The Pomp Podcast - Alan Lane, CEO of Silvergate: Why Bitcoiners Shouldn’t Hate Banks

Episode Date: November 19, 2019

Alan Lane is the CEO of Silvergate Bank. In this conversation, Alan and Anthony Pompliano discuss the Silvergate story, how Alan first discovered Bitcoin, how important the bank has become to the crypto industry, what Alan feels is important for the future of banking, and why Silvergate recently went public. BLOCKFI-----BlockFi allows you to keep your crypto, put it up as collateral, and receive a USD loan funded directly to your bank account. They do loans ranging from $2,000 to $10,000,000, and they're perfect for helping you reach your financial goals of all sizes. Visit BlockFi.com/Pomp to learn more about putting your crypto to work without having to sell it. CRYPTO.COM-----Crypto.com is a pioneering payment and cryptocurrency platform that seeks to accelerate the world's transition to cryptocurrency. With the vision of "cryptocurrency in every wallet", the Crypto.com App offers a full range of financial products with competitive pricing, well designed UX and high security. It is the best place to buy, sell and pay with crypto. COINMINE-----The Coinmine One is like an Xbox that turns your electricity into Bitcoin. You just plug it in, connect to wifi, and tap on the crypto you want. It’s so easy anyone can do it. Everything is controlled from the Coinmine mobile app and the Coinmine keeps getting better with over the air updates that add new coins, features and services to your Coinmine. Visit coinmine.com/pomp to get a Coinmine and earn crypto for powering a new world. ETORO-----This episode of Off the Chain is sponsored by eToro, the smartest crypto trading platform, and one of the largest in the world. Join 11 million other traders and create an account at etoro.com and build your crypto portfolio the smart way.

Whoa, before we get started, I want to go over the four sponsors for this episode who make all this possible. They're fantastic, so go show them some love. The first is the best URL in the industry, Crypto.com. They're a crypto platform with one goal, driving mass adoption. That's why we're all here, right? To get every human on earth a digital wallet and to get them using digital currencies. Crypto.com is helping people do that through buying, earning, lending, and a new card payment. Everything you could want is at Crypto.com.

They've been longtime supporters of Off The Chain and recently announced a new exchange. So go help them out, download their app from the App Store, or visit Crypto.com and tell them POM sent you. There's nothing better in the world than a company helping to drive global adoption of this new technology. Another part of global adoption is making sure that we secure the various blockchains with computing power. CoinMine has built the best consumer experience in mining. Hands down, no competition. If you want to help secure the blockchain and get started in mining, you can go to coinmine.com. Order a CoinMine, it'll arrive at your door, and you simply take it out of the box, plug it in, and connect to your Wi-Fi.

You'll be mining your favorite crypto in five minutes or less. It is honestly magical. I have one running right now here in the office, and it's super quiet, it's got no heat, and every person that comes in the office asks, what is that? Every single person asks. It's a CoinMine. The best part to me is that the CoinMind comes with a mobile app that's super slick and the company continues to push over-the-air updates to the device that add functionality, add tokens that can be mined, or increase the efficiency of the device. Similar to how Tesla does car software updates over the air, CoinMind's sending these passively to thousands of CoinMinds around the world on a periodic basis. Pretty damn cool.

When Farboot and the team pitched me on the idea of an Xbox or PlayStation-like box that could mine cryptocurrency in your home, I was immediately sold. I invested in the business, have a device personally, and keep telling people to go to coinmine.com so they can save a lot of time if they want to get started mining today. And CoinMine has a partnership with our third sponsor for this episode, BlockFi. BlockFi is one of my favorite companies in crypto because they allow users to deposit their assets in a deposit account and immediately start earning interest. Think about it. If you keep your digital assets on an exchange or in cold storage, you aren't benefiting from any yield on the asset. With BlockFi, they allow you to deposit crypto and then get paid interest on a monthly basis in crypto. Deposit Bitcoin and want to get your interest payment in ETH?

You can do it. Deposit Bitcoin and want to get your interest payment in Bitcoin? You can do it. The rates at BlockFi are currently some of the best in the industry. You can earn 6% interest on Bitcoin and you can earn up to 8.6% APY on GUSD deposits. I'm an investor in the company and think BlockFi is building really important and compelling infrastructure.

So go check them out at BlockFi.com slash Pomp. Again, that's BlockFi.com slash Pomp. And that brings us to the last advertiser of the episode, eToro. These guys have absolutely crushed it over the years. Their founder, Yoni, was one of the original Bitcoin OGs and has been ahead of almost every trend in crypto. He built eToro to help people buy, sell, and trade cryptocurrencies. But he added a few twists, social trading, copy trading, and virtual trading accounts.

Social trading is a feature where every asset available on the platform has its own separate social feed where people talk about the asset, share trading ideas and analysis, and even include various charts or graphs. Virtual trading accounts is targeted at beginners. If you're just starting out and want to try trading with play money, eToro will give you a virtual account with $100,000 in it to test, learn, and get comfortable. And so then that brings us to copy trading, which is by far the coolest feature. This allows you as a user to select any other user's portfolio to copy. If you see someone on the platform you like, you can set your account to mimic their trades.

They buy Bitcoin with 5% of their portfolio. Your portfolio buys 5% Bitcoin. They sell 50% of their Ether position. Your portfolio does the same thing automatically. Copy trading is awesome. So go join the 10 plus million other traders on eToro and start trading all the most popular cryptocurrencies today. They're one of the largest companies in the space

and you can get started by going to eToro.com. Again, that is eToro.com where the entire team is ready to get you started in just a few clicks. And don't forget, go subscribe to the Off The Chain daily newsletter. You can go to offthechain.substack.com. I write a letter of news, analysis, and opinion every morning that goes out to more than 40,000 investors. See you there. What's up, everyone? This is Anthony Pompliano.

Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Alan Lane is the CEO of Silvergate. In this conversation, we discuss the Silvergate story, how Alan first discovered Bitcoin, how important the bank has become to the crypto industry, what Alan feels is important for the future of banking, and why Silvergate recently went public. Alan is an OG in the Bitcoin and crypto industry. I always enjoy talking to him, so I hope you really enjoyed this episode as well. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek

Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only. all right guys bang bang i'm sitting here with the the man the myth the legend alan is here and uh just first of all thank you so much for coming to do this i know uh for those that don't know uh silvergate recently went public and he has been on the road for two plus weeks telling uh story after story and uh and fundraising so he's uh he's pretty talked out at this point but thanks so much for coming to do this yeah absolutely happy to be

here. Thanks for the opportunity. For sure. Let's get started with just your personal story, kind of what you did pre-Silvergate, and then we can get into the crypto stuff. Sure. So I actually started in banking as a teller while I was in college. And so over the last almost 40 years, I've done just about every job that you can do in a bank. Amazing. And I did spend some time in private industry in the 1990s in both retail and manufacturing. And so actually, ran companies that needed banking services, and then in the late 90s got back into banking. And it was a business bank, and so really liked being back on the other side of the table, helping businesses. And as we were just talking about, one thing I know, having run a business

and then being back in banking, businesses just want their bank to work. They just don't want to think about it, right? And so our whole goal is if we can just make it seamless for our customers to kind of do their business and not have to worry about their bank. But anyway, so I've done that for most of my career. I joined Silvergate in 2008, right at the height of the financial crisis. And what attracted me to Silvergate was it was a very clean but small platform that I thought was going to be really good to build a foundation on. And little did I know that around that same time that I was joining Silvergate, there was also this white paper, you know, being written about Bitcoin.

I didn't know anything about it. You know, I'm not a cypherpunk. And so we just went about building the bank. And because we were clean during the financial crisis coming out of that, we could lend when a lot of other banks were struggling. And so for the first few years, we were growing like crazy on the asset side, making loans. And ironically, what we were struggling with was we were struggling with growing the deposit side of the balance sheet to fund our loan growth. Why was that a challenge at the time? Yeah, it was really just because, first of all, Silvergate was not well known.

And Silvergate didn't really have a deposit franchise, if you will. We had four branches kind of spread out all over Southern California, didn't really have a brand name. And then at that time, if you were a business and you had a banking relationship, you didn't want to lose it because there was so much turmoil, you know, coming out of the financial crisis. And so it was really difficult to kind of, you know, shift people's mindset to leave their bank and join a new one. um and and so you know and that's certainly understandable so um we just kept on lending and you know we were finding creative ways to fund the loans um you know opening um cds and you know doing a little internet banking and some of that you know some of that stuff um and then along the way in 2013 i started reading about bitcoin and um what i and it was just intellectual

curiosity at that point i wasn't really thinking about it and how it might intersect with silver it was just kind of in my spare time I you know I read stuff yeah and and we were looking for deposit niches for the bank and I was reading about Bitcoin and I was reading that there were companies that were being formed to provide infrastructure to this new thing called Bitcoin it wasn't called crypto you know wasn't you know it was Bitcoin only at the time and and so I learned that There were companies that were raising venture money, so they had deposits. They wanted to put them in a bank, Silvergate's bank, and they were getting kicked out of their banks.

And so, obviously, there was a reason they were getting kicked out, and it was the perception of risk, right? And talk a little bit more about that perception, right? Because I think this is a key piece where if you don't pay attention to Bitcoin and crypto on a daily basis, any other industry in the world maybe other than cannabis banking is you know readily available if you're in developed world country uh as you're saying that wasn't true in 2013 and actually wasn't true for a pretty long period of time right why were other banks getting rid of these crypto or bitcoin companies and what was that risk that they perceived sure so there were there were two things um from a regulatory perspective one was just a general sense in the united states

where banks were kind of de-risking money service businesses um check cashing companies uh payday lenders um you know there there was there was this this whole kind of movement in the from the in the larger banks away from providing banking services to those money service businesses and if you think about um companies that were being formed at the time you know example i use often is coinbase right so coinbase is a money transmitter and money service business and um so they were struggling to find bank accounts because lots of banks were kind of just they were leaving that that segment so that was that was one reason the other reason was because of the whole concern about anti-money laundering bsa um and that really has more to do with kind of terrorist financing um you know

bad actors and you know it's it was right around that time that silk road happened right um and and so big concern that the primary use case for bitcoin at the time was for you know nefarious activity right and um and what people didn't really understand at the time was that well you know if you're using bitcoin for you know that kind of stuff you've got a higher probability getting caught right um and and so um that and that was a little bit of an aha moment for us early on because when i so i was reading about bitcoin read about silk road read that companies were getting kicked out of banks and i thought well here there might be an opportunity for silvergate um but the first thing you know we're a we're a regulated financial institution we're

We're a state-chartered bank in California. We're a member of the Federal Reserve. Our deposits are insured by the FDIC. And so we had a lot of regulatory oversight and still do. And so the first thing I did was called our compliance officer. And I said, hey, have you heard about Bitcoin? And the great thing was she had. Oh, really?

Yes. So she's now our chief operating officer. Her name is Kate Frayer. And Kate immediately sent me articles. You know, and so it's so cool because at Silvergate, we've got this culture and just a whole bunch of folks who are curious, who are, you know, reading about stuff in their spare time. And so, you know, so we started a dialogue and I said, well, do you think we can figure out how to bank these companies because it might be a source of deposits? And that was as simple as it was. We've become a lot more, you know, a lot more sophisticated in our account offering to our customers.

but in the early days it was just it was just here's a niche that is no one else wants to serve if we can figure out how to serve them but also kind of pay attention to the risk yeah then we can drive deposits drive deposits we can continue to fund loans grow assets that's right that's got it and so um let's fast forward a little bit as you grew that business uh the first customer is somebody that you guys had actually known for a while let me tell the story a little bit about who that first customer was and how that all came together yeah so so it's funny how how things in life work. So probably two or three years previous to that, I had met this company by the name of Second Market. And Second Market was founded by Barry Silbert. And his claim to fame, or the way

I heard of him, was they were making a market for illiquid securities kind of pre-IPO. So making a market for Facebook stock before Facebook went public, for instance, okay? And the reason our paths crossed, and I didn't meet Barry at the time. I met someone who worked for him. But I think they had a thesis that, okay, where are there other markets where there might be illiquid securities or, you know, illiquid ownership, people that want liquidity? And there's all these privately owned independent banks across the country.

And so that's how we met. Silvergate, up until a week ago, was a privately owned company. And so we met. We talked about maybe doing something together. And that never really took off. Little did I know that I think Barry was already kind of starting to pay attention to Bitcoin. um but what what um the intersection there was i think second market got to know us as a bank that was um maybe willing to look at things a little differently and and we've just kind of had this

um this process or this um this methodology of looking at risk um what it was what is the perception of the risk um versus the actual risk because oftentimes there's there's a you know and that's the whole thing about Bitcoin too, right? But if the perception of risk is here, but you can mitigate that risk and the risk is really here, then all of this is opportunity, right? We talk about mispriced risk all the time.

Absolutely, absolutely. And so that's the way we looked at Bitcoin. And so in 2013, all of a sudden, we start getting referrals from Second Market for companies in the Bitcoin space. And it just coincided with us looking at it. And so in January of 2014, our very first customer in this space was SecondMarket.

They're now known as Genesis Trading. And the whole, you know, Barry sold SecondMarket to NASDAQ and created the Digital Currency Group. And so what started as one account With second market that became Genesis, we are their bank, and they've made a lot of investments in companies over the years, and a lot of those companies are now clients of Silvergate as well. It's amazing, and it's so funny how Barry and Digital Currency Group have become a very important part of the ecosystem. But in the very early days, obviously, you know, kind of being that first customer, I think probably gave you some confidence that, hey, look, at least we've got one person to do this.

Well, yeah. And the other thing that was important is because we are regulated, you know, we have to make sure that we're doing everything right. And so going and banking second market because of the fact that they were a broker dealer. So we knew that they were familiar with regulation. um they understood kyc know your customer they understood bsa the bank secrecy act aml anti money laundering all of those things they had to do that um for their for their customers as well so we looked at it as like providing banking services to another regulated company um but the cool thing was that we also went to school right away on understanding um what it was they were doing so so um in order for us to get comfortable that so let's say that um second

market was facilitating the buying or selling of bitcoin between you know between two parties and the and the u.s dollars were going to go across silvergate bank's wire system right so what we were doing in january 2014 is we were asking the second market hey for that transaction that you're sending that wire provide us the um the blockchain address um so that because we want to do is go to a block explorer you know and we want to type in that address we want to see a transaction that represents the dollars that's going through the bank and i think um they were they were kind of surprised that a bank was even asking that question in 2014 for sure and so today like you go from that first customer to maybe share a little bit about just like where you

guys are from a size i know in the prospectus you guys have shared a bunch of this but more than 800 customers today and kind of just talk about where you got into with the business and then we can go into kind of what those products are sure so um yeah today we we have close to 800 customers um it it started small obviously and um i think by the end of 2000 and maybe 16 we still only had a couple dozen customers um but importantly um there were some of the, the most well-known companies, you know, that still exist today. Um, and so back in the day, you know, we, we were, um, you know, we got to meet all the crypto OGs before anyone knew they were OGs, right. You know, and just people looking for bank accounts. And, and, and so, uh,

we were just very blessed. Uh, you know, I, I mean, I, I will say there's certainly an, an element of luck, um, you know, and an element of just kind of being opportunistic. Um, but we ended up you know banking some of the best most well-respected companies in this little ecosystem and and then in 2016 we hired the other really important person in this story for just you know I mean there are first let me say there are over 200 employees at Silvergate who every day come to work figuring out how to just kind of kill it for our customers you know I mean it's it's just It's a pleasure to work with them. Ben Reynolds is a guy that we met.

I met him in January, I think, of 2016. Okay. He knew nothing about Bitcoin. Like most people. Yeah, absolutely. And we were just looking for somebody to help us, you know, kind of what should we be doing next, right? We had a couple dozen customers, maybe $40 million, $50 million in deposits. the bank was about maybe 600,

six to 800 million in assets, okay? So deposits didn't even represent 10% of the assets at the time. And, but we had great customers. And so Ben, you know, what he did was he would just went out to our customers and said, hey, I'm new, explain to me what you do. And, you know, how can we be more helpful?

And it was out of that dialogue that the SEND was born. What, you know, it's, we call it the Silvergate Exchange Network. Most of our customers call it the SEND. SEND for S-E-N, Silvergate Exchange Network. Absolutely, yes, thank you. For some of the people listening, they won't get that, so I've got to clarify for them.

Yeah, so the idea was born really out of talking with our customers about the pain points that they experienced, the friction, the banking friction, getting money into and out of the crypto ecosystem. And even though we were helping them do that, some of our customers, especially the exchanges, they wanted to be able to do that at scale. Okay, so how does that work at scale? Well, you really need to build an API. And there are a lot of companies, a lot of banks in the country that have APIs for doing things like pulling an account balance or transaction history. There's probably less than two dozen banks in the U.S. that actually have a transactional API that will allow you to transfer value.

and and so that was the really kind of aha moment for us is that we've got a lot of customers who are actually transacting with each other but without the ability to do that in a programmatic way and so it's really time-consuming so first we had to upgrade our core data processing system which we did in 2016 we then started building the API and then in 2017 we started connecting people to each other our customers to each other and that timing again talk about luck because in 2017 we were really poised when the market took off yeah and we went from you know having less than you know a couple dozen customers to having a little over 200 customers by the end

of 17 we grew we doubled the size of the bank in a year now that was the you know that was the bull market of 2017 um and but again it's important that you guys were doing exactly what you've been doing all along you're offering banking services to folks that were playing by the rules doing the right things in crypto and at the same time even in 2016 and 17 just like in 2013 other banks were still uncomfortable they were still shutting people off they were still kicking people out and so i think when i first heard hey silvergate is you know kind of friendly to this it was in a thank god we have them right because where else are we going to go if there's not silvergate there wasn't very many options at the time sure right and obviously you guys benefited from having

done the work up front and kind of being open-minded um and working with those companies and obviously doing a good job because the reputation spread and the business took off yeah yeah i appreciate that yeah so so um we yeah we i i still i i just feel very blessed that that that the timing worked out in such a way that we were working on this and that we were in the right place at the right time. And then, obviously, doing the right things. But that gets back to the team, you know, back at world headquarters, you know, of Silvergate in La Jolla. They're living in Southern California.

It's cold here in New York this morning, and I'm thinking about, what are you doing here when you could be in Southern California? Yeah, yeah, it is a little chilly out there. All right, so anyone who's part of this Silvergate Exchange Network, talk about what changes for them from a user experience standpoint and what functionality does the network actually give them, right? So what's the value? Yeah, so if you're a member of the SEND, you can transact with other members of the SEND 24 hours a day, 7 days a week, 365 days a year. And you're transmitting fiat currency, primarily U.S. dollars, although we have opened this up for other fiat currencies as well. And your money is there instantly.

Got it. It's like Venmo for corporations. We joke about this. One of the guys back at the office jokes that his primary role in life is to connect 1970s legacy banking technology to the 24-7 crypto market. But I believe we were the first bank in the world, and I'm not sure if anyone else is doing this yet, But to be able to take the legacy banking system that only operates, you know, 40 hours a week, Monday through Friday, and bring it into the 24-7 crypto market that never sleeps. And this becomes really important if you are an institutional investor. You know, and I should say this, we have an institutional focus.

So when we talked earlier about the almost 800 customers, that's broken down into three categories. The first category would be exchanges, OTC desks, et cetera. And then we connect them with institutional investors. These are family offices, hedge funds, folks that are approaching digital currencies as an asset class. And so they're employing different investment strategies. And what they want to do is they want to have confidence in their banking relationship. But then importantly, if we can make it efficient for them to use their capital to get on and off of different platforms and not just in the U.S., but around the world. So, you know, we started obviously as a U.S. centric operation, but, you know, we have customers internationally.

um and so if you if you wake up on a you know early saturday morning or sunday morning or a holiday um and you see that something's going on the crypto market in asia and you want to put some money to work um you can do it log into your account at silvergate push some money over um onto whatever exchange you know you're working with um or call your otc desk um you know and Say, hey, I want to buy or sell, and you can do it just like that. And so it's really been a game changer for our customers, and then that has just really just kind of helped grow the business because many of our customers, they don't want to trade with others unless they're on the send

because we just take out the friction. There is literally no friction on the US bank side. It really is a true kind of network effect, right, in the sense that once somebody comes over, Then they want all of their partners to come over, right? Once those people come over, you get more people to come in, et cetera. Let's talk a little bit about kind of how you see the bank playing with crypto, right? So you've built the SEND, obviously, which has been incredibly valuable for folks. But you're not a crypto company, right?

You're still a legacy-regulated financial institution that you look like a bank, you smell like a bank, right? You walk like a bank, so you're a bank. We're a bank. And you provide necessary infrastructure to crypto companies, right? And I think there's two components that are important here. One is that connection or that support is a point of failure for the crypto industry, right? You know, we've seen in countries like India where the regulators stepped in and said to the regulated financial institutions, you are outlawed from working with crypto companies. Well, that doesn't sound like a big deal except for now the crypto company has no bank account to store fiat, pay employees, etc.

It can be very kind of detrimental to their business. But do you just continue to build financial services from like the legacy world to support these companies? Do you have ambitions to go into kind of the crypto world and become more of like a crypto bank in the future? Kind of just talk to me. Sure. Knowing that there's some stuff you can say around regulation, that the regulators allow you to say and some that you can't with forward-looking statements, et cetera. But just like how do you see this evolving over time as you continue to support these 700, 800 customers? Yep.

So, first, to touch on bank-specific regulation, we would not be able to do this were it not for the support of our regulators, right? And so the way that looked from the very beginning was in 2014, as soon as we started banking this industry, we had a handful of customers. We invited our regulators in. I can show you a presentation in the summer of 2014 that we made to the state banking department and the Federal Reserve. And it was essentially a Bitcoin tutorial. This is how Bitcoin works, you know, is, you know, the graphics from the distributed ledger, you know, all that kind of stuff. But then we segmented the market and it was obviously a very nascent market and it still is. but we looked at it um the same way then as as we look at it today which is we we said look there's

there's the different verticals um some folks are approaching bitcoin as an asset class you know as a new asset some people are thinking about it as a payment rail you know you can think about like the bit pays of the world that are trying to disrupt you know the payment side of thing um and we said we're gonna you know we're gonna focus on this institutional market and then the other thing we're going to do is um focus on other companies that are building infrastructure you know um whether they be protocol developers and you know miners etc but what we're not going to do is kind of play in that middle space which which is the remittance space because that's not how we're set up we don't have a a credit and debit card offering um you know so that that

really wasn't where where we wanted to play but importantly back back to your question so so early on, we explained to the regulators, this is how we view it. These are the controls that we're putting in place. This is how we're monitoring, you know, the KYC, AML, et cetera. And by doing that, having that dialogue with the regulators early, prior to their next exam, it allowed them the opportunity to prepare for when they came in to do their annual exam, okay? Fast forward now, for 2014 that was first year 15 16 17 18 19 we just finished our sixth annual regulatory exam right yeah we're not allowed to talk about regulatory ratings um but suffice it to say we've been doing this for six years um our program has become a lot more sophisticated i was telling

you earlier about you know looking at the um you know the blockchain um to look at a specific address to see a transaction um you know that was before chain analysis elliptic um you know Cypher, Trace, all these other tools. Elementus. Elementus, yes. Got to get them all in there. Thank you for that. You know, so that was before all these tools were developed, which we've, you know, obviously now incorporated into our systems, right? And so our process has matured as, you know, as the ecosystem has matured. So as we move forward, you know, we continue to build our program. And then we're essentially, we're customer driven. Everything that we do is in response to our customers. The SEND was born out of customer demand, our customer requests

saying, hey, this is, it's painful to, you know, the banking friction is painful and the lack of liquidity, the counterparty risk. And so really trying to smooth all that away. That's how the sen was born now that we've got you know you know growing towards a thousand customers in this in this space our customers are saying you know we love the sen for the u.s dollar um we love the sen for yen the sen for euro the sen you know for the you know british pound sterling the singapore the singapore dollar etc so we're enabling foreign currency exchange which is something that silver gate never did in the past right um and so but we also recognize our customers want to do it at scale right um they're all thinking about scale yeah there's scale and they're global right is

the two big components that this industry probably more than most has when a business starts on day one it's a global business exactly so so um so we stood up a foreign currency desk um earlier this year um and we're in the process of um establishing all those correspondent banking relationships around the world so that so that we can facilitate foreign currency exchange so so that's the most recent product that you know that that that we've added the next thing we're working on is um credit doesn't exist in this market right the way it does in other mature financial markets um the concept of prime brokerage um all of these things that just kind of work in the traditional financial system um don't exist in in crypto and and so um one of the things we're working on right now

is the ability to provide leverage to customers who are long Bitcoin. And because of the 24-7 nature of the market and the 24-7 nature of SEND, again, I think we're probably one of the only banks in the world that has the capacity, the capability to actually do something like this. You can think of it as kind of in traditional kind of margin lending, And I'll put margin lending in quotes because we're not a, you know, Bitcoin is not a security and, you know, we're not a broker deal or we're a bank. So we're looking at it as providing collateralized lending, which is what we do. We make loans and we like collateral.

You know, the collateral for these loans is going to be Bitcoin. It'll be Bitcoin only for the foreseeable future because it's the only deep market. Yeah, exactly. But that's something that we're in the process of launching a pilot this quarter. And so we're going to do it small to start with, the same way we got into this initiative. You know, let's get some of the very, our best customers on both sides of the Seine, right? And let's, they're already trading with each other. They're already customers, you know, they're customers of the exchange, they're customers of us.

and then let's figure out how we can offer them credit. And so we're working on that right now. And then going into next year, the other product that we're working on is a digital settlement offering so that we can, up to this point, we've only touched fiat currency. Okay. And we're contemplating also providing

a settlement service for the digital asset. Interesting. So that'll be a game changer, we believe, because just as our customers have asked us for, you know, they asked us for the send. They didn't know what to call it, nor did we. They asked us now for the send for foreign currencies. They've asked us for credit. They're asking us, you know, hey, we trust you with this. We trust you with our dollars.

You know, we'd love you to also stand in the middle of, you know, of the digital side of the trade. um and and so we get all that done and you know and it's a pretty robust offering yeah absolutely what do you think you've learned the most if since 2013 when you first read you know the bitcoin white paper to today so six years uh that's more than 50 of the lifetime of bitcoin if you kind of think of it in that sense uh and you have built some of the most important infrastructure for this asset in this industry but it wasn't traditional like bitcoin infrastructure right it was the legacy bank stuff what would you say is your biggest takeaway or lesson learned over those six years yeah that's a good question um i would say first of all recognizing that

that we're a bank okay so um and believe me when when um when when you catch the bug you know and And, you know, I've heard people say, go down the rabbit hole, you know, whatever metaphor you want to use here. And then you happen to be in this position where you have access to all these, you know, these OGs. There's a temptation to want to run off and do all of this, you know, oh, you know, crypto is going to solve cancer and, you know, it's going to cure cancer and solve world hunger. And, you know, all those things to say, hey, wait a second, what can we do as Silvergate? We're a California state chartered bank, a member of the Federal Reserve, and we've got these great customers who have real problems that they'd like us to solve. So probably the biggest takeaway is let's stay in our lane, okay?

But, hey, that lane can be pretty broad, But we don't need to go out and do some of these other kind of esoteric blockchain things. We just need to solve problems for our customers. And as long as we're being responsive to what our customers are asking us for, and it's legal and permissible for us to do it, then we've got just an incredible amount of opportunity. And we don't need to go out and look for the next thing. so we're not you know we don't have skunk works at the bank trying to figure out gosh if we build this i wonder if our customers will you know will want it it's rather just taking in all of you know what our customers needs are and sifting through um you know what what can we really do to help

want to know who has the best url crypto.com that's right crypto.com they're a crypto platform with one goal, motherf***ing mass adoption. That's why we're all here. We're trying to get crypto in every wallet. Crypto.com is helping people do that through buying, earning, lending, and card payment. Everything you could want at Crypto.com. Go help your boy out.

Tell him Pomp sent you. Download the app or visit Crypto.com. Pomp's got you, always. Ever wanted to get into mining and didn't know how? Don't worry, your boy Pomp's got you. Everybody got some electricity and Wi-Fi. all you got to do is go to coinmine.com you buy a coin mine it's like an xbox or a playstation that helps you turn your electricity into bitcoin that's right you purchase it it shows up at your

doorstep you pull it out of the box you plug it in connect to your wi-fi five minutes or less you're mining bitcoin all you have to do is control it from the mobile app they provide and then you receive over-the-air updates that add new coins and new features on a consistent basis. Kind of like how Tesla does over-the-air updates and updates the car software. Just you're updating your CoinMine. Consumer mining made easy. That's right. Go to CoinMine.com, tell them Pomp sent you, and thank me later. One more word from our sponsor BlockFi. Their new interest account allows you to securely deposit your Bitcoin or Ether at BlockFi and receive 6% annual interest paid monthly in cryptocurrency. This rate actually compounds, so you receive a 6.2% APY, which is

very attractive given the alternatives so you can actually take your bitcoin you can deposit it with blockfi and get paid an interest rate of six percent in return go check out blockfi.com slash pomp again blockfi.com slash pomp to sign up and start earning interest on your crypto today and so uh we happen to be recording this on a day where uh google just announced that they're going to start offering checking accounts to users, Facebook's got their Facebook Pay, which is separate from Libra, and we've obviously seen Square, the Cash App, etc., kind of all these technology companies that are pushing into the banking industry, what's kind of your take running a bank that's been very successful in a specific vertical, right, and obviously

you're growing very quickly, how do you look at the balance between these large technology companies that for all intents and purposes probably have better technologists right just resource wise than most of the financial industry but the financial industry understands finance banking regulations much better than the tech companies like how do you see this playing out over time yeah so it's interesting um the announcement this morning um by google i mean they were at least the article i read in the wall street journal they were very specific that they aren't trying to be the bank right um they're going to partner at least what i saw they're going partner with Citi and with Stanford Credit Union. So they recognize that they're not

a bank. And so I think one of the biggest takeaways there is that what does Google have? They have distribution, right? What does Facebook have? Distribution. And we recognize at Silvergate we don't have distribution right now. We're certainly... You're building it. We're building it. And in the institutional market, you know, I would say we're building that distribution. But the distribution of having, you know, millions, hundreds of millions and billions of retail consumer, you know, customers, that's just something that really, to your point, the tech companies are, you know, much better at building those networks. And and so even when Libra came out, you know, or, you know, when Libra was first announced and I looked at the the initial members of the Libra Association and I thought, OK, well, we don't have a direct relationship with Facebook, but we've got relationships with that company and that company and that company, you know. And so, you know, if and when there's an opportunity to work with some of those folks, you know, I think we're well positioned. But in the meantime, we're going to focus on, you know, on solving the needs of our existing customers.

And I'm pretty confident that there will be an intersection there at some point. But we're not going to try to compete with, you know, with the behemoths that have, you know, all the financial resources, the tech resources, and the distribution, right? Yeah, and it's interesting because this is, Google's announcement comes on the heels of the launch of the Apple card, right? Which was Goldman Sachs and Apple coming together. And what I've really tried to balance in my head, you know, what you call distribution, I look at as distribution is one component and the trust is another, right? Of like, look, I trust Apple with my iPods or whatever the hell they're called. I trust them with the iPhone, right? I trust them with my computer, et cetera.

Why would I not trust them with banking, right? And there's plenty of people who say, you know, there's data issues, there's privacy, you know, there's all of these potential concerns. But for the most part, I think people feel pretty positive about Google, Apple, Facebook, et cetera. is this a world where the finance industry is going to need them to continue to build trust or do you think that there's folks like silvergate who they start to specialize right so rather than go really general and say hey we take everybody from anywhere and that's our focus and we want to stay really broad right which is more of kind of like a jp morgan or wells type approach you guys have done a great job of saying look we're very very specifically focused on this one industry

because we found a niche and we're the leader and we're going to kind of double and triple down I'm guessing that there's other verticals that you'll eventually go into over time as well and kind of execute that same strategy. Is it a thing where you can get fast followed by the big guys into these niche strategies or is it just right time, right place? You guys happen to understand the problems better and you can really build a moat around, you know, certain industries and then go try to replicate in other niche industries as well. Yeah, so I certainly think that the bigger guys can do the fast follow strategy, right? And so when you think about competitive moats, the whole reason in 2016 we hired Ben and said, hey, we've got something here. We need to figure out what we do next is because our first moat was the compliance, the regulatory compliance piece, right? But I'm not naive.

I knew that any large bank could just throw a bunch of bodies at that and replicate it. And it wouldn't take them nearly as long as it took us because we were doing it, you know, during our day job, you know, as we're running the rest of the bank. So the SEND became our next competitive mode, right? And then as you start to build the network effect that, you know, you mentioned earlier, the network effect. And we really do have like this two-sided network now, right, where we've got, you know, the exchanges and the OTC desks. We've got the institutional investors. and every time we add a new institutional investor it creates value for the exchanges every time we add another exchange or a tc desk it creates value for all the other institutional

investors so it's this virtuous loop um and and so um do i think that someone else can come in and replicate that perhaps um you know i i'm not i'm not throwing the challenge out there you know but but the but the fact of the matter is um network effects are really difficult to disrupt you know i mean why why is tether so strong right i mean tether just gets pummeled you know and and um and yet they've got four billion dollars um at least we think they do um but in the important thing is the market thinks they do right and the market you know and and so So network effects are just incredibly difficult. Now, you also talked about trust, right?

You can lose a network effect if you lose trust, right? And so now, having said that, you know, we've seen the example with Libra. But why has Libra come under such attack? Because of some of the issues with Facebook, right? It's a Facebook issue, not a Libra issue in most cases. Yeah, I think that's spot on. But even with that, so with all the issues people have, you know, with Facebook, it's still a pretty powerful force. Four, five hundred billion dollar company, they're doing okay.

Yeah, exactly. So, you know. And do you feel like that's a Western-centric problem, right? Like I worked at Facebook, so, you know, full disclosure, I'm highly biased whether I think I am or not. But to me, it feels like the Twitter crowd, the kind of journalism crowd, the, you know, very kind of North American audience, you know, we love to yell and scream and bring our pitchforks out and say, you know, Facebook sucks and they're stealing our data and all stuff. My general take is probably people outside the United States, they're like, man, Facebook's pretty powerful, right? It connects me to my friends and family. And many, many people in the world, they don't, that's how they access the internet, right?

I mean, they're accessing, they're doing it with Facebook on their phone, right? And so, yeah, I do think, you know, the West and particularly the U.S., I mean, just look at the, you know, at the crypto Twitter, you know, wars that go on. You know, people love to take a position and then, you know, come hell or high water. You know, that's the truth, you know. Intellectual combat is what I call it, right? The intellectual combat is very real. They should be giving out, what is it, like purple hearts on Twitter for the intellectual wounds that people take. And by the way, on that point, you know, how cool is it?

You know, so you got Jack Dorsey who, you know, who founds Twitter, right? And then Square, and then with the Cash app, comes full circle with, you know, with Square Crypto. crypto um and and people are fighting about that on twitter you know so i mean so it's why you bring him up uh i still think he is highly underrated in the industry in terms of how important he will become right so he's important today for sure in terms of twitter obviously he built that platform square um but uh he's recently been on this kind of world tour he's been going uh i think he was in nigeria then he was in ghana and i think he's kind of going through a couple of african countries uh and he's meeting up with folks uh and the only things he's sharing online

are these bitcoin meetups right and there's not a lot of people there right he's at meetups and it looks like there's seven or eight people yeah but he's taking the time etc and so i wonder a lot is that a uh is this a personal social type trip right where he's just going for fun is this hey i want to understand my users on twitter and square right or is um what i immediately think through is you know there's a world where actually westerners are last to understanding the importance of bitcoin and crypto because we do have banking we do have the dollar we have a credit card right you know there's all these infrastructure in place yeah african countries asian countries south american countries like there's a lot of people who actually don't have

that stuff available to them right right and if you think about the difference between if i have to sign up for a u.s bank account and go through all the kind of hoops and hurdles of doing that and to buy a stock, for example, versus if I have an internet connection, I can jump on Binance or some exchange that's outside the United States and just buy a tokenized stock. The accessibility and frictionless experience

of going with my internet connection on a crypto exchange may actually drive me to go do that rather than go the traditional route. And so do those other countries leapfrog kind of US infrastructure. They kind of do this with mobile banking a little bit. And so I think a lot about just, you know, are Westerners almost too spoiled to see the opportunity?

Yeah, no, and I mean, certainly in crypto, that's the case, I think, where, you know, there are so many folks in non-Western, you know, the non-Western world that kind of get what, you know, kind of some of the core underlying values and opportunity is with Bitcoin. You know, the stuff that you were just articulating. Um, and that's, that's one of the things. So when I get philosophical about this, um, you know, I, I don't think that Bitcoin is going to replace the US dollar, right? Um, I don't think that it's now, could it become as, um, you know, the Bitcoin standard, you know, could it, could it become, um, you know, kind of like the reserve currency for, for the world and, and replace gold?

Certainly. Um, you know, I mean, gold's got a huge head start. Um, and, um, but only 5,000 years. Yeah, exactly. But but but but if you think about it, you know, I mean, in a digital world, you know, what other asset is there that has the digital scarcity of Bitcoin? Now, folks don't understand it. It's still early, you know, but give it another, you know, couple of decades and it still will have nothing compared to the 5000 years of gold. But but things are moving a lot faster now, too. Yeah, for sure. What what's been the one thing that you kind of sit back and say in 2013 when I jumped into this?

uh i didn't expect x to happen like what's been the most surprising thing over the last six years um well uh just kind of on a superficial level the price right um i mean i bought bitcoin in in 2013 as an experiment you know it was um i i wanted to understand how it worked um and um you know i didn't buy enough because i didn't believe enough uh you know but but but what i thought was i thought wow um so when i was i was reading that um this thing called bitcoin everyone was going to be able to be their own bank and as i shared earlier i've been banking my entire career and i was like oh what am i going to do you know now i work for myself exactly and and so i thought i'm going to try this and you know and and um even though i'm not you know i'm not a super

techie guy deep in the weeds i try everything you know um i i just want to see how it works And so I bought some Bitcoin, and then the price ran up to $1,000. And I thought, wow, that's incredible. And then the price came back down, and I thought, yeah, okay. But I did buy more because I thought, well, heck, I might as well just – one of the women on our board of directors said, you know, Alan, we ought to just each buy $10,000 worth of Bitcoin and just forget about it. I wish I would have done that in 2013.

you know um so i did it later but but you know it you know i i bought a lot fewer than you would have but you know if yeah if i was going to buy if i was going to spend ten thousand today i'd only get a little over one you know um so anyway so so the surprising thing i guess on the one hand is is the price um and um and i think it's got obviously got a lot of room to run still but um and then you know i just the development of the ecosystem um i've i kind of missed the whole internet thing okay um i was you know that was in the early 90s i was out of banking and running companies and so you know on the periphery i was hearing about the internet but i was i was in i was in a wholesale bakery doing a chapter 11 turnaround of this of this

family-owned operation in san diego i didn't have time to you know internet internet you know you know i look back on some of the um actually um something that you just wrote where where you were talking about i think the you know the early internet the early internet yeah um and and you know hearing the you know the dial tone you know and seeing um you know that clip from um what show is that i think it's brian gumbel brian gumbel yeah what is the internet what's that at symbol or yeah that a with a circle around it you know so um but yeah you know so it's it's been just absolutely fascinating to be just be blessed um to be at the early stages of this kind of revolution um that is digital currency yeah and it's pretty crazy to me i think um as you think

through the impact that this can have on the world right in terms of um the united states has been a great beneficiary of things like credit for example right right things um where people when they're given access to financial services in terms of income generation and and yield and ability to invest etc i always go back to just this idea that there's not a lot of people in the world on a percentage basis that have that access right right and so i've spent a lot more time now thinking about like what i call income generating uh activities so mining right you know I was talking to somebody from Venezuela recently, and he's like, look, man, you know, the average person doesn't make that much money here, right? And guess what?

That money is getting worse and worse in terms of the hyperinflation, et cetera. But I can buy a computer. I can plug it in at home. I can turn it on with my internet connection. And now, all of a sudden, I'm making money every month, right? And it's like more like income supplementation. And it really threw me down this hole of like, well, what else can you do with just an internet connection, right? So you can do staking.

You can do mining. You can do these interest accounts. It's like you start looking at it and you're like, look, again, I don't think that it's going to, you know, completely solve the world's problems, right? And, you know, global warming disappears, right? You're kind of like, how did you jump from Bitcoin to global warming? But in terms of giving access to what you and I would consider kind of table stakes financial services, it can be really powerful for economic development around the world. And what I look at is like when do the governments realize this and say, you know what, maybe we aren't the best at trying to drive economic development. Instead, let's empower people to use these services, get connected to the rest of the world, financial industry, et cetera.

It may never happen or maybe it happens somewhat in the short term. But to me, it just feels like that's like another inflection point that onboards a lot of people very quickly and kind of gets them into what I think is this alternative financial system that has a lot of benefit to it. No, I definitely agree with that concept. I don't see governments, you know, really kind of pushing that, right? Because government, you know, so, but if governments can just kind of, you know, not over-regulate it and let it happen, I think it can be very complimentary. How do you look at the regulatory environment today in the U.S. with crypto? Like, you sit in an interesting seat because you actually are more regulated than almost every crypto company, right, given that you've had state charter, et cetera. But when you look out at the crypto industry, there's a lot of people who say, hey, there's uncertainty or the rules need to change, et cetera.

Like, you're probably one of the best people to have an opinion. What do you kind of think in terms of that regulation in the environment today? Yeah, so there's certainly opportunity for, you know, for improvement of the regulatory climate. But what folks really need to understand is, you know, if you want to change the regulation, in most cases you have to change the law, right? Regulations are just written to kind of interpret and, you know, essentially enforce the law in a certain sense, right? So when we first got into this, what our premise was, well, you know, there are existing regulations that, you know, that determine how we're supposed to treat a money service business. What type of KYC are we supposed to do? You know, what type of regulatory framework should these companies have?

And one of the biggest kind of filters that we use when we're working with a new prospect, whether it be an exchange, OTC desk, you know, do they understand the regulatory climate that they're stepping into, right? And if they don't, if they don't have a view on which states they need a money transmitter license on and which states they don't, you know, do they have a compliance officer or is the compliance officer also the CEO? So, you know, I mean, in the early stages, folks were just really kind of coming up the learning curve. And it's understandable because they were essentially software engineers. You know, they were coming from the technology world. And all of a sudden, they had people banging on their door saying, hey, you know, you need to comply with these laws. And they said, hey, wait a second. I just created this, you know, this program to, you know, to trade Bitcoin.

And so we certainly had the benefit being a regulated financial institution and understanding regulation. It was just, okay, well, let's figure out how the existing rules apply. So I didn't buy the fact that, oh, this is the Wild West and it's not regulated. I said, time out. It's regulated. People need to understand how it is. So now, are there opportunities for improvement? Certainly.

I know there's a lot of concern about the state-by-state money transmission licensing, you know the fact that that there is no federal you know one you know but i mean be careful what you wish for right um to have one federal um overseer for all of that you know there is something to be said about the sovereignty of the individual states and you know on the end and the way the u.s is set up so um so i think it's a mixed bag our our goal is you know we're certainly happy to enter into dialogue with regulators um and with politicians you know about how things could be improved, but those changes are probably going to be slow. And when we do get them, we're, you know, again, be careful what you wish for.

So we're just going to focus on what are the rules and how do we, you know, how do we comply with them? One of the things my wife teases me about is when I was growing up, I have three brothers. I loved to play board games. And I always read the rules, you know. And so we just read the rules. you know, and figure out what are the rules of the game, and, you know, and that's how we got into this business, and that's how, as we think about new products and services, you know, we have a relationship with the New York DFS, we're a California bank, right, so why would we have a

relationship with the DFS? Well, because they regulate a lot of our customers, right, and so several years ago, we realized, you know what, they should, we should know them, and they should know us and so we we um made an appointment and i think initially they were like well what was it why is this california bank coming here but um but we have a dialogue with them and so as we think about perhaps offering like the digital the the settlement for digital assets um and perhaps not doing that inside the bank but maybe in a separate licensed entity um that would be a sister company to the bank um there's an opportunity perhaps to do that here in new york um you know with with the DFS. We've got a relationship with the OCC. They regulate national banks, but we've been in

there to talk with them. The FDIC comes in even though we're a member of the Fed. So the FDIC doesn't normally come into a state bank that's a Fed member because you only have one federal regulator. But the FDIC likes to come in to see what we're doing. And since they insure our deposits. What's that crypto bank? Those guys are friendly with the crypto people. What are they doing yeah so so so we have a lot of dialogue with a lot of regulators speaking of regulators and kind of lawmakers um there's a lot of talk now of a digital dollar right so the u.s creating this digital dollar any thoughts in terms of good idea bad idea um or kind of how you see that playing out yeah so um so it's interesting because in one sense and i know this isn't what people are

talking about but in one sense it's already digital right um you know so that's i i know that's not what folks are talking about but when you go to the 90 just for those that are sitting at home 92 93 of the money supply is not physical paper or physical coins that's right it's exists somewhere in the digital world when people talk about this quote-unquote digital dollar what they're talking about is essentially tokenizing the dollar tokenizing the dollar um and then you know essentially making that though then a direct obligation of the federal reserve as opposed to an obligation from your bank um and that's and that's the primary difference is when i I have a bank account

at Silvergate right and so theoretically that's where my money is right breaking news the CEO of Silvergate

has a Silvergate bank account okay well hey but that was important that gives me confidence yes well but I'll tell you

when I when I bought my first Bitcoin and I wanted to understand the experience of buying it through an exchange

so I connected this is in October 13 I connected my silver gate account to my coin base account that i had opened online i wanted to see where where did my money go um you know and and so it i took great comfort being the CEO of silver gate that i i could i could really watch watch the account closely you know so so um but back to your question on the tokenized dollar um you know i i think um there's some things to figure out

there right because um the whole credit system of of the u.s you know how do people get loans they don't get loans directly from from the fed they get them from banks right and and why do banks you know so so banks are essentially fueling the economy um you know in the sense of kind of that's how that's how the government creates money right um is through is through the banking system and if you tokenize those dollars to where you don't have to go to a bank but you can you can just do direct um you know now all of a sudden there aren't deposits um in commercial banks to fund the loans um and and so i there's some stuff to figure out there there's just a lot of challenges in terms of there's almost like uh second and third order effects of doing it so you may solve

one problem but create another that's right yeah interesting um all right as we wrap up uh rapid fire set of questions what do you think is uh the most important company in crypto other than Silvergate. You're one of the only people who come in here who legitimately you may be one of the most important companies. I joke with people usually, but you actually may be one of the most important guys. What is, what do you think is the most important company other than Silvergate? Sure. So, um, I'm going to actually go back to our, our very first customer. I think the digital currency group, um, is, is probably, um, you know, because if you think about what they do, So they have three primary businesses, right?

So they have Genesis Trading, where they are facilitating, you know, the buying and selling of Bitcoin. They're also doing lending, right? So they've expanded their offerings. So that's one line of business there. They have Grayscale, which is the way that, you know, you can do institutional buying, you know, of a regulated security, if you will. you know, of all the different funds that they have. And then they've got Coindesk, you know, which is the marketing arm. But then importantly, they also then have investments in,

and this is probably the most important piece from my perspective, they have investments in around 150 crypto companies. So they're providing seed funding and, you know, and assistance with companies that are starting in this ecosystem. And so, you know, hats off to Barry for the vision that he had, you know, and I want to thank him, too, for sending us some of those early referrals. And then I don't think we've mentioned this yet, but I should mention to you now that I've said I think they're the most important company. But I actually personally invested in Digital Currency Group back in 2015 when they were essentially selling second market. They were going all in, creating this company called DCG, the Digital Currency Group.

I thought this would be a great way for Silvergate to really participate. participate but i knew that the bank you know talk about regulation you know the bank wasn't going to be able to itself make an investment um in digital currency group and so i approached barry and asked him if he was doing a little friends and family round and and i i wrote a very modest check um but but it's been an incredible partnership um you know to to have an inside view um and there's a lot of stuff that digital currency group is is going to be involved in that isn't going to be relevant to Silvergate, and that's okay. But you've got a front row seat.

Yeah, absolutely. Yeah, it's great. What's the one regulation that you would change or improve if you could? I'm going to stay away from all banking regulations so I don't get in trouble. I actually think the whole concept of a de minimis amount of Bitcoin that you can transact with, folks have talked about like $600 or something like that. I faced this myself. So I'm a hodler, you know.

I bought Bitcoin. I just, I tucked it away. But then when I wanted to experiment with, okay, well, what if I wanted to set up like my own node? You know, I want to set up a Lightning node, for instance. So I'm going to go online and I'm going to buy a nodal. Okay, well, guess what? I can only do that with Bitcoin or Lightning. So now I've got to go, you know, either sell some of my Bitcoin that I bought at $100 and pay tax on it, right?

Or so I just bought some, you know, so I just bought some new Bitcoin, you know, but I mean, so that was like a $400 transaction that I'm going to pay tax on. Right. And so it's just it's a huge discouragement, I think, right, to people making these smaller transactions. Hopefully it gets figured out. What's the most important book you've ever read? So I could I could give you a bunch of business books. But when you ask the question that broadly, I'm going to have to say the Bible. It's the only book that I read out of every day.

It's funny to me how few people say the Bible. I would think that that would be the most popular answer. And most people usually say whatever other book. But I think it is, for those that read the Bible, it probably is the most popular. Yeah. No, it's, it's, it's the only book that I always have in, you know, I always, I've got it in my backpack. Um, I read it every day and, um, so yeah. Um, yeah, that's awesome. Um, what, uh, what about aliens? Believer? Non-believer? Yeah. So, so, oh, he may go, he may go with a no. No, no, no, no, no. I'm not going to go with a no because it's certainly possible, right? Okay.

It's absolutely possible. I don't spend a lot of time worrying about it. You know, now, I love, you know, I grew up, you know, enjoying science fiction, that kind of stuff. And so, but it's just, I mean, there's so much to do here on Earth and with our fellow human beings that I don't spend a lot of time worrying about, you know, whether or not, you know, so. But is it possible? Absolutely, it's possible. Are you somebody who would be more interested in space exploration or ocean exploration? Yeah.

So actually probably space exploration. Okay, space. Okay. And that just, you know, I had a telescope when I was little. I loved astronomy. It fascinates me how, and maybe it is because we're little or whatever, but just the human desire to look out and go up and kind of space and all that stuff. when we don't know what's underneath the water. Yeah, no, absolutely, absolutely.

Like it just strikes me as, and again, I don't know if it's a human nature thing or what, but just there's not that many people who say I'm very interested in what's beneath the water right here on Earth. But if you think about it, and, you know, I grant you that most of the Earth is covered by water, but there are a lot of people that don't touch the ocean, you know, but everybody can see the sky. Everyone looks up, yeah, that's very fair. What one question do you have for me to end this thing? um so what what do you think the most important um most important company in crypto is you you talk to a lot of companies yeah i cheat uh so you you've probably been asked this question before

not not actually that often um i say bitcoin yeah it's not a company right but just the market is determined to be the most valuable it was the first it it's uh my joke and say it's like the first love of anyone who comes to the industry right is the oh bitcoin got me here right maybe they kind of go their own path whatever but but that one will always be there uh but in terms of companies um so that's always my answer and then some people push me like well you can't say not a company yeah right now uh and i'm always careful to say like this actually changes in my opinion right based on market dynamics kind of where companies are people can fall from grace right Right now, I'd have to say that Binance is probably the most important.

And I say important because, one, it's one of the deepest liquidity pools, if not the deepest. It's also got probably the most aggressive kind of land and expand strategies. So start with a spot exchange, and then it quickly adds futures and lending and all this other kind of stuff. And then the third part and probably the part that is most underrated about the company that I've started to think more about, CZ and that executive team are probably most open to working with non-North American countries to really drive adoption basically everywhere else in the world. Right. And I think that there's a lot of companies who say, hey, I want to be in the U.S., I want to be a U.S.-based company or I want to service U.S. customers. and then there's people who focus on China and kind of Asia. But there's a whole bunch of countries that get left out.

South America, Africa, you know, Europe, kind of the whole Middle East. You know, you kind of just go through all of this. And if you look at some of the countries that Binance has pushed into, it's not places that you would normally think about. Yeah, that's a great point. You know, Uganda. Right, yeah. Who's sitting there in their corporate boardroom saying,

hey, what's our Uganda strategy? Right, yeah. Right? But for whatever reason, right, and I actually don't even know the story as to why that became a place where they really pushed in and kind of got a lot of success. But I saw recently, I think he, people will correct me on Twitter if I'm wrong on this, but I think he was in Uzbekistan or somewhere, right? And kind of just these kind of obscure places when you think of it from a corporate planning process. But there's millions of people that live in these countries who they want access to this stuff. And so right now I think they're kind of pushing the pace.

And look, they are either going to be successful or not. But when you have somebody out in front pushing the pace like that, everyone else is playing catch up. And so you kind of drive the competition by having somebody who's willing to kind of go out there. So for right now in, what is this, November 2019, I'd say Binance, ask me in six months. And CZ, don't mess up or I'll have to change my answer. So listen, thank you so much for doing this. Where can people go if they want to open an account at Silvergate or become a customer? Where can they go?

Silvergate.com. In the legacy world, they have the dot coms. We do. And they act like normal companies. Yeah, we're a company that actually has to make money. I won't say the name of the company, but I was looking for somebody's website recently, and I tried every get at the name, with at the name, the name app.com. I was trying all these different things, and I couldn't find it,

Google wasn't being helpful and it eventually ended up being with the name of the company dot IO oh wow and I was like

that's no wonder I couldn't figure that one out yeah no kidding awesome well thank you very much you're on Twitter as well I'm on Twitter at Silvergate CEO

alright don't don't leave because then you'll have to change the Twitter name that's right alright Al thanks so much for doing this alright thank you

hey everyone Pop here if you liked this episode of Off The Chain and want to help us take crypto to the top of the Apple spotify and other podcast charts please do us a favor and rate review and subscribe to review

simply go to the off the chain homepage scroll down until you see the five blank stars taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts i appreciate you listening and see you next time on off the chain We'll see you next time.