The Wolf Of All Streets - The FEDs will help drive Bitcoin to six figures with Richard Byworth, CEO of Diginex

Episode Date: March 30, 2021

The last time Richard Byworth was on the podcast; Bitcoin was slowly pushing to $10,000. Now that it has exploded to 5x this figure, Byworth’s Diginex exchange has seen spectacular growth in every metric and yet, he still believes the leading digital asset is an opportunity not to be missed. His thesis suggests that governments, corporations, investment funds, and the FED will each play a unique role in driving Bitcoin’s price to a 6-figure cycle top. In this episode, Melker and Byworth discuss a range of topics including: Supply-side shock CFOs convincing their board to buy Bitcoin Peter Schiff capitulating Ethereum scam wicks Government seizures Exchanges running out of Bitcoin Apple’s secretive treasury A 175K cycle top Governments buying Bitcoin --- 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. Go to https://www.investvoyager.com/ and download the Voyager app and use code “SCOTT25” to get $25 in free Bitcoin when you create your account. --- Mina Protocol Mina is the world's lightest blockchain, powered by participants. Rather than apply brute computing force, Mina uses advanced cryptography and recursive zk-SNARKs to ensure a super-light and constant sized chain, that allows participants to quickly sync and verify the network. The team behind Mina is backed by VCs such as Coinbase Ventures, and Mina's adversarial testnet was the largest public testnet outside of ETH 2.0. To get involved ahead of Mina’s mainnet, visit https://minaprotocol.com/wolf --- Matcha 0x Matcha is the easiest way to trade in DeFi. Matcha enables traders to seamlessly swap tokens using 20+ aggregated liquidity sources that deliver better prices than going to a centralized exchange or Uniswap. Connect your wallet and start today at https://matcha.xyz/wolf --- Join the Wolf Den newsletter: ►►https://www.getrevue.co/profile/TheWolfDen/members --- 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

What is up, everybody? I'm Scott Melker, and this is the Wolf of All Streets podcast. Crypto exchanges have seen unprecedented growth in volume, traffic, signup, inflows over the course of 2021 already. The growth is the reason I decided to invite back an earlier guest to the podcast, the CEO of a major crypto exchange. Richard Byworth, the CEO of Diginex, has over 20 years of experience in trading equities and derivatives long before he even got into crypto. It's my goal on this podcast to better understand the growth Diginex is seeing and get Richard's take on why this is actually happening. Richard Byworth, thank you so much for coming on again. Thanks, Scott. Great to be here. I'll just preface our conversation with the fact that obviously we are a NASDAQ listed company now.

So I have to be a little bit more careful with what I can say. But I'm looking forward to having a great discussion. All opinions expressed by Richard are his own and do not reflect it. We've all heard the disclaimer many times before. And once again, before we get into the questions, you are listening to the Wolf of Wall Street's podcast, which airs twice a week. And I talk to your favorite personalities from the worlds of Bitcoin, finance, trading, art, music, sports, and politics.

This podcast is powered by my good friends at Blockworks. You can check out everything they're doing at blockworks.co and access the highest quality information in the space. And if you like this podcast, you follow me on Twitter, you got to check out my website, sign up for my newsletter. You can do both those things at thewolfofallstreets.io. Now to get into today's episode. So we spoke back in September now, which seems like a lifetime ago, and Bitcoin is around $10,000, right? And we had made some grand predictions and both of us thought that what we've seen is possible. And I think that at the time, many did not.

So what happened? What got us here? How are we sitting over $50,000 now when it was only $10,000 those few months ago? Yeah, I think for those of us who are deeply immersed in the Twittersphere and Bitcoin as an asset obviously, of Bitcoin that we saw in May 2020, combined with this massive, explosive growth in stimulus, which has really just rocket-fueled what we're likely to see out of Bitcoin pricing this year. We've really, I mean, it's phenomenal to watch the price action. I mean, you're a trader, you look at it all the time. I watch some of your videos, like the way that this is dipping now and then rallying further, it's

just such a strong signal that this momentum is going to continue. You flagged recently that I was on Bloomberg making a prediction of 175,000 for this year. And you, like many others, said, why so bearish? Yeah, I think, yeah, but you know, I mean, this is probably, I mean, I said it on Bloomberg as well. I think that I expect it to actually overshoot that level. But I think that that's probably where if I had to have a gun to my head where I'd be positioning it right now. And yeah, I think when you and I sat down, we were talking about 30,000 for the end of the year, which seemed like not very far away, but we hit 29,000 on December 31st. We pretty much nailed it. Yeah. Yeah. It's interesting.

I just saw that Scaramucci came out. He's obviously become a massive Bitcoin bull. And he said that he was predicting $100,000 by the end of the year, but then gave the caveat that he's only saying $100,000 because every time he tries to say a higher target, people say that he's nuts and think he's crazy. So he's sort of conservatively estimating. And that's where I feel like you're potentially at here. But that is reasonable, I think. I don't think that $175,000 is crazy at all anymore. And I don't think that you're getting the same pushback on those high predictions. The thing is, Scott, and I think more and more institutional investors are starting to understand it.

The Fed is not going to stop pushing that button. They are in an absolute hiding to nothing if they start to see deflation permeate through. They have to, have to start to see growth or devalue that debt burden that they have, $28 trillion of it. They get to value it. If they get deflation, it's no go. They're going to be in a debt cycle worse than what we've seen in Japan. For 30 years, they've been in deflation. It's not something that the US is on a political level ever going to be able to stomach. So they've got to keep printing money against this sort of very deflationary impact of technology. You know, another, you know, we talk about the book Sapiens,

but another good book you should read is Price of Tomorrow by Jeff Booth. I think that's a phenomenal book. And he's, you know know obviously absolutely nailed that part of the the deflationary element of technology um and the impact that that has on a central bank that's trying to create inflation to create jobs and fight against this deflationary pull uh that you're going to have which is you know on a human capital level, we're going to see jobs fall by the wayside at a massive rate. So the Fed has to just keep trying to push, push, push ahead. So there's a lot of people actually saying that this is going to be the last cycle

of Bitcoin where you actually have the chance to be buying it before, you know, you're not going to get one of these massive dips that you had last cycle where we saw Bitcoin touch 3000 in 2018, obviously then touched it again in the beginning of 2020. It's possible that you're not going to get that with the monetary situation going on in the background. Right. You say that they obviously have to keep hitting the button. They have to keep printing money. They have to basically create inflation to fight deflation, but you can't do that forever. So what's the end game? If you just keep printing

forever, I mean, maybe it's different because it's the dollar. That's the argument people make. But we've obviously seen with Venezuela or Lebanon, Iran, all these other places that have done it, and they're not a global reserve currency. We know how it ends. But how does that end for the dollar if they just keep printing? So you're going to end up in a situation where effectively either the US says, okay, we have to just let deflation play out. And we have to just accept austerity measures and accept the fact that we're going to go through this cycle of just really painful lack of growth with people losing jobs by the droves. And you'd end up with a sort of probably a very socialist type economy for a period of time with universal basic income. Or you end up moving to a monetary system that's based on a hard money like

Bitcoin, like gold, where people can actually rely on that as a store of value, rely on that as value transfer for their time. And then, you know, that, that brings with it a totally different era. So, you know, at the end of the day, one or the other is going to start to play out because you're right. They can't just keep pushing the button and devalue it and have a complete crisis where the dollar just becomes worthless. Where do we go? So it's one of those two outcomes, in my opinion. So good for us if we've been hoarding Bitcoin, but in general, there's no good outcome for your

average person, right? I mean, Jeff Booth definitely describes a world where after all the austerity and after this deflationary pain, you have this beautiful sort of utopia of people having endless free time and machines are doing our jobs and people work a few hours a week and things cost so little that they don't need to work. And we have this, I guess, sort of renaissance of entrepreneurship and thinking, but it would take quite a bit to get there and they would have to let it happen. Well, it's a lot of pain to get there, right? It's a huge transition, right? And, you know, you say it's great for all of us who have held Bitcoin,

but you know, there will become a time if Bitcoin becomes as valuable as we think it is, where governments are going to start coming after your Bitcoin, right? And then it's, what do you do then? And have you got it in a position where you can protect it in the same way that gold got confiscated? I mean, you've got FATF regulations being rolled out that are obviously beneficial from a KYC and AML perspective, and we support that, but then what does that mean longer term for protection of personal assets? So I guess that is the question. If you're holding quite a bit of Bitcoin now,

and you're in a major country where that could become a risk down the road, how do you secure your own assets? Is it a matter of your hardware wallet or multi-sig? Is there somewhere that you can custody and it would not be confiscatable? Because obviously that's one of the most compelling arguments for Bitcoin is that it can't be confiscatable. Because obviously that's one of the most compelling arguments for Bitcoin is that it's not, can't be confiscated. But I've always made the argument that when someone has a gun to your head, anything can be confiscated. Yeah.

And look, I mean, I know that a lot of Bitcoin maximalists are of the opinion you should always hold your own Bitcoin. I really don't feel comfortable with that at all. Being your own bank is scary. You're a public figure. I'm sure you don't like the idea of someone knowing who you are, knowing that you've got a lot of Bitcoin and wanting to get access to that. I mean, there are plenty of people around the world that, you know,

are paying attention to all of this. And, you know, I don't feel comfortable holding my own keys whatsoever. So we obviously with DigiNext, we have our own custodian DigiVault. It is obviously very KYC and AML compliant, but that's the trade-off you have to make. That is it going to be, if you do see that scenario play out, is it going to be a if you do see that scenario play out is it going to be a mad

max type scenario where people are running around um you know raiding people's houses or is it going to be the government um and uh you know i think probably i'd prefer to be in a safe secure custodian that's third party that i can't i can't get access to easily. Because otherwise, you're going to be an obvious victim for this sort of stuff. Absolutely. I've made it, I mean, I can only say personally, but every day I make it more difficult for myself to access my own Bitcoin. And I put everything at further arm's length and secure it in the craziest of ways, or at least crazy to me from two years ago, because I would have never considered that I've gone this far down that security rabbit hole, but you're absolutely right.

And the more attention that it gets, the more risky it will obviously become. It's the trade-off of the prices that we predict are very good for us, but maybe not for our health and security. Well, yeah. I mean, if we're talking about $175,000 for the end of this year, that's really going to make that bounty, that sort of that center of attack very appealing. So that's obviously the answer for an individual, what you guys have been building for years now is really institutional grade products. And that's something that we talked about at length last time, something that we both obviously view as being probably the fundamental difference between the 2017 run and the 2020 run. I don't want to speak for you, but obviously institutional interest paired with the ability to actually, you know, be able to interact with

this asset, secure your assets. I mean, we know that Tesla wouldn't have come in in 2017 and put their 1.5 billion in Bitcoin on a ledger, right? So what do you see from institutions now? Do you think that we've finally reached the point where they're comfortable with the tools that you guys are providing and what's accessible and that they really can plow into this without much fear? Yeah, I mean, look, the corporate level of interest, the family office level of interest is higher than we've ever seen before. What's really interesting is the corporate level of interest because what Michael Saylor has done with MicroStrategy has effectively put every, and Elon Musk as well, has put every CFO in a position where they are having

to at least explain to their board, why are these companies buying Bitcoin? So all these boards are being educated by the finance departments and the CFOs of these corporates as to what Bitcoin is, how it can be a store of value against their treasury assets, and effectively educate them on a product that they potentially will go and say, you know what, maybe we should be making an allocation here. So this is waking up a lot of corporates. I mean, we have regular corporate interests and working with a number of institutions that amalgamate corporate treasury interest for education around how to store Bitcoin in a safe way. And as you mentioned, none of them are thinking about trying to store it by themselves. They need to have a reliable, regulated third party custodian. Exactly. want to, because I felt that in the past, if they wanted to, they still couldn't. So do you see, I mean, you brought up Michael Saylor, obviously, do you see him as sort of the white knight for the institutional adoption? I mean, is what he did really what flicked the switch for a lot of these people, whether they like it or not? I mean, I got to say, full respect for the guy

to go and just leverage the debt markets in the way he did and has done and continues to do. I mean, he's done two convertible bond issuances now, which if you think about the market capitalization of his company before any of this was announced, it was what, $2 billion company? He's raised $1.7 billion in debt to buy more Bitcoin since he did the initial $425 million trade. So I mean, the guy is really singing from the hymn sheet that he's written. He is sort of mapping out very clearly how to switch fully from fiat to a Bitcoin standard. And I think it's just phenomenal to watch him play out. It is fun to watch.

But do you believe that we'll see other companies take that level of insane commitment and let's be frank, risk by plowing that much of their treasury? And I mean, you know, the movement of their stock now is largely dependent on Bitcoin, not on business software, right? Or do you think that we'll see more of the Tesla or Square model where they put a couple percent at most of their treasury into Bitcoin, just sort of as that hedge, the sort of idea that people have discussed forever, just as an individual, just put one to 5% of your money in Bitcoin just in case, right? I mean, because that's as much as Tesla's $1.5 billion as a function of percentage,

it's nothing near what MicroStrategy has done. Yeah. I mean, well, I think Tesla was what, 7%. I'm pretty sure they're going to be making more purchases. But as you said, the MicroStrategy move is super aggressive. I mean, taking down debt to go even further is impressive and aggressive, very aggressive. I think that it's particular to MicroStrategy and the construct that they have with his particular control of that company, control of the board. It's not something that you will see from the majority of publicly listed companies. That said, private companies can be that degree aggressive. And we've actually seen a lot of private corporates come to us faster than the publicly listed companies who, you know, they have to go through a level of governance that is just different. It really is interesting. I

spoke to him on the podcast. And when I talked to him, he definitely downplayed his individual power in the decision, and sort of spoke to the fact that it was like, listen, to do this, I had to convince the board and I had to talk to the lawyers and I had to, you know, run it by the stock shoulders. But I do think that he is, as you said, in a unique position where he has quite a bit of power relative to those other sort of entities. So I'm curious now, since it's been since September, when we talked to last, this was all just starting to happen. We were sort of seeing this adoption increasing. What have you seen since then? Is it absolutely parabolic for you guys? Yeah, no, it's really been quite amazing. I mean, I think we were just at the

point of listing on NASDAQ when I came on the show. And the exchange had just launched. I think we were doing a very small amount of volume. We've 10x that volume as of today. We launched our own token two weeks ago, which you can only earn through trading on the exchange. So that's obviously impacted trading, sign up, customer acquisition. A lot of people paying attention to that now. I can talk a little bit about the token in terms of what it does. I would love to hear more about it because we didn't touch on that at all last time. Yeah, no, in fact, it was something that was percolating in the background, but not something that I was at liberty to speak about. We launched it, we launched the white paper Monday last week.

And the first earning of the token was Tuesday morning Hong Kong time and now we're in this sort of special allocation period of three weeks where you trade on the platform as a price taker you end up getting a portion of that special allocation the utility of the token is quite interesting so what we did was we wanted to focus it on what we're trying to build so we're trying to build obviously as you know, an ecosystem that allows you to run your own private bank effectively for digital assets. So what do I mean by that?

I mean a place where you can earn interest, where you can borrow fiat against your crypto holdings, or you could write derivatives around your crypto holdings using those as a collateral base, right? So with all of that in mind, we've built utility into the fact that ECWO, the token, allows you to increase yields on assets

that you hold on the platform. It allows you to use ECWO as collateral for derivative trading and also for loans as well. So, yeah, it's really playing on that future of this, you know, thinking about having this platform as your own private bank for digital assets where, you know, private banking is an industry that's really it's limited to very wealthy people. But with this asset class, you don't need to limit it to that. You can do all of that with this asset class, as we've started to see with the emergence of DeFi. You know, you can lock stuff up and get yield on your assets.

And that's exactly what we're trying to build. And in fact, we've got quite a cool little element of DeFi within the token as well. If you hold the token every day, you get more of the token from effectively staking rewards in yield. It's awesome. So the reason that I giggled when you said that private banking was because you were talking about yield before. And I laugh because we all know that yield is a thing of the past in an actual bank.

So, you know, and I don't even know that you're saying it was percolating. It was probably on your radar back then, but I feel like now, if you're going to be a functioning and successful exchange exchange, that you have to be offering yield on holdings. I think that, and that's all happened very, very quickly. Yeah, no, it has. I mean, I think probably it wasn't even happening across the board when you and I spoke. I mean, we announced that we'd acquired some technology that allowed us to

roll it out relatively quickly. So we're actually starting to do our first trades at the moment. We'll be integrating it into the platform next quarter for people to actually be able to lock up their assets and earn yield on them. But there's one other aspect of the token that we wanted to pay a little bit of a homage to Bitcoin. We made it so you can only ever have 21 million tokens. That's awesome. That it has a halving supply schedule. So the tokens are earned in reward blocks every single day.

And every 90 blocks, the reward of tokens reduces by half. And that issuance period goes on for two years. So you've got even blocks. So it's similar to Bitcoin in style. Obviously, we wanted to pay homage to our favorite cryptocurrency. So deflationary has the having and also earns your yield. And that's a pretty compelling use case. You mentioned that it gives a yield bonus. I love that. So if you hold it effectively, you guys have your standard rates and it increases the rate if you're holding it basically. I don't know how much, I haven't looked,

but what are the actual rates? Take an example, you've got bitcoin on the platform let's say you got fifty thousand dollars of bitcoin if you're in the first epoch before the first halving of equo every one equo is equivalent to one dollar so for example if you hold fifty thousand dollars of bitcoin you'd need to lock up fifty thousand equo against that bitcoin to get an enhanced yield so you'd get a minimum of a ten percent uplift so let's say just for simplicity bitcoin was a five percent yield on our platform you'd get minimum of 5.5 percent on on that bitcoin but you'd probably even get more um just in whatever we could end up doing in terms of spreads so you get an enhanced yield those yield rates would be published daily on the website once we roll that out and then interestingly as well we've got this power function of equo as well that every halving the power function increases so after that every halving, the power function increases. So after the first halving, you'd only

need to lock up 25,000 at quote against $50,000 of Bitcoin. Right. $50,000 of Bitcoin. Please. Yes, please. Yes, please. Indeed. 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 6.5 APR on Bitcoin and up to 9.5% on USDC. Yes, you heard that correctly, up to 9.5%.

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the available liquidity and routing to the best source. My favorite part of Matcha is it offers high-level trading features like limit orders, liquidity, depth, visualization, gas efficiency, and more. Sign up for Matcha now at matcha.xyz slash wolf. That's M-A-T-C-H-A dot X-Y-Z slash W-O-L-F and join the tens of thousands of traders who are already a part of the movement. What are you seeing as far as the, excuse me, you obviously have the other facets of your business beyond just the exchange. What are you seeing as far as growth there? I mean, I saw that,

it's Bletchley Park, correct? The crypto asset management business did 35% in the last 12 months, which is pretty incredible. So you're clearly seeing growth across the board. Yeah, I mean, assets have tripled on that platform as well in the board. Yeah. I mean, assets have tripled on that platform as well in the last three months. It's different to crypto because we're very focused on alpha in that fund. So I try and explain to people, don't think about this even as a crypto investment.

This is a hedge fund type investment. So if you're someone that's investing in hedge funds, trying to get five to 7% of alpha eked out in whatever market environment, this is exactly in that bucket, right? So, you know, if Bitcoin's going up or down, we should be still making money. There is an element of directionality to it. So as Bitcoin performs, it ends up performing a little bit better than what it should be doing on a monthly basis. It should be doing something between 2% to 3% a month, which if you compare that to a traditional hedge fund, those are the sorts of returns that you used to get in the early hedge funds in the 70s and 80s. You can't get that anymore.

Markets have become way too efficient. And so, you know, even the best performing hedge funds, something like a Millennium, you know, they're getting like 14, 15% on their asset base. Whereas, you know, we're looking at a standard IRR of about 25%. As you say, the last year we got 35%. So for me as an investor and looking at allocations, this sits firmly within that hedge fund alpha segment. And yeah, it's very unique alpha that you have in crypto

because you've got so many different arbitrage opportunities. I mean, for a long time, there was the grayscale arbitrage. Now it's gone the other way, as we all know, with the discount. You've had multiple cross exchange arbitrages. I'm sure you noticed what happened on Kraken the other day when ETH traded down to $700. If you were sitting with dollars on Kraken, you could be sitting there just taking $700 for every single ETH you trade. So, I mean, there's a lot of money to be made in these alpha centric opportunities that are market neutral. It doesn't matter what way Bitcoin is going, you're making money.

Right. So you talked about, oh, sorry, go ahead. No, I was just saying, so it's extremely unique alpha. Yeah. I mean, you talked about the sort of origins of hedge funds when they were able to do those tremendous returns. Do you see sort of the similar inefficiencies in the market now that because the crypto market is still so inefficient versus legacy markets, that that's why this opportunity exists? Exactly right. I mean, you used to have GDR traders. So the guys that were trading the depository receipts in Europe and the ADRs in the US, they basically, a good example was HSBC was listed in London and it was also listed in Hong Kong. If you could do the FX and do the trade effectively every day, you could be scalping like 5%. Now, obviously, that just doesn't exist anymore. I mean, markets have made that so efficient that it's like one to two basis points of

slippage between those things. But we've seen the traditional markets become considerably more efficient through technology. What you've got today still with crypto is you've got a better asset that's being moved around digitally. And you've got exchanges that are, you know, they're unreliable. Many of the exchanges are unreliable falling over. They have, you know, fat thing, no fat finger controls, which is obviously what happened on Kraken. So people were, you know, selling at market hitting down $700 on ETH. I mean, Jesus,

you got to be pretty furious if you were on the other side of the, on the wrong side of that transaction. Yeah. Also, I mean, each exchange is sort of its own microcosm and its own market, right? So, I mean, you might have one market maker on one, another market maker on another, one random drunk who, like you said, fat fingers, extra zero. And, you know, so then you get that opportunity on one exchange that never exists elsewhere. Exactly right. And because the liquidity providers have to move their assets around all the time, and this can take, you know, can take up to an hour in some cases, then, you know, you can have those inefficiencies persist for some time. So what are you seeing on the exchange now as far as increase in trading volume versus a few months ago?

Yeah, look, it's been parabolic as it has across the industry. What's been good for us, and we actually announced it this morning, is that with the launch of the token, even though volumes have calmed down a little bit since Jan, Feb hours have actually boosted. And we've, we had a record day for retail volume on Tuesday, on the day of the launch on the platform. So it's, yeah, it's really been great. Unfortunately for many of your listeners,

we're still not um able to operate in the united states nobody um yeah well we look forward to the day that we're able to get across that chasm and and offer our products and services to to u.s residents but for the moment uh yeah we're uh european and uh and as Asian. So is it possible that will actually happen anytime in the near future? Obviously, we hear about it all the time as we look forward to it, just as you said, but what's happening here that makes it so difficult to offer? Look, you've got state by state regulation. You know that in itself you know if i'm trying to operate out of singapore as we do we're dealing with one regulator um you know with with state

by state regulation you you're just incurring a massive amount of cost a massive amount of paperwork and administration um and uh you know new york itself uh with the bit license um yeah it look i'm not saying that it's insurmountable but it's just you know it would be great if there was some federal level uh regulation that would allow us to just move in with a bit more ease um but look we'll we'll overcome the hurdle it'll be something that we're looking at doing in the future, but it's probably at least a year away at this point. State to state is incredible because even once you get to the United States, if you live in New York, you still can't do anything that everyone else can in all of the other states. It really is.

I mean, the system makes sense the right way that it was designed but i can see that for someone like you it'd make literally no sense to have 50 different conversations about the exact same thing pretty yeah i mean the lawyers love it obviously a lot of billable hours yeah yeah so we'll look forward to hopefully uh getting there at some point in the future. So I'm curious, what barriers do we still have to overcome in this space to really get the biggest money in? I mean, it's even Tesla at $1.5 billion. That's big, but what do we need to have? Could it be market cap or platform inefficiencies

for the Apples and the Googles and the Facebooks to come in with 10 billion or 20 billion 50 yeah look I think I think over time these guys are gonna make the move um it's really just a case of you look at where apple allocates its treasury right now it's in corporate bonds and and and government bonds and it's you very, very low yield, low risk. And they've got a money machine there. They don't have any risk to their capital. So they're not too concerned about this at this point.

Now, as the Fed continues with this program, we've already started to see some of the charts in M2 money supply that are coming out, people are going to have to start to pay attention, right? 35% or 40% increase in the monetary base in a single year. And your treasury is focused on assets yielding zero to 1%. You've got to wake up and pay attention. So as I said, Michael Saylor has done God's work for Bitcoiners in terms of inspiring every board to demand from their finance department to understand what exactly is happening here. And I'm sure all of those big tech companies that you talk about are having that conversation at a board level. It needs to be considered.

It needs to be carefully thought out. Apple, I think it's Braeburn Capital, which is the way that they allocate the majority of their capital. It's a very secretive unit. Very hard. I can tell you, as an investment banker, we tried to get access to Braeburn Capital. It was difficult. They're very secretive about what they do. And I'm sure that their investment philosophy takes, you know, it takes a lot of time to be changed.

Sure. So is it, does Bitcoin need to be bigger? Do we need to go from $1 trillion to a $2 trillion market cap? Does it have to be $5 trillion? Is there some number that's the final hurdle? Or is it that we need an ETF and all of a sudden compliance and there's no question marks and they can just buy the ETF and call it a day? I think the ETF will just open up the pension markets. So although all those 401ks that are sitting there not knowing what to do with their capital, and just play stonks are effectively just, yeah, I mean, they're waiting for it. So I think that once the ETF comes, it will open up a lot of that 401k capital. When it comes to the corporate treasurers, I think that it's more about, as you said, having more reliable custodians. And what have we seen? We've seen Bank of New York, Mellon,

come into this space, say, OK, we're serious about digital assets. We've got a strategy. We're going to be providing custody for our clients. So that, I think, is the tipping point for many of these corporate treasuries. Once you have a custodian that they have no headline risk about, because if they go and put all their money into Zappo or BitGo, you know, no offense to those companies, they're great companies but at the end of the day if something goes wrong and they lose billions of dollars of shareholder money because of you know a hack or whatever it might have been that they they can't turn around and say well hang on this was bank of new york melon right yeah so i think that changes the game for them on an institutional level, which is that like 10x as important as these companies putting their treasuries in? I mean, once that door is open, is that really the floodgate? Yeah.

And I think those two, I mean, I was obviously talking about self-managed pensions and 401ks. But when you talk about these pension companies, it's going to be a similar sort of profile. B.O. and Y. Mellon, they're in the game these guys okay we've we've we've mitigated a lot of reputational risk at this point i think in terms of market cap you know when we're getting to 175 000 you're approaching four trillion dollars of market capitalization that is a very important asset class all of a sudden. Yeah, you're bigger than silver. And yeah, and gold's not far away, right? It's just one more doubling and you're nearly at gold.

So then, yeah, I think it really becomes a very serious proposition. And I think the Morgan Stanley news is also extremely important that they're starting to now offer this out to their wealth clients. Only their wealth clients. I always laugh at that because, and I had Jason Janowitz from Blockworks on the show recently, and he said that he had spoken with Morgan Stanley and got some insight on that. But obviously the threshold is 2 million under management with Morgan Stanley to be able to participate in crypto. And apparently, a huge percentage of their client base has between 1.5 and 2 million in assets under management with Morgan Stanley. So if you want to do it, you just need to throw us another 300 or another 400, and then you can participate. So it's kind of funny and not unexpected when it comes to a bank.

Yeah. No, look, they've got a business to run, right? Yeah. I mean, it makes perfect sense. So it's interesting. So that brings me to another point. You have Morgan Stanley offering this to their wealth clients. We're going to see that from the JP Morgans and obviously the Goldman's and all that. But when you get down to the core of it, Bitcoin wasn't really made for those people. And so we talk about institutional adoption. It's amazing. It makes the number go up, but are we inevitably going to end up creating another wealth divide in an asset class that was really made for poorer people who don't have access to banking or unbanked or underbanked

and are underserved? Or do you think that, you know, there's a way for everybody to sort of enjoy the bounty of Bitcoin? I think that the, and this comes back to what we talked about earlier, the idea of a hard money in a society where you know that by saving your money, you're actually saving your value into a future period of time, as opposed to fiat money, where you just know that you probably better just spend it because it's getting devalued over time. And that's what fiat money incentivizes. It incentivizes consumerism. So I think that actually, you know, for the less fortunate in society, it's probably better that we're not in a consumer focused society and that they can

store their work or their time in a money that holds its value. And I do think that's important. I think that the divisibility of Bitcoin allows for everyone to participate. You know, $1 is still 9,000 Satoshis today. I mean, we'll look back on this podcast and say, wow, imagine you could get 9,000 Satoshis for $1. Imagine. Almost 6x where we were last time we talked. Exactly. So I think that, yes, these institutions help number go up. Right. And that in itself is important for the overall adoption of this hard money. Right. So eventually, yeah, it's getting into the hands of more and more wealthy people, but that you're never going to be able to avoid that. I would say that this is because as they recognize it,

as it continues to grow, then they're going to jump on that bandwagon. But this is also being given to people in Venezuela, in Turkey, in Lebanon, who are struggling to hold the value of their work and what they've done to provide value to society. And they're also benefiting from this number go up situation that we're experiencing. So I think that, yeah, it was only a matter of time until big money started to come to play in Bitcoin. And their impact on pushing the price higher means that it just becomes more of an important asset, more of an asset that the central banks

can't ignore. And as a result, more likely that we start to see mainstream adoption. And actually, it could, in that future that we talked about, be used as the unit of account, which is a much brighter future for your average person. Sure. You just said, so central banks can't ignore it. When do central banks put this on their balance sheet? I tweeted the other day that I thought it was really interesting if you looked at the difference between Pakistan's response to India's response. India just banned Bitcoin again. And then Pakistan announced that all government hydroelectric power facilities will start mining Bitcoin. So it's very interesting that two opposing governments that have been sort of at loggerheads

for a long time are taking a very different position. And I think that as you start to think about how this is going to play out with nation states and central banks, it's going to be the first movers into this space that will propagate the rest of the people following. I think the Swiss National Bank will be one of the first credible central banks that will put Bitcoin on its balance sheet. Obviously, Switzerland as a nation is very pro-Bitcoin and pro-crypto. But also their central bank is very astute in terms of allocating the money that they're printing. And what better way to accumulate Bitcoin is to be able to just push a button and accumulate fear to buy more Bitcoin.

It's effectively what Michael Saylor is doing on a smaller scale. Right. That makes perfect sense. So you talked about, obviously, nation states becoming involved. Obviously, I think the first ones maybe besides Switzerland that we will see it will be sort of those controversial nation states, the Pakistan, Iran is doing the same thing with their excess energy, at least they were. We know that North Korea obviously owns quite a bit of Bitcoin. But I think that, I mean, I think that that's fine. Obviously, I just think that they'll be first. But then you kind of take the next step to CBDCs, the central bank digital currencies. And we just saw, obviously, that China is already testing theirs. We know that's coming.

And I believe the Boston Fed and MIT have both now said that they're very close in development of a central bank digital currency for the dollar. Although, interestingly, neither would say if it was based on blockchain, which kind of blew my mind because what else would it possibly be based on? But so what do you think of the role of central bank digital currencies, which I think are inevitable? Oh, absolutely inevitable. If you want to keep printing money, if you want to be increasing tax rates on people and have no escape, as Christine Lagarde put it, then you need to make all money digital and remove cash because it's total control. So you can't hide cash under your mattress anymore. You can't do what the Swiss are doing and locking up thousands of Swiss notes in bank accounts, in bank vaults, because it's all digital.

So you imagine that day when no matter where you try to hide your digital fiat, it's in a wallet somewhere. And oh, whoops, my wallet just went to negative interest rates of another 10%. Well, you've just got no control over this. So then they have ultimate control, ultimate way to devalue the money, which is what they need to do, as I said before, with the huge debt mountains these governments are holding. Not good. But you have to then think that perhaps a central bank digital currency, I guess, my eternal optimism says that that will teach everyone to use a digital wallet and then they'll be led towards obviously superior assets like

Bitcoin and they will lose that sort of fear of transacting digitally or the things that have been barriers to entry for your average person. Yeah, sure. No, you're absolutely right. I mean, that is exactly what is going to happen. You're right to be positive about it, because suddenly everybody's going to get used to the idea of using a digital wallet. And more and more people will understand Bitcoin, the fact that this is a hard money. Yeah, that makes perfect sense. That's what I'm hoping for. Because like I said, I do think that,

I mean, those digital currencies are coming. It's sad. I mean, it really is a central bank wet dream, isn't it? To control every aspect of the money supply. Yeah, I mean, this is very clear. This is Christine Lagarde's intention. It's, you know, Yellen seems to be on the same page with all of this.

So yeah, as you said, it's a very clear intention. So I'm curious what you would see as signs of, I don't want to say a market top, but perhaps a cycle top. Obviously, people will talk about the jokes about Lambos. We're seeing $69 million NFTs and tweets being sold for $2.5 million. I'm just wondering at what point does the FOMO and the euphoria start to kick in so heavily that you start to be cautious? It's funny you ask this because i was i was actually talking to my wife uh this morning she was uh reminding me that at christmas one of her one of her family members berated me

at christmas lunch because i hadn't forced him to buy bitcoin i told him to buy bitcoin and last christmas i bought him the bitcoin standard and he still hadn't bought Bitcoin. And he literally berated me in full anger in front of everyone at the lunch. And, you know, while I looked at that and I was like, you know, how can this guy be serious? It actually made me think about the exact point of the question you just asked. So he was of the opinion, well, it's too late for me now. It's too late now. I've missed it.

This was at 23,000. And I'm like, look, I'm like, look, you haven't missed it. Okay. Bitcoin is cheap. Bitcoin is still cheap today at 55,000. We're talking about an asset

that is superior to gold in every aspect. And it is one-tenth of the market cap of gold today. So where's it going to go? It's cheap. In a valuation basis, just assessing it from that pure perspective, it is cheap. It is undervalued. The point I think many people make is that people always feel they're paying the top in Bitcoin. And I think that what will happen is when that family member of mine turns around and goes, actually, you know what, I'm going to buy it. That'll be the cycle top. There's always that one guy who's like the best top signal in history. To me, it's when Peter Schiff capitulates. Exactly. Exactly. Yeah. If Peter Schiff capitulates and says that he's finally given it and is buying Bitcoin, it's probably time to end this experiment, unfortunately.

So we've seen a whole lot of news about supply leaving exchanges, right? Obviously, there's conjecture as to why, whether it's these big institutional buys, they buy, they move it to a custodian, it's over. But I mean, at the very basic level, we're seeing reduced supply with something that has increasing demand, right? Are you guys seeing that as well, that supply is leaving exchanges? Do you think that we could see legitimate supply side shock? And you know, a situation where exchanges have no Bitcoin left to sell. We are in a supply side shock already. That's the thing. That's why I just do not understand when I'm seeing things sell off in the way that they're

selling off. I'm like, who is selling? All we are seeing on the institutional level from the real institutions coming in, the corporates, the family office style, all of them are buying just buying buy tickets coming in so it's like where is this selling coming from and you know to your point we are seeing um a lot of people just immediately buy and then take off and stick in our cold custodian that's it right it's not moving so yeah i mean to point, we are in a supply side crisis already. I think that we're just getting the last noise of it before we start to see the parabolic move. And as I said, you know,

before I love it, because most people would look and say, we had this conversation a few months ago is 10 grand. We haven't seen the parabolic move yet, right? We haven't. I mean, look, I mean, look at the stock market, right? I mean, there are stocks that have just gone absolutely parabolic and they don't have the same value discount, the value profile of something like Bitcoin. I think that, you know, we're going to go into this, we're going to see a very, very hard shock to the upside. And then obviously, you're going to see a very hard shock to the upside. And then obviously you're going to get everybody capitulate the Peter Schiff's of this world. And then, you know, you're at the market top. Makes sense.

So who is selling? Is it miners? Obviously like the, you know, a lot of the on-chain metrics obviously show that miner wallets are sending to exchanges. We saw huge movements to Gemini of late, which was kind of on everyone's radar. And we saw another one recently to Coinbase. So I mean, is the theory that basically, I mean,

those guys have to pay their bills, right? This is a business. So it's less about having it as a treasury asset or reserve. They have to sell Bitcoin at some point when they've made profit. Yeah, no, absolutely right. And I think what you're seeing now is it's interesting because obviously a lot of that wallet off exchange focus is on Coinbase in particular in US hours. But what's interesting is, and we watch this obviously daily, is that you're actually generally seeing a firmer market out of Asia. And when those institutional buyers don't turn up in the US, then you're actually getting a very weak market in US hours, which actually tells the story of where we've seen mining migration. Recently, there's a hell of a lot of new miners being set up in North America. And I think that that's to your point is where a lot of that supply is coming from. Yeah, that that makes total sense. Another

interesting thing is that we talk about institutional adoption all the time, and we only talk about American companies. We have an entire world of corporations and people with huge amounts of money, but we only talk about American companies. Why aren't we seeing, or at least, why aren't we seeing in our news cycle, we've seen Chinese companies, but like a ton of Chinese companies or a ton of European companies plowing into Bitcoin as a treasury asset? As I said, a lot of the early movers are private companies, right? If you look at the guys that we've seen come out, they're public companies that are very controlled or have some major element of control from the CEO who is a big Bitcoin proponent, right? So Tesla with Musk and Square with Jack Dorsey.

You know, I think obviously we talked about micro strategy ad nauseum, but yeah, look, we saw it with Maitoo the other day, the Chinese company announcing it. We're seeing a lot of interest out of Europe as well, European, but mainly private companies. So it's going to take time. A lot of these boards are conservative and they need to make sure,

every board member that signs off on this has personal risk. So it will take time to percolate into more public companies. And that's when you hear about it. So does that indicate that perhaps there's a whole lot of very large private companies that already own Bitcoin and you just don't hear about it because they don't need to announce it? Yeah. Yeah, you are already seeing that. So right. So we've only seen these announcements because they're from a particular set of large public companies, but it's already happened or is happening. So I'm curious then, you know, we know Michael Saylor had this 2000 companies come and sit in his conference and he taught them how to buy Bitcoin. We haven't really seen any announcement out of that. I can't believe that

he didn't convince, even if he convinced 5%, right? Then that's 100 more companies, we've seen like five. So if he convinced, you know, even that low percent, is it just because they haven't had to announce it yet? Like they, you know, that date hasn't come or? It comes back to that governance cycle and and you know those those corporate treasurers or the cfos the finance department heads have sat at that presentation what was it in end of january early february yeah yeah so then they're coming up to their quarterly boards they're presenting to that board the board's probably got questions okay um you know come come back at the next board meeting and present me X, Y, Z. And then you'll probably

see it in the next board cycle. So you'll probably start to see the majority of that flow through in what, June, July, August. Yeah. You're going to start to see, I would say that play out. So they're kind of on a three to six month cycle. We talked about obviously pensions and stuff. I mean, those guys can take three years to do due diligence on an asset, right? I mean, I've heard that they started in 2017, some of them, looking at this. They did. And Pomp was very successful in getting, I think, what was it? The New York Firefighters or New York Police Pension Company to invest in his fund to buy

Bitcoin. So yeah, Morgan Creek. Yeah. to invest in his fund to buy Bitcoin. So yeah, Morgan Creek. Yeah, so yeah, look, every institutional investor has been paying attention to this for some time. Now they've got that reputational risk alleviation from so many big players coming in that they can start to participate.

And that's where it changes. I would almost argue there's reputational risk now for not including it and that maybe we will see that be the real turning point for this, where it was like before it was, you were crazy if you considered it because you could go down with the ship. And now if you're not considering it, you're a dinosaur. Absolutely spot on. Absolutely spot on. Perfect. So I know we're kind of getting up against it here with time. What can we look for from you guys specifically, you know, in the coming months, year, years, even because I know

that none of us are going anywhere anytime soon. Yeah, exactly. So look, we're very excited about the next quarter. We've got a whole load of derivative improvements coming out. So things like isolated margin, cross-collateralization, where you're going to be able to use your entire asset base, or you can just segregate specific portions of your collateral to specific trades. We've got then, we're going to have the whole option suite rolling out. We have our first tracker product coming probably next month, which will then lead down the road to more

structured products. And then that starts to feed into the overall ecosystem for flow into options. So yeah, we're really building a long term platform for derivative expansion. As we've seen, you know, the model built before in traditional finance, that's the model we want to lean towards in terms of what we can do with derivatives, because it becomes very powerful. And when you can use that as an individual, rather than having to have a prime brokerage account with an investment bank, it's very, very powerful. And it's super exciting in terms of what people are going to be able to do with that core collateral of bitcoin and other assets around the space um so yeah very excited about what it's going to bring obviously equo started its special issuance period and and feeds utility into all of that

future roadmap um so very excited about when people start getting their daily rewards because the launch is actually on the 8th of April. So while people are earning it now, they only get their first allocation on the 8th of April. So that's going to be fun as people start to see every day their balance just going up because they're staking it, earning extra yield on it and then realizing that this is an asset that I can earn the most of if I'm trading early. Like Bitcoin, right? If you were mining early, can earn the most of if I'm trading early. Like Bitcoin, right? If you were mining early, you got the most of it. I wish.

So clearly, I mean, clearly, and we talked about this the first time, but your intention is to build a singular ecosystem and people come to you and they never leave. They can do literally everything under your umbrella. Exactly. We want to make it a super sticky, great place to be. The most successful prime brokers in traditional finance, they have that. They offer a full suite of services

to their clients. We just tied up with ITIVITY. So we announced a partnership with them. I think it was a little bit after I last came on the show, but we actually announced full integration with their PMS. I don't know if you know what they do, but they're effectively a traditional portfolio management system, execution order routing system company, have some of the biggest hedge funds in the world, prop shops, HFTs, using their infrastructure. We've now plugged them into one of our products, Access,

which allows them to trade across pretty much every major exchange in crypto. And so this is a really nice Trojan horse for institutions into the industry. And again, talking about stickiness, having a platform that can then feed their assets into our custodian, do their transactions onto our exchange, and have that collateral base that's in the custodian being used to finance derivative trades onto the platform as well. So it's really nice sort of circular ecosystem, all in common. Next time we do this, I want to dig deeper into what you're doing with derivatives. That's something we talked about last time. And how your average person, since like you said, you don't need a prime brokerage account,

you can just be a guy, how someone can actually use that to sort of develop a effective hedging strategy because it's something that's so foreign to your average, probably Bitcoin investor trader. But I know that that's like a whole other hour worth of conversation probably. So where can everybody follow you and obviously follow the company, sign up? Sure. So we have our exchange you can follow on Twitter at Equos underscore IO. The overall company is the NASDAQ listed company that encompasses everything is at Diginex Global on Twitter. We trade under the ticker EQOS on NASDAQ.

And my own Twitter handle is at Richard Byworth. So yeah, that's the full suite. Well, thank you so much for coming back on. I didn't even make the joke earlier, but after our first one, at least 50 people said that you and I looked like we were like long lost brothers or something, which I found just really, really hilarious. We'll see if we get the same feedback, same feedback this time. But thank you so much for

your time. I really do appreciate it. I'm glad we got to do this a second time and there will definitely be a third. Great. Cheers cheers scott really great chatting with you you too awesome you're good to go man thank you cool yeah it was good thanks for that thanks for reaching out again and thanks for uh including me in your uh your youtube video i loved it i loved it it was awesome yeah of course no we should uh we should do a bit more stuff together. I'm open to anything. Just let me know. I'm here. Yeah.

I'm just wondering if we can somehow get you some air quo. That thing is designed to go parabolic. I was going to say, I didn't want to say it while recording, but it's literally like that. I mean, deflationary, you can't even buy it. It's pretty epic. Yeah. If there's a. You can't even buy it. You're like, yeah, it's, it's pretty, pretty epic. Yeah. Yeah.

And everyone gets it. There's a well, there's a way. Yeah. Yeah. We'll work it out. We'll work it out. Let me know. But thank you again, man.

It's really great. Great. Cheers, Scott. Really appreciate you having me. Have a good one. Thanks man. Bye.