The Pomp Podcast - Patrick O'Meara, CEO of Inveniam Capital Partners: The Automated Future of Finance

Episode Date: July 12, 2019

Patrick O'Meara is the Chairman and CEO of Inveniam Capital Partners. In this conversation, Patrick and Anthony Pompliano discuss the issues with traditional financial asset structures, what it means to model financial assets for data and not code, how tokenized assets are currently being selected, and what an automated future of finance could look like. -----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. Patrick O'Meara is the chairman and CEO of Invenium Capital Partners. In this conversation, we discuss the issues with traditional financial asset structures, what it means to model financial assets for data and not code, how tokenized assets are currently being selected, and what an automated future of finance could look like. I really enjoyed this conversation and I hope you do 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, bang. I've got Pat here with me. Thank you so much for taking the time to do this. Hey, it's my pleasure. Thanks for having me on your podcast. It's fantastic. Absolutely. Let's start with your background. What did you do before crypto and tokenized assets? Sure. Yeah, I worked for Raymond James and then I worked for Bear Stearns. I started on derivatives desk. I ended up managing some technology portfolios at the interface of

PCS or the private client part of Bayer and the derivatives desk. And then I ended up leaving and starting my own firm. I ran that firm for about 14 years. It was called O'Meara, Ferguson, Whalen, and Conway. And in a part of the market, a very specific part of the market, faith-based donation-driven nonprofits, we became kind of the global leader in that. So as an example, we were the largest lender to the Catholic church in the world. Um, we had about 42 diocese in the United States. And so whether it's a, uh, Hasidic Jews or Catholics or Mormons or an Amy Zion or city church planting, uh, we helped, uh, the markets understand the credit and what are the true cash flows and the margins of those people. And we had a, an asset management

business and a, uh, a debt business and a consulting business and a fundraising business. So that was a fun business for about 14 years. I sold that. I became chief investment officer for a university, one of my clients. And that was less fun than it sounded. So I ended up leaving after about a year. And I started managing the private equity for the third generation of a Forbes 400 family. And while I was doing that, we really started looking at how can we facilitate the coalescence of physical settlement debt or non-bank lending coalescing around a series of technologies as we believe that banks were dying, right? And so as we did that, that's in, I think, 15, we began looking around the world. We discovered blockchain. The family did not want to put the money into these deals like I did and with the same focus. So I ended up buying the vehicle that we'd done the diligence in.

And I started Invenium. And so Invenium, we built our MVP. By May of 17, we did some tokenization. We did about eight transactions in 2018. We think we were the first people to do commercialized debt, commercial debt on the blockchain. That was February of 18. We did about 50 million in total in 18. And then now we're in the market hoping to do some larger amounts, hopefully somewhere around 500 million to 700 million in face amount paper this year. Got it. Absolutely. Let's start with the problem,

uh kind of the structural problems in the legacy financial market maybe maybe describe like why you think this is a um you know a problem worth going after and kind of what those problems that you identified were yeah absolutely so you know that you know the banking market has gone through an enormous amount of changes and uh there's been enormous consolidation not just in banking, but in the banks, when Glass-Siegel came about, we're literally, starting in 99, all of the big banks, on average, the top four, who have about 53% of the deposits, they, on average, bought 75 banks, right? And so, you know, big institutions, Bear Stearns, where I worked, right? For Chicago, you name it, Montgomery Securities. These are just fantastic institutions

that were innovators and served markets really, really well. They were bought up. And what happens is that as the bigger these banks got, there was a race to serve bigger and bigger clients and the middle market was not served well at all. So not only was investment banking, The shops all over middle America, whether Roberts and Stevens, all of these great shops all over middle America got bought up and they either the really good capital markets talent moved to the coasts or they got turned into annuity salesmen. And so what happened is the super regionals kind of started to fill the bank, fill that void. And what happened is following the financial crisis, they were no longer able to serve that market. And so the middle market has not been served well at all. And so you have enormous amounts of money being raised in funds to serve middle market lending. And everybody from BlackRock has gotten into this and KKR has gotten into this. And you have these big business development organizations like AlRock that have raised 18 million that are lending. But the reality is they don't have the coverage across middle America.

And what we wanted to do is say, how can we empower all of these smaller borrowers having more appropriately priced access to capital that on a risk adjusted basis is is more appropriately priced? And so the idea was, A, we wanted to decentralize the construction of financial instruments and then the ability to embed enormous amounts of data of the underlying assets associated with those financial instruments that are being created. so that they can be compared to transactions on an apples-to-apples basis, and you can have an effective digital global marketplace. And to do that, you need good data that's validated, and you need to be able to then compare that data to empirical price points as transactions are happening. And we are doing that with private debt and real estate equity.

So this is income producing, data rich, low frequency trading assets. And if we can do that, we think we can significantly compress the illiquidity premium on those types of assets. And we can do a number of other things to move the needle. But that's where we're focused right now. Was that a little bit too long of an answer? No, makes sense. So let's talk a little bit about this difference between tokenized assets and security tokens. How do you delineate between?

Yeah, so a security token is something where that digital instrument ensures that it is a security. And what is inside that might, in fact, be a airline miles program or an email program or utilization of cloud storage or all sorts of different things. But based on the mechanism for monetization of services and utilities, you need to comply with securities laws, right? Well, that's its own thing, right? And there's lots of people who are doing it. And there's reg tech and identity tech needed to facilitate that. But we're focused really on something on the other side where we're talking about the tokenization of securities, meaning these are already financial instruments that we are turning them into digital instruments. And so they're a security whether they exist on paper or they exist digitally. And what we're trying to do is use the tokenization function in order to facilitate higher functioning of the existing financial instruments. And so it is a financial instrument and it is a security, whether or not it exists digitally or on paper. But the digital form of it is higher functioning that we think can be socialized in a more efficient manner.

It can be connected. Digital ownership can be connected with the digital identity of the assets on commercial real estate. They talk about the digital twin of that asset. And right, all of that data is being validated real time, utilizing the blockchain. So think all the IoT data, all that kind of stuff. And that is a data rich, high functioning instrument that makes the financial instrument perform more efficiently, but underneath it, it actually has a financial series of assets. A security token may or may not have assets underneath it. It may or may not be a security other than that's the form in which you want to distribute it. And that really is something else.

What we're focused on with the identity tech and reg tech is not something that's going to make this thing dummy proof because we don't have 2,000 or 5,000 or 10,000 investors. We might have seven or 10 investors where you have financial institutions who are putting in bids for 5 million to 40 million to buy pieces of these assets. And if you're doing that, you don't need somebody holding up their passport and wiggling it in front of their phone to validate their identity, right? So we can use what we call sneaker wear, right, to do that basic functionality because you're not solving a problem that actually exists in the market. You're just making something more complex. But if we can actually solve a problem in the marketplace,

meaning all of this data associated with that instrument is not validated and you constantly keep having to call in third party oracles to validate it, well, that's what the blockchain is built to serve. And so if we can use the blockchain to validate all that IoT data and connect it with the digital ownership, people who use our software, whether they're big property management companies or somebody like that, can have far more efficient pricing on the assets that they manage on behalf of their clients. Got it. And so what does that mean in practice, right? For the individual or the organization that's looking to be on the other side of the asset, the investor, like how does that change? So that's really interesting because we've evolved

on this point over the last 24 months pretty dramatically, right? Because we were first building digital instruments that have this financial capability, this capability for all this data where we're able to see the environmental data. So talk about equity in the real estate, Right. So what we're tokenizing is the interest in a limited partnership and people are buying that limited partnership interest and what they can see their token is their access point where they can see all of the data on a real time basis that's being generated from that building. And so literally, it is your passkey to gain access to see data that's been verified, timestamped, kind of this hypernotary function, and then indexed by the blockchain. And you can see all that data in what's called an S3 or kind of like a data bucket, right, the storage of all that data. And so your token gains you access to that. But what we do is literally we can see the environmental data, the atmospheric data, the power utilization, the foot traffic, the security fobs, how many people are actually coming in and out of the various different floors, the relationships with vendors, the relationship of that asset to what's below it, meaning to the municipality, whether you're talking about certificates for construction or occupancy or utilities or above

it, the relationship to the tenants. And all of that data is coming in and the smart contract, which also governs ownership, is uniquely writing that data as a timestamp. Just like when you come in to the floor of a factory, right? And you put your time card in and it puts the timestamp on that. Literally, this is timestamping, but then also in kind of a librarian function, we index this data, make sure that the data format is in ISO 8601 compliance so that it's clean data and it's indexed and you're able to find it. And the advantage of that is code, as you know, is brittle and short-lived, right? So Solidity right now is a new thing. It doesn't even have a real debugging tool. And, you know, soon there's going to be Solidity Plus and Solidity Plus Plus and Solidity

Sharp. And if you model transactions as code and the code is evolving, you're going to have to reprogram that. But data is robust and it lives. And if all we're doing is using the code to make the data more functioning, high functioning, you can replace it less frequently and it's easier to do so. And so what we're doing is making sure the data that comes out of these assets, right? So I can tell that sensor number eight from the 42nd floor of this building is driving this information that's coming in. And so I don't have to hire somebody like a CBRE or Cushman and Wakefield every time I want to reprice my data. I'm going to be able to validate that this information actually is coming from this place is indexed it's time stamped and uh and

it's structured in a way that it works on a global digital marketplace got it and then let's talk a little bit about this idea that um you know these financial instruments that you're creating um you've said before that they are modeled as data uh not necessarily as code like elaborate on that Sure. When something's modeled as code, literally somebody is writing code. And the way we think about it is it's like a blank stock certificate where you've got four places where you can write some information in. Or when you go to the car dealership and you lease or buy a car and there's that long piece of paper that has 20 places that data gets written into it. But it's the only place that the printer can print. That's what modeling a transaction as code is. You build code

to support data coming in in various different places. And if you don't have data that fits into those fields, you can't really use that highly structured asset. And meaning the parameters of that really are written in code by a programmer in Solidity. When you model it as data, you're taking all of the data points from these physical settlement transactions, private credit and real estate, where when you go to a settlement of a piece of a real estate deal, you got 400 pages of contracts and you take your copy of the executed agreements. That's literally you taking those documents home is the form of settlement. Literally, what we're doing is all of those documents are notarized on the blockchain with the hash and the cipher and a time and the data

associated with it in an ISO 8601 standard fashion, but also it's indexed so you know where it exists. So all of that data exists, but then you can put code on top of that data to make that data higher functioning, meaning in the legal documents that says you need a compliance certificate every quarter or every six months. And what happens is you can use call outs to seek that data, or you might have an API being driven where you're collecting all this information in. But when you structure something as code, where the code is the law, that makes sense for high volume, low variable things like consumer loans or auto loans or something like that, where there's very little variability other than the person's name and the amount and the interest

rate. But when you're talking about capital markets, you have to structure those loans Because each deal is unique. And let me tell you, the lawyers and the structuring agent, the investment banker, the credit specialist, the accountant says they put those deals together. Each one of those deals is unique. And what we're doing is saying, hey, let's put this out there in a way that's going to be robust and last for 30 years. so I'll give an example right what do you think about in 1993 when data was put on the internet right Excite could read that data when two years later Netscape could read that data right three years after that Google could read that data but you know over time all of the different browsers could read the data because the data was put out there in a format that was robust and what we're doing is we're saying we want to preserve the data, meaning the legal contracts, the actors, the actions, everything that induced you to make the investment, but then also the performance of

the instrument and the performance of the asset underneath that instrument to evaluate that security continuing to not only perform, but to price correctly in relationship to other assets around the world that was a really long answer does that make sense no no it does make sense and i guess part of this is you know the structure of these assets um i think is important but for the detractors right if i play devil's advocate for a minute i think the detractors would say uh you don't need tokens you don't need a blockchain to do this what would your rebuttal to that? Well, I mean, you have to say what's the point of a distributed ledger, right? It's to do away with third-party oracles, right? And if we can use the distributed ledger as a mechanism

to validate data, right, that is coming out of IoT devices from buildings, you're using the trust function of the distributed ledger to your benefit. In addition, the ownership and the ability to clear and settle quickly is enormously valuable. But as you know, clearing and settling an asset has no value and it doesn't make something liquid unless you have bids. So how do you generate bids? You have to have data that exists in a fashion that you can socialize in order to generate bids. So you have to have it through the validation, right? And so we do believe that a tokenized instrument that you can physically settle or you can accept it as a digital instrument that relies upon the blockchain where you don't need third-party oracles is what

is going to democratize and you're going to do away with the bottlenecks, not only with the creation of financial instruments, but doing away with the bottlenecks as it relates to distribution credit function and validation. And what's going to happen is we're going to create an economy where the on-ramps for the creation of financial instruments, the validation of those instruments and the pricing of those instruments can become democratized. And right now, if I'm selling a piece of real estate in Miami, if I know a guy who knows a guy who might be a buyer, I can reach out to him and maybe sell to him. But if I can model that as data and I can find all the global buyers of assets who like that particular type of building or private credit, and the right buyer

might be in Scandinavia, in a global digital environment, that can be connected up, right? Where matching algorithms and search algorithms and machine learning can do this because we can see the data we can structure the data it's been validated utilizing the blockchain you create apis and then you allow people to use that data to match up and what we're doing is we don't think the the world in the future will be broken down between public and private or listed or not listed it's going to be data rich and data poor assets and data verified and data ambiguous assets right So the asset that's data rich, where the data is verifiable and you're using the blockchain to do that, will trade appropriately priced. Got it. And so what does that do in terms of the impact on what I'll call infrastructure, right?

So when you start to change the way that things are priced and the way that investors actually interact with it, does that change the exchange business? Does that potentially cause a lot of problems for people like the New York Stock Exchange? How do you see the ramifications or the tertiary effects? Sure. Yeah. And so let's talk about that, you know, kind of in two or three steps. Right. The reason we went here, which is the physical settlement market, is because it is the easiest market to be an early adopter of this new technology. Right. Because we're not interfacing with an enormous number of existing systems that we have to integrate to like legacy systems, because literally you're physically settling these assets. Right. So we're skipping over landlines going directly to cellular. Right. And so that's one of the things that we're doing. And one of the reasons we went here is because, A, we think that this is a great place where we might have early adoption. But also the spreads are pretty significant for private credit. Right. We think we can move the illiquidity premium on these things pretty dramatically.

And the way we do that is we have good data that we're going to be able to compare in a highly sophisticated and efficient model that has empirical evidence coming into it, which will allow us to move from an illiquid asset in an accounting and under FASB 157, it would be called that moving to a type two asset from an illiquid asset. And there's three types, you know, one end for real estate, as an example, you know, a liquid real estate asset is a REIT, which is expensive to get and maintain. And at the other end, the illiquid is just a limited partnership, which is easy to set up, but is illiquid and there's no comps for pricing. Well, if you use our technology, literally, you can have this data that's verified, that's in a model that you can compare with empirical data points happening when other buildings are trading around the world. we think we can get those to become what are called marketable alternatives or type two assets on FASB 157, which is going to dramatically open the door on who can own these assets, right? So 40 act funds are going to be able to do that to own these. Pension funds are going to be able to own these, et cetera. Well, then there's a pricing functionality where there needs to be

pricing that is posted, informed by these models. And we think technical listings on exchanges, global exchanges is where you're going to see these private illiquid assets get listed whether it's in Bermuda the Deutsche Bourse Singapore Hang Seng people like that that will be listing and serving as a data feed which is what exchanges are doing more and more these days and you get the halo effect of saying I'm complying with all the registration requirements of being on listed on one of these entities. And what happens is you're going to see these data-rich private assets that where you see the pricing on an exchange, but we believe the future of the world is not on these ATSs or these smaller exchanges. It's going to be an OTC world with enormous number

of nodes that are trading back and forth across each other, but where there's pricing that is verified pricing on certain exchanges that serve as data feed services, which in fact is what these guys are doing. And these exchanges are very excited because the idea that suddenly you're going to have private debt and real estate listed on the exchanges, there's going to be a bunch of listings. And once you have a certain number of listings, then you can start creating indices. And once you create indices, you can create derivatives and other financial products. So these exchanges are very excited about that. And those are the guys we're talking to about listing of private assets.

And this is called a technical listing, but where it's going to be traded away from there. So it's a non-exclusive listing. And we think the future is an OTC world, but where there's enormous data because there's going to be lots of nodes, whether you're talking OTC desks, et cetera, but where you have engines

that are gathering information on pricing and seeing where there's opportunities for arbitrage and mismatch, etc., because in the future, when you want to buy debt, private debt, public debt, whatever it is, instead of an Asian pension fund who wants to own some of that middle American debt that it doesn't originate, right now it's buying a CDO or a CLO. In the future, they're going to be writing an algorithm that is going to be reading data on loans as they're created and literally hoovering up those loans as they're being created. And the question is, who's going to have the best data that's going to have the right structure? And

people, these big pension plans or serial buyers are going to be hiring investment banks to write the algorithms to find the assets that hedge the risk for their macroeconomic views that they want to be represented financially in the form of an economic thesis that they think is going to drive the greatest return. I'm sorry for the really long answers. No, it's important to understand it. We talked a lot about kind of the data of the assets, but I want to have you elaborate a little bit on like, where do you think or what types of assets are the first types of assets to kind of get put through this process? And then how do you either you guys or others go about selecting the right assets? Yeah, fantastic. Yeah.

So our first eight were kind of right down the fairway, you know, multifamily housing. We did asset backed stuff that's throwing off a steady coupon. Right. And we are trying to get things that where people are getting used to a new structure, we don't also want them having to get over a hump as it relates to, you know, a real tough credit to understand or get behind. So we were trying to be, you know, right down the center of the fairway, whether we're talking multifamily housing, whether we're talking about student housing, whether we're talking about commercial real estate for offices, you know, in urban, in the urban core. Right. I mean, that's what we wanted to do because we want to get assets that are the getting over the credit function and buying the asset is going to be less difficult so that the difficult part of the adoption of a new structure is going to be easier for them to do. So that's what we've been focused on, right? Trying to get kind of real meat and potatoes. And it's, you know, we're, so we've got a student housing deal for 78 million, but a single financial institution, one of the top 10 municipal underwriters in the US is just taking that whole deal down. we've got a um 55 million dollar financing for water pipeline and we've got two term sheets for

that uh that are going to be our kind of our anchor uh investor and then from that we'll raise on top of that um the additional but that'll be about 55 million um you know and you know that's thrown off kind of a 12 coupon but you know it's real assets with several hundred miles of pipeline that water's flowing through right and so these are these are core assets that we're doing that are income producing, data rich, low frequency trading assets. That's what we're focused on. And we are then going to, we're going to be in the business of helping people who have existing portfolios of assets, tokenizing their existing portfolio. And so while there will be some primary issuance, we think that that's really going to,

the primary issuance for new things is going to take off in a year or two. But where we're going to see the real growth is where we have current owners digitizing their existing holdings so that they can begin to harness that data with all sorts of data tools that are actually already out in the marketplace. So our first user of our technology, third-party user, is a portfolio lender who's going to be tokenizing 425 of their existing loans. And then the following quarter, they're going to start 100% of all their new loans that they originate are going to be digital. They're going to be tokenized assets that they can hold in a crypto wallet, or they can hold as a paper asset, and the token is going to be an authorized but unissued token.

So that's kind of where we're focused. Anthony, does that answer the question about kind of where we think that the the beginning of this begins that really starts to take off absolutely and i guess as part of that right how much of this is pulled versus pushed uh to these investors right if they're the ones who are writing algorithms they're out looking for the assets they're looking at this data um how much of it is uh the the assets are kind of um being presented and then people are coming in and getting them versus let's say uh you know in the legacy world um assets are being put into certain types of vehicles or funds uh and then really being marketed to uh to investors like do you think that marketing um kind of goes away uh after you go through this like

site or asset selection process and and um and actually get the data or do you think that uh maybe that stuff actually becomes even more important so yeah we actually think it becomes more important right there's an old saying on wall street right securities are never bought they're only sold. And we believe that you're going to have to sell these things and you're going to have to do that in an efficient manner, writing towards algorithms that you think you want to buy. So as an example, I'm in Topeka, Kansas, and I want to start a cupcake shop and I'm going to start my own website. I can do search engine optimization towards what I think the Google algorithm is. And literally, I can get my cupcake shop on the first page of Google for great

new cupcakes within a week, right? Because there's an algorithm that I'm managing towards. Right now, the only way I know what MetLife and Prue are buying from fixed income instruments is I literally have to have a guy on a fixed income desk who's picking up the phone and saying, hey, Tony, what are you buying this week? Do you know what I mean? And tell me about what you're looking for, etc. We think that MetLife and Prue and all of these other big buyers are going to publish the algorithms of what they want to buy. And people are going to build financial instruments with the end buyer in mind that is data driven. And now, of course, there are going to be qualitative aspects to this that need to be drilled down. And you're going to have to get brand names of people who are going to do credit assessments of the management teams and whatever.

or subject matter experts who are going to look at the, you know, the quality of the construction or the quality of the deposits or whatever it is, right? You know, if you're looking at mining, and there's going to be qualitative validations, you know, with rating agencies and other people like that. But really, we believe that this, it's going to be both a push and a pull, but people are going to be able to literally design financial instruments with the take out in mind. And what that does is it takes away the power of the Morgan Stanley fixed income guy who knows how to build the financial instrument because he's got somebody covering the financial buyers, whereas the smaller security shop in Kansas City or Des Moines or Kampala or wherever

it is, right, who wants to put a business into the global economy and get correctly priced and efficiently priced capital. In fact, he's going to be able to know what the benchmark that he's trying to hit is because those algorithms are going to be published. So we think it'll be push and pull and people are going to build things. They're going to have to push it there, but they're still going to have to pitch. You know, sales will never go away. It's just going to become more efficient and more targeted to the right the right types of buyers and there'll be less you know spraying of of uh marketing does that make sense it does what do you think the biggest challenge is for you guys moving forward so there's a lot of challenges one of the biggest

challenges is where we were building them first as digital only and we kind of spent an enormous amount of time where we have the ability now to either physically settle or deliver as a digital instrument. That took us a long time to get to that place, both in a form of documentation and technology. And so that allows people to dip their toe into the digital world a little bit more. And the way we talk about it is literally there are 10,000 asset managers of size in the U.S. And in the next five years, every single one of them is going to buy a first digital financial instrument. And we want their first to be with us. That's data rich and they're happy that they own it because it's got more functionality than just buying it in paper. And so that's, A, it's going

to take time. We've got to build an ecosystem that around us where people work together well. Right now, the blockchain ecosystem is not working well together. There's a winner-take-all attitude, and people are not helping one another, and they're not trying to build an ecosystem that's supportive. And so, A, that's a challenge. B, I think that there was a lot of hype without a lot of delivery of real financial transactions. People were more focused on delivering a digital instrument than delivering a digital instrument that represented a really good investment, right? And so getting over some of the past ICO headaches and associations, which is one of the reasons we say we're in the tokenization of securities and we're in the digital instrument business. is because of that. So I think those associations and facilitating and working with other people in

the ecosystem, those are our big challenges right now. But I have to tell you, people in the private debt space and people in the commercial real estate market, they're really, really, really interested in seeing a working functioning model. Now, the other thing is everybody wants to be the second buyer, right? There's very few people who want to be the first buyer. And so, you know, finding, being on the bleeding edge of this, right, we've got to find some of these first buyers for these, you know, real, you know, sizable institutional assets. And so I think, I think I've probably over-answered that question. Oh, I think, I think it makes a lot of sense. And part of the, you know, the evolution here to me is you're really going from a world where

data is, those who hold the data are seen as the powerful people. And it is up to the job of the investors to go find the data as the first step and kind of put together various data sets to make a decision. So you see hedge funds, for example, they're doing everything from looking at parking lots, satellite shots of cars in the parking lot, number of cars and changes over time, um, to buying credit card data, et cetera. And so they're trying to find all this dispersed data and bring it together. Um, I think when you have a world where everyone knows where to find data, uh, you probably get much more efficient markets. Um, and on top of that, uh, I also think that, uh, you get a much more automated market. Um, and so what that means is you get more accuracy

of the analysis, um, because everyone's operating off of the same, uh, same information, um, which Which is, you know, it's something that today seems a little bit like a pipe dream, but I actually have a high level of confidence is something that can happen in the future. It really is. And we are going to see we think that there's a convergence of a number of different. So, A, it's data, right? Data driven creation of financial instruments. Right. And the blockchain really makes that possible and in some pretty core ways where these digital instruments exist and where we're going to see real transformation of the financial services market is when you see markets where people are not banked right now or the financial services markets don't serve them well. you're going to see people creating financial instruments in those other areas and you're going to start to see crypto acting as the capital that's financing those right and so this non-bank lending uh exploding an example i always use um is that i think is going to be one of the

early ones you know knock on wood in 2020 2021 where we're going to be able to go into a place like Spain or Italy, and literally we're going to be able to, where they don't have a home mortgage market that is banked, right? And it's why home ownership is so low there. And lots of people live in apartments forever and there's owner financing and those types of things. I think the creation of digital financial home mortgages where Bitcoin and other crypto serves as the tier one capital for several hundred million dollar portfolio that's denominated in a stable coin, you're going to start seeing these underserved people becoming digital natives to the crypto reality. And when that happens, literally you're going to explode financial services

because the ability for people to utilize crypto as a form of tier one capital, because financial instruments are being created in markets where financial services do not serve people well, you're going to see people moving to a currency that they trust more than the currency that they live in because they believe it's being manipulated. And when that happens, financial services are going to be remade completely. And so that's, I think, the future of where we go over time. And I actually don't remember the question that you asked me as I went off into my future prophetic view of how the integration of crypto with digital financial instruments is going to really remake and be a catalyst for the massive remaking and re-envisioning

of this. Because I do believe that people's dissatisfaction with who are being underserved is going to cause them to go to alternative structures, meaning digital instruments and cryptocurrency. And when we can serve at the nexus of capital markets, data validated on the blockchain and crypto, that is the position that Invenium stands in. And if we can do that, the movement between the new economy and the old economy, where we're solving old economy problems in new economy ways, that's the mechanism for some pretty meaningful

global growth and change. Absolutely. Before I finish up, I always do rapid fire questions. What do you think the most important company in crypto is other than NVIDIA?

Can I not do a company? But BTC is. BTC and Bitcoin Foundation. Bitcoin is the most important thing in blockchain and in crypto. And I can give you a couple of others if you want, But I'm going to just go with Bitcoin and Bitcoin adoption is the most important thing as it relates to that.

Sorry, maybe that was not a good answer. No, look, I tend to agree that Bitcoin is by and far the king and will remain the king for a long time. So I think that's a good answer. What regulation would you change or improve if you could? So I think that there's a 704.2 in the treasury and how that's viewed by the service as it relates to allocation of capital gains. As it relates to crypto, I don't hear a lot of people talking about it, but it's actually a meaningful impediment to crypto being used as a form of investment into pooled products, specifically around real estate. And we need Treasury to talk to people specifically about how the allocation of capital gain in a highly appreciated asset, whether that will be counted towards good income or bad income, that is actually a real issue that is affecting crypto and the ability for us to take that in. And and and so I think Treasury and SEC getting on the same page as it relates to crypto is enormously important.

And they're actually going to follow the legislature. And so we need we need we need our legislature to really talk to us about or weigh in and come up with some good laws as it relates to how cryptocurrency is perceived as a form. anyway sorry that's that's my quick answer what do you think is your most controversial thought in crypto the code will never ever be the law ever ever ever ever the code serves the law and the and when these deals break and they get adjudicated in fact uh which is going to happen no judge is ever going to say what did this coder intend when he wrote this he's going to say what did the parties believe they were agreeing to and he's going to look for a natural you know language uh document which is should be a contract and that is the law the code serves the law and

the law is the master full stop the other thing is code is brittle data is vibrant and long-lasting there what um most important book that you've ever read i'm gonna go with the bible how's that Is that OK? Am I allowed to give that one? Of course. It's probably I would say that is the most repeated answer. Right. In terms of of frequency. So let me give you let me give you quick four answers on other ones. Right. I think the Federal Reserve, America's bank, is a really instrumental book in understanding the cycles of what was happening in banking that led to the Federal Reserve. that really is analogous to where we are with all these crazy cryptocurrencies and what's going to happen here. And I would say that that's an important book right now. Scrum, I think that from Snow Crash as a book of understanding how the young millennials view the world of the

hardware, software vision of who they are themselves and the future of the world. That was kind of a prophetic book, Snow Crash was, even though it's a hard book to read for the time. I mean, there's, you know, what's another, you know, the legal concept of money is, which just came out, you know, that's a pretty fantastic book. And then I'm going to, gosh, I would probably – I'm going to stop there. I'm going to stop there. Everything by Mises. Can I say everything?

The anti-capitalist mentality should be read by every person who supports cryptocurrency in the world. What about aliens? Believer, non-believer? Are they real? uh my brother-in-law is a legal resident alien from canada does that count no like actual uh aliens from outside of earth uh i haven't seen one yet okay so non-believer agnostic all right that's a politically correct answer that means that uh you don't believe but you don't want to say you don't believe i yeah i don't the i don't i don't yet care because that

is that a fair statement i end each one uh letting you ask me one question what uh what question you have for me how do you think harbaugh is going to do this year with michigan football and you think we're going to beat ohio state i'm a big urban meyer fan actually from his days in at florida and uh when he was at ohio state uh although i do like harbaugh uh i i would always go with uh mr meyer there but now that he's gone um i think that uh the jim harbaugh is he's one of a kind for sure and one of my favorite uh stories about him is him going to recruits houses and sleeping in their living rooms um which is uh pretty ridiculous but uh anyone is willing to do that you know a little crazy and uh he's probably got a shot at success

you know anthony when we started this you said this was uh not going to be a contentious interview i'm sad that this went so downhill so fast yeah look it is uh if it makes you feel any better i'm a florida gators fan and ever since urban meyer left he took uh everything good with the program with them uh we've pretty much not done a single thing in the world so let me ask Yeah. Let me ask you one other question. Who who do you see as the biggest innovators in the blockchain space who are going to move the needle as it relates to capital markets other than Invenium, of course? Satoshi. Good. I'll go with that answer. That's a good answer, actually. That's a great answer. it's just the invention of a blockchain which is simply triple entry accounting um and uh really

lays the groundwork for uh accounting system that can operate in the automated world i think is probably one of the uh greatest inventions of our time uh it is highly uh under appreciated right now i think over time we will look back you know um kind of increase the uh the allure um that people have or kind of the importance that they put on it and uh you know it's one of these things where it just takes time right people got to see it actually put into action in order for uh for them to be able to uh understand what um what the importance is yeah yeah great great great answer great answer um hey thanks for having me on your podcast this has been great fun for me absolutely no look i appreciate you taking the time to do it and i'll do it again in the future

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