The Pomp Podcast - Mike Novogratz, Founder and CEO of Galaxy Digital: A Billionaire on Why Crypto

Episode Date: March 25, 2019

Mike Novogratz is the Founder and CEO of Galaxy Digital. In this conversation, Mike and Anthony Pompliano discuss Mike's time at Goldman Sachs and Fortress, how he lost billionaire status, and what that meant, the criminal justice system and bail reform, his thoughts on privacy and surveillance, and what he believes the future of crypto looks like.  ----- Join the Off the Chain newsletter. Pomp's daily email analyzes the crypto market for institutional investors. Simply, it’s the best crypto newsletter delivered to your inbox every morning. No frills. No bullsh*t. Just everything you need to know in a 3-minute read. https://offthechain.substack.com/ ---- Totle is a rare blockchain investment opportunity, one that offers a live product, active customers, an established revenue model. Totle solves three significant problems with blockchain asset exchange: 1) Security 2) Complexity and 3) Pricing. Over $4 trillion of blockchain assets were exchanged in 2018 and growth is forecast for at least the next 10 years. Totle’s sophisticated platform powers the blockchain economy with safe, simple decentralized asset exchanges at the best price for traders, wallets, businesses and other financial apps. Totle’s B2C Web App and B2B API are live and serving customers today. Visit totle.com/pomp for more info. ----- 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. ----- ZenLedger simplifies crypto taxes for investors and CPAs. We provide the best software for importing crypto transactions, calculating gains and income, and auto-completing tax forms like 8949, Schedule D and FinCEN. If you had losses in your crypto investments, ZenLedger can help you save up to $3,000 on your income taxes, with our tax loss harvesting tool. ZenLedger is also a TurboTax partner and has the best support for EOS owners. Finally, a simple tax tool that saves you a ton of time and headache!Visit Zenledger.io/OffTheChain to get your taxes done with ease, and as an Off the Chain listener, save 20% of your 2018 tax forms! ----- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

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. Mike Novogratz is the founder and CEO of Galaxy Digital. In this conversation, we talk about his time at Goldman Sachs and Fortress, how he lost billionaire status and what that meant, criminal justice system and bail reform, his thoughts on privacy and surveillance, and what he believes the future of crypto looks like. I really enjoyed this conversation, and Mike is one of the most thoughtful people in the space. I hope you enjoy this conversation as well. I'm sure a lot of you have used Kayak to find the best flight. Total is kind of like Kayak,

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zenledger.io slash off the chain. Go check it out. 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, I'm here with Mike Novogratz. You are a legend at this point, I think, in both Wall Street and crypto. I really appreciate you coming in and doing this. Awesome. I'm excited. Yeah. Everyone knows, I think, a lot of the

Wall Street background, but maybe let's go pre-Wall Street. You grew up in Virginia and then wrestled at Princeton? I did. I did ROTC. So you did that in college? I did it in college. You know, back then it was a way to pay for college and I grew up in a military family. And so you didn't even think you were joining the army. You just thought you were a way to pay for college. Yep. And I wanted to go to Princeton because Brooke Shields went there and that seemed like a cool place to go. Plus Tom Cruise like went there in risky business. And so it was kind of in the school of the moment. Yep. And not many, you know, kids from my area were going there. And So I afforded it by doing ROTC and then woke up one day and I was like, damn, I'm in the Army.

Yep. I became a helicopter pilot in Fort Rucker, Alabama. It was a great year, one of the favorite years of my life, quite frankly. Learned the South, made a lot of friends. Didn't really want to spend eight years in the Army. And there was a track to join the National Guard. Reagan had put too many people in the Army at that point. and his surge to build up our defenses, he overdid it.

And so they were like, anyone want to volunteer to be in the Guard? And my hand was up. In a lot of ways, because I really didn't think we were ever going to be used in war again. I mean, one of the great misjudgments of my life, you know, there was Glasnos and Perestroika. And even in the Army, they were always talking about tank warfare. And, you know, when we're fighting the bear, you know, the Fold a Gap. The whole Army was set to fight this ground war in Germany with the Russians invading. And I was like, dude, you guys don't read the paper.

And so I was so smug and I was like, I'm joining the guard. I don't want to practice and never be used. And literally my best friend from flight school, I think he was in combat for about 25 straight years. Wow. Yeah. You know, when you think about it, we invaded. First, we went down to Panama, got Noriega, and then you had Desert Storm 1 and you had Bosnia and you had the second Gulf War, Afghanistan. Look, if you're a kid in America today and you're, what, 17, 18 years old, you've lived your entire life with the U.S. at war in the Middle East? Yeah. And so my generation of officers and enlisted men have really spent the bulk of their career, if they stayed in the Army, in and around combat. And I was convinced we would never go. All right. So I want to talk a little bit about Princeton Wrestling. I play football at Bucknell, and I'm assuming it's somewhat of a similar experience.

But the idea of participating in a combat sport where there's a team aspect to it, but really when you get on the mat, it's you versus the opponent, right? What is that like or what kind of lessons you learned there that you think help on the investing side or some of the other things you've done in your career? You know, listen, wrestling is a sport, probably bar none, that teaches toughness, toughness and discipline. And so, you know, you get the crap beat out of you. And so it teaches toughness, discipline and resilience. You got to get back up and go back to, you know, you're not going to win every match. And so, I kind of think it's the grit and toughness is what you take into the investing world. Also, discipline.

You can't just be a good wrestler. You're a good wrestler because you practice. You can't be a good athlete in anything. I mean, you know, Michael Jordan shot more basketballs than just about anybody. Tiger Woods swung more golf clubs. And so, the great athletes, you know, it's push-ups, it's running, it's drilling. And it's that practice that builds a discipline that shows up when you're in competition. Yeah.

It's the actual work that you put into it. 100%. I see you tweeting all the time on Twitter about the UFC and some of these guys who are going. I've been actually pretty shocked that there hasn't been pressure or conversation about that becoming a collegiate sport, right? Just given how combative it is and popular it is in the U.S. Well, it's interesting. So, I have been a big advocate for both high school and college wrestling and Olympic wrestling. It's been a big part of my philanthropy and a lot of my energy.

And when UFC first showed up, I was really kind of anti-UFC. Oh, really? It's like there's something noble about wrestling, even the rules. Like, I can pick you up, but I'm responsible for putting you back to the mat. And USC felt just too thuggy. It felt like too barbaric, almost like, you know, freaking dogfighting. And remember, the original UFC, there were less rules than there are today. I was going to say, they put gloves on them, right?

You couldn't kick people when they're down anymore. And we really had to be careful. When we were getting wrestling in New York City schools, and we're now in, I think, you know, almost 200 different schools that we've, my group Beat the Streets has slowly, when we started, there were 25 schools that had wrestling. We had to really differentiate ourselves from UFC and say, no, it's not this violent sport. Listen, UFC has become more mainstream. Lots of my friends are participants. I mean, actually, three of the champs right now are guys that are my wrestling guys. Really?

Cormier is a great friend of mine. Ben Askren's a buddy. Henry Cejudo is like my little brother. That's awesome. And so for me, it's been fun to watch them. But it took me a long time to kind of come around to UFC. Yeah, yeah. What do you think about Conor McGregor?

He seems at everyone's attention. You know, Conor, I saw, I sat front row at that Khabib fight. Oh, really? Yeah, it was fun. And matter of fact, when he jumped over, we thought he was jumping right at us. I was like, oh. and he is probably the most charismatic athlete uh since muhammad ali in terms of pure charisma now he's not a quarter of the man a tenth of the man ali was i mean ali was a

a poet and a and a real social warrior and mcgregor's just seems to be a fun guy that's you know a bit full of himself but man does he have charisma yeah i don't think you know and he's not going to have a great UFC career from here. The wrestlers are going to continue to dominate UFC. They just are, you know, in a fight when you get, look what Ben Askren did in that last fight. I mean, he was literally getting destroyed and stayed in it. Next thing you know, he choked the guy out.

Well, it just seems to like when a wrestler is an elite wrestler and they get their hands on somebody, get them on the mat, it's game over. Right. Yeah. All right. So you're in the National Guard helicopter pilot and all of a sudden you join Goldman and you go to Asia. Describe kind of like why go to Goldman and then why take the job in Asia versus do something else.

You know, after I left the guard, I thought I'd go to D.C. and join politics. Oh, really? I did. I love politics. I love policy. And I interviewed with lots of jobs and just nothing paid anything. And I had spent so much money in college. I owed my friends money.

I had student loans. I always liked to live a good big life. And, you know, those jobs just didn't pay a thing. And so a lot of the guys that got the entry-level jobs either had wealthy parents, which I didn't, or really were more committed than I was. And so I came to New York and lots of my friends, you know, they had started two years earlier, were working on Wall Street. And, you know, Princeton and Wall Street is a pretty big connection. And I ran into a buddy of mine who got me a job, got me an interview at Goldman. And, you know, 24 interviews later, they gave me a job and felt like it was as good a place as any to work.

Yeah. And so I had an 11-year career there, first in sales, then in risk-taking. Loved it. Goldman is a cult. I was going to ask about the interview process and how that leads into the culture. You know, listen, it's like playing for the New York Yankees if you're a baseball player. And so once you're in the process, you think, I want to be on the New York Yankees. It's a wonderful firm. They've got a really strong culture. What makes it wonderful is they hire the best and the brightest. And so they continue to get great human capital. Um, they had this partnership gig, they still do version of it, which keeps you there because you start defining yourself on God, if I'm going to be a partner or not. And so you get paid less than you would if you worked at somewhere else because you had that chance of the golden ring. Um, I was lucky enough to be in the kind of right seat at the right time and do well enough that I became

a partner. And it was, it was a, to this day, it's a very cool, um, fraternity and they have a Goldman Sachs retired partner's dinner every year. And it's shocking how everyone from around the world that was a partner comes back just for that dinner. Really? There's a real tie to that sense of excellence and sense of greatness that Goldman has been for a long period of time. It's funny to hear this because I think that the military has somewhere kind of tie in. You know what people went through to be there, thrive there, et cetera. I think that some of these tech companies today, right, that really blew up. And there were small teams that eventually built multi-billion dollar companies. And Goldman, I think still today, focuses on the best, the

brightest. And now what they're even doing is they're going after new types of people. They've got this program where they go get military veterans, right? I think they get a lot of NCAA athletes. So, I think great companies and great institutions create extended family. You know, Princeton is a really neat place. It's actually people are more excited about Princeton after they graduate than when they're there. It's hard when they're there. And so you create this sense of family. Goldman has done the same thing.

So, again, being a retired Goldman partner, there's a synergy. If I do well, it makes Goldman look good. If they do well, it makes me look good. And so, you know, they reach out to their ex-partners and keep us engaged. Absolutely. As does Princeton. As do great companies. or great non-profits uh and so it's this idea of you can create identity like we're all searching

for some identity especially you know listen when you see religion breaking down more and more people want to feel community and your job is a place where there's community yeah it's one of your identities for sure what um what was it like uh working on at a wall street firm in asia in the 90s so interesting you know asia 94 to 2000 i always said they were like dog years you know like you worked, 1997 felt like seven years. You had this unbelievable exuberance of free markets and China exploding north in terms of, you know, capitalism just spreading through China. It was a little bit like the Wild West. At times, I felt as a market participant, an unfair advantage in that, you know, J.P. Morgan and Goldman Sachs and Barclays and Barings,

These are institutions that taught you how to take risk and think about risk and understand finance. And often we were competing against, let's say, in the Thai crises, against a group of risk takers and traders that didn't have the education that we did. And so it almost felt unfair. And, you know, we did very well. And so. You think it's still like that? Or you think it's the talent has really evened out? I think the talent is evening out.

I mean, listen, China does not let in U.S. financial institutions because they still don't want to compete. And I remember sitting with Zhu Rongji, who was really the architect in a lot of ways of China's great miracle, or at least the second half of it. He was like, listen, we'll let in Kodak because we'll be able to figure out what they do real fast and then we'll be able to beat them. We're not letting in Goldman Sachs. We're not letting in J.P. Morgan. Not for a long time. And they still haven't. They were supposed to have.

And it's one of these reasons we have this trade tension now. But partly because the jobs of risk and finance are a little more subtle than they are, say, in manufacturing. They're getting there. Listen, I don't like competing against the Chinese. You look in our industry, I mean, I think the most influential guy in the whole industry right now is CZ and what they're doing at Binance. He's running 100,000 miles an hour. Now, he doesn't have the same regulatory oversight that the rest of us are. He's kind of playing the game of catch me if you can. But he is a, you know, unbelievably dynamic entrepreneur. When we interviewed him on here, I'd spent some time with him before and was really able to help unpack why and how he's built it.

And the part that's crazy to me is it's one thing to go from no revenue to a lot of revenue. If you're a high growth company in a big space and kind of you ride the trend and you benefit from it. He's also built a team of 400 people in 18 months. Right. And they're completely they're like 40 different countries. They communicate all through technology. And just it's incredible to scale and stay somewhat efficient and move at that speed with also hiring 400 people in 40 different countries. Right.

So when you look back on the last three, four years, the most profitable parts of this industry from a business perspective, so it was profitable if you bought a bunch of, you know, Bitcoin or Ethereum and went up and you sold it. OK, that was great. But in terms of building a business was can you connect into the gambling culture? right the single best business out there right now is arthur hayes like i mean it's just a freaking money printing machine but both binance bitmex they you know uh bitfinex they all connected into this love of asian gambling uh you know you can call it investing it's speculating it is this surge trading speculating whatever it is and that being able to profit on that and you know

with that enthusiasm of what we had as kind of the speculative bubble literally gave these guys war chests to now grow out other businesses and so it'll be interesting to see uh i i don't think in the long run uh those margins will be sustainable right there's it's barriers to entry aren't high enough uh and so i think the exchange business will come down some um but those are the guys that have the capital to invest in new things and hire 400 people and uh you know if you took the institutional route it's been a much slower route for sure well and i think the big question is what's more sustainable over 10-15 years right you know i think we'll see a big transition in this industry in the next you know i don't know six months to six years

um both businesses are quite valid uh i think right now there's almost been very little institutional business. And so there's a lot of work being done building the architecture to allow institutions. And the architecture is not just custody and trading and regulatory architecture. It's also educational architecture. It's educating the pension funds and the asset managers on how the system works and why it's important. That's happening. And it's happening not as fast as i'd like uh if i've made you know off predictions in the last you know 12 months it's always been thinking something would start and then it's four months later than it's going to be um but i'm wildly confident that it's happening because i see it every day well and

part of it too i think that's really interesting so um before before we get into the institutional side one other thing i want to cover is uh you left goldman went to fortress right and when you went to fortress uh you were there when they took the company public right there was kind of a big financial windfall event for a lot of people involved. Just walk through, like, what was it like going from Goldman to something that was newer, younger, and kind of earlier in its life cycle? And then what the parallels are that you see to today with crypto? Well, sure. So I remember sitting around a table, you know, Fortress existed. It was a small company, Wes Edens founded it. And me, him and Pete Brigger sat around a table and both Wes and I had the

exact same idea that one plus one plus one could equal eight. That was just simple that we could create an alternative asset manager and have businesses that had very little to do with each other other than they were alternative asset managers and put them together and create synergy. And we set out, we literally drew the business plan on a napkin. Our first contract was on a napkin. We kind of used the Goldman theory of true partnership. And so each of our businesses, we threw 100% of the profits into the pot and then split it up, which in some ways was insane because we had so little to do with each other. Like, Wes ran a private equity business. And at that point, he was just killing it. Pete Brigger was building a lending, you know,

specially lending business. And he was just starting. And I ran a macro business. But we did it that way. We had great success the first four or five years and took the company public, you know, in some ways right at the right time and right at the wrong time. I mean, we were rock stars for a month. It was the longest time between a stock and a stock opening on the New York Stock Exchange in 15 years. And, you know, we were, I don't know, 50 times oversubscribed in our IPO. And so that was exciting. Unfortunately, we ran right into the jaws of the 2008 financial crises. And quite frankly, having built a business as fast as we did And the headiness of going from, you know, a wealthy guy to a billionaire to like, you know, and having everybody call you and all that goes with it.

We stumbled in 08 or, you know, the various businesses. I used to kid around about like the three pigs. One was built of bricks, one was built of sticks, and one was built of straw. And, you know, some did better than others. For sure. But it was humbling. There were lessons learned. And I think the big lesson that is relevant to crypto is it's hard to build a business that fast because you have the two different forces.

A, it's hard if you're the most sober, you know, a woke person on the planet. But when you're going from Arthur Hayes having been, you know, fired from Citibank to now the richest kid walking around in Hong Kong, it's hard for it not to impact your judgment, your ego. you are and it usually takes some lumps uh and some stumbling uh for you to kind of regain your your balance um and so people are gonna make mistakes they're gonna make mistakes because they think they're on on you know untouchable uh when when things happen it's not so much even just humbling when you're building a business in general right forget the personal aspects of it the business is going to go through good times and bad times and weathering that it's really hard to build a business, like make no bones about it. If I've learned one thing in Galaxy, having this as,

you know, my third shot going through this stuff is it's hard to hire the right people. It's hard to get customers signed on. It's like everything is a little harder than you hope it would be. Absolutely. All right. So you go through the Fortress time and then I think everyone pretty much knows when you first started looking at crypto, got excited about it, et cetera. What was it like, though, to go from being a billionaire to not a billionaire? Back to being a billionaire. There's only a couple of people in the world who have done that. Three times.

I was going to say, you've done it at least three, right? You know, a lot of it's just psychological. Once we got very rich, I never was not really rich. So it's unfair if you're worth $600 million or $800 million or a billion dollars. In lots of ways, it's just... It's the same thing. It's the same thing. You're going to give less to philanthropy in lots of ways.

You can't buy a sports team. but there's nothing in your life or your or your ability to do new things that changes it was a lot of fun uh and it was empowering uh to have caught you know the bitcoin ethereum rally and to have believed in it and you know it's also there was a lot of luck involved if joe lubin was my college roommate and if i didn't stumble into his office and in bushwick when ether was trading at 96 cents i'd have made a whole lot less money yep absolutely you know just would have. I get credit, I think, because I bought a lot and I held it for a long time and most people would have sold it and we traded it well. But it was a lot easier when the money

didn't matter as much. Absolutely. I had other both intellectual pursuits going on, business pursuits going on and financial pursuits. It's almost a sense of one of the things that holds a lot of people back is fear. Right. And when you don't have a lot, you actually make decisions that if you have less fear or you have more freedom you're empowered to make those decisions and that's actually where the risk reward is kind of plays in your favor yeah fear is really interesting because it's necessary right if me and you are walking across a balance beam between these two buildings 46 floors up we should be scared because you fall you die yep and so fear is a helpful thing at times where it's unhelpful is when it's an imagined imaginary dragon and your body locks

into and often it's your ego right it's oh god what do people think about me if i do and that that's completely unhealthy fear and so i once had a shrink who uh was yelling at me because he was like dude you're not scared of all the things you should be scared about like you shouldn't ride a motorcycle 125 miles an hour when you're not a really great motorcycle rider like that's just stupid you should be scared and you really shouldn't be scared of taking risk in life and failing yep and i was like okay back to the back to the drawing board well it's funny that you say this because uh i saw uh you tweeted um kind of the top five uh daredevils basically and alex hanan the guy who uh scaled uh the big rock and uh uh in the documentary that i recently watched

he has no uh um kind of initiation of i think it's the amygdala or whatever he's he he uh he has a smaller amygdala than others that apparently comes from practice oh interesting maybe it's genetic maybe it's from practice uh and so he gets less scared yeah it's i don't know that documentary i met him and and was just in awe it's crazy yeah like the the part that actually uh i didn't know about the story is he started to climb was like no i'm not feeling it today cut down and then just came back one day and said to everyone tomorrow you know just six months later just crazy talking to i'm not a giant climber but i have a place in jackson hole and a lot of the great adventure people migrate to jackson it's an amazing mountain uh and talking

to other great climbers and adventure people lots of them think no one will ever do that again like no one yep like that's a once in a you know not generational it's like once in a humanity thing he literally climbed that thing with no rope yeah it is uh it is pretty crazy um all right let's uh let's get some into some of the crypto stuff uh galaxy you guys got a whole bunch of stuff going on um let's talk a little bit about the asset management stuff is pretty self-explanatory you guys manage money you invest it you guys got some balance sheet stuff you're making so we have four businesses if you want to think about it and you know we set out to be a credentializer in the space. I used to talk about Drexel Burnham because I think Milken really helped credentialize

high yield and junk bonds, and they became a real part of the financial armory of all companies. And I think at one point, crypto won't replace, we're not going to have a whole new world, but it's going to supplement. It's going to be part of the payment system of the world. You're going to have security tokens. Crypto and blockchain are going to be integrated into lots of both the consumer side of our world and the financial side of our world and we want to be part of that process and so we have that's the core you know reason to exist uh we have a direct investing business we invest off our balance sheet uh and on behalf of one one other uh investor um in the venture space uh in credit in new new businesses

in venture and gaming in you know new protocols and in wallets and so that's been the the most exciting space because you're sitting with people and you're like, hey, this is the new new and what's coming down the pipe. And having never done that before into the last few years is by far the most enjoyable part of the business for me. And quite frankly, the hardest because it's a learning curve of trying to understand what will work and what won't work. You almost feel like you're getting told the secrets, right? That's what I always find. These are the smartest people in the world and they're going to show up and they're going to tell you everything that they know and they're going to tell you everything that they think is going to happen. And then you have to

to decide whether you believe them and they can do it. Yeah. Right. Like it's incredible to have those people show up to want to talk to you and tell you all this stuff. It's fun. It's a whole lot of fun. And, uh, that's really the, you know, the, the juice of, of this revolution that's going on. There's a trading business that we're, we're setting up and we're in the process of, you know, getting good at, uh, the tokens from Bitcoin and Ethereum to all the tokens, you know, need to get bought and sold and stored and lent. And I think that part of the infrastructure is still not as built out as it needs to be across our space. A lot of these companies who are good at it slap their technology together. And it's complicated stuff. You can't buy it off

the shelf. We've tried many times. And so there's a race going on there to provide liquidity and lending services and custody. I think that's going to be a continuing growing part of the business because I see, forget the coins we already have, there are new ones coming. We know Telegram has got a coin coming. JP Morgan's got a coin coming. Facebook has talked about a coin coming. These coins need to be traded and stored. And so there's a big opportunity, I think, to continue to invest in infrastructure. And so how do you see the Wall Street bank? So the funniest word to me in this entire space is institutions, right? Because I think people who come from more of a Wall Street background, when they think of institutions, they think of the J.P. Morgans, the banks, the financial institutions.

And then people who come from less Wall Street but still asset management, they're thinking of endowments, pensions, sovereign wealth, etc. The Wall Street institutions, what's the general sentiment there? We saw Citi go to build a coin. They've backed away. J.P. Morgan is now going to build one. How do they all look at this? So they have a monster business. And why take risk on something that's really small until they're convinced it's going to be real?

And so they're getting closer. I know Goldman, for instance, is gearing up around securities tokens. They're not doing anything yet, but they are getting really ready and looking at all the questions on where would you store them? Do you have to build your own custody? Can you use someone else's custody? How are they going to work? Listen, the regulatory framework isn't there yet in securities tokens. We're working really hard on that.

On our security token business and we've got I think some cool things in the hopper Do you think that that's something that? You're not only excited about but will be just as big as kind of the the tokens ICOs all of that It's gonna be a lot bigger and a lot less sexy. Yep. So think about something We're one of the projects we've been looking at is Tokenizing a triple net lease portfolio, which is a bunch of leases from a Midwest real estate company maybe yields 7%, 7.5%. Like, what crypto investors you know wants to buy a 7.5%?

You know, none. The only 7 they're looking for is a 7X. But there are plenty of investors in the world that would be thrilled with a stable 7%. And they're buying them now. And so all, in some ways, the tokenization of that asset is going to do is it's going to be, at least in the short run, a call on liquidity. And then maybe in the long run, some liquidity. In the short run, you're going to distribute it to probably the same exact people that would have bought it anyway.

But in the long run, maybe we'll get to the point where you could crowd sale distribute. And transferability will be easier because you'll have that built into the token. And so it's a marginal increase in the product. There's a $2.5 trillion to $3 trillion a year private placement market. And so each year, basically, there's $2 trillion of new public equity and $2.5 to $3 trillion of private. Some portion of that private is going to get tokenized. And so if you're any one of the major banks and you're like, hold on, I was part of that. And now if I don't get into the token business, I'm not going to be.

They're all going to be part of the security token world. Yeah. Again, it's not as radical in lots of ways as, you know, changing the payments payment network or or, you know, creating peer to peer systems. But it's going to happen. And part of it, too, just feels like all they're going to do is they're really just switching out the underlying technology. It'll make some efficiency gains. It's a new wrapper. Yeah. Yeah. But it's going to be a big, big business. Well, and I think a lot of people in crypto forget how large, you know, real estate is or the credit business in traditional markets, right? I mean, these things, I said to somebody the other day, I said, look, money is like, what, $85 trillion or so, give it, you know, globally. Real estate is like $215 trillion. So, literally, real estate as a market cap or addressable market is just at least two times bigger.

And so, this stuff is going to happen at some point. I think the big question, right, and I think your articulation of like six months to six years, right, is, you know, it's really hard to tell on the timing of this stuff. Listen, there's architecture that we're an investor in Templum, right? They've done a great job of trying to get all the regulatory framework so you can actually, you know, buy a security token listed there. But even how that world plays out, where are these things going to get traded? That question is still open, right? Because none of them are being traded or very few. For sure.

And so I also worry like if I'm in that trying to create the exchange, there's just no way that the NASDAQ and the New York Stock Exchange and all the big vested interests are going to, if we really do have a big surge in security tokens, are going to say, oh, let those new guys take all the business. Of course. Right. So the legacy players are doing their homework and they're coming in. And I think one of the biggest things I've noticed in the last year is, you know, their capital to the space has slowed down some. But the venture business, there's still plenty of capital coming in. If you actually added the capital being spent by legacy, that's why more people are getting hired in crypto than used to be. Because each of these places is working on their piece of it.

Well, and it's more natural, right? I think a large Wall Street institution is much better set up to go into security tokens than, hey, there's this new thing that may replace the U.S. dollar, right? The radical aspects of this are just on the fringe and there's everything from the regulatory standpoint to, it's just they don't have that type of talent today, right? When I think of Galaxy, there are kind of three buckets. One is, I'll put the Bitcoin bucket, but really is, are we going to have, and I think we will, a market for what money is? You know, Bitcoin versus a dollar versus some algorithmic coin versus whatever. You know, money is really a social contract, right? Bitcoin is worth something because we say it's worth something.

If me and you took the exact same technology and put it out there and said, hey, it's NovoCoin and nobody cared about it, it's worth zero. Absolutely. Bitcoin's worth whatever it's worth today, $80 billion or $70 billion. Thank you. because the social contract, we've decided that I'll trust and enough people have decided that they trust it and that it's worth something. And so I think part of, and maybe the coolest aspect is we're going through this experiment that we are going to have a market for money. That's kind of one. Second bucket is really this idea of a Web 3.0. And the third bucket is really

this tokenization digitalization of stuff yep and so they're they're different stories they're connected but they're not the same stories and so we kind of break up our thinking of the business and attacking each one of them what is um let's switch gears a little bit and uh i know that you've been talking a lot about uh surveillance in china and some of the stuff that's going on there what what's the what's your thoughts on kind of just again technology is permeating a society and the questions around how it's being used and by who what's your thoughts there so privacy is a a giant issue in the world um i had a conversation with lloyd blank fine about this and uh lloyd's one of the smartest guys i think i've ever met uh and he's a lot of fun to have a

conversation with and he was like i never got you wrong we've already lost it it's just gone and so deal with it uh and i was like oh that was just too depressing i haven't i haven't agreed with that yet. And he's saying, just to be clear, he's saying that we've already lost privacy. And so, like, we're going to, the new generation is just going to learn to live with a non-private world. It scares me, you know, the social responsibility score that China is, you know, there were 30 million people last year that were not allowed to travel in China, let alone out of China, because of their social responsibility score, right? So, it's not like a theoretical thing that's happening. And when you look at the growth of AI and how good AI is getting at

understanding people's behavior, and you have data, all of their data basically being shoved into a government-owned database, all their spending data, it's a really scary thought. And I looked at a company I'm debating to invest in that takes a picture of you and instantly shows me all the pictures that match your face on the web and your name. And so I never can remember anybody's name. Like this guy forgot his name already. I take the picture and I get his name, I get his bio. That's scary enough. Imagine in five years when you've got a bot that can race through every last database that you can sneak your way into and find every last picture of him. And next thing you know, we find a picture of him going into an illicit place or quite frankly,

going down the street and interviewing with somebody else. And so it's like, you know, I fundamentally believe we have a right to privacy. And I don't know how you stop it. I mean, there's lots of ideas, you know, with the blockchain being able to help. Well, what about Facebook? And, you know, they've run into a lot of these issues. And now they're starting to talk about, you know, do they decentralize some of the products? Do they maybe give you as the user a little bit more control?

Like, how do you think a company that, again, very similar to the banks, they've got a huge business and it's working, but there's a lot of concerns and, you know, people are saying, hey, what's around the corner? I think it'll be one of the most fascinating things to watch over the next, you know, six months to a few years on how legacy companies who are under attack because of their privacy respond. Bold ones will respond boldly and others won't. And, you know, I think that the bold response is needed. You know, I think the bold response would help. Yeah. I think, you know, there's going to be this is going to be attacked two ways. companies themselves are going to realize, I better change or I'm going to lose some consumers.

But governments are going to, you know, Europe is much tougher on privacy than we are. And you're going to see governments regulate these guys. You can already hear it. There are just too many, too many breaks. Yeah. I mean, this, this, this, one of the most scary parts of, of the technology that all our smart friends have created you think about this new zealand video that went viral of some jackass coming in and shooting up you know all these innocent people and you know facebook has all the vested interests of the world not to take it not to let it go go viral they worked as well

as they could and they got it down as fast as they could but it's still a zillion people saw it i think the number they said was in the first 24 hours took down 1.5 million copies of the video There you go. Crazy. Think of that in a peer-to-peer censorless system. Like, that ain't good. Like, you know, so should media even be on the systems? You know, there are real ethical questions to ask.

Well, and the tradeoff that you're talking about here is, so all of a sudden there's this video that gets streamed live. There's no centralized party to take it down, right? And that gets bad. The counterargument is, in China, you have people who want to get words out, and so they put it on the Ethereum blockchain, right? Good and bad, same system. 100%. And so it's really complicated and it's really nuanced. And it's going to take a lot of smart minds to try to figure out, right?

The pure libertarians are devil be damned. And there are 45 million images of kiddie porn out on the dark web and on the web. Crazy. So do you know what kiddie porn is when people say kiddie porn? No. It's pre-verbal. That's three year and under. Like, I don't want those images in any society being available to anybody.

And so, it's really an interesting debate on where privacy and how you do it. And so, again, I wish I was smart enough to know the answer. I'm fascinated with the subject. There are some things that are simple. I don't want my DNA going to 23andMe, even though I liked that stupid stick years ago. I would rather that be between, you know, encrypted into a kind of a blockchain database and, you know, companies being able to pay to use that data. That seems like the simplest architecture. And I don't think people would disagree with that.

The porn world, you know, you can have your own moral decision, you know, 18 and over. OK, maybe. But when you're talking three years and under, people don't have no agency. I don't think anybody in the planet would say that's OK. Yeah. Yeah. Well, and part of it too is there's, you have to layer on then the regulation piece of this, right? In some countries there's much more lax rules than not. And I think a lot about when you go onto the internet, a lot of times it acts as a single country, right? You know, the laws

that apply in kind of the physical world, sometimes they're hard, right? If you're, you know, if you go and visit a website, if it's on a server in the US versus Canada versus China, sometimes there's impact, sometimes there's not. And that really just makes things more complex. I want to talk a little bit about criminal justice. And I know that you're really passionate about this bail reform and stuff. So I don't think a lot of people understand some of the problems. And maybe just articulate the two or three things that you think are the most screwed up. And then we can talk about why they are the way they are and some of the solutions. Sure. So one of the great windfalls for me of having bought Ethereum cheap. And when I sold a bunch and wanted to buy some fun things

for myself, I, to make myself feel less guilty, decided to give an equal amount to, to charity or to, to a nonprofit. And split it, you did 50, 50 or close, you know, generally. Yeah, roughly. And so I got behind a group called the bail project. And so I heard the story once and that's all you needed to hear it so here's the story tonight in america 450 to 500 000 people will go to bed in a jail cell uh a dangerous stinky you know unpleasant cell uh having been arrested but not convicted of a crime solely because they can't afford bail uh so they've been they've been arrested they're put in a jail cell they're told you can get out if you have x dollars yes if you don't have x dollars you have to stay here jamie dine and diamond from uh jp

morgan yesterday was talking about the two americas and he said listen 40 of america can't afford 300 or 400 60 of america can't or 50 of america can't afford like a thousand dollars you know bail gets set at 600 800 not only most people can't afford it uh they don't even have a friend they can call like even and bail bondsmen don't work on those low-level bails and so they stay in jail. Now, if you're in jail, you're seven times more likely to plead guilty because you want to go home. You're going to lose your job. You don't get to see your kids. You're, you know, it's in a dangerous environment. And so you plead guilty usually for time served. And now you've got a record and it's really hard to get a job. If we bail you out, 50% of the time, the DA drops the

charges. 97% of people that get arrested never actually go to court. It's all plead out. And so it's this completely screwed up system based on do you have the money to pay bail and in that project what they basically have i think it's like a revolving bail fund so we raised a whole bunch of money now and we are setting up in 25 cities to literally show up at jail and pay people's bail uh it's a humanitarian really direct service getting someone out of jail helps 40 of all prison rape happens the first five days you're in jail 40 of all prison death happens in the first five days you're in jail. Right. So jail is one year and under and prison is one year and over. And so jails are dangerous. Go out to Rikers. It scares the shit out of you. Absolutely. Or go

to the ship up in Brooklyn. And so I plunged into that and it was this unfairness thing that just touched on something. And since then, you know, I spent a whole lot of time. I've got a team that has looked at the whole arc of criminal justice from pretrial to probation and parole. I teamed up with Meek Mill and Jay-Z, which was kind of cool, on probation and parole. There are four and a half million people stuck in this idiotic system of probation and parole, where you might be there for 12 years, 15 years. Meek's still on probation. He came to play a concert in New York City last week.

He's got to get permission for a crime that they already realized he didn't even do. But he's still stuck in the freaking system. Well, the stat that I heard, and I'm going to forget exactly what it was, But there's some high percentage probability that if you go for your parole hearing, so you're in jail, you're possibly allowed to leave and judge is going to make a decision. And the people who go within like the hour and a half before lunch get denied parole at a much higher rate than people at early in the morning. I read that once. And so, you know, again, this is their life, right? Yeah.

And the part that I've always just you wrap your head around. So if I'm a judge, I'm sitting there and somebody comes in and we convict them of whether it's drugs, crime, you know, whatever it is. And then they say, OK, you have to sentence them. I can say six years or seven years. It doesn't really sound like that big of a difference. It's 12 months of somebody's life. They're going to go sit in jail. Right.

And so there's a huge. There was a big outroar when Paul Manafort got four years only. And I was like, you know what? Four years is a long freaking time. Plus, they're taking $28 million. dollars he's got to pay back plus he won't be able to work and he's humiliated that's probably a fair sentence what's unfair are these crazy long sentences we give people for a little crap and so we're thinking about it all wrong we need to change one of the things we did this year we

took 38 people to germany we took the prison heads of the bureaus of prison from louisiana south carolina north carolina michigan connecticut we teamed up with vera justice who have been doing this work for 75 years and toured the German and Norwegian prison system. And to start with, same crime, one third the sentence. So our sentences are three times longer. But the big difference is they look at the entire system from a completely different lens. So the moment you get sentenced, post that, you lose some liberty. Everything else is about your rehabilitation? How can I make you a productive member of society again? And so you're treated like a human. And our system is about degradation, debasement. The moment you

get arrested, you're treated like an animal. I mean, you walk, I've been to seven jails now in the last year and a half. You walk through jails, like you're shitting right in public, you know, guys are master. I mean, it's, it's, you know, you, you start treating people like animals, they act like animals. And there is nothing about rehabilitation and moving forward. There's a mean spiritedness, there's a punishment side that our whole system seizes on. When I walked through the German jails, the US jails and the Norwegian, and I was just going to give them a grade, Germany would be a 90 out of 100 and Norway would be a 99 out of 100. The US is like at 12. Really? I mean, it's barbaric. Up until February of this year, if you were a woman giving

birth in a federal prison, you were shackled hands and feet to the gurney. Shackled. In 13 states today, you're still shackled as a woman giving birth in prison. It's incredible. It's freaking barbaric. And it serves no purpose. What do you think about the death penalty? I think we should do away with the death penalty for a lot of reasons. One is that there are so many people that, you know, unfortunately, they make a mistake. That poor indigent people, especially in the South, haven't been provided the good defense. There's emotions around crimes that show up where DAs and jurors could be. It's like a mob mentality.

It cost us a whole lot of money. I even think these crazy, you know, triple life sentences. We have 10,000 people in New York State prisons right now that are over 55 that have already served 15 years. The chance of them committing another crime, if you all let them out, is about zero. That's just statistics. So, we're paying all this money to keep them in because, you know, they killed someone. It's up to 18, 25. What I've learned in this 18 months I've dove in is usually between 15 and 20 years in jail, something changes in somebody.

They take complete ownership of what they've done and they've changed. Matter of fact, I had two guys who had committed murder in my house last week and I left them with my kids with zero worries. Unbelievable decent humans. And so you have to ask yourself in our whole system, do you believe people can change? If you don't, you've got a different criminal justice system. I fundamentally believe you're not your worst moment in life. Partly because I've had a lot of shitty moments myself. And I refuse to believe that's who I am.

Yeah, yeah. You've got a number of kids. What's their take on crypto? Or what have you done with them in terms of technology and crypto? You know, my kids used to get asked at school all the time once I started being public. And they were like, yeah, my dad's got enough for all of us. that is that's epic because what they're like uh late teenagers early 20s no i've got well i've got a 24 year old who's you know working in the movie business and and a 23 year old who's teaching

for teach for america in chicago and i've got a 21 year old who's still at school an english major and i got a 16 year old who's a sweet kid here in the city which one gives you the hardest time yeah my 21 year old i i uh that was a good time in life So one thing that you've also said, going back to the crypto stuff, every fund should own some Bitcoin, right? Not just crypto funds in terms of, you know, macro hedge funds, et cetera. Explain a little bit more. I agree with you. And we talk a lot about it with institutions.

But why the funds and kind of what's the benefit there? Bitcoin is kind of, if you step back and like, how cool, like 10 and a half years ago, we have this experiment, this social experiment. We've got a technology that allows us to create this sovereign money, really. We've never had sovereign money outside of a sovereign. And it's worked. $70 billion market cap 10 years later is staggering. And so, like, someone should bow down and, you know, rub Satoshi's toes and thank him. bitcoin in my mind has taken this place of hard money or you know gold has been hard money so i

keep thinking of it like gold is store of value um it's clear to me that there's there's architecture being put in place to allow easier and easier adoption and access of it and so at its base just as a digital store of value in a world where most money gets inflated away at a pretty high rate. You know, the euro's 20 years old and looks like there's arguments that it could blow up. It might not. You know, there's a huge vested interest to hold it together. But man, oh man, half of Wall Street thinks the euro's toast. Average currency is 27 years old. And so, you know, Bitcoin provides a really interesting alternative to gold. Forget the other stuff that might come out of it. Forget level two solutions and payments and everything

else. Just at its core, sovereignty should be expensive. People bitch about Bitcoin's expensive. I don't think it's that expensive. I actually wired from my bread wallet $10,000 worth of Bitcoin to someone a week ago, and it cost like $0.06. Seems pretty damn cheap to me. And so I think the macro case for it is pretty strong. And so if you're going to put a couple percent of your portfolio and there's a decent chance you know it catches wind we still you know fidelity is just getting set up back continues to get delayed a little bit but it's not going to get delayed forever uh they're going to be in the game and there's lots of other players coming yeah um it sounds like what you're doing is you're making kind of a qualitative

look the the reasons why this works check out right so they're legitimate reasons why people want this asset and then also you're making a kind of non-correlated asymmetric return you know supply demand type argument that just look if demand increases the price is going to go up gold's got its eight trillion dollar market cap or seven and a half trillion dollar market cap and so we're we're a hundred times off on that and we're not going to get there in bitcoin in the next year or two but over a 20-year period could that happen easily easily uh and that's giving zero optionality to all the other stuff of course um and so i think it's seems like a pretty smart portfolio bet uh you i want to make sure i get this right you sit on the advisory committee of

the federal reserve bank of new york or at some point you did i did for three or four years what organizations like that think of crypto blockchain like just knowing how they think and mean and stuff like that so i remember going to visit the fed in 14 maybe with dan moorhead okay i took Me and Dan, because I was on the committee, I called them. I said, I want to come talk about Bitcoin. And to be fair, they were really interested. And they were well-versed even then. And their view was, it'll never be a currency because fixed supply currencies just don't work.

They're too easily squeezed, manipulated. But maybe as a payment system. And they love the blockchain concept. and maybe the blockchain as a ledger, that technology they were fascinated with and maybe as a store of value. It just isn't nearly big enough to reach their level of importance, right?

We have a $20 trillion economy. And so I literally talked to one of the Fed governors a week or two weeks ago about stable coins. and he's like yeah you know no big deal yeah uh talk to me they probably should worry about it more than they do but it's just not on their radar yeah if it grows in size they'll start paying attention but it's just not there yet the problem is by the time they start paying attention it'll be too late for them to do much about it yeah that makes sense uh before uh you came i tweeted and asked what questions people had and the the most popular question by engagement was

uh, for you to tell a story of the most extreme fun or savage thing that you've done in your life. And so I said, uh, I'll ask him, I don't know, I don't know how, uh, how far he'll go, but, uh, but, uh, what, what, what story would you tell? It's just kind of a, this is Mike Novogratz at his best. When I, uh, I've told this story about, you know, when I left Goldman Sachs, it wasn't a, uh, graceful exit. And I took a year to kind of sort my shit out and, you know, you're depressed at that point you're trying to get yourself feeling better and uh me and two friends went and we went to the sahara and we did this race called the marathon of the sands okay uh it's a marathon a day for six days across the sahara and running running and so you're

running in 135 140 degree heat and then it freezes at night you got to carry your own food they give you six liters of water a day and it was an amazing life fulfilling you know it's just you're like what am i fucking whining about i'm in the middle of a gorgeous desert i'm running with 600 cool people from around the world uh my feet hurt uh you just felt alive again yeah and so when we finished it i had literally no skin on my feet like all the europeans they'd get a blister they'd quit the race like but are you quitting i got a blister i gotta quit and i was like here god damn wimp uh and so i literally finished with almost no skin on my feet i came home in a wheelchair uh but it just it kind of reaffirmed like toughness and life and like stop whining yeah and uh i

literally soon after that like you know started fortress or you know joined fortress and moved on to the next chapter it is uh events like that i think are very uh they're a reset button right anytime you kind of go through an event in your life if you just go um i know people have gone and done endurance races people have just you know disappeared actually you went to what india for like a month right around the bitcoin ethereum stuff i did india for many times for for long periods to again i have this thesis that we're all screwed up like and our parents screw something up they try and so your your number one mission in life is to sort your shit out and there are lots of ways to do it like i went to a one week healing center in costa rica

two weeks ago uh on an ayahuasca journey which that might be the most radical thing i've ever done in my life explain a little bit about what that is you know it's a plant-based medicine that that purges shit in your body that you don't need and gives you a real therapeutic insight to yourself you literally have a conversation with yourself like you've never had and you're like you think you're talking to someone else you're like it's just me and so it's therapy without the therapist um it's had you know people there were for all kinds of different reasons you know for healing trauma for healing pain or for just learning about themselves uh it's not for the faint of heart um but i try to do one thing a year where i learn about myself uh and so that

my second mission is then try to walk each other home and try to help out your community however however you want to define that if it's charitable if it's being nice to your cranky brother if it's being a good employee but like we all have capacity to to help each other out and so the more you sort your shit out the easier it is to help other people out yeah well and look one of the things that um you know before we started recording what we were talking about is uh i recently was looking at all the drug statistics and crime right and so you know it's like 1.3 million americans every year get arrested for like simple possession of weed right and 22 states have now decriminalized this stuff and i think from your standpoint it's okay look the laws are screwed up and

at this point everyone knows we got to fix this stuff right but there's also an element of um you can use all sorts of different therapies whether they're drug-based or not to help better understand yourself better understand what you want to do in life etc to be fair i i think a lot of drugs are not good for you at all right the world would be better off if there was no cocaine it just would be better off uh the world would be better off if there was no heroin um and so by no means do i want to advocate for for those use there are some drugs or plants uh that really do have a purpose for sure and from a criminal justice perspective most of this should be in in health and mental health and throwing people in jail uh for being addicted to to anything just as

a it's counterintuitive to them and ever becoming a a productive member of society and so i think we should decriminalize all drugs and it's a radical statement because i just said there are There are a lot of drugs that are really bad, like bath salts. No real purpose in this planet. Like, you know, we'd be better off without bath salts. Most, you know, lots of drugs we'd be better off without. And so, you know, it's a complicated issue. But, like, putting people in jail because they're a heroin addict doesn't really help them not become a heroin addict.

Like, helping people deal with their trauma that led them to become an addict, that's where we need to get society to look at. But it goes back to your whole point about the criminal reform system, right? The jails, et cetera, should be driven by rehabilitation, not by pure punishment. Yes. Right. And the more that you can focus on that, the better the outcome is. 100%. Yeah.

I actually agree with that a lot. Last thing for you. CBOE recently announced that the Bitcoin futures, they're going to kind of revisit, et cetera. I think a lot of people are yelling and screaming on the internet about, this is really bad. No one wants this stuff. I take the view that it's probably not the first product the institutions want to participate in. Where are you on this and how do you think it affects the industry? Listen, I think liquidity is always good for your space.

I mean, the reality is the CME kicked their butts. And, you know, these guys have limited resource on where they're going to spend their focus and they decided to spend it elsewhere. Finding leverage in Bitcoin is going to get easier as the architecture of the space gets better. You're already seeing the lending market around Bitcoin went from 10% to like 3%. Once you can borrow, you can short. And so now it's not so hard to short Bitcoin. It used to be almost impossible to short Bitcoin in 2006. Don't know how to do it.

And so as the lending markets of all these coins get built up, you can. And then all of a sudden, firms like us will start giving people leverage once we've done understand the customer well enough. And so, A, it wasn't great, but it's not critical. again you look at arthur's business uh over in wherever it's wherever it's based these days um gives you unbelievable amounts of leverage uh i don't love the way that as a user i would be very careful uh he's given what like 50 i think 50 times leverage on a theory even 100 on bitcoin or something you know he's a fascinating guy to me i listen listen i i once met him and i I was going to be mad at the guy.

And by the end, I was like, can I buy a piece of your business? He was like, absolutely not. I was like, please. Listen, he's built a great business. He's smart. He's tight. There are businesses that are living outside of what we would consider the regulatory sandbox. And, you know, it's another thing that's going to be interesting to watch over the next few years.

Like, I can't build a business like that. Based in New York, I pay my tax. You know, you can, there are, you know, Binances living outside of that regulatory sandbox. There's plenty of them. And some are openly violating regulation and then some are saying, I'm just going to go to the places where it's the most lax. 100%. There's two very different approaches. 100%.

And listen, I think that's all going to play out. The last thing I'd say is I'm more confident today on the space than I was six months ago. and even a year ago. Because I think you're going to see in the next short period of time a few announcements that wake people up and they're going to look back and say, wait a minute, this is no longer a fringe thing.

Like it might not be taking a huge amount of commerce right now in the consumer or the financial space, but the commitments that legacy players and crypto players are going to make in the next six to 12 months, the whole world's going to wake up and going to say, oh, this is real. I got to get involved. And so the decision process around, is this a real thing or not? Does the technology work?

Will it work? Do we even need crypto? What's the use case? Those questions are going to fall away much quicker than people think. And all of a sudden, you're like, ah. And so I don't know when it's going to happen. I have a sense there'll be some big announcements. And it's one of the cool things of being in a seat that sees lots of projects and talks to lots of both institutions and companies.

But I think both on the consumer side and the financial side, the change is coming. And again, if I'm wrong, I'm wrong by some timing. But I'm more confident that I'm not wrong, that you're going to see this. And there'll be a step function where people are like, OK, crypto is a real thing. Because a lot of people still don't believe crypto is a real thing. Well, I was going to say one of the things that from afar I've always appreciated about you and there's a handful of other six, seven people who come from very traditional financial backgrounds is it always seems like you've had this belief in the inevitability of the assets, right? Like, of course, this is going to happen. When does it happen? At what scale? Which asset is the one that kind of takes the lead? All of these different things are to be determined. But of course, this is real. Of course, this is going to persist. And of course, it's going to grow over time, right?

Like, to your point, there's a lot of people who don't believe that stuff, right? Like, they're still actually questioning, like, is crypto as an asset class and as an industry going to go away completely in the next five years? Right. Like, there's people who believe that. And I think sometime in the next year, a lot of those skeptics are going to be like, OK, I give up. And they're going to not do that just because it's more of the same old thing. I think you're going to see some projects announced that are of scale that get people thinking. And all of a sudden, you're like, wait a minute. So, J.P. Morgan, the second largest bank in America, is now trying to get involved.

That's a centralized coin. It's not really the same DNA of our spirit, of the spirit of the community. But when you see more distributed systems, even if they're not decentralized, I mean, decentralized, distributed, it's a nuanced word, I think you're going to see kind of a mindset shift. Look, I give the bankers a harder time than anybody else with the whole long Bitcoin short the bankers, etc. But if you take the JP Morgan coin, for example, it's actually incredibly intelligent. It's forward thinking. And if you're in their seat, that's probably the best thing for them to do, right, is to go and say, look, we're going to use this internally. We're going to kind of control the risk. We're going to use it for ourselves and maybe a couple of clients. And if it works, then we can branch out from there. But it makes sense for their business to do that. And one step cooler would have been the 40 biggest banks having a, you know, right. Instead of just JP Morgan running the, it's running the one node, having a distributed, 40 big banks having a coin. And, you know, it wouldn't have been as good for JP, but it would have been, then all of a sudden you would have been like, wait a minute. The banker coin. Banker coin.

All right. Before we finish up, I usually do rapid fire questions. You don't have to answer rapid fire though. What's the most important company in crypto other than Galaxy? Well, that's a good question. That's a good question. Listen, you know, the, I mean, in a lot of ways, Coinbase has been the most important U.S.-based company in terms of connecting to the end user. Really driving adoption.

ConsenSys has been a really important company in terms of creating this Ethereum ecosystem. They were in our office last week. They gave a presentation. It was A+. Block.one is interesting. The EOS blockchain, they kicked out. They have a huge war chest. They've hired a ton of smart people, and they've got a lot of cool things.

You wait come June, July, you're going to see announcements that I think are going to be exciting in that space. And we're still early enough in this space. There's a layer of sovereignty, I think, of Bitcoin that is slow and expensive. The kind of thick value where you would feel comfortable transferring big value. You can take some time to transfer big value. You know, EOS has taken this universe of very fast transaction speed, and so more transactions, less value. And so we've been investing in lots of gaming companies that are building on top of it. It makes a whole lot of sense.

And so how this whole Web 3.0 plays out is still really early. You know, we just had Cosmos come out. And so, but I think these companies that are investing lots in the developers and the developing communities are the essential companies in a lot of ways, you know, for the space. What's the one regulation? Binance. You know, you got to give Binance. I mean, he's dominating right now. And in recreating the energy of, and I don't know in the long run, it's fun and it's exciting.

I don't know if in the long run you'll see all these new deals that are getting done through his distribution product. My sense is they're going to go up and they're going to go down. And if that happens, people are going to fade again. Like rerunning the 2016-17 playbook isn't smart for the whole space. It was a frenzy. It was a speculative bubble. It was fun. Have you ever seen anything like that before?

No, I've not. I've been in bubbles before, but I remember looking at the chart of Bitcoin when it went from 12 to 20. And I was like, I've never seen a chart on a log, a log chart go parabolic. And it did. And we kind of picked 20. 20 was going to be the top at one point. And it was just because you could draw a line on a log chart. There's not a chart you can find literally in history of any kind of large market cap that goes parabolic on a log chart.

It takes out the upper channel. And so that was a frenzy. that, you know, was fun to participate in. It necessarily wasn't horrible for the space because it dragged in energy and excitement. It wasn't great. And I don't think we're going to see it again. And so you'll see these little mini versions of excitement.

That's not really the next chapter of this. The next chapter is actually building a product that works, is getting, you know, blockchains fast enough and dApps on top that are consumer, you know, interfacing that are easy to use, institutions buying into those three buckets we talked about, you know, the market for money from Bitcoin to whatever stable coin or X coin there is, Web 3.0. And then this whole new world of digitalizing, you know, old assets, art, you know, non-fungible tokens.

All of that. So there are three buckets. I think it's all happening. Takes longer than we all want it to. It's all right. It'll happen. That's it. What one regulation would you change or improve if you could? I would wish, so we have an SEC who in their DNA under the Trump administration says, we don't want to regulate a lot. We've already told you the rules. I don't think that's fair because we've also got FINRA that's not approving lots of stuff.

And I wish they would give a little more clarity. So really just get the clarity on a whole bunch of stuff across crypto. Yeah, because what's slowing growth down, right? The security token world isn't clear. So, yeah, you know, what's slowing growth down is that level of clarity. And they're just still waiting. Yeah. I do think they'll make some progress, but that would be if you can knock the regulators and say, hey, could you speed it up a little bit? um well and look i've always said that tell entrepreneurs what the rules are right and give them confidence that those rules aren't going to get changed or kind of pulled out from underneath them and they'll go figure out how to build businesses so the frenzy of the market allowed

people to you know go to this idea of i mean part of the the theme of crypto was the democratization of finance why should mike never be able to invest in a biotech firm or buy a buy an expensive piece of art, but the man on the street can't. Well, OK, let's digitalize, let's fractionalize it and give him a chance. Well, I don't think at the core regulators, the Republican administration in charge doesn't think that would be a good idea. Their job, though, is to protect the little guy. And the little guy got run over in that process. And there was fraud and there was hype. And even the whole ICO process, the way it worked, I got in early and then you'd get your buddy's tokens and you'd raise tokens and you'd hype it up and you had these up downs. That wasn't good

for anybody. And so the regulators said, no, no, no, no. The little guy can't participate. And I think for the next few years, the little guy is not going to be able to participate in any security coin offerings. I don't think that's the long term end. I think once there is a sobriety and there are credentializers and there are underwriters in the system, we will see a crowdsourced distribution of assets that retail never had access to before. I do think that's the long-term end. I think we had a step back. The regular is like, no, no, no, no. So it's one step back for two steps forward. Absolutely. What's your most controversial thought in crypto? What's the one thing that you believe that you think most other people disagree with?

i think we're going to well i'm not sure they disagree with it i think in five years you're going to literally disrupt the entire advertising business oh really explain that i you know when you you look at the the the ability to take there's a company of atomic uh eric pullier's company um and you know he can create that Jack, a digital version of it, or Coca-Cola's. And imagine flying your airplane over New York City, a real airplane, and dumping out virtual Cokes. And me and you with our phone, just like Pokemon Go, we're catching those Cokes and we can now bring them in and convert them. And maybe it's a new Coke, a new flavor. And so we've just done this product launch by dumping a virtual good

that's a unique object that when I shift it from my phone or from my blockchain to the store, it disappears from my phone. Or it could be they did an experiment with butterflies. They had a bunch of butterflies around. If you caught one of the butterflies, you could get $50 to your charity. Or it could be a beer that if I give that beer to five people, it actually fills up and I actually turn it into a real beer. And so I think you're going to see gifting and advertising transformed when we have this grid out there where the the the two-dimensional world or the three-dimensional world and the virtual world kind of intersect yeah and china sees it i mean look all over asia this stuff's happening right the red envelope and wechat and all this stuff

is happening and you know the technology's there now uh there's a bunch of companies working on it wax wax has a new company they're going to literally take fancy tennis shoes and you can buy them and they're going to put them in a warehouse you know how the people trade these tennis shoes all the time uh it's a huge market of trading like fancy nikes well right now i got to sell them to you and you got to sell them to them what if we put the put them in a in a warehouse now we've got the digital form of them and we're just trading them around yep all of a sudden sit in a centralized database yes they're building databases to store tennis shoes yep and other consumer goods and so i think you're going to see that part of the world

shift much faster than people think yeah what's the most important book you've ever read ah that's a good question in the last few years it was sapiens sapiens i think you know hariri is brilliant this idea that humans are storytellers and that it's just a story it's such a powerful it's powerful on your individual journey like everything you think that's just a story i don't like i don't like answers the story you can convince yourself to try any food if you just unwind the story yep i was a picky eater growing up now i will eat literally eat anything my last thing was uni i don't like uni i like all sushi but uni now i think uni is literally the best thing on the menu and i literally was just it was just shift of

mindset like we're and so he he does that both on the individual but he does it on the societal basis yeah i thought that was pretty cool so before i finish up i always let you ask me one question but we have to talk about non-crypto stuff which is uh aliens do you think that they're real You think aliens exist? Go do ayahuasca and you'll certainly think so. Is there other life force out there? You know, there has to be. And I don't think I've seen any other than in my mind, but just my mathematical instincts tell me, yeah, we're not the only people out there.

All right. And so most people think about space, aliens, all this stuff. As I've asked this question to everybody, it's got me to think more about the depths of the ocean. Because we probably actually know less about the ocean than we do about space. Would you rather go to the depths of the ocean or to space? Like if you had to go to one, which one are you less afraid of going to? You know, it all depends on if we've got the Star Trek speed. Like, you know, sitting in a space capsule going through black for like 11 years to get somewhere, it doesn't interest me.

But if I get that, if I go to the turbo or hyperspeed. And you just show up. 100% space. Okay. But I love the oceans as well. I do. Yeah. I, I just, the bottom of the ocean scares the hell out of me. I think like what, what's down there. We don't know. I just, I don't know. All kinds of freaky things. Yeah, for sure. What, uh, what one question do you have for me to, uh, to finish it up?

That's a good question. So who's been your most exciting guest you've had on this place? The most exciting, um, or where you learned the most. Yeah, that's a really good question. Uh, uh i would you're gonna piss off the other 90 i'm sure no i'm gonna throw two or three out there uh one um two of the highest energy like most fun ones um were uh josh brown uh and uh um reform broker on twitter and uh jim uh o'shaughnessy so both of them came in very different you know kind of perspective jim literally came in and said i don't know i don't know i don't know anything about crypto like five times and said okay what do you want to talk about uh and josh just was being himself and uh when i asked the alien question he uh out of nowhere said ghosts are

more real than aliens which you know that's a strange answer to this day i give him a hard time about but uh but those two guys were the most fun i think the most uh impressive person was cz and it was really again just how he's built the company scaled it so quickly you know so many different countries um and then my favorite conversation was with uh peter mccormick who does the what bitcoin did podcast he came on uh we didn't talk about crypto at all and so i just gotta talk to him about his life you know he's got uh kids and and just kind of how he has um built a career lost a career rebuilt a career now he focuses full-time on this and um it reminds me a lot of like kind of your whole you gotta figure shit out you got a journey in

life and and kind of what that journey looks like and the the kind of heroics involved um that one was really, uh, really cool to, uh, to hear. And then you also said that you did a, what, six marathons in the Sahara desert. And I'm sitting here thinking about what crazy shit I can go do to beat that. I got a list for you. I'll give you afterwards. All right, man. Thank you so much. I think, uh, I think people are really going to enjoy this. So I'll do it again sometime. Awesome. Thank you. Another word from our sponsors at total. They're kind of like kayak, which helps you find the best flights, but total helps you find liquidity by aggregating decentralized exchanges and optimally routing trades for execution. Remember, that's Total.com

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