The Pomp Podcast - #551: Hany Rashwan on Building Crypto Products

Episode Date: May 10, 2021

Hany Rashwan is the founder of crypto companies Amun AG and 21Shares AG. He previously founded social commerce company Ribbon and enterprise fintech company Payout. In this conversation, we discuss crypto indexing, US market vs European market, institutional interest, ESG bitcoin, 21 Shares’ AUM growth, and when countries will buy bitcoin.  ======================= Revolut is a finance app in the US and UK, that say they're the simplest way to access crypto. Sign up today at Revolut.com/pomp and make 3 card transactions to get $15, which you can exchange for any tokens Revolut supports. As usual, when you move your money from fiat to crypto your capital is at risk. See T&C's for details. Revolut is a financial technology company. Banking services provided by Metropolitan Commercial Bank, Member FDIC. Cryptocurrency services provided directly by Paxos Trust Company, LLC. ======================= Cosmos is building the Internet of Blockchains, marking a new era of interoperability, scalability, and usability. The free flow of assets and data between blockchains with bridges to Ethereum and Bitcoin will unleash the potential of DeFi, NFTs, and much more. Dive into Cosmos at cosmos.network/pomp  ======================= Remote makes it easy for companies of all sizes to employ global full-time employees and contractors. We take care of international payroll, benefits, taxes and local compliance, so you can focus on growing your business. Learn more about Remote and their new Remote for Startups program at http://www.remote.com.

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Now let's kick this thing off. Hani Rashwan is the co-founder of crypto companies Amoon and 21Shares. He previously founded social commerce company Ribbit, an enterprise fintech company Payout. In this conversation, we discuss crypto indexing, US market versus the European market, institutional interest, ESG Bitcoin, 21 shares AUM growth, and when countries will buy Bitcoin. I really enjoyed this conversation with Hani, and I hope you do as well. Before we get into this episode, though, I want to quickly talk about our sponsors. First up is Revolut. Back to basics for a second.

That's why I've partnered with Revolut. They're a finance app in the United States and the UK that say they're the simplest way to access crypto. They're putting their money where their mouth is. You can sign up and make three card transactions and you'll get $15. That's right, $15. When can you get 15 bucks and what can you do with it? Well, you can exchange it for Bitcoin or any of the other tokens Revolut supports. Yep, they are crypto enabled. These guys have made it easier to get some skin in the game. And as usual, when you move your money from fiat to crypto, your capital is at risk. You can sign up now through Revolut.com slash Pomp to get that reward again revolute.com slash pomp and you can put them to the test revolute.com slash pomp see

their terms and conditions for details revolute.com slash pomp next up is cosmos they're building the internet of blockchains making a new era of interoperability scalability and usability the free flow of assets and data between blockchains with bridges to ethereum and bitcoin will unleash the potential of DeFi, NFTs, and much, much more. You can dive into Cosmos at cosmos.network.com. Again, cosmos.network.com. The Internet of Blockchains making a new era of interoperability, scalability, and usability, including bridges to Bitcoin.

Go to cosmos.network.com. All right, let's get this episode with Hani. I hope you enjoy this one. 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. All right, guys. Bang, bang. I've got Honey here with me. Thank you so much for doing this. Thanks for having me. All right.

what is going on in the world of institutional adoption of crypto in public markets? I feel like you are maybe the world's expert on all of this. What's happening? Yeah. So we're based in Europe, so I can talk a lot about institutional adoption there. That's where our products are registered, listed. That's where they get sold. We have seen a lot of demand primarily from fund managers, independent asset managers, family offices, private banks. It's no longer just dipping their toes in. We see people talking about allocating 10, 20, $30 million across a number of different strategies. Bitcoin is sometimes the gateway into all of this. Sometimes it's not. And so we've had people come in on smart contracts.

We've had some people come in more recently with the Coinbase news on Binance and starting to see, well, the exchanges are actually printing cash. They're making real revenues. You can look at them as defensible businesses with moats and all of that. And a bunch of people have come in and wanted to invest in those kinds of things. And so I think in terms of pension funds, insurance companies, like really big institutional guys, they're not in yet. and it will be a while. We've had some conversations. They're interested,

but they're very slow moving. And it's going to be, I think, a long time before they're really in. But yeah, asset managers, private banks, family offices, high net worth are all more than dipping their toes in. So let's talk about the business that you have, because you basically have kind of two sides of the business. And I should say up front, I'm an investor, so I'm a big fan and obviously very long uh one is a moon and the other is 21 shares what is the difference between those two it's very simple so we do etps etfs under 21 shares and we do tokens under a moon okay and when uh you say etps etfs i think most people know what an etf is what is an etp uh an etp is basically what the swiss call an exchange traded commodity and it is it is what the swiss specifically call

it. Sometimes you go across the border in Germany and suddenly they want to call it an ETN or sometimes you go elsewhere and they want to call it an ETC. In Europe, as opposed to the United States, you cannot do an ETF on a single asset. ETFs have to, in order for them to be what's called USITS compliant, they have to have a diversity requirement and you have to have a number of elements in there. So you could do an index as an ETF, but you can't do a single asset. And so in Europe, not even any of the commodities, silver, gold, et cetera, are done as ETFs. So it's impossible to do one there. On the 21 share side, talk to like just some of the products, right?

So you have a Bitcoin ETP. Yeah. You have a ETH ETP. Yeah, yeah. What are some of the other assets? So we have 14 total products listed on the Swiss, German, and Austrian stock exchanges. You can buy them using dollars, francs, pounds, or euros. Bitcoin and Ethereum are two very obviously popular products.

The other 12 products include a bunch of single assets, some of which you can only purchase through our company, like Polkadot, which isn't available on a lot of exchanges, including Coinbase in Europe, or Coinbase globally, actually. We have a Polkadot ETP, we have a Binance ETP, we have a Tezos income generating staking ETP, stakes on your behalf, returns to the dividends. In addition to that, I think we have Ripple, Bitcoin Cash. We just released Stellar and Cardano last week. We also have the world's only indexes.

So we have four indexes, one made by us, three made by independent third parties, including the American company Bitwise, Signum, and Bitcoin Swiss. And we also have the world's only listed Bitcoin short. So you can buy a product to hedge or make a bet on the negative price action of Bitcoin just as easily as buying a share. So the 21 shares side of the business, how big is that from an AUM standpoint? Yeah. So things have escalated, I think, since we last chatted.

We were doing, I would say, probably 20 million when we last chatted. We were at 27 million about a year ago. We're now at $2 billion in total AUM. And if you look at the price movement in the last year, a lot of that isn't just the price increasing. lot of that is bigger checks from family offices, private banks, and a lot of retail interest in Europe as well. So $2 billion in assets across those 14 products. In the last 12 months, yeah. Okay. Now when you go and you look at the Amun side, you said that you do tokens. Explain the

difference between the tokens and the ETPs or ETFs. Sure. So ETPs, ETFs are very regulated financial products. They're structured as securities. So in many ways, we take crypto and we securitize it in order for institutional and non-technical users to feel comfortable making a bet on the asset class. Tokens are on the exact opposite end of that. They're not securities. And they're listed in predominantly today ERC-20 format, but we will soon list them in other formats as well. So you can imagine a Binance smart chain token, for example, or something built on another platform. For us, we just want to provide products

to access the crypto ecosystem to users. And what we found is sometimes it's significantly easier for certain populations to buy tokens. And for certain strategies as well, sometimes they're better in token form. And so whatever it is we can do on the token side, we'll issue it there. Whatever it is we can do on the ETP side, we'll do that.

And there are sometimes overlaps. So we have both a BTC short token as well as a Bitcoin short ETP, and that's fine. How big is the Amoon side? And what is the interest you're seeing there? So the Amoon side is unreleased. So we're about to launch the first four tokens in about a month time. So we're launching with a pretty cool partner. Haven't announced that yet publicly, but you'll see it and it'll be cool.

And we're launching, we're going to have a plan of launching both what we're calling autopilot tokens. So they will go, you buy a single ERC-20 token and then it on your behalf goes and generates yield optimizing rewards in some theme. So we're going to do that with liquidity mining, and we're going to do that with lending. So if you want to optimize all the DeFi lending protocols, just buy this token, and it will optimize that programmatically, airdrop you the rewards on a daily basis, on a regular basis. We're also going to launch a number of indexes. So if you would like to bet on the entire DeFi ecosystem, that's going to be the first product. We're also going to launch a few more interesting strategies there. So take like a DeFi index token. how do you determine what goes in what doesn't go in is it rebalancing like just walk through

the kind of mechanisms of how one of these tokens would work where you're essentially buying like an index exposure we're doing it in token form yeah so um we take a look at a lot of things in defy we take a look at market cap and total value locked uh we have certain um tokens that we allow in so we have the you know a committee that takes a look at this makes sure that we respect the teams. We know the teams. We know who's behind them. We like the vision. We think this is worthy of inclusion. And that benefit is a little bit subjective, just whether or not it is eligible to even be considered. But then after that, we take a hard look quantitatively at what the ecosystem looks like, how it functions, how it's growing, and then we will do the weights

there. Rebalance is regularly. I think the entire point is that a lot of people believe in DeFi as a concept. They think it's going places, but they think it's really quite innovative and interesting and they would like to invest in it, but maybe not necessarily have the time to dive into the specifics. It's sort of like betting on the Brazilian economy by buying a Brazilian index fund um and what we want to do is we want to do that on um these themes so defy being the first one but we'll also start thinking more about other themes as well as uh more momentum driven things so it's sometimes really really difficult to see what is up and coming we can programmatically do that which should theoretically have give you easier access to uh the new things that people

don't necessarily know will be big yet. And that will be another way of, again, buying a single token, leaving it, setting it and forgetting it. And then it just does work on your behalf programmatically. What about actively managed tokens, right? So what I mean by that is obviously we've seen people in the traditional world have a lot of success by raising ETF that's actively managed. Can you do that in the kind of crypto token world or is that not yet possible? I mean, you can do whatever you want. I think depending on the jurisdiction, sometimes there are regulatory issues with active management. As a firm, we sort of decided very, very early on that we're not really interested in active management. We're not interested in endorsing any specific product. On the ETP side, all we look for is whether it's investable or not. Nothing more. It's not an endorsement. And on the token side, our committees there are going to do something similar where, again, we're going to try and verify that these aren't scams. But beyond that, it's not an endorsement.

What we believe our company should be doing is being a very neutral picks and shovels business, right? We want to give you the building blocks, the tools from which you can then go and using your ideas, your thoughts, go about and invest or build out your strategy in some way that is professional, institutional grade, has the safeties. You're not going to get robbed. The fees are low, et cetera, et cetera. But we're not going to jump in it and say, we're going to pick the winners or endorse this or endorse that. When you think about in the ETF, ETP side, on the 21 shares, is the same thing true there as well in terms of active management and just

saying, hey, whether it's a token or an actual fund, we're not going to have to active manage ourselves and we're also not going to endorse anyone? So 100%. There are ways of doing active management ETFs and ETPs. Obviously, there are a couple of popular ones this year that have come out and everyone is talking to them. I think it's important to realize that active management is really, really hard. It's sort of like venture capital. We know the top winners and they do well, but the industry overall is oftentimes not having great returns. Active management is really, really difficult. And I would say that philosophically as a company, again, we're not really interested in active management. We're not interested in picking stocks or we

don't think we are smart enough to do that. We just want to build the tools from which others can then use that. And so in the same way, we don't endorse any specific product. We believe it's investable. We don't think it's a scam. We believe the teams behind the products that we are launching believe in a vision, believe in a mission, are working towards it in a professional way. And beyond that, we don't do much else. We don't do small cap stuff on the ETP side. And so it has to be above a certain threshold that moves constantly, but guarantees as well that especially on the ETP side, you're not investing in like brand new things. They've matured a little bit. They've, they've shown some staying power. Um, and then we give you easier access to them.

One of the people who appears to be smart enough to do active management is Kathy Wood. Uh, I know that you've done a bunch of stuff with her, uh, including she's now personally invested in the business. Uh, she's joined the board of directors. Maybe talk a little bit just about her involvement in the business and kind of how this all came together. Sure. So, um, we, we've always been huge fans of Kathy. Um, I mean, if you think about the, the business and 21 shares being the first thing we did it's an etf issuer on the 21 shares side and um kathy's pretty big on in the etf world like before she hit the mainstream and was this huge figure that everyone knows now um she was still very very very um much a big deal within

the etf world so my co-founder ran into her at one of these um exclusive etf product structurists conference. They hit it off. We developed a relationship, chatted for a year or so. And then there came a point where we wanted to have an independent director on our board. And so Kathy ended up doing that and joining the board, as well as more recently, she also became an investor in the company. And so super, super excited about that. That besides all of the things that we hear about on the Bitcoin and crypto side, like she started investing in Bitcoin in 2015 when it was $250, right? I think people really undervalue how big of a deal that is and how difficult it was

to do that at the time, especially for an institutional fund manager on Wall Street. But besides that, what she's doing on genomics, what she's doing with Tesla, what she's doing with all of the other products, this space exploration ETF that she just came out with, it's really, really innovative. And we're huge, huge fans of the shop. And we wanted to, you know, gather some knowledge on that. One of the things that is really important and near and dear to our hearts is research. And so we believe really strongly that we should build a brand that is trusted and we should educate everybody. If you think about the internet was created in 1983, it took a while for people to fully

understand, maybe a decade later, then the boom and bust, then Web 2.0, then now we're starting to see the rewards. This is a generational thing. And it's, as John Oliver once said, crypto is everything people don't know about finance and economics combined with everything they don't know about computer science and cryptography. And that Venn diagram is tough. And so we seek to elucidate all of that. And we seek to publish very deep research as well as very casual research. We do it in five languages now.

We do it in Arabic, English, French, German, and Italian. And in addition to that, we do podcasts. We print a quarterly magazine for institutional investors. It's awesome. It looks great. We should probably charge for it, but we give it away for free now. And for that kind of philosophy to then run into Cathy, where ARC is an acronym. I think it stands for Active Research Knowledge.

Most people don't realize that, but ARC is all about research driving these decisions. And Kathy's background as an equity research analyst had a lot to do with, honestly, her big bets and her vision and how she's built the firm. So we also really overlapped there. And over the years, we've stolen a lot of how she's done research and that kind of thing. And so it was very nice to start working together. What do you think makes her so great? is it the research and just the constant like wanting to learn yeah i think i think it's the

when when you when you do research it's it's scientific it's not personal it's not biased there's not a huge you know selfish personality behind it it's not egotistical um it's very fair logical scientific and as a result when you make big bets in that direction then it's not personal and you reap the rewards. And I think a lot of people appreciate that. Wall Street is full of personalities that will come on TV and scream or have a certain, or scream on Twitter or have a certain sort of reputation where that sometimes is removed from how their firms are doing or what their investment strategies are, et cetera. And on her, the first thing she did was say that research should be open. All of these investment banks are super closed. They're super private.

They're charging so much for this. We shouldn't do that. We should have very strong theses that we really fundamentally believe in, and then we should share them with the world. And so you can go and see an Excel spreadsheet of how they value Tesla and all of that broken down. And I think people really, really appreciate that. And then when you're right once, they appreciate it more. And then when you're right 17 times, then maybe you're onto something. When you think about the operation that you have going in Europe, a lot of the stuff that you have is not available in the United States today. That may change in the future.

Talk a little bit just about the difference that you see in the institutional investors and the family offices between Europe and the US. Are there material differences that you can identify? Or do you feel like an institutional investor is an institutional investor and so that there's really not that much to kind of call out there? uh yeah they have the same no they have the same characteristics uh oftentimes the family office staff um is recruited from from the same uh i guess cut from the same cloth wherever you go the interesting thing about europe actually versus the united states and family offices

if i recall correctly the average family office in the u.s is much smaller like i think in america People will set up family offices with 100 or 200 million of liquid assets, whereas in Europe, the average to start is more like 500 million. And so you get sometimes the average, the median that you're speaking to is a larger organization. Got it. And do you think that that's like a cultural thing? Is that an egotistical thing in the United States of like people want to say they have a family office? What drives that? I mean, as an American, I feel like it's a good spirit of, I'm ready.

I got this. I'll grow. I feel confident about this. Who says that the limit for me to have this is 500? I think it's 100. I can do it. And I think there's a good spirit of Americanism actually in that. I appreciate it.

Yeah. I mean, it's just interesting that that's something that you notice, right? The size of the family offices are very different on the two different geographies. Well, it's sort of like startups, right? One way of looking at it, and a lot of people, I think, make this mistake and do it is like, I'm not ready yet to do a startup. I still need to go and have 10 years of work experience. And I need to also maybe get some experience on the investment side. And then you only want to start a startup when you're super well-qualified to do one. And I think I would argue as a person that did his first company when he was 19, very rightly

so, America will reward people that go out and try. And you can try and fail, and failure is much more accepted in America than it is in Europe. And as a result, I think people take bigger bets, which is why, again, it's the median. The minimum is different in Europe, but obviously the wealth is much, much, much, much greater in the US. Yeah. When you talk to regulators on different geographies, is there a change in tone or interest or kind of receptiveness to this stuff as we've seen, one, prices go up, but also two, various institutions kind of over the last six to eight months, nine months kind of come into the market and not only come into the market, but actually be public

about their participation? Yeah. So talking about regulators is a tricky subject, and I can't talk about any specific ones. And, you know, before I share some thoughts, you should know that we are speaking as of today with, I want to say, 16 different regulators. So this does not apply to any specific one of them. In my experience, the response can be varied. But at the end of the day, I haven't yet met a regulator that was personally motivated to bring something down or to champion something. I don't think it's a crusade on any part. they're, in my humble experience, very technocratic folks whose sole mandate, or sometimes their biggest mandate and their biggest concern, is protecting end investors. That's really it.

All of that other stuff is a distraction. Like price action, Bitcoin increasing in price, I don't know that that really impacts anything beyond, well, maybe the market is more streamlined now such that the average retail investor won't lose everything in a scam by whales because the price action moved so hard in one way or another. So I don't think regulators are motivated by the same things that certainly investors or entrepreneurs are. And it's actually my personal opinion on this is that they tend to do a great job most of the time. We want them to move faster, but of course we do, because we move at a ridiculous speed as startup founders. But at the end of the day, they're very well versed in this, sometimes more than certain people in the industry. And again, they're just trying to do their mandate of protecting the end investor. And if anything, regulation has gone pretty well. There is a good trend going in most of the countries that we've interacted with. Certainly, Europe is far ahead of the competition, but there are certain regulators that are moving in Asia.

We're going to announce in the next quarter or so a Bitcoin ETF in Asia, in APAC. We're going to do one in the Middle East. And we're going to continue doubling down on Europe and other territories. And again, regulators are smart, receptive, and aren't being personally motivated. And sometimes you see some weird comments on there. It has nothing to do with their personal beliefs. They're very technocratic folks. Yeah, it's good to hear that, right?

It's a positive for the industry and frankly, a bullish tailwind. When you think about recruiting, how has that changed? Is it now that everybody that works on Wall Street or institutional investors like, hey, I got to quit my job and I want to go and work in this new industry? Is there still some lack of receptivity in terms of folks? Just like what's changed there over the last maybe year or so? Yeah, so there's a lot of impact there from the price action. Are they mad that everyone's getting rich and they're not? I mean, I think a lot of people in the finance industry can speak very directly about how

broken the finance industry is. And so a lot of the solutions, a lot of the problems that blockchain, Bitcoin, smart contracts, DeFi want to solve, seek to solve, they're very intimately aware of those. And so that's pretty easy. However, from a job security standpoint, up until recently, it was a higher hurdle. But I would say at this point, we have never had an easier time recruiting from the traditional industry. A lot of it is inbound in a way that is, you know, for someone that's been in crypto for a long time is really validating. How talented are the people? Are these people that are coming in that you're like, wow, this is incredible talent? Or are these people who are lower percentile performers in those other organizations and they want to come into crypto? No, no, no. The heads of departments. We recently made an offer to, and she's accepted and she'll become our new head of sales, to the head of a department at Euronext, which is a major stock exchange, was leading a number of initiatives there. um we've um we have been able to snag from traditional asset managers traditional financial

companies country heads like the person that was responsible for all of southern europe the person that was responsible for all of switzerland all of germany um and again a lot of this is inbound a lot of this is inbound we we have recruiters and obviously we we try and seek other people but what is surprising to me is how many people are just interested in in this how many people realize that the banking and financial system is broken. There is something wrong and maybe we're onto something and they want to be a part of it. Yeah. What's so fascinating to me is not only are you getting an increase in total talent coming inbound, but also the quality of talent is still very high. And what I wonder is how much of this kind of talent leakage or brain drain from

the Wall Street firms becomes a threat. And also they realize, hey, we're going to lose a ton of people if we don't start actually doing this as well. So there's kind of like an economic return uh, that is a incentive to get into it. But also there's this element of like, literally if these people can't work on this stuff, they're going to leave. And therefore we have to get into that business simply to retain our best talent. Yeah. I, I would argue that it's a part of a longer, um, tech impact on finance in general. Like before there was crypto, people were leaving for Silicon Valley to do other things. And so I think the financial industry has had an issue retaining top talent for, for quite some time. Um, the top people in America,

at least, go to Silicon Valley, in my experience. A lot of people in finance will then switch to Silicon Valley later. And so I think that's typically how it's going. I'm not sure that there's another strategy that the banks can have besides embracing this. And to their credit, But not every bank, there's some very bad people that should understand innovation more in the financial world. But to their credit, there are several top institutions who have been quite early mavericks, and I think it will lead to very good things for them, right? A lot of the recent news coming out of, I don't know, Goldman Sachs.

I think JP Morgan is doing some really interesting things. some of the early market makers, like the traditional guys, Susquehanna and Jane Street and flow traders. The fact that they were in crypto super, super early, like DRW owns Cumberland, that says a lot of great things about both of them. And so I think the early adopters and the people that made big moves are going to be rewarded really handsomely. And the one last thing I would say on this, and it's something that we in the industry should really embrace, it's completely fine to have skeptics that switch this happened with jp morgan and jamie diamond right and a lot of people will attack jp morgan say you know you've been against it for so long

you're acting hypocritical there's nothing wrong with that there's nothing wrong with admitting you're wrong and they should be fully embraced i would love for we're obsessed with warren buffett and munger and what they think i would love for them to switch their mind and i'll i'll i will hug them with open arms and welcome them to the tribe you know changing your mind is a sign of intelligence, right? That's fine. One of the things I'm really interested in, I feel like it's like literally like a trillion dollar question in the industry right now is all these institutions that are coming in, how much do they resemble the retail investors that came before them versus their new breed of investor? And what I mean by that is, do they really have

strong hands or not? So one of the things is look at Bitcoin as a market structure, right? We know that 60% of Bitcoin or so hasn't moved in the last 12 months. We know that more and more Bitcoin is coming off of exchanges on a daily basis, right? And so you basically have this majority of Bitcoin that is held by quote unquote strong hands, people who they're not trading, they're not looking to sell regardless of price volatility up or down, like they just they hold for a long period of time. Institutions come in. And frankly, there's like two different arguments, right? There's one argument that says, oh, they're big institutions, they don't care about the volatility, they're going to hold very strong. Whether the price goes up or down, they're not going to go and just dump

all the um you know bitcoin they're doing this because they're in the industry right like they had to go through a lot of pain and probably internal hurdles and bureaucracy to do it so they're in the other argument is bitcoin drops 50 and the first people run into the door is tesla and jp morgan and you know goldman and whoever and they're just getting this thing off their balance sheet and like they actually are going to be the weakest hands in the room maybe the truth somewhere in between there but just how do you think about like institutions compared to what to some degree is almost like a non-economic actor that has been the retail investors that have really kind of built this industry over the last decade or so?

Yeah. So I think we should specify a little bit. The umbrella term of institutional investors is too broad. If we compare family offices and ultra high net worth individuals who are, I would argue, the driving force of, quote unquote, institutional adoption in crypto today. They resemble a lot of retail in many ways. It's a much larger check, but it's sometimes driven by the same considerations. We're still not doing heavy investment committee meetings and the bureaucracy that's associated with it. Sometimes it can be driven by a single individual or a group. and largely the reasons that have attracted retail and by the way the reasons that have attracted early adopters like us because i would argue we're we're not quite retail or institutional

are the same um a lot of people are concerned with the amount of money printing going on a lot of people are concerned with the inflation or lack thereof a lot of people are concerned about geopolitical risk. And family offices are usually based on an individual or a family, and they're equally concerned about the same things. And so I wouldn't worry too much about hands when it comes to ultra high net worth and family offices. And in our experience, they're pretty damn strong hands. um the price sometimes died rates in a wild and crazy fashion and they don't move oftentimes they buy more and um you know our our first product was called hodl for a reason and i i think that that really translates one-to-one for them on the trading side we've started seeing

um some trading firms go in um and they're very different they're just a different breed, they're looking to make short-term profits and they're advertising it. They're not shy about it. That is what they do. But I would say that anyone who makes an investment in crypto, a meaningful one, in my experience, at least talking to European family offices, they're planning on holding it on a similar time horizon as a VC fund, as being an LP in a VC fund, which you know seven to ten years minimum that kind of thing outside of what i'll call institutional uh usf retail institutional corporates and countries feel like the other two big thing that you know has happened yes i say that like over the last like two three years everyone was

so focused on the institutional investors almost forgot about corporations right like there wasn't a lot of talk over the last two three years about the corporations and sure there are some people who had very great foresight and they wrote about it you know years ago or something but that was not a mainstream narrative yeah michael saylor elon musk jack dorsey a few others mavericks have completely changed that narrative and now it's like every day uh i was at mercato libre in latin america largest publicly traded company in in that region uh they've now bought bitcoin uh you saw metro mile which is a kind of insurance tech company recently came out and said not only did they buy bitcoin for the balance sheet they're not going to accept bitcoin for premium payments

They're also going to do claim payouts in Bitcoin if you want that. And so you can just start to see, OK, here come the corporations. Yeah. And then obviously we have countries, the nefarious or kind of malicious actors from a U.S. Western world perspective of Venezuela, Iran, North Korea, etc. There's a lot of talk about things that they could potentially be doing with crypto, whether they're trying to mine it, buy it, hold it, whatever. But there's other countries that obviously are paying attention and they've publicly talked about it. what's kind of your read or experience with either the corporations or the countries? Are there things there that, um, you've got like unique views on or things that people

just don't understand yet? Yeah. So I'm very, very, very excited about this. I think it's going to be absolutely phenomenal. I think it's so early. Like we're, we're happy that Elon and Jack and Michael are in, uh, that's like three companies, right? There's 497 other companies just in that group of people that are absolutely not coming close to it at all.

And it will be a while. But I think this is how it happens, slowly, slowly, then all at once. And the country stuff you bring up is super interesting because I think we need to saturate the – sorry, the country stuff is super interesting. I think we need to saturate the companies a little bit more. It needs to be less of a huge statement for more companies to just have this as part of their normal portfolio composition, as part of their normal cash needs. And then countries will follow. And they will follow first with sovereign wealth funds, which are more of private equity, venture capital investments, even if they're very long term minded. And then at some point, central banks.

we've had very good conversations with certain central bank governors um they're aware of it not yet but in the same way that central banks hold gold they will hold bitcoin one day um and i think countries will come it will be a very big deal but companies need to be a little bit more saturated first and it's super super early for that and by the way if you're talking about like the big big vision of bitcoin everyone's talking about it replacing gold if bitcoin becomes the new reserve currency like the crazy estimates that you know we read about of 10 to 30 million dollars per coin you need sovereign holders you need corporate holders and you need that to be standardized so maybe that's a 10-year thing i think that bill gates

said it best we overestimate what we can do in one year we underestimate what we can do in 10 uh but i do think that's gonna happen much much faster than that and i think that uh michael sailor in the corporate world was like a perfect example it almost feels like there's uh the first one to break the seal yeah then you get the early adopters right you still don't get mass adoption so to your point 497 companies still haven't done it right but one led to three and it's no longer a big as big a deal yes it normalizes a little bit there's it's more of conversation there's literally cfos and those other 497 companies are like should we do this they have to come up with a strategy maybe we should go to a conference and learn about it

right like there's all this stuff that happens countries are gonna be the same way and maybe it's one does it and then one other follows right and then it's just two and it's only two for a while but i do feel like we're getting close to this point where uh a country that is doing it not to get around sanctions but is doing it from a pure financial benefit standpoint is going to embrace it and when that happens i then think that uh there's a kind of a fast follower two or three four five however many uh the bigger thing that i've got confidence in though it's not going to be the united states it's not going to be a major country right it's much easier for the smaller countries to go ahead and do this of course and to essentially say listen this is my

opportunity right if this thing is going to be real and this thing is going to have global importance well i can use speed to benefit in a more outsized way than those who have larger dollars larger economies you know more kind of firepower from military standpoint whatever and so to me it just is like kind of the mid-level and down somebody in that bucket is going to be able to uh kind of get it together and do it we're recording this in may of 2021 by the end of this year i think we'll see it i completely see that and um to be fair my 10 year horizon is when it becomes ubiquitous i think it will i think that's fair i think it will take 10 years for it to become ubiquitous uh but how long does it take the u.s you think the u.s doesn't need to

be first that's the thing that's the thing that you know people don't realize it's really hard to turn an oil tanker uh or i guess this is like a carnival cruise ship you know i was gonna say The oil tankers were much bigger. With 400 million people on it. Than it is to move a small sailboat that will just turn on a dime. And the U.S. does not need to move fast. The U.S. needs to make sure that not everything breaks. And that's a different consideration entirely, which is fine, which is completely fine.

I agree with you. I think someone will do it this year. It will be a small country. And there's an opportunity. There's a huge opportunity for a number of countries to go in. What happened with Bulgaria? Don't they have 200,000 Bitcoins? Did they sell those?

They claim that they sold them. They sold them? They claim. Who knows? The U.S. claims that they don't have any either anymore, right? Because they confiscated it, so they auctioned it off. Maybe. I don't know.

Look, it's kind of like folks on Wall Street for a while. You just bought some just in case. We didn't tell anybody. And then all of a sudden, if it works, you're like, oh, I bought it back two years ago. I'll look at how smart I am. and if it didn't work then you just don't tell anybody ever right nobody knows and so like why take the reputation risk or the uh in this case geopolitical risk if you don't have to yet it's like my guess is that some of these countries are already holding it right it's just who's the

first to come out and say it yeah right because that's like another thing is if you separate out do the action from the announcement like the action has probably already happened in some of these countries and it's going to be a um like a national security thing to not hold it i think in a few years' time. And I don't know when, but at some point it will be prudent to hold this. And you're starting to see some countries trying to regulate mining more.

Like more mining hash power should come here or you can only use locally mined Bitcoins. It's crazy. But that says something about the national security apparatus thinking about this under the lens of national security. So from a sovereign central bank perspective, yeah, they'll hold it strategically, forget economically, because I think countries are mostly driven by surviving versus thriving. And there's a subtle but important difference. And so if national security necessitates holding crypto, you're going to get a lot more holders than the economic opportunity. agreed but this whole idea of like uh special bitcoin is all bullshit of course like green

bitcoin uh my friend kevin o'leary i keep giving him a hard time he keeps talking about blood coin right meaning like you know bitcoin that's not uh um mined with a renewable energy uh now you're getting all sorts of uh i think my buddy marty bent said uh virtue signaling bitcoin uh they're Our Cuban only buys like freshly mined Bitcoin, allegedly. Something locally mined Bitcoin, right? I mean, there's all these little things that people are trying to do. Trying to create a Whole Foods for Bitcoin. It's all nonsense.

This is organic. Right? There's 21 million Bitcoin. If I have Bitcoin, you have Bitcoin, and literally we trade them. And now I still have Bitcoin, you have Bitcoin. It doesn't matter. It's just like dollars, right? Imagine if somebody said, you know what?

I'm only going to take dollars that are freshly printed from the Federal Reserve, right? or i'm only going to get dollars that have uh been held by one person yeah no technology is not there to do it obviously so you couldn't do it here you could actually track some of this stuff but i just think that it's ridiculous and it almost feels more like uh intellectual stimulation than any sort of actual real world uh applicability what do you think i feel like for certain people it's just another excuse like oh i'm not investing in this because um renewable energy and then you look their stock portfolio and it's a bunch of coal-powered companies and you know african mining uh based corporations do you want to know what i think somebody should do what i'm definitely

gonna get in trouble with polina for saying this but i'm gonna say it anyways so you know how just another day right yeah you know how uh the media loves to write these articles all about um the bitcoin miners and how they consume so much power and like they're ruining the planet i'm waiting for a bitcoiner to write an article that says that the media how many trees get cut down every year so they could print their newspapers and magazines and they're ruining the environment, right? And kind of be like, oh, okay, hold on a second here. Like you fight fire with fire.

Like you guys want to have these ridiculous, stupid articles. Like here come ours. I will take this back to our research team. I'm literally going to run the numbers on this. You might see something soon. Right? Like think about it for a second. That's really interesting.

We should shut down all of the newspapers and magazines because they cut down too many trees. Yeah. Like you're killing the environment. You're destroying the planet if you don't use a Kindle. Right? It's kind of crazy. why do you guys still have this so like it's almost to this degree of like it's an absurd

argument uh and there's no scientific or mathematical uh like application that is used in this analysis like literally she's like look how much power they use let's compare it to countries it's like the electric grid is also really hard to explain and to understand and so look at how much power the dollar says nothing yeah let's do the dollar right or or how much electricity is used by the media organizations to just keep the lights on so that they can write articles yeah yeah right and you start to do all this stuff and like what you realize is like look by the way i'm not here claiming that bitcoin doesn't use energy right but i do think that the context is really really important and on top of that the you know what is it 75 percent

renewable energy or what like all these little details get left out of the story and so i think that that's like the world we're headed to is whether it's hey i have green bitcoin or locally mined bitcoin uh or i was used on energy efficient bitcoin or you know whatever people come up with it's all crazy i do think though that this year we'll probably start seeing some esg bitcoin and people will do you think it trades at a different price maybe like we're thinking about it really yeah we get we get a ton of requests from um so this is where i would differentiate between the two right i think there are certain people who are absolutely just vehemently against it and are looking for an additional excuse. And then I think there are people who are constrained

by their fund mandate or their own rules or their country's rules from investing. Like a lot of listed products in certain countries are unable to buy Bitcoin. Why? Because of local regulations. Just local regulations. One of the reasons why we've been successful is that we've come in and we've securitized it for fund managers whose mandates would otherwise preclude them from investing in physical cryptos. Because they can't invest in a fund, they can't buy that coin directly. Exactly. And so off of that, I would be a proponent of, if you need an ESG entry point because of certain fund requirements that you

have in Geneva, that's okay. Let me figure out some clean energy mines, get you in that way, because you're ready to come in, your rules just prohibit you from doing that. And I think we should differentiate between the two. Even though I agree with your bigger argument that over the long run, I think Bitcoin will be a huge, huge part of solving the climate crisis. I think right now it's probably the number one or one of the top R&D drivers of renewable energy in the world. In addition to that, carbon taxes, which are actually the solution, but no one is politically able to do it. Bitcoin will be able to put an economic component to the energy grid and to clean energy and to global warming in a way that nothing else will. So I think in the long run,

I agree with you. Absolutely. And it will be clearer the more time runs by. But in the short term. If I can do something to bring more people into the crypto ecosystem, let's do it. And by the way, we have a product that does that already in a different way. So we have a Swiss product. We have a product that is an index of Bitcoin and Ethereum that is in Swiss francs, with Swiss custody, Swiss trading, Swiss everything, Swiss branding, two Swiss issuers. there's a certain set of people who will only want to invest in swiss products i don't know if you know this but with gold etfs there are gold etfs that are only swiss gold swiss custody gold and they charge a premium for that and people feel more comfortable doing that we've launched that

product it has tens of millions of dollars does it trade at a premium it does not trade at a premium maybe maybe these are good ideas from pop uh that we should incorporate i'm not saying it doesn't trade at a premium trades at the same price as everything else but certainly that these tens of millions of dollars that are in this product it's just an index of bitcoin and ethereum right there are a lot of complementary products out there um i'm glad we brought them in somehow and i would do the same thing with esg i'd do the same thing with a few other things but i think it's different when you're saying hey i need a swiss uh security i need swiss um you know license i need a swiss exchange i need a swiss issuer or whatever those are all things are true right

there you're not going to convince me that a bitcoin is different depending on where it was but you're not the one that's being convinced what you will have is you have a fund manager who's bullish who believes bitcoin will replace gold who believes all of that and he wants it and then his compliance department needs to tick the box on an esg requirement i would but what i'm saying is uh and i'm never going to talk to his compliance no i'm not i'm not having that conversation what i'm saying though is it's a mirage right because the bitcoin is the same either way yes so what you're basically doing is uh if you think of it from a first principle standpoint you're literally making up a whole charade to simply be able to buy it which fine

And okay, if you acknowledge that, what I'm saying, the difference is if you say, hey, I need a Swiss regulator, right, or a Swiss issuer, you go, it's either, it's true or false. Are they Swiss issuer, yes or no? I think it becomes, I guess that's where I disagree with you. I think it becomes, it's a mirage over the medium and long term as some of this stuff becomes clear and plays out. In the short term, it's a valid concern for someone that is legally and by regulation required to show everything that they invest in and its environmental output. And that's difficult to do if you're just buying Bitcoin on an Asian exchange. Completely agree that it's difficult to do all this stuff. What I'm saying, though, is that's an investor problem.

That's not a Bitcoin problem. It's not a Bitcoin problem at all. Right, because if that was the case, no, but if that was the case, then they shouldn't hold dollars. I agree. I don't think it's a Bitcoin problem at all. But we should help those kinds of investors that want to come in but can't due to some handcuffs here or there. Change the rules. You should do both.

both actively i think that we can agree yeah um what are you most excited about moving forward like next 12 months what's the thing that you're like industry-wide not necessarily for the company because then you'll have to say things uh no we don't want me to say things um i can come on my podcast and not talk of course of course um i think i have been really really really surprised by what has been going on with DeFi. And I think we talked about it actually the last time I was here very briefly. Things are interesting there.

Yeah, that has escalated to a point where Uniswap now on certain days does more volume than Coinbase. I think on an annualized basis, it's like a fourth of their trading volume. Sushi swap came out of nowhere. Pancake swap came out of nowhere. There's so much innovation in this space.

What is up with the names? What is up with the names? It's good. I love it. Ethereum has more of a, you know, Rainbow Kittens meme vibe about projects. And that's... It is what it is. That is the community.

Whatever sticks. By the way... We have to do research on SushiSwap and explain that to people. Listen, if I'm a huge believer that communities drive their culture. Yeah. Right? And if the community wants something, not only are they going to create it, but like, who is anybody outside of the community to judge?

Right? So, like, the naming conventions, all that, like... to me i'm like how do they think of pancake swap right but also i'm like by the way is that that's what they want awesome yeah right like it's great i have yet to have somebody come in here and have a conversation about this stuff and not start laughing as we talk about the names which is almost part of the fun right and if anything it has infected the other uh part and so chef nomi is the you know head of sushi swap what's the cfo of tesla's title again yeah right master of coin master of coin and techno king of tesla exactly and so i think it it goes it goes both ways but

what's going on in defy is really early and really really exciting i'm confused a little bit still about nfts um i think that it's really exciting to see bitcoin become so standardized i i think most people are starting to come around to the inevitable outcome of bitcoin i was gonna say is it a foregone conclusion at this point it's close it's close no one ever wants to say but like i kind of feel like it's close um and i'm really excited about that what are you excited about same stuff as always like to me it's a foregone conclusion it's been for a while but uh i think like really now like uh you have congressmen and senators with laser eyes yeah yeah right and mayors you have mayors we're sitting in miami right you have uh people who work at some of

most conservative organizations in the united states that are all accepting this using it buying it holding it like it's not going away yeah and if it doesn't go away the properties of the asset are going to continue to affect this like apex predator um mechanism in the market that's going to continue to suck liquidity out of other assets it's like one of the things that i think nobody's really talking about is when bitcoin flips gold does not happen at a 10 trillion no no not at all it's happening at like eight trillion yeah right and why it's because bitcoin is going to continue to grow but also gold's market cap is going to contract like gold is a dying asset which sounds nuts to people but what we are watching is we are watching a new asset

that is digital slay an analog asset and some of it is causation some of it's just pure correlation but literally as over the last six to eight months bitcoin has gone up 600 gold is down yeah but you know why it's not inevitable yet why bitcoin winning because i think it will be inevitable when you as the manager of a treasury somewhere at a corporation would have job risk of if you do not invest in crypto where you could be fired if you do not have a crypto allocation where it's that obvious and you but i think that that's already like in the inevitability like that's already going to happen it's going to happen it hasn't happened yet which is why i'm saying i don't think i don't think today it that's why i said we're close we're not quite

there because that's fair yeah you want more uh i want you to be more risk aversion than me i want you to be more yeah if if you have a risk of getting fired from your job if you don't invest in crypto. That's when we've won. Is there another asset where people have that risk? I mean, if you don't hold public equities, I guess you're considered an idiot. If you're managing some portfolio or some treasury and you're not holding normal equities, that's pretty strange. If you're not using some sort of hedging mechanism in a basic way, maybe people will question you. And if you have zero allocation to crypto, maybe then your Sharpe ratio is so wrong that clearly you don't know what you're talking about you're not fulfilling

your fiduciary duty something exactly yeah all right where can we send people to find you on the internet at handy on twitter is the best way did we talk about last time how you got that handle just a very very early twitter you just went in and typed it in and like let's go foreign name very early twitter user all right winning combination uh and then 21 shares in a moon 21 21shares.com, A-M-U-N.com. Both dot coms. Yeah. 21 shares, nobody had.

We're getting good names, right? Yeah. 21 shares, nobody had. 21 shares, we had to buy. Oh. Is there a good story? No, no. We paid a really high.

Pretty low price. Oh, low price. Pretty low price. I think it was a couple thousand bucks. Oh, all right. That's fine. They should have taken a Bitcoin. Exactly.

They'd be in better shape. Hi, my friend. Thank you so much for doing this. Thanks for having me. Always fun.