is uh heard of before it's kind of innovation etc and so is blackrock the leader in crypto now in crypto it's funny thinking about just just bitcoin um right and or bitcoin right is like if you said who is big winner in bitcoin well i guess rock your fidelity of bitwise like you have a couple of

players but actually it appears that the large players are going to end up having outsized benefit here yes yeah compared to the people who are early or the quote-unquote you know hoodie innovation crowd and that's not to say that those people aren't i actually think they're incredibly important and you know if i had to guess satoshi's wearing a hoodie not a suit right um but i think they bought in at a dollar right blackrock didn't buy in a dollar but that's my point if you buy it at a dollar with ten dollars maybe it's worth 10 million today be incredible return blackrock made that in the first second that their etf started trading yes and that's going to change the world for crypto too i think because it'll be a lot less volatility

because there's a lot of buy and holds but um look at the top data companies in the world for example this is the i do think there's going to be growth which is where i'm going with this so the top data data companies in the world number one is ibm right that's their business cut and clear both google and amazon fit into the top data companies in the world neither of which is their core business but they are what we call web you know i know people don't like web 2 web 3 but you get the idea of their web 2 companies you know born and bred and they've recognized opportunities outside of that i think we will have web 3 companies that similarly will become behemoth companies that recognize opportunities outside of just what their day job is are there any examples

you have because of data i think there's a lot of different things and now we're dealing in the banking world and people are a little more forward thinking so i mean it's difficult but if you can find revenue streams which is uh and something that you can actually um generate capital really um i think there's different if you look at you know stablecoin and again the winners haven't aren't out yet but um because part of that's expanding their business but uh look at circle has done really well with stable coins usdc it's through it's regulated compared to the other stable coins and it's with the recent regulations it's kind of coming to be clear um i think they have opportunities i think fireblocks has done a good job in creating the custody solution for

example just you know there are other opportunities they can do outside of just that so maybe they have an opportunity um i've coinbase for example i think coinbase has created something they've on public so there's other opportunities again i think they would have to expand into different revenues but i think there's all of them are revenue positive i believe uh some are private so so what now becomes interesting is like coinbase is the upstart coinbase is like the hoodie crowd right and they've grown and now they're this huge thing um new york stock exchange not participating yet outside of letting you know uh kind of etfs potentially uh trade um but they did invest so they are benefiting it was kind of a either way this market goes we're gonna we're

gonna make money um now they are talking about potentially adding crypto uh i think it was cme or cboe they said hey we're looking at this this is interesting to us right um obviously there's all the futures like you can see hey here we go like they they're not gonna get left behind here um and and so when i see that i'm like okay wait a second who owns new york stock exchange ice okay so they own new york stock exchange was going to benefit from the etfs they're going to potentially add crypto themselves they also are investors in coinbase they also did backed right like you start seconds like you're like yeah maybe actually people have been making a lot of money all along were the big institutions it doesn't mean that other people didn't make money but i

think this narrative of like wall street wasn't involved they were involved from their strategic venture groups and i also think that uh many of the crypto funds how many of the lp dollars because a lot of these funds couldn't raise money from endowments or hospital systems or, you know, pension funds, et cetera. How many of the dollars came from people who would fall into, you know, the wall street crowd? A lot of a lot. Look at, look at the FTX, you know, so you kind of go down this line and you see all this. And so what my point is not so much like, Oh, one side is better than the other or whatever. It's that actually it's one big market, even though I think when people talk about it, we'd like to try to make this like

analysis. And I think what you're talking about in this book is this idea that like, hey, the other side, meaning the suits, are going to be really important here. And they're coming to adopt this stuff. And so there's an education component. There's capital flow. There's all these things that are going to really matter here. And if you want to get mass adoption, you need everybody. It's always like a funny thing to me. People are like, I love mass adoption, but not those people. They're coming because you ultimately are going to see the mass adoption occur both individual uh and at the corporate level i also think everyone needs to be connected i think there's a huge interconnectivity and it's this is kind of um there's lots of consortiums i think you

have to work together to help create this there's no standards yet they're starting to be standards when you have more institutions working together um and i agree the point of you know the inside of the cover talks about mars zuckerberg who was obviously a big hoodie who then when he went to congress now he wears suits a lot and so that's kind of the maturation and that's why i feel like this market is maturing as well there have been a lot of people who have left traditional organizations either in tech or finance and moved into crypto kind of helped go build those uh do we see the you know kind of brain drain the other way are people leaving kind of hardcore native crypto companies and going into these large organizations i think it's harder to go into

corporate um i'm trying to think of examples most of the there there have been some there have been some kind of if you look at the heads of innovation or heads of digital assets some of them have experience in startups i don't know that would be a brain drain though because i feel like that makes a lot of sense because you're adding value both to the institution and then that will help the startups too because you know who to work with or partner with but there have been a lot and there continue to be especially with the bull markets people looking for opportunities that are leaving kind of the more standard, comfortable job into crypto, something crypto oriented. Yeah, it's fascinating to me, right? In terms of how this all plays out. Where do you think

the biggest opportunity is for Wall Street? We talked about where they're being sucked in now, but that doesn't necessarily mean it's the biggest opportunity. Where do you see that value creation occurring over the next 10 years or so? I think digital money is number one. I think just payments. I don't think that they're like CBDC is tough, which is central bank digital currency which is backed by reserves the u.s bank um u.s uh thank you federal um because of a privacy perspective right i think that's gonna be hard but i do think there's lots of opportunities within digital dollars programmable money uh i think the funds like we were mentioning uh and then i think debt i think there's a lot of opportunities in debt because again debt debt can be programmable

which could be corporate bonds which are generally pretty basic um but also loans i think figure has done a great job in proving out cost savings in both securitizations and in loans. I think there are about 150 basis points in cost savings, which might not sound like much, but when you deal with huge sums of money, it is. So I feel like those are probably the first steps. And really, when we talk about tokenization of real world assets, it's the opportunities, which I was kind of putting into funds, right? The alternatives of asset, different types. i will talk about um for example the the horse mage who won the kentucky derby last year was token would not tokenized he was a security though right because he people it was it was um

wait what is the story madge was won the kentucky derby last year and he was a crowdfunding um so he was fractionalized he wasn't tokenized yet but he was a technically a security if we look at legos aren't securities but he's a security and that's the definition of like securities because there was because he was fed, he was trained, all of these different things. And there's a demand for these alternative assets. And so I think from a tokenization perspective, you can add that in as well. So I do think that will come along as well. So even if it's not a tokenization of funds, I think the tokenization of technically all of these are real world assets. But I think alternative investment opportunities will pick up as well. That's a little more bespoke because

they're not as liquid as Apple stock, for example. But I do think that will continue. the horse people crowdfunded the money to buy the horse and feed it and do all this stuff and then they got a certain percentage of the profit well they were just investors in the llc that owns the horse think about it that way but it's just interesting to think different types of things i think also within that alternative investment crowd rihanna had a song that was tokenized so anytime you listen to that song you can you know make money off of it yourself and so um i think there's more opportunity that touched that crowd that almost user experience of things that you're interested in, I think that is going to be smaller, but I think it's going to be very

interesting and seeing all that develop. I still think companies also have tokenization, you can actually have more interaction with your investors. Look at, this is something that Amazon Prime and Amazon stock, right? There's utility that I think will develop, which is kind of in that real world asset bucket. I bought AMC stock because it gives you a utility of free popcorn. And I wanted to see if that worked but you didn't it doesn't actually tie together you just check a box right so um as in like you they're not checking that i actually own the stock wait they just give you free popcorn if you check a box at the movie theater uh well it's actually online that when i sign up for the rewards program they ask if you're an investor and so now i checked the box that i'm investor

i don't think they're checking because i they don't have access to my investment accounts but i am i did buy this documentally um just to see that example my thought process here is like the, and this is the Amazon, the utility experience you can get from stocks. For example, the Amazon stock and Amazon prime, Amazon prime are their super users. Super users are the ones that are actually helping generate revenue for the company. They're also the best feedback providers of how to bend, like how this company can do better or, or, uh, what it's doing great, right? Amazon stock, you actually are benefiting from the profits of the company. What if those to merge what if there was some sort of opportunity that you know you get amazon prime to become a

super user if you're a shareholder something like that working together um there was the aspen st regis coin was done uh years ago nothing else has really been done like it but there are utility benefits to owning that token as well and this is a um the st regis in aspen colorado and if you stay there you get upgrades or you get champagne in your room you get different benefits so i feel that there's different ways that in that tokenization real world assets, there will be utility benefits also. It's fascinating to me how much, um, has been tried already, but it feels like it's only half a percent of what is going to be tried. Yep. All right. What, um, what did you learn from writing the book? Oh, I never thought I would write a book. Um, but I, it was

after for me, it was really, I think that we need education for adoption. And I think people just need to understand Bitcoin and blockchain are not the same thing. Uh, and this is, there's so much this technology can offer and this is why I should care and why it can affect me and how I should think of business going forward, especially from a business perspective, understanding how this might change my business line. I think it's important, but what did I learn? I, um, I actually enjoyed the process of writing. I knew what I wanted to say. I did it in three months. Uh, I did quit my job to do it. Um, I wrote a majority of it in the two months, uh, and then I backed it up with fact. And then the last month was 11, like chapter 11, which is where the world's going

to go only because that's where you can poke holes in. And that's where there can be a lot more pushback. And it didn't change what I said. It just, I spent more time researching and kind of looking at the upsides downsides. Um, I w I learned that I'm better in the morning. So I would write from like six in the morning until noon. And then the afternoon I'd do phone calls because I was had a hard time concentrating. Um, what else I learned that the process of writing a book is not you know this you've got your book coming out which is exciting um working with like the publishers were great but a lot of the promotion actually is is on me which is interesting um i tried to work with pr that didn't work very well for me um but luckily you know it's a great it's

a great industry um and i think there's a lot to say so this was really a labor of love i don't think that it's you know i'm not going to get rich off the book but i really do help hope that it you know makes a difference for people what i've found i thought it was for the finance crowd i have found lots of tech people that have really appreciated now this book only came out last week um it sold out on amazon over the weekend which is exciting um but it really like the tech crowd really appreciates it because it teaches them about finance i've talked to finance professors that have read it that help them explain the tie-in of tech and finance that they didn't actually get before so there's a and i think also millennials appreciate it because it's where kind

of the world is going. So for me, it's got a much more broad audience than just, you know, from a finance perspective. I love it. From hoodies to suits, innovating digital assets for traditional finance. Again, if you haven't gotten it, go get it. There's the title book cover. Looks great. I appreciate you coming in and doing this. I think that you're dead on in terms of this transition that's happening and this kind of teamwork and collaboration. And so I think it's important for people to be aware of it because then they can kind of be open-minded to it. So thank you so much for writing the book. And we'll definitely do this again in the future. Thanks so much. Thanks for having me. It's been great.