The Pomp Podcast - #1541 Michael Ellis | CIA Says Bitcoin Is A Tool They Use

Episode Date: April 30, 2025

Michael Ellis is the Deputy Director of the CIA. In this conversation we talk about the relationship between US and China, Taiwan, how they evaluate technology and AI, bitcoin, cartels, and what Micheal pays attention to on a daily basis. =======================Figure Markets is where crypto meets real-world finance. Trade 24/7 with speed and transparency, borrow against your crypto with no credit checks, and earn—all on-chain. Stocks and real estate trading are coming soon, giving you 24/7 access and instant settlement. It’s the best of TradFi and DeFi in one platform. Get started today at https://www.Figure.com/pomp! Disclosures: https://www.figuremarkets.com/disclosures/=======================Simple Mining makes Bitcoin mining simple and accessible for everyone. We offer a premium white glove hosting service, helping you maximize the profitability of Bitcoin mining. For more information on Simple Mining or to get started mining Bitcoin, visit https://www.simplemining.io/=======================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/

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How are you guys doing? Today we're here with Michael Ellis. He's the deputy director of the CIA. And I thought a great place to start this conversation is everyone wants to understand the United States relationship with China. On one hand, they are an important trading partner. They rely on us. We rely on them.

On the other hand, they are a competitor in the global arena. And at times they're even an adversary. And so how do you look at that relationship and understanding maybe there are things that we need from them, but also there's things that we should be worried about. Yeah. Well, first of all, thanks for having me on today. It's great to chat a little bit about all of the work that Director Ratcliffe and I have been doing to execute on President Trump's agenda over the first 100 days. On China, I mean, you're absolutely right that this is a different kind of competition that we're in. It's not like the Cold War or the Soviet Union, which was a primarily political and

military competition, because this is an economic competition. And as you know, you know, a huge trading partner. But for too long, you know, and I give President Trump huge credit being the first to really realize this and pointed out to people, you know, China has been competing in an unfair way, right? That they were breaking the rules on trade, on intellectual property theft, on cybersecurity, right? I mean, you can go down the list of issues where it was not a fair competition with China. And President Trump was the first one to recognize that, right? If you look back at the national security strategies of prior presidents, Republican Democrats alike, right? George Bush, Obama, they said that their policy, the official US government policy was to

enable the peaceful rise of China, right? That was the government's policy. President Trump was the first one to come and say, no, that's not our policy anymore, right? That's absolutely wrong, right? We have to deal with them as a competitor. And as you know, in many respects, an adversary. And when we look around the world, obviously there are other threats, North Korea, Iran, Russia, ISIS and al-Qaeda and other terrorist groups. They're all still significant threats that we can't take our eye off the ball on. But China is the existential threat to the United States on all of these realms, but particularly on the economic realm where it is a technological competition with them. How do you look at the CIA's role in evaluating that risk, maybe participating in some of the potential solutions or maybe other things that people don't even realize that you guys are involved? Yeah. Well, obviously, a lot of the specifics I can't talk about in this format. But, you know, our aim is to give President Trump a decisive intelligence advantage. Right. That whenever he is sitting down for a meeting with a foreign leader, whenever he is making a decision about U.S. foreign policy, that he has the best possible intelligence to inform his decision making.

Um, and that's true for China as well, right? That, uh, uh, China is obviously a tough target, right? Um, you know, China is not an open society like ours. Um, so it is, it is a place that is, um, you know, uh, it is, it is a, a hard target for the intelligence community, um, to operate in and to collect on, but it's vitally important. Um, and for director Radcliffe and I, it's a top priority that we be able to give the the best possible intelligence on China and every other country in the world. If I was to ask the internet, what's the number one question on China? I think they would say

Taiwan. And I know that many government kind of position on this is the strategic ambiguity and not really saying kind of a specific view, but maybe what you could help us understand is what are some of the considerations, right? You guys come to work every day. You're trying to understand And this issue, as you mentioned, it's very difficult to get information sometimes. But again, you have two allies of the United States, but also at times you have one that is an adversary, another that is strategically important based on a number of different organizations. And so just talk through that China-Taiwan situation and kind of how you guys currently are thinking about it. Yeah, I mean, you're right that it's obviously at the forefront of everyone's minds about China and Taiwan. It's also an issue where Taiwan is a great partner of the United States.

It's economically significant as well, right? If you look at advanced semiconductor manufacturing, right? TSMC, that Taiwanese company, is one of the world leader semiconductors and is important to the electronic products that Americans use every day, right? So this is a significant challenge and one that we are certainly focusing on. In terms of a lot of specifics, again, hard to get into too much in the unclassified realm, but it's part of a whole of government effort, you know, alongside of the military, the State Department, other parts of the intelligence community to be ready for possible scenarios around China and Taiwan. You mentioned semiconductors, which is kind of another key pillar of, I think, this administration and the CIA in general is technology. Technology feels like a great tool for many use cases, but it can be also a great weapon. And

we've seen in recent conflict globally, things like drones that, you know, I was in the military in 2008, 2009 deployed, and there was no worry whatsoever that there's gonna be drone swarms coming after you. That seems to have changed very rapidly. And so how do you guys think of technology both on the battlefield but also as part of the intelligence gathering uh effort yeah you know we we view technology as both a tool right as you say there are there are you know phenomenal advances in how we can collect intelligence now um and and analyze and synthesize it especially when you think about like ai tools um and we've been working to integrate those into cia um it's also the target for us right you know this like i mentioned our

Our competition with China is economic and technological in a way that is very different than how we took on the Soviet Union. And our aim is to give America a decisive advantage in the technological competition. Whether it's quantum computing or AI or semiconductors or biotechnology, we want to secure a decisive American advantage in all of those fields against China. And obviously, that's not just for the CIA. is all across the government a role for different departments

and agencies to play. But it is one where I think the intelligence community has for too long ignored that mission, right? The IC is very good at counting Soviet tanks to be ready for a possible conflict

in Europe in the Cold War. But when you ask the IC to look at issues of where Chinese companies are in artificial intelligence research, it's not one that we've been well-positioned historically to think about. So that's something that we're looking to change, right?

To develop more resources, to develop more personnel. And as part of that, we need to recruit some different kinds of people into CIA as well. We need more people with science and technology backgrounds, which is, again, a little different than the global war on terrorism mindset of the last 20 years. One of the things that's always struck me is the public sector government intelligence effort combined with the military has become more and more dependent over the years, whether it was Blackwater back in a decade or two ago, Palantir today. These things take different shapes and sizes. Sometimes it's, hey, a personnel type stuff. Maybe it's weaponry. Other times it's

software. How do you think about that public-private partnership to really get after what these stated goals are for your organization? Well, I think there's a lot more that could be done there, to be candid. Certainly, when the government needs to be smarter about contracts, I mean, gets we we could also talk about our doge efforts at cia we had elon musk over a few weeks ago to what was that like that was great um i mean he brought little x with him i saw the photo yeah yeah yeah well i mean uh little x his middle name is a12 after the a12 ox cart a cia project uh amazing so it was great to be able to show him that um show little x's plane yeah um because we have one um obviously decommissioned uh uh out uh on the cia campus uh at line but like when

when a guy like that comes into cia right and he's there specifically let's slash cost let's you know find all the waste and abuse etc um you all also have a very important mission to go and gather intelligence and inform you know our leaders that they have that tactical advantage um how do you think about the balance there between rooting out some of the you know the waste but also still doing your mission yeah well you know the reason we we asked them to come in was because you know we need to um to find that waste um look it's it's a government it's a government agency like every and like every government agency there's always things that we could be doing better um areas where you know we could be more efficient and um smarter with

our spending and by doing that not only is it going to open up resources that we can deploy to higher priority problem sets right um but also it makes us more agile as an organization right that we can respond more quickly and more nimbly to what the president needs of cia so um you know the i the idea is yes we're going to be you know looking for waste and and cutting spending at cia um but it's with the goal of having a more efficient and effective cia um that we can use to help deliver that intelligence advantage to the president and is that where areas like artificial intelligence and you know these new models that are coming out and all that kind of stuff as you guys embrace that um we've seen it work in the private sector with the palantirs of the world

but also you guys think that you can go use those same technologies internally absolutely um and again it's it's critical that we do so because um our adversaries are certainly going to be making use of those technologies as well and you know you can think of uh an enormous amount of uh of applications for these in intelligence community whether it's analyzing um information right to be able to identify patterns that human analysts would take hundreds if not thousands of hours to identify, or in the operational tradecraft of CIA officers collecting intelligence. There's enormous potential in these new technologies. You also mentioned earlier UAVs on the battlefield in Ukraine. I think you're right that they are revolutionizing warfare,

and that's an area whereby studying what's going on in these other conflicts around the world, you know we can bring those lessons back help share them with the military make sure that the united states is ready for that next conflict i think that i will get tomatoes thrown at me if i don't ask you about bitcoin um i know that uh it's kind of this unique uh unique asset that is somewhat outside the system but being pulled more and more in every day with wall street embracing it um i think criminals uh thought they could use it as anonymous payments uh now it seems like law enforcement is very excited when people use bitcoin because they can trace it how are you and the CIA thinking about Bitcoin?

Well, just like law enforcement, I guess, you know, we are excited as well because, as you know, people may have thought Bitcoin was anonymous, but I'd say it's pseudonymous, right? It's not truly anonymous. And, you know, there's a lot of work that we do with law enforcement,

obviously, to try to track, you know, illicit crypto payments by bad actors. I mean, look, bad actors, whether they're drug cartels or terrorist groups or outlaw regimes use cryptocurrency, but they use other tools as well, right? They use dollars in cars. Yeah, right, right.

They used toner cartridges for their printers, right? It doesn't mean we say we should ban all of those, right? No, look, Bitcoin is here to stay. Cryptocurrency is here to stay. As you know, more and more institutions are adopting it. And I think that's a great trend and one that this administration has obviously been leaning forward into. It's another area of technological competition where we need to make sure the United States is well positioned against China and other adversaries.

You know, we need to make sure that we are a leader in these fields internationally and not a laggard. And there is, as you know, tremendous potential for law enforcement and intelligence community to be able to, you know, use cryptocurrency to help trap what our adversaries are doing and disrupt it. One of the things I always am shocked by is people talk about it as a tool for the bad people, but also it could be a tool for the good people as well, right? And so whether it's Bitcoin or stable coins or anything else, you know, CIA has a lot of payments probably that are going all over the world, as do many large organizations. And so is that how you guys kind of use as a framework for all of the technology is like

it can be a tool or it can be a weapon against us. And we want to be good at using it, but also understand how our enemies are using it against us. Yeah. I mean, I mentioned we use we use technology as a tool. Right. And Bitcoin and other cryptocurrencies are another tool in the toolbox. It's also a target. Right. So it's something we can use to we can we can disrupt our adversaries use use of it. And we can use these technologies to collect more intelligence, to gather more information about them. So, yeah, I think, you know, in that respect, Bitcoin is actually very similar to other sort of advanced technologies and one that we have to that we have to prioritize.

And again, it goes back to there's a little bit of a generational shift, a cultural shift going on that Director Ratcliffe and I are leading the way on at CIA right now. You know, not everyone in the government is has these attitudes around new technologies. Right. People are trapped in older mindsets. sometimes we have to break through that and realize, you know, this isn't just this idea that cryptocurrency is for people with something to hide. That's not, it's just, it's just not right. You sound like the in-house Bitcoiner. Let's, let's talk about the, the cartels before I let you go. Obviously that has been a huge focus of this administration, both at the Southern border, but also fentanyl and illegal drugs. And just talk about kind of that entire effort of

a group that obviously has kind of run wild for a very long time. And now seems that that's not to be the case anymore that's right so you know it all starts with the president's agenda right and he has promised the total elimination of the cartels right that's his priority that is what we are seeking to achieve and we're going to do it um and it's going to be a whole of government effort right there's a role for um for all parts of the government in taking on this threat now obviously there's a huge law enforcement role and um traditionally i think the intelligence community took a back seat to law enforcement we said oh well you know this is more of a domestic issue that's not our concern um but when you look at you know these deadly drug flows take fentanyl

right the precursor chemicals are starting in china they're being shipped to mexico and other places in latin america they're being synthesized there and smuggled across our borders um you know this is an international problem as well and in that respect i think it's actually very similar to the counterterrorism threat that cia has been very successfully fighting for the past two decades um you know, these are networks, obviously different motivations, different structures of the networks, right? But they are, you know, networks that are outside the United States seeking to bring a threat into the United States. And we need to make sure there are no gaps between intelligence and law enforcement communities in disrupting those networks before the threat reaches our

borders. And what about a partnership? And partnership usually is kind of an American idea. We want to partner with people around the world. But one of the things I've heard talked about over and over again, is this idea that whether it's the cartels or other organizations actually partnering up with some of our adversaries. And during the campaign, as one example, there was talk of, you know, a certain weaponry that was actually brought into the U.S. through the poorest southern border. And whether that report is correct or not, I don't know. But it does feel like it's not hard to start to connect dots where if you're an adversary of the United States and there's groups that seem to have an in, right, in the United States, you may want to

work with them. And so how do you guys think about, you know, how that global alliance? And it's one of the reasons that, you know, having a secure border is so critical. I actually went down to the border last month. I went to San Diego and visited with our immigration and law enforcement counterparts there to, you know, learn about the work that they were doing and also to see the differences in how the border is now secure compared to just a few months ago. But, But, you know, when we think about these threats, right, talk about the precursor chemicals are starting in China, right? There is an avenue here for, you know, maybe an avenue for cooperation with China, right? That they need to stop the flow of these precursor chemicals.

There's also opportunities to partner with countries in the region, the Western Hemisphere, right? You know, look at Mexico. They don't want the cartels in their country. They don't want the violence, the corruption. um so it's working with them um as well to help uh to help rid this deadly scourge from um you know from our hemisphere and you know i think there's a role for cia uh and the rest of the community for too long we viewed this as somebody else's problem um you know cia was was busy with china and russia and terrorist groups right you know counter-narcotics that's that's for the fbi

or for DHS, that attitude is over. Director Ratcliffe recently announced that we have merged our counter-narcotics center of CIA into a new America and counter-narcotics mission center, really elevating the prioritization, increasing the resources, attracting the best personnel for that mission, because this isn't going to be an afterthought anymore. This is, again, a top priority for the president. So it's something that CIA is going to deliver on. When you come to work every day, what do you pay attention to? Are you reading the headlines or other KPIs and data points? You know, like how do you think of your day and highest prioritization, but also whether you're making progress or not?

Yeah, it's tough because, you know, some of these are longer term efforts where the progress can, you know, it can be one, you know, two step forward, one step back at times. Right. Obviously, you know, that the headlines always get things before even before the intelligence community does. right uh and that's the evolution of new media right like places like x um you know and other you know social media platforms uh can be fantastic sources for aggregating um you know open source information um and you know because back to what we were talking about about you know the agency needs to be better about uh utilizing some of this uh this technology but um you know obviously i read the intel briefings too um you know we make sure that we're delivering that best possible intelligence um for the president and you know we have a lot of phenomenal men and women

um in the intelligence community who are working to to carry out that mission we obviously need to make sure that we um avoid any of the politicization any of the bias those things are over um there's no there's no tolerance for that um but you know it's a it's a we've been talking about information flow you know i try to absorb as much as possible and then um you know use it to help advise the policymakers to help help advise the president on on the decisions he has to make well i think you guys are doing a fantastic job we're excited that you guys are taking on some of these hard challenges and we'll definitely do it again in the future oh thank you thanks for having me today absolutely all right