The Wolf Of All Streets - Solving the Crypto Price Problem with Robert Materazzi, CEO of Lukka

Episode Date: January 12, 2021

Robert Materazzi is a US Marine who eagerly attacks big problems, as evidenced by his time at PWC and at Lukka. Robert discovered crypto and believed in the sector's potential, but determined there to be a missing link in crypto markets with regard to fair market price evaluations. While it may sound simple to determine the price of a crypto asset, it is quite the opposite - and over 160 crypto firms have leveraged Lukka’s products to accurately price the assets that they own for guaranteed accuracy. When billions are at stake, every penny and dollar matters. Scott Melker and Robert Materazzi further discuss, working with the S&P, providing the most precise indices, how a fair market value is determined, avoiding artificial volume, catering to 160 crypto funds, the accessibility and liquidity of tokenized assets, staying compliant with regulators, crypto tax audits, Lukka Prime, Series C investments, Bitcoin as a gateway drug and more. ––– RSK/IOV Sovryn is a decentralised Bitcoin trading and lending platform and one of the first Bitcoin-native DeFi platforms. Earn interest on your Bitcoin and get paid for lending assets, with up to 5x leverage on long and short trades using USDT, BTC and bitcoin-backed stablecoins. All with no KYC. Click the link below to get your first month’s trading fees for free. Be one of the first 100 and claim a $100 bonus! Visit Sovryn.app/wolf for more info. --- VOYAGER This episode is brought to you by Voyager, your new favorite crypto broker. Trade crypto fast and commission-free the easy way. Earn up to 9.5% interest on top coins with no lockups and no limits. Download the Voyager app and use code “SCOTT25” to get $25 in free Bitcoin when you create your account. --- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by Blockworks. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworks.co

This episode is sponsored by Voyager and Sovereign. Stay tuned for more information on both later in the episode. What is up, everybody? I'm Scott Melker, and this is the Wolf of All Streets podcast. Today's guest is the CEO of Luca, a company that has been making headlines of late after partnering with S&P Dow Jones to launch a global cryptocurrency asset index. S&P Dow Jones will provide branded and customized indexing and benchmarking solutions supported by Luca's proprietary crypto asset pricing data. To that end, Robert Matarazzi is the ideal guest to discuss the future of crypto trading and products, how crypto can reach institutional and mainstream adoption, and at what level

the big players are already seeking exposure to Bitcoin. After all, he's the man who is providing the data that can make all that happen. So Robert Matarazzi, thank you so much for coming on the show. Thank you for having me. So before we get into the questions, once again, you're listening to the Wolf of Wall Street's podcast where twice a week I talk to your favorite personalities from the worlds of Bitcoin, finance, trading, art, music, sports, and politics.

The show is powered by BlockWorks Group, a media company with over 20 podcasts in their network. You can check them out at blockworksgroup.io. And if you like the podcast and follow me on Twitter, you can check out my website and join my newsletter. You can do both of those things at thewolfofallstreets.io. So now to get into what's actually important. So unfortunately, Robert, I heard that you're a seminal. I'm a gator. Should we stop the interview now or can we make it happen? Yeah, I can't really brag about our football this year. Yeah, it's getting harder to brag about ours this year as well. But what are you going to do?

So I want to dive right into the S&P Dow Jones news. Can you tell us how that came to be and why it's important? Sure. We've been in conversations for S&P throughout this year to help support them. I mean, generally speaking, across the industry, we're seeing a lot of the traditional logos that support financial services start to open up their risk appetite towards crypto assets in general, depending on what their business is. And so we went through, as you can imagine, some very, very detailed data quality type conversations and checks to make sure that how we're catering to the crypto industry meets the same standards that traditional financial services is used to receiving.

And so that's a big part of our relationship. And from there, we're going to be supporting them with a couple of our flagship data products, specifically Luca Prime, which is a pricing and valuation product that values crypto assets to determine a fair market value. And then additionally, our reference data, which normalizes all of the various ticker symbols among other data elements across 6,000 plus assets. So those are two critical data sets in order to create derivative data products, such as indices or benchmarks, marks, et cetera. And so that's what we're going to be supporting, I think. It's interesting because a normal stock or bond or something that's traded obviously has one fixed

price, correct? And that price is consistent because you're going through a singular broker at the end of the day to make a trade or an exchange. Not so much the case in crypto where we have exchanges all around the world, often different prices. I mean, in 2017, there would be days where Bitcoin was $3,000 more expensive on one exchange than another. So is that what the major challenge is here is to find an accepted and fair price for an asset? It is. That is absolutely the intent. I'll say some of the underlying complexities go a bit deeper than what you just described. So hundreds of exchanges, hundreds of trading desks, lots of activity that's

peer to peer, right? Just, just, you know, individuals interacting with each other's and very, very fun, various funds. But another key thing is, is people are interacting with thousands of these crypto assets and they're trading them for one another. And so that's another key difference between what we see with like securities. I mean, closer to the FX markets maybe, but there's still differences from that. And so when you trade one asset for another and fiat, so like US dollar is not part of that transaction, we're missing some of the common data elements that are required for reporting or determining fair market value. And so that's one of the many uses of Luca Prime.

And how do you actually do that? Do you aggregate it all and come up with an average? Or is it, I'm sure it's much more complex than that, but how does that actually look? Yeah, we actually very deliberately do not come up with an average. That is a key thing, because that would not be fair market value in short. So what we did is we designed a proprietary methodology that takes a number of qualitative and then quantitative factors and applies them to a series of, we're using 14 exchanges today. So for Bitcoin, which is offered on all of them, there'll be 14, potentially 14 different prices for Bitcoin.

And what we do is using those qualitative and quantitative factors, we choose an executed exchange price that represents the primary market. When in crypto, there's an absence of a primary market there the markets are open 24 7 and so we designed these factors to align to gap and ifrs standards um and uh and in short we take the qualitative ones which you can imagine um weed out some of the particularly some of the foreign exchanges that have a lot of artificial volume or watch trading or whatnot that inflates or deflates the price and then from there after we've we've taken the qualitative ones out of there's a number of quantitative factors that have weights assigned to them you know volume or liquidity is the most common one that you can imagine. And that helps us determine down to very finite intervals

what the price is for each asset at that point in time. It's really interesting. How do you identify the exchanges that are participating in wash trading or that have fake volume? Is that something that you have to go to a third party to assess or is that something that is have to go to a third party to assess? Or is that something that is part of your internal? Those are more symptoms of lack of regulation or lack of other standards. So we more focus on those aspects and not specifically the like identifying

artificial volume. Got it. So why now? Right. I mean, you obviously talked about the fact that S&P, you've been in talks with them all year. But why now are we finally seeing this come to fruition? We're seeing the news. And, you know, why did they choose an index product? Sure. I mean, that's what they're known for. I mean, S&P is a trusted brand that supplies information in the form of indices and other products to, and I don't want to speak for them completely here, but, you know, they're a very trusted, reliable brand that people are used to trusting here that support indices today. And so this is really just expanding what they do today towards this new asset or technology. And, um, and to answer your why now question, um, there's a lot, I mean,

we've had these products for some time. We launched them formally, um, this past January, we were using them internally before that for several years. So they've, you know, these are not brand new products. They've been tested for many years and they're actually an integral part of our software products as well. And what we've seen over the last several years are standard setters, regulators, government agencies, all mobilize stronger efforts and formalize, you know, everything from guidance to FAQs and other releases like the OCC allowing banks to custody crypto assets, right? Huge milestone for the

industry. And so we're seeing all this kind of culminate right now. Honestly, most of the financial services companies have been working on something related to blockchain or crypto assets for many years, but it's taken place primarily in innovation labs. And so right now we're finally seeing it shift from innovation labs to business units that are driving revenue. And those are the partnerships that Luca is going after. It's really interesting because we've obviously in the last few months seen a lot of institutional interest in Bitcoin itself, right? I mean,

MicroStrategy, Square, MassMutual putting reserves into Bitcoin, but haven't heard as much talk of the other cryptocurrencies, right? And an index obviously covers the rest of them. So that's where I guess I'm trying to figure out why their priority is an index rather than something that focuses, you know, like a grayscale product sort of, but just on Bitcoin, which I guess would be viewed as safer. Yeah, I mean, at the end of the day, there, I think there's a use for the full spectrum of all this, right? I mean, there's brand new funds, for example, that don't know anything about cryptocurrencies or crypto assets, I expect that they're going to go with the safer ones that they're used to seeing. And right now, you know,

Bitcoin is the Kleenex of crypto assets. It still represents the majority of the volume globally. And it's been around the longest. So it's natural. It's also, you know know similar to ether and some of the other um you know top 10 cryptocurrencies are are kind of the backbone of the ecosystem so for there's many of the users will um will purchase one of these cryptocurrencies on what we call an on-ramp like a coinbase someone where you can buy bitcoin for cash i usually connect to your bank account so it's you know very easy then you can transfer it over to another exchange, like a Binance, where you have more trading pairs. And now you in your trans, you're making that transfer in Bitcoin, and now trading for those other crypto assets, right? And

then they're all the volume happens, and then you do the reverse to settle or, or sell on a different exchange. And so because of that, the way that some of those more frequently traded assets are being utilized they're the foundation to to create accessibility to the the less traded assets we cater today over 160 crypto funds and we've been doing that for years that's one of the foundations of our business it was one of the first customer segments that we started catering to, primarily through fund administrators and fund admins. And if we look at their portfolios generally across it, you're going to see a lot more sophistication, right? I mean, sometimes we'll see up to 600 assets in a single portfolio,

30 liquidity providers, where you go to the super simple funds, you see only Bitcoin that they're acquiring at maybe one or two OTC desks. So I mean, we see the full spectrum of that. Everyone's going to have their own, is going to create their own risk appetite and figure out how they want to ultimately structure their portfolio. But regardless of where that is, we think that Luca's got high quality products for them. Right. So you basically offer a singular product or a few limited products that give them exposure without having to go through the, jump through all the hoops that you sort of just mentioned. And anyone who actually does it even actively as a retail trader understands how complex it is to get into a lot of these other assets.

And then if you're in the United States, the tax implications of doing so. I mean, when you send off 6,000 transactions for the year to your accountant, they're not usually that thrilled with you. We actually support consumers in retail with the exact same products that we have. They get less of the bells and whistles and the features that our institutional customers do because we're even going to be releasing shortly here. It's in a pre-release mode right now with just a couple thousand users, but a free portfolio management tool for the industry. And then they'll be able to purchase if they need to the tax add on to support their taxes. But it'll be with the same quality of software and data products supporting them in the background. Honestly, most of the retail customers don't even realize that they're benefiting from Luca Prime or from our reference data as part of the software.

But that's kind of by design. We want the experience to be as easy as possible for those types of customers. That makes sense. So touching back on, you know, what we've seen with the sort of institutional adoption increasing on Bitcoin are you finding that people want access to that store of value, but then also want the upside of the other assets? And that's why the indexes can be more attractive? Yeah, I mean, ultimately, everyone's trying to trying to figure out where, where they can get the biggest gain, or there's some other strategy that's tied to several of these cryptocurrencies. I mean, whether it's the speed of the transactions taking place or the privacy aspects

or it being backed by another asset like gold or US dollars or what all the stable coins are working on. I mean, everyone's got a different idea. And the industry is innovating rapidly. I mean, honestly, it's difficult to even keep track of all the different types of crypto assets that are represented here. I think that's part of the excitement. Honestly, at Luca, weird. We don't really have an opinion on or not formally on which of these is going to be around in 10 years? Of course. It's going to be the one that's going to be dominant. You know, is Bitcoin going to continue to be the number one just perpetually? Or is it going to fizzle out and be replaced by some other better idea? We have no idea. But the underlying data challenges and the services that are required to manage all of those transactions is the same. And so that's really the focus of our capabilities.

So you could effectively remain currency agnostic and just make sure that you're providing good data. I hope that all assets in the world are tokenized and exist and can be traded the way that crypto assets are being traded today. Even the traditional assets would be. Let's talk about that. So what does that actually look like for tokenizing other assets? I've had a number of guests on who obviously, we talk about non-fungible tokens and the many use cases for tokenizing your mortgage or your car loan, any of these things, obviously your car title. But what does it look like to tokenize the assets that we're used to trading on legacy markets or investing in? I mean, it's very simple. It's very common today. I mean,

we see their real estate has been tokenized. I've spoken to companies that are focusing on tokenizing debt. I've even heard of musicians or artists, musicians or artists, you know, tokenizing their assets. I think that's one of the great things is that we can create liquidity in assets that traditionally are not liquid. You know, real estate is the prime example of something that isn't. And the reason is because we can make it more accessible and we can trade it in lower quantities because crypto assets are traded in fractions, not, not whole quantities. Right. And so just because of those two things and because of the fact that there are

marketplaces for them through all of these trading businesses around the world, it allows people to innovate very differently than they have before, which is very exciting. I mean, we could go and, I mean, we hear examples of people wanting to go long in Manhattan and short Brooklyn, for example, in real estate, you know, if there's a large volume, or you hear all these different trading strategies that can result from these assets being more accessible and more liquid. And so I think those are the two underarching themes when it comes down it comes down to it, that's, that's exciting as we, as we look into the future.

It's so exciting. It really is. And yeah, like you said, I mean, we're seeing, we've seen athletes, you know, tokenize their future future earnings. We've seen artists, you know, use tokens to interact better with their fans and their audience. And the potential is really endless, but I guess that's not what we're here necessarily to talk about today. Touching on something you said. So you work with 160 funds, you said, which has been a core part of your business already for years.

What kind of funds are those generally? Are we talking about crypto focused funds, funds, specifically family offices, smaller hedge funds? And, you know, what really is the hierarchy of the clientele? Yeah, the 160 that I'm talking about are pure crypto funds. Right. And those are the active ones that we have today. It's probably a little more than that.

But, you know, we've had over 300, if you include all the historical ones that are no longer around. Um, and, uh, and those are primarily catered to through fund administrators or fund auditors, or sometimes a combination of those. Some of the larger funds will also want to be able to look at their portfolios, you know, for, for an extra subscription. Um, but we also cater to large number of family offices, prop desks, exchanges, a lot of the large exchanges in the US are our customers. So we'll do their corporate books. So that's everything from financial statements, their taxes at the end of the year, or, or passing audits,

a lot of them, some of the first financial audits, the industry is going through that right now, which is showing the maturity of it. And that's another one of the, to get back to one of the questions you asked at the beginning, I mean, that's another one of the symptoms that I see that's an indication that the industry is maturing rapidly, right? When they're thinking about how to pass an audit, when they're thinking about risk management and risk governance in a more mature way, they're working with regulators and standard setters. Those are all really good signs that this is kind of ready for mainstream and is here to stay. Right. You talk about working with regulators and standard setters. I have to imagine that the question marks surrounding regulation,

particularly in this country, are a huge barrier to entry for institutional adoption. And just why take the risk until you know that it's going to be an acceptable risk? So what do you see happening now as far as regulation? You touched on the OCC and their sort of direction with allowing custody at banks. What are you seeing with regulation and how soon do you think that we'll start to get the kind of clarity that that we need for really big players to confidently enter the market? Yeah, I mean, I kind of think we're already there. Honestly, I don't think I don't think that I mean, it needs to improve. There's no way that it's it's final in any way, you know, we're we're seeing I mean, a lot of IRS like tax guidance exists in FAQs. There isn't formal, formal, formal regulation or law on it. We're, we're seeing the SEC work on, on a number of things.

You know, the OCC news that I already mentioned, that was a huge milestone. And now what we're seeing from the traditional logos out there is there's, there's clearly a lot of companies are thinking about custody. The crypto industry, honestly, in my opinion, defines custody services very differently than the traditional custody services that we're used to. So there's a little bit of a learning curve, just like a crypto exchange is different than a traditional exchange, right? We're redefining some of these things.

But ultimately, I think it's here. I think that, you know, custody is, is a big topic. Fund administration is another big business that's, that's moving very quickly. We're seeing a lot of interests from traditional funds looking for some of the tradition from, for some of their existing vendors to continue to support them towards crypto. And then from there, I'm sure down the road,

we'll see more of the kind of mass market mainstream retail stuff. I think that'll come last. And the bearers entry are just a little bit different for that than some of the institutional use cases. Right. Well, you guys do audits and you handle taxes for large companies. We don't perform the audits. We assist with cleaning up the data to facilitate passing an audit. So auditors would be our customer, for example. Right. And so as you said, the IRS sort of has guidance in their FAQs, but that guidance is absurd. I mean, perhaps that's

just my opinion, but I don't believe that every time you buy a cup of coffee with Bitcoin, that should be a taxable sale of an asset. So do you think that they sort of made this blanket judgment as to what it was, and now they'll sort of regulate it back to more common sense? Or do you think that we're going to continue to see- I think it's fairly simple, and now it's going to get more granular is probably a safe statement i will say that even if you look at the faqs a lot of people don't notice how frequently they're updated um and if you look at them or anyone that looked at them over a year ago and if you look at them today you'll see they're far more improved than

they were a year ago they still have a long way to go. I mean, it needs to turn into something more formal than just an FAQ, of course. But I mean, I've participated in a ton of panels and working groups with a lot of these agencies. And I mean, any government agency, and they all know this, know the pace that they move at. Aside from that, I think they're taking it very seriously and they are very focused on it. And I actually think about it, they're thinking about it with a very open mind and trying to do it the right way.

So I say a lot of that with confidence. Doesn't mean that it's finished in any capacity. There's a long way to go for sure. Sovereign is an uncensorable, no-KYC, Bitcoin trading and lending platform and one of the very first Bitcoin native DeFi platforms. Finally, start trading your Bitcoin in a permissionless and decentralized way today just by connecting your private wallet. Earn interest on your Bitcoin and get paid for lending assets via the Sovereign decentralized exchange. Get up to five times leverage on long and short trades using USDT, BTC, and Bitcoin backed stable coins, all with no KYC and always maintaining

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Once again, that's S-O-V-R-Y-N dot A-P-P slash W-O-L-F. Sick of paying ridiculous fees to trade crypto? It's time you try Voyager. It's hands down my favorite place to buy and trade crypto and is 100% commission free. Voyager gives you easy access to more than 50 top crypto assets and you can instantly transfer cash from your bank account so you never miss a trading opportunity. Even better, you can now automatically earn interest on crypto holdings. Currently, they're offering up to 6.5 APR on Bitcoin and up to 9.5% on USDC.

Yes, you heard that correctly, up to 9.5%. And there are no limits or lockups, which means your funds always stay liquid. Find out why so many people are making the switch to Voyager. Visit investvoyager.com or search for Voyager on the Apple App Store or Google Play Store and get $25 in free Bitcoin when you use the promo code SCOTT25. That's S-C-O-T-T-2-5. I mean, I'm confident that regulators are focused and serious about it. But then you see things like Rashida Tlaib or whatever, proposing that stable coins basically be

treated as banks. And it makes me wonder if politicians in this country understand it at all. Yeah, no, I'd say their understanding is probably pretty limited. I mean, even just as part of our very normal sales conversations, I'd say the first 75% is all education. Education. But that said, clearly you've been doing this a while and you're confident that you can plow ahead and that regulators or some sort of government intervention is not a major risk. I agree with that. That's my personal opinion. Right. But yeah, but for a very long time before the narrative has sort of finally shifted in 2020, I think we always saw governments as the biggest threat to cryptocurrency. China banning, China unbanning, India banning, India unbanning. Yeah. I can't speak for all of the countries around the world, of course, as far as the United States is concerned. I don't see that being a threat to disrupting the industry.

I think it's definitely more jumping on the bandwagon instead of trying to resist it at all. Or that's good. I'm not seeing any. It would be nice to think that regulators are, you know, primarily altruistic and just making sure that they protect, you know, the American citizen from the inevitable scams in this and, and every other industry. So yeah, it would be nice to get more clarity moving forward,

but I'm glad to hear that they're taking it seriously. So obviously we talked about the kind of clients who do have the 160 funds that are primarily crypto focused. How do we turn that into the biggest hedge funds in the world and the big names and the ones that everyone knows? How do we see them start to gain exposure and confidence and work with, you know, Luca? Sure. I mean, some of the deals that we've been putting out in the press are all are all steps towards that so i mean s&p we announced a couple weeks prior um a data redistribution deal with ihs market um and uh and you know we're we're planning on putting out some more press releases soon that i can't share publicly yet come on that are all uh that are all supporting the same thing. So I mean, if you just think about all the players

that are required to make a fund comfortable, you know, I mean, fund administrators, right? Very obvious one that, you know, they're not going to want to go to a totally brand new fund admin. And, and they'd, or I'd rather they'd probably prefer working with their traditional one if they had the capabilities. So I think that's an obvious business. Same thing with custody. They're going to be looking for different solutions. That topic is a can of worms. There's a lot of different ways to accommodate custody. And there's a lot of other less obvious services that are part of that same ecosystem that need to fall into place here. That makes sense. So I mean, we touched on obviously the data being a huge challenge, being able to find a fair market price for these things

that are being traded. What are the other huge challenges, things that are perhaps lacking in crypto markets that are, you know, taken for granted, or they're completely standard, you know, when you're trading stocks or other legacy markets? Yeah, it's, you know, technology controls, I think is huge. And that's another part of the foundation of our products. We actually built them to satisfy some of these controls. So such as AICPA service organization controls. So the SOC 1 and SOC 2, and there's a lot of different ways to do them.

There's, you know, revenue streams from SOC auditors that come in to do that because you have a third party come and test your controls. But really what they're doing is they're making sure that whatever software solution that is part of your service organization are meeting the standards to allow your customers to rely on the accuracy of the data and the outputs. So, you know, if we're capitalizing fees or we're assigning a fair market value to it because the fees were actually capped in crypto, all of those different methodologies and the consistency in which our, you know, reports are generated and all of those kind of derivative deliverables that are created by the software need to be trusted. And if they can't, then the customers can't do things like support their audit, right?

Otherwise, they have to comes to the technology and the products. You know, there's going to be really smart software developers that are operating in a garage with five people that are the product and create a website, you know, with with some seed money. It doesn't mean they understand accounting or how to derive fair market value or apply fair market value to an asset, right? So it's a lot of those things can get very complex. And so I'd say kind of sorting through all the different providers out there can sometimes be challenging, particularly when you're doing it with all new terms. And so I'd say that research is critical but a lot of the traditional controls like stock controls can be can be used to help with those types of challenges that makes perfect sense you touched on the the IHS market I don't know if call it partnership or deal, but can you talk a bit, a bit more about that? Because it seems huge.

Yeah, I, I, we believe it is. I mean, it is another way for the world that IHS market already caters to, to, to tap into some new products related to crypto assets. So the same data products that I mentioned earlier, Luca prime, we actually have several, several variants of Luca prime. So there's an intraday and end of day and an hourly, um, versions of it. And then we also have varying degrees of coverage. So at our, our base model, we'll, we'll supply someone with prices for up to 50 assets that they can choose from,

all the way up to our entire portfolio of assets, which is 6,000 plus and 3,000 derivatives, for example. And so all those have different price points. And then that plus reference data and some of our other data products are all being redistributed through IHS market. And that's on a global, on a global basis. Yeah, that, that, that's incredible. So, I mean, you really are bringing a manner in which people are familiar with trading assets to sort, to sort of familiarize them with crypto and make it seem safe. We do have other partners too. Obviously IHS, you know, is in,

is in the, in the press. We're very happy to be, we're partnered with dev experts for data redistribution as well. They're based in Europe. We have our partnership for our professional tax products with cpa.com

and a number of other very important partnerships to help support the ecosystem. That makes sense. So I have to ask you, why cryptocurrency? I mean, you were a price waterhouse cooper before this, right? Doing something quite different. Yeah. So I mean, what initially sparked your interest in this space and made you, I mean, you effectively went all in, you know, and starting a company and believing in the future of this. Sure. And I didn't start Luca. I've been with Luca for two years. So I was asked to be CEO earlier this year and worked in several roles before,

before CEO. And, but yeah, I mean, why, why I jumped over here, I was introduced to the company, which, you know, sparked my interest. I did a lot of reading. I was very interested in the data. And when I heard that Luca, and at the time when I started speaking to them, they were building the first version of their software, their institutional software product, and they're doing it with SOC controls. That to me, I thought was had great foresight, I thought that it was going to pay off. I didn't know exactly when because we had to wait for kind of what I believe is happening right now, where the more mainstream adoption of all of this. And but the fact that they were doing it with institutional quality products, you know, both software and data products, I thought was, was very wise. And, and I knew that there is a whole new type of data that the world was going to need. And so that excited me. And so I'd say that's what made my first first leap there. And then when I started

doing all the research, and I kind of realized, going back to the topic we were talking about earlier on how this can change the way that assets are managed or traded in just a whole different way. That was the vision that I thought I was just going to change the entire global economy. So I wanted to be part of that. I mean, with the excitement and the pace and all the other things that come with joining a startup. Yeah, it's interesting. So many people that I asked that question, you know, sort of their crypto journey,

it's often it's about either they were like trading or they wanted to invest and they sort of backed into it because they just wanted to make a bunch of money. Either that or they're just hardcore Bitcoin maximalists. And you actually came sort of from a different angle. You approached it because you were so interested in the data and the technology

and the platform behind it, really nothing to do with cryptocurrency itself in that regard. That's absolutely correct. Yeah. I mean, I'm much less focused on blockchain than I am the ecosystem. And I think the ecosystem is really what we've catered to that we're focused on. And it's one of the biggest things, one of the biggest misunderstandings, honestly, is they're like, well, why don't just all these assets exist on one blockchain? I'm like, well, then you hinder innovation. You know, I mean, we want people to keep reinventing Bitcoin in different ways, like, like all these other, you know, the Ethereum foundation, you know, the ripple team, I mean, all these, all these other teams that have a better idea than their, their predecessors. Um, and, uh, and I think that's one of the, one of the great parts

of it. I mean, I'm a big, big, um, advocate of innovation in general. Um, even though at Luca, how we're innovating is more, um, you know, we describe it as the not sexy side of crypto. I mean, we're, we're doing all the middle and back office operations, cleaning up the data so all the innovators can continue to do so. That's so interesting. So, I mean, what are your thoughts on Bitcoin in general? I mean, the narrative, as we've talked about a few times, have changed. Did it back you into

loving Bitcoin and loving the crypto space? Or is it still something that is nascent in your eyes? And, you know, just curious as to how you view it at this point after being behind the scenes for so long? Yeah, I mean, Bitcoin is just one of thousands of crypto assets to me, honestly. I mean, it's the one that everyone is used to saying, and it's the one that everyone is used to saying and it's the one that people usually buy first when they're you know starting to dabble in it um a drug it is yeah it's the gateway crypto so um and uh and i'm sure it's gonna you know um hopefully hopefully appreciate and gain more adoption but if if something else replaces it, I won't, you know, to me, that's just another way that the ecosystem is evolving.

It's interesting because I think when you dig into the maximalist community and mind, you know, they have that sort of short the banker, long Bitcoin, F the system, rage against the machine sort of vibe. And this is sort of the opposite of that, right? This is making it accessible to everyone. So, I mean, I guess those people are just going to have to accept it because this is clearly going to be adopted. Yeah. I mean, you know, I'm not going to, you know, governments and regulators and standard setters all serve very important roles in the economy. And, and I'm an advocate for for all of that as well. And I think that in order for crypto to really hit mainstream, all of that has to be part of

that solution. I mean, that that has to be in play. We can't just have anarchy in financial markets. Right. Also, they love to talk about $100,000 Bitcoin, a million dollar Bitcoin, but that doesn't get there with a bunch of guys, 100 guys on Twitter talking about how important it is, right? I mean, those prices don't happen. That level of adoption doesn't happen without truly, truly getting the big players involved. Exactly. You have to have the institutional players involved in order to make that happen. And in order for them to get involved, we have to do things the right way.

And that's going to involve the standard setters and the regulators and the governments and the financial institutions. So I'm assuming you talk to a lot of funds and institutions that are not your clients, who maybe you want to be your clients, but who are interested in this space, but still have fears or questions. What sort of fears and questions are you still seeing presented today? I think the number one is they're either skepticism that it's actually really here um or lack of understanding of how the ecosystem actually works you know people will focus on

bitcoin they'll read the blockchain white paper and then they'll form an opinion um but in order to truly i think form a a more mature opinion you have to understand the ecosystem and what um what the world is doing. And because what they're doing is, I mean, that's your, that's your demands. That's what we need to cater to. I mean, when developing products, we cater to what our consumers or our customers need. And so, um, it's amazing how sometimes when you get to a very technical product, how the technology can kind of distract you from just how something is being used in a, in a practical way. And, and so I encourage a lot of those businesses to be a little bit more practical

about how this is just being used today and kind of focus around that and less on the underlying technology. You know, you don't need to invent a new protocol to go facilitate custody or fund admin for crypto assets, right? You just need good old fashioned software and data. So I think sometimes it's that, it's stepping back a little bit and looking at it from a different lens

and focusing more on the ecosystem than on an individual blockchain is the biggest thing they can do. And then from there, it's all down to each individual business's strategy and their risk appetite and whatnot, which are all going to be, we're all going to be.

I always hear, obviously, that security is a huge question mark, which obviously indexes and these products that don't require you to own the underlying asset basically solve that problem, right? You don't need to go buy Bitcoin, figure out what a hardware wallet is and figure out how you're going to custody it. You can just buy a product that represents it, trade futures, something like that. You're a cybersecurity expert, right? I mean, we haven't talked about that, but your background is actually in cybersecurity.

I've worked a lot in cybersecurity. I wouldn't label myself as an expert, but I have worked in it quite a bit, particularly some incident response and a lot of the technology controls. But in short, I mean, just like all the cybersecurity rules that are applied to with traditional technology can be applied to crypto. I mean, right. There's, there's different tactics and whatnot, but, um, but ultimately humans are usually the biggest, uh, the biggest weakness, um, that, that threat actors can take advantage of. And, uh,

the same logic applies to all the crypto assets, right? I mean, if you share your key the wrong way or you don't secure it, just like sharing your password or using your date of birth and your mother's maiden name for your password, right? You're making yourself a soft target. So all the same concepts apply to crypto.

You know, cryptography though is incredibly strong and reliable. That's just the strongest link. So, you know, threat actors are going to focus on the weaker links like phishing scams and things like that to get a hold of wallet addresses. And so, honestly, a lot of that is really trust custody solutions and not really have to take that responsibility in their own hands, which wasn't the case before. I mean, is that fair? I mean, a lot of the big exchanges, particularly the U.S. ones, are insured now. I mean, so even if there is some type of a breach or a loss of some of the assets, it's usually that exchange that's going to take the majority of the burden there and not the individual customers on average.

That's another one of the reasons why there should be some caution more in selecting where you're trading these assets and what businesses you're interacting with to make sure that you're doing it from ones that are reputable and that are working with standard setters that are regulated because then you're going to see some of those much more mature policies in place that that you know something as simple as as kyc or um a lot of the a lot of aml stuff i mean there's a there's a lot of stuff at all um everything that we do to our to our cash you know a lot of the same rules we might have to do it in different ways for crypto um but the intent you know is still there and we still have to apply a lot of ways for crypto. But the intent, you know, is still there. And we still have to apply a lot of the same rules. Makes sense. So I've had a number of CEOs on the show who are Marines. Oh, really? It just seems that either they find their way into this industry, or they find their way into leadership roles. And I know that you served, I believe, for nine years. Is that correct? That's correct. Yeah. How much of that experience shape you? And I know that you served, I believe, for nine years. Is that correct? That's correct. Yep.

How much of that experience shape you and I guess drive you or, you know, what did it teach you about leadership and being the CEO of a company? How much has it shaped your view? I mean, I'd say incredibly so. I mean, I went into the Marine Corps straight out of college. I was a helicopter pilot. Um, and, uh, the, the, the leadership that you, that you learn there, um, I think is just, is just priceless. So I, I rely on, on the, the education and the experiences that I gained there. Um, and in combination with other ones, I mean, a ton of the and the experiences that I gained there. And in combination with other ones, I mean, a ton of the experiences I learned

at PricewaterhouseCoopers were incredibly valuable as well. So I think all of that has helped me so far. And I rely on all of that, I mean, every day. Brilliant. So what is the future of Luca's business? You know, what, what, what are your, what's your intention a year from now, five years from now, 10 years from now, what do you think this looks like? A lot of that is dependence on the economy. I'm, I'm, uh, very, very optimistic about Luca's future. future i mean we just announced our series c that we're

we're um incredible incredibly thankful and and uh and appreciative of all of our investors and our partners that were part of it um and uh and we're very anxious and and uh and excited to take on the next the next phase i mean really it's it, I think the stars aligning a little bit. I mean, Luca is now in a very, very nice position where we have a ton of lessons learned. I think we understand some of the middle and back office problems better than any other company in the world. I truly believe that. And and I think because we have that understanding of the problems now,

all we have to do is execute and and keep doing what we've been doing. It doesn't mean we're coming out with any new shiny products or anything. It's more just refining the products that we have and continuously improving them, listening to our customers to incorporate their feedback and what their needs are, and continuing to execute on what we've been doing. So at what point does all of this just become like acceptable practice, totally normal, you don't even think crypto is weird or crypto is new or any of this. They're just products that are being traded that people don't even think about. When does that, I know you can't say when, but how does that happen? Sure. I mean, in our office, it kind of already feels that way. Of course.

I think a lot of the people that have been working in the crypto industry for a while probably already feel that way. They probably feel that it's intersecting with the mainstream world right now. And I don't know. I think that 2021 is going to be a huge year stepping in that direction i'll be very curious to see how how far we step but uh um i'm very excited about 2021 so i mean obviously 2020 has been a unique year outside of crypto so um i think everybody's ready for uh for some change that's the understatement, perhaps,

of the century. I don't think anybody's going to forget 2020 anytime soon. I'm sitting in our office right now for the first time since March. Really? Really, today. First time since March.

Congratulations on making it back. Where are you guys located? It's just me, actually, not our whole office. We are still remote, but I had to come in for a couple press events and stuff. We're based out of new york we're in uh by you we're in new york city i lived i lived in new union square for almost eight years actually

right right by the the uh cole's store on 13th between second and third right around the corner from from you guys then yep yeah we're on fifth avenue i absolutely i absolutely love it there and miss it tremendously so actually then what what is that challenge been like switching to remote and kind of moving out of the office paying manhattan rent on an office yeah it's not fun paying rents um for no. The, you know, this, so we, we started working remotely my second week into, into CEO. So that was, that was pretty, pretty interesting. I have to say that a lot of the credit goes to the team. I mean, we've been, you know, raising money, rapidly improving our products, our offerings, you know, working with some of the biggest organizations, not just in crypto, but in

the financial services world throughout this year. And we've been doing it all remotely. So I think that coming out of this year, our company and you know, probably a lot of the world is a lot stronger than we were a year ago. So that's really I look at it as just an opportunity to do even greater things going forward. Yeah, but do you think that you guys ever go back to your office? Or have you found that, hey, this works? Why not? A lot of people just do. I think when we go back, we'll go back in a different way, of course. I mean, not just complying with whatever local laws or policies or whatever, but I mean, also, we'll probably reorganize our office. I mean, all the same concepts that people are sharing on LinkedIn and that a lot of thought leaders are working on. I've been reading a lot of that. I know a lot of our team has to kind of anticipating that we're going to go back soon. So hoping it'll be within the next six months. But if it doesn't, we're ready to continue to operate in how we are. So we'll

continue to adapt as needed. It's such an incredible new world. So where can everybody keep up with you and follow you after this and follow your guys' progress? Yeah. So, um, Luca.tech, L-U-K-K-A dot T-E-C-H. So Luca.tech is our, is our main website. We have several other websites that you can get to from there. Um, also on, on Twitter and LinkedIn, Luca tech is our handle. Um, and you can find all those on the, on the website too. So really that, that website is the main way to get to all of our different social, depending on which, which one you're a fan of. Awesome. Well, thank you so much for taking the time. I, so interesting. And it gives me a great, great confidence that, which is what we all want to hear. The big money is coming. They're just trying to find a way to do it safely. Yeah,

no, thanks so much for having me. This was a pleasure. Awesome.