The Wolf Of All Streets - Why This Shark Is Extremely Bullish On Crypto | Kevin O’Leary, Shark Tank Investor

Episode Date: January 20, 2022

Legendary investor Kevin O’Leary loves money, in all of its forms. Once known as a vocal Bitcoin skeptic, Kevin has done a 180° and is now an outspoken crypto advocate. His journey didn't end at Bitcoin. Kevin has gone deep down the crypto rabbit hole, investing in protocols and projects across Web3. Kevin believes digital assets are the “12th sector of the S&P” and has positioned himself to be a bridge between traditional finance and the newest innovations of our digital age. -- HBAR Foundation: Fund your project quickly and easily with the HBAR Foundation. Apply for a grant and be put on the fast track to success at https://thewolfofallstreets.link/hbar  -- Bullish: Bullish is a powerful new exchange for digital assets that offers deep liquidity, automated market making, and industry-leading security. Combining the innovations of DeFi with the regulated environment of traditional finance, Bullish empowers users to trade with confidence across variable market conditions, while secure in a regulated environment that's backed by multibillion-dollar liquidity contributions from the Bullish treasury. Follow @Bullish on twitter or visit https://thewolfofallstreets.link/bullish to learn more. Not investment advice. Digital assets and cryptocurrencies are high risk products. Consult your professional advisor before dealing in them. Bullish’s services are available in select locations only and not to U.S persons. Visit bullish.com for important information and risk warnings. -- 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 ーーー Join the Wolf Den newsletter: ►►https://www.getrevue.co/profile/TheWolfDen/members

This episode is sponsored by Arculus and Bullish. Stay tuned for more information on both of them later in this episode. What's up, everybody? I'm Scott Melker, and this is the Wolf of All Streets podcast, where twice a week I talk to your favorite personalities from the worlds of Bitcoin, finance, music, sports, art, trading, basically anyone with a good story to tell. Now, some of Bitcoin's most passionate supporters were once ardent critics and skeptics. I often talk about the idea of strong opinions loosely held, the idea that the smartest and most savvy investors often change their opinion on an asset or an asset class when presented with compelling information,

new information. Well, today's guest is certainly one of those people. He was a notorious Bitcoin critic who now is investing in basically every facet, seemingly, of the ecosystem. It doesn't hurt that he's also a famous TV personality and probably earned his first billion dollars long before Bitcoin was even an inkling of a thought. So it's an honor today to have Kevin O'Leary, Mr. Wonderful, on the show. Thank you so much for joining me. Great to be here. Thank you. So as I said before, a lot of people started as skeptics of cryptocurrency and of Bitcoin in general. If someone presented you Bitcoin a few years ago on Shark Tank, you probably would have told them to take it out behind the barn and shoot it, right? So what was your early reason

for such skepticism? So in 2017, when I put on my first position of some Bitcoin and Ethereum, at the time, the regulator, if you recall, was very vocal about their position on crypto and particularly at the time tokens. It was a lot of tokenization going on. Regulator was not happy about it. Those of us that worked in the financial services industries, either as chairman or issuers of securities, knew very well that we would be risking our mainstream businesses if we were going to become so-called crypto cowboys and start to fight with regulators, which is, you just don't want to do that when you're in financial services industry. You can't afford it and your clients don't want it. And I was in the indexing business. So when I saw the

criticism, I immediately realized, well, this is not going to go anywhere. And I was a critic, but things changed and I changed too. And I'll tell you what happened. I started to notice in other geographies, in other countries, the regulators were starting to be more progressive about the use of cryptocurrencies as payment systems or storage of value. The Swiss, the English, the British, the Germans, the Canadians, the United Arab Emirates, the Canadians were the very first to issue an ETF with the underlying being Bitcoin, an ETF with the underlying being Ethereum. And they were extremely successful in terms of products. And so I began to realize that change. But what really tipped me, I remember the moment that I said, OK, I've got to get serious about

this because it's here to stay. It's not going away. And even our own domestic regulators were starting to offer palm branches towards the industry, realizing how fast it was growing. But for me, the specific use case was last year when we sold off a significant portion of our commercial real estate in our operating company. And it was significant because it was over a 30% weighting of what we were managing. And we generate a lot of cash. I called the cash desk up. I said, what can we get on this cash while we redeploy it? 20 basis points, 0.2%. Now, inflation right now is over 5%. So that means I'm basically being taxed at around 4.8% on holding cash. And that was not a sustainable model. That's when we first started investing in Stablecoin and staking Stablecoin and getting a

lending desk going. And all of that happened at the same time. I hired multiple people for this. It is a nascent industry. It took me six months to get my own internal compliance officer on board and even longer to get my auditors, external auditors to sign my statements. But that's all past us now, because when I started in stablecoin, I think there was $2 billion worth of USDC. Now it's $30 billion. So clearly, I'm not the only person trying to solve this problem. And it's become a part of our very broad portfolio of holdings in crypto and blockchain and tokens and coins and NFTs and everything else.

I consider it to be the 12th sector of the S&P. It just hasn't been designated that yet. I hope that that certainly becomes the case. And it does eventually get designated something like that. But anecdotally, to the point that you just made, interesting story. I used to passionately try to get my friends to buy Bitcoin, Wall Street guys, hedge fund guys, all guys that went to the University of Pennsylvania with me, and I had very little success. The thing that got them interested was the ability to just park their dollars in USDC and earn 10% a year. So we used to sort of joke that Bitcoin was gonna be this gateway to cryptocurrency

and everyone will come in that way. But it seems that actually what you just described was the reason that most of your average people or your normal investors got passionate about crypto to a large degree. You're right. You're absolutely right. The idea of staking your assets

and getting some kind of yield on it has become prevalent now in most of the wallets that we manage and maintain, whether it's centralized or decentralized. So we have a lending desk. We look and we look. We stake our holdings and we try and earn what we can't on cash. And so what I'm hoping for this year, I would like to see this issue resolved. As you know, there's been some controversy with the regulator around stable coins. There's some litigation out there around Ace, a particular stable coin. That's not helpful. None of us want to litigate the regulator. That doesn't make any sense whatsoever. It would be better that we get a ruling on what the terms are on stable coins so that we could,

you know, right now I have to treat it like a stock, like an equity. I can't own more than 5% of a portfolio. When in fact, I don't think stable coins are stocks. I think they're cash proxy, but I can't use it that way because the regulator has not spoken yet. So I'm very constructive that there's so much demand for stable coin as a payment system and also a way to at least match inflation that the regulator would make some decisions about it in 2022. That's what I'm hopeful of. Yeah, I agree that the notion that a stablecoin is a security is nonsense.

I mean, one of the major premises of the Howey test is that you have to have an expectation of gain by buying it. You're obviously not buying a stablecoin, assuming that the price is going to go up. But you touched on something so important, which is that we lack regulatory clarity. I think at this point, a lot of people in the crypto industry would even prefer hard-handed regulation that comes with clarity of what you can and can't do than this world that we live in now, where you have no idea what you're allowed to do and fear litigation from regulators down the road for something that's not even illegal yet. Do you agree? Yeah, I do. I actually would like to see the rules set. I think it would be good for everybody involved because there's a tremendous amount of institutional capital sitting on the

sidelines. I service institutions every day and sovereign funds as well. And most of them have not even got into the asset class in any way whatsoever. So when we talk about Bitcoin, which is probably one of the most desirable assets for a pension plan, we have to deal with ESG issues. We have to deal with issues around compliance on ethics. Where was it mined? All this stuff still remains out there. And it's something that will over time get resolved. But for all of the excitement within the crypto community, it's a fraction of the potential of this market if we could get the rules. Now, I am encouraged that the regulator is taking their time to get it right because our regulators should set the rules for the world. And everybody's waiting for that to happen. In the meantime, though,

as an investor, I have to travel to different geographies to find out where I can invest, be compliant, places like Canada, like the United Arab Emirates, like Switzerland. These are countries that have rules about crypto investing, and you can be compliant in your own domestic, wherever you're paying tax, and in that country where you're making the investment. You just have to disclose it, which I'm happy to do. Right, but that's far too complicated for your average investor, right? And so it speaks to your point,

if it's gonna have all this friction, then why even try? And you're obviously, you said, you're talking to sovereign wealth, you're talking to institutions all the time. Clearly there's some interest, but is this a conversation that you're having with most of them? Are they coming to you saying, how do we get into this?

And then just looking for the best way to do it? Or do you still think that a lot of them are completely sidelined, disinterested and skeptical? No, no, no. They are not skeptical. They're not sidelined. They're asking, how do I get into this? Let's talk about one specific problem regarding Bitcoin and how it's getting solved. Okay. So as you recall last year, particularly at the Bitcoin 2021 conference, this issue around ESG emerged when many people were talking about it. Elon Musk made reference to it. The fact that so much power was being used in cases of some jurisdictions, coal was being

burned to actually get a coin awarded. Now, that is a big problem for a pension or a sovereign that has an ESG committee sitting above the investment allocation committee. So they look at every asset class, regardless of what it is, to say, is it ESG compliant? And in many cases, in fact, most of them, they have deemed Bitcoin to be non-compliant because you can't know where the coin was mined and how it was mined and all the rest of that. Now, here's what's happening today to solve that problem. There are multiple jurisdictions now that are funding mining operations that are 100% ESG compliant, whether it be nuclear power, remnant electrical grid power, zero-based emissions,

carbon credits, whatever it's taking. These are institutions that are going to own equity in these miners that will never sell their coins. So they'll know with certainty that the coin was mined according to the ESG mandate they have. They're not different Bitcoin. They're just Bitcoin that was awarded on a known basis where it was awarded. Now, there's a fair amount of debate about it, but at least they're allowed to invest under that basis because their ESG committee says, OK, if you're using solar, if you're using wind, if you're using nuclear, we get it and we're OK with it. You're not creating carbon emissions that we have to buy offsets for. So this is a new world of mining coming.

It's getting solved. I'm certainly investing in it. And as far as I'm concerned, I'm going to be able to say, look, for all the institutions that I deal with, all my coin is ESG compliant. It's all carbon neutral. So I don't have to deal with that issue anymore as I was dealing with last year. China gave the world, the Bitcoin world, certainly a gift by banning mining in the country and allowing it to move to countries that were obviously more concerned with the environment and just what you described. And that really has been, I think, a huge movement now in the space and is being solved, as you said. I actually sort of had this thought experiment last year, and there was a lot of pushback from the Bitcoin community that green Bitcoin, so to speak, as you described it, could actually eventually trade at a premium.

Which people wouldn't love in the Bitcoin community, of course, to have separate prices for two different Bitcoins. But I hypothetically could see a world where that happens. Yes. I also suggested the same with a wrapper that was set on the Ethereum chain. And I took a lot of flack for that because they don't want bifurcation of the Bitcoin market. It is one market. The coins are one asset. It's just that in the early days, no one cared that coal was being burned to create the electricity. And you mentioned China.

You're right. Most of those stacks are leaving the country to other jurisdictions where they're going to be reassembled in a much more compliant fashion, whether it be a Nordic country or West Texas or wherever. A lot of that capital that was destined for China has been rerouted to much more compliant miners. So it's one thing, obviously, to change your sentiment and go from being a skeptic to being a fan. It's even another step to say, listen, stable coins make sense. We can earn a yield. We can fight inflation. It's a whole nother level to then become an active investor in the space, which you've done. So why did you decide to start really investing in the ecosystem? And what are

your favorite plays at the moment? So here's the way I look at it. I've been in the software industry for my whole career. For the learning company days when we used to make software for reading math test scores, I've been dealing with engineers my entire professional investing life. Bitcoin is not a coin. Bitcoin is software. Ethereum is software.

Solana is software. HBAR is software. Polygon is software. Solana is software. HBAR is software. Polygon is software. It's all software. Now, I'm a very fortunate guy. I believe in investing in the hottest hand over the keyboard, the best teams. Because at the end of the day, the only reason this is going to work is because these platforms provide some kind of economic value. And I argue to investors that say to me, what do you mean you're investing in crypto? If you're going to invest in Google and you're going to invest in Microsoft in core holdings in an equity portfolio, 5% each, that's very common, very common.

What is Microsoft? It's software. What is Google? It's software. What is the difference between that and investing in Ethereum or investing in any of the other platforms I talked about? It's software. What is the difference between that and investing in Ethereum or investing in any of the other platforms I talked about? It's all the same with the added benefit that these coders are the hottest hands in the world right now. Meet the Polygon team. I met them in Dubai just a few weeks ago, became an investor in their deal because I love the fact they're aggregating transactions to reduce gas fees. Very productive idea. That's a great team. So for me, I'm placing my bets across all of these different platforms, not knowing with certainty what's going to work and what isn't, but investing in the software. So if you wrap your head around the idea that really crypto, cryptocurrencies and blockchain

technologies are all software, it's much easier if you're an institution to understand, okay, I get what I'm doing. Now, obviously, Microsoft and Yahoo stock or Google stock, I mean, is regulated. It's an equity. We don't have that platform yet for these software platforms, but it's coming. And my attitude is I want to be invested now because we're in the first inning. So where do I have to go? I have to go to Canada. I have to go to Switzerland. I have to go to UAE.

I have to go to Germany. And I do. I get on a plane and I go there and I find teams and I invest in them and India as well. I have a very similar view on the market and approach. And people often ask me, you know, if I want exposure to NFTs, which NFT project do I buy? Should I buy a Bored Ape? Should I go, you know, invest in any of these small metaverse games? And I sort of tell them that these layer ones, as you described, behave like index funds. Just put a small investment

into each layer one and you'll get the benefit of whatever happens on that chain. So it sort of echoes my own thinking. You've obviously taken it a step further by investing in the picks and shovels of the space, which we're seeing from a lot of venture capital and people, right? You have your platform, WonderFi. You just did the acquisition of Bitbuy. I'd love to hear how that materialized. Well, you're right. I'm a big believer in investing in the infrastructure of a nascent industry.

It's the picks and shovels analogy for the gold rush. But in the case of Bitbuy, that was the very first market exchange awarded by the regulator in Canada. And you've got to remember, the regulator in Canada is very progressive. Again, they were the first to do ETFs in Bitcoin, the first to do ETFs in Ethereum. And it took years, but that was the very first award. And it has 375,000 accounts. What you like about an exchange is you're agnostic to asset price. You, in fact, like volatility. And I know with certainty, and this reminds me of the early days of Amazon. I've been an Amazon shareholder for 17 years. It corrected 50% to 30%, 38%, 48% every year, sometimes twice. It was immensely volatile. But look where we are today.

When it comes to crypto, same thing. So if you own the exchange, you are actually participating in the volatility and you're agnostic to the price, not just on Bitcoin, Ethereum and other assets. And so for me, that's very important. And I like what WonderFi is doing because that's just one of their mandates. They're also simplifying decentralized finance because it's incredibly complicated to actually set up and maintain a DeFi wallet. Most people can't do it. So they're making that a lot easier. And I've got great partners,

Joss Richardson, who's got 40 million followers of Gen Zers that are very interested in crypto are part of this. It's a great team of investors. We love the management there. We like what they're doing in the Canadian market. And it's a way that I can invest and be compliant, 100% compliant. That's what really matters to me because I've got so many other investments in financial services that are regulated.

I cannot afford to be offside for one second. So that's the way I look at it. And I would say something else here that's important. What's missing in this industry is the infrastructure to be compliant. So if I'm an institution, I want to put a billion dollars into crypto. What do I do? How do I mark to market? How do I show my compliance department every trade by the second? The same way I do with stocks and bonds. I need big platforms. There's where FTX comes in. I became a shareholder in FTX as well. That is an institutional grade compliant platform. You can get the reporting on there. It's centralized. You can manage a portfolio. You can do a global search for whatever you want to do, but your compliance department can

also see what you're doing, which is what you need. And so we need more of that. And that's very important. As they're growing that business, FTX stands probably in the centralized wallet space to be the best for institutions. And by the way, I am a paid spokesperson. So let me disclose that. But there's a reason. I'm using it. I'm using it. I use it. Right. Well, I know that you would never advertise something that you weren't using. And I think that that's the sentiment across the market is that FTX is the leader there. I just had Sam on the podcast for the third time last week. I'm a huge fan of everything they're doing and a cheerleader. And it's nice to be in Tom Brady's company as a spokesperson, right? I mean, that's cool. Well, you know, I got to put a football helmet on and it'll fool around them

on the field sometime. I mean, the guy's wonderful. And I'm a huge fan, obviously. That guy is just, it's phenomenal what he's done in football. It's just magic. But I love the fact that FTX is wanting to become a household name because it really is true that eventually everybody will use this asset class. And you want to basically stake your market share now. That makes total sense to me. But what I was able to do, and it took me six months, it took a long time, when we were building

up the platform to actually get my internal compliance department to even let me stake Stablecoin, they said, show me the reports. How do we check in on the leverage you've got on at any one second of the day before the market closes? And that was the key to be able to say, look, here's the FTX platform. Here's all my 32 positions. You can go online and look at it any second you want. And we'll close out at the end of the day, although the crypto markets are 24-7. You can come on any time you want and look at it. I started internal compliance, got them on board. Then I went to my external auditors and said, well, you signed my statements. And they said, are you kidding? This stuff is unregulated. Six months later, I got them on board. Then I went to my external auditors and said, well, you signed my statements. And they said, are you kidding? This stuff is unregulated. Six months later, I got them on

side. So this is the birthing pain of every institution trying to get into this and getting their compliant departments, which have been around for decades, to actually work with this stuff when we have such nasty platforms. I think it's funny. And I said the same thing, Sam and I were actually discussing this. It's hard, obviously, to mark to market or know exactly what's happening at any given time for your risk manager, but it's actually far easier in crypto than it is in other markets, right? I mean, we saw, obviously, for example, Elon Musk go on Twitter and say, should I sell 10% of my Tesla shares? I believe that was on a Saturday. And on FTX, you could see, because it's tokenized Tesla stock, the actual movement over the weekend

before it happened in the market on a Monday. And that's the power of crypto trading 24-7. Actually, you probably have a much better gauge of what's going on every minute of every day. Yeah, I love the tokenization of an equity. I'm very grateful for Sam for tokenizing WonderFi because I love that company. And he's also a shareholder in it. And it's a fantastic platform that we are able to offer 24-7 trading for tokenized form of equity, which is going to be more and more adopted over time. But the real issue here is to get, and I keep saying this over and over again, because the crypto community is a fantastic community. There's so many great ideas,

but we're not there yet until we can get the sovereign pension plans to be able to allocate their 3% to 5% weighting, because that's where the real money is. And we're just not there yet. We've got a lot of work to do. And what I love about the FTX guys is I've had sessions with some of the designers and developers that are saying, look, guys, add this report. We're going to need this for compliance. Add this report. Because it was born out of the necessity and need to trade globally. But now as institutions and compliant, people are starting to use the platform. They're adding those features that are going to make it better and better and better to be something an institution can work with. The FTX team is

incredibly light on their feet. I mean, they can list an asset within an hour of being interested in doing it when it would take another platform literally months or years to do it. And I think that that's the benefit of being young and fast. So I'm not surprised to hear that if you give them feedback, they're immediately reacting and giving you what they need because they're notorious for that. They're famous for it. That's just something that is not going to exist in other markets. I've never seen an organization that's that large be this nimble anywhere. So clearly, Sam has kept that entrepreneurial vibe going right through as they've grown this into multiple countries.

I mean, there's different teams. You can talk to the team that deals with the Middle East, talk to the team that works with Canada, whatever. But the point is, it's very entrepreneurial. And they move quickly, as you suggested. I've really enjoyed working with them. Something that really resonated with me when you were just talking about the wonderfied deal with Bitbuy is that it's a combination of sort of DeFi, decentralization, and a centralized exchange that's highly regulated. I think in crypto, there's this notion that it's very black and white, centralization versus decentralization, and it's a war. But the reality for everybody is that it's

a sliding scale. Everything in the middle is gray. And the happy medium for most people is probably going to be somewhere on that sliding scale, right? Very few people are going to be fully decentralized and very few people want their money fully on centralized platforms. There's another narrative. In addition, I agree with those comments, but something else is emerging very quickly in the institutional market. Many institutions cannot actually own Bitcoin directly or Ethereum directly. So they take proxies. They try and find equities that are basically proxies to the volatility of the pricing of Bitcoin and cryptocurrencies.

And one of the narratives that they've, and I've heard this multiple times in just the last few weeks, is it's all about customer acquisition costs. So when you're acquiring a customer in a centralized platform, like an exchange with a dealer broker, such as Bitbuy, and that same individual decides that they want to hold their NFTs in a decentralized wallet and you don't have one, all the money you spend acquiring that customer is lost as they go drift off somewhere else. You want to keep them in your ecosphere, which is why I love what Ben is doing over at WunderFi, because he said, if they want decentralized, we got it. If they want centralized, we've got it. If they want a broker dealer account, we've got it. So he's capturing his customers, 375,000 plus of them so far, many more to come, I'm sure,

and offering decentralized apps and giving them full service. That really rings true to me as an investor, because now I can use this as an equity, give it a 5% weighting in a fund or whatever in my operating company and say, this is a proxy to anybody interested in dealing in crypto, whether it's centralized or decentralized. But the customer acquisition cost, the bigger it grows, is less and less. That is going to be a constant. Companies are going to survive in this space, are going to consolidate quickly, get large, reduce customer acquisition costs, and provide full service. That's what they're doing. And that's the mandate. At least that's what he's communicating to investors at WonderFi. So you effectively have to become a one-stop shop for everything crypto. And in doing that, make the UX and UI so simple that grandma can use it, right? And I think those

have been the biggest challenges. Like you said, you have to go open this MetaMask wallet to put ETH and open this and go on this other platform. And you find that your money is in 17 different places. Your NFTs are in a different place. You can't get out to dollars in any of those places, right? So you need to go to a centralized exchange and it's complicated and most people don't know how to use it. To me, that is the biggest barrier to mainstream adoption. That is the best statement I've heard in weeks about how the problem is, and at the same time, the opportunity. It is so difficult. I had to hire three separate people just to manage our staking desk, just to deal with the fact that we're trying to maintain all these wallets and the security involved.

We need more transparency. We need more security. And above all, we need more simplicity. I mean, it shouldn't be that hard because you've got hundreds of thousands of people, if not millions, that are sitting on maybe $14,000, $15,000, $20,000 in their saving account making nothing that would love to make 6% a year if they could figure out how to stake a stablecoin and they have no idea how to do it or get the tax reporting they need in all the jurisdictions they have to report it. It's a nightmare, but such an opportunity. It is a nightmare and such an opportunity. Absolutely. And you talked about sovereign wealth and pensions, sort of the final boss, I guess we would describe it, this huge wall of money that could come into crypto.

And they tend to do it through proxies, right? We've obviously seen micro strategy stock described as sort of a Bitcoin ETF. You have them in Canada, Brazil, other places. But I think, in my opinion, a Bitcoin spot ETF in the United States would likely be the vehicle that would allow the really big money to come into the space. I agree with you. The minute an ETF comes with the underlying being a mark to market Bitcoin itself, that will be a multi-billion dollar ETF in 24 hours. That's my opinion. Because it will let you in any equity portfolio simply buy the ETF for the 3% to 5% weighting you want. Then you've got your exposure directly to the price of a Bitcoin. I don't like that product

with futures because there's a lot of tracking error with futures. It's got to be the real thing. Now, there may be an issue around institutions that say, I don't know where the coin was mined, so I need it to be coins that I know are mined ESG compliant. You've seen a lot of that coming out of BlackRock, the Larry Fink letter every year. I mean, it'd be really great to get some clarity because that's the largest asset manager on Earth. And they have their own ESG committee. And they're dictating a lot of policy on hydrocarbons and all kinds of other issues.

And generally speaking, it's being well received by the institutional client. Bitcoin is not high on their list as a clean asset yet. So the industry has some work to do in terms of getting, and I keep saying this, it's all great if you wanna buy some Bitcoin, but if you really wanna see it achieve $100,000 and above, it has to be compliant on an ESG basis to institutions. It just has to be, because that's the next wave up.

I think we're gonna solve it probably in the next 24 months. Do you think that if that's solved, that that would be more fuel for the fire for the argument of a spot ETF? Or do you kind of have the feeling, my feeling, maybe I'm a skeptic, is that they sort of punted, they gave the futures ETF, they shut the industry up to a large degree and said, we're going to kick the can down the road and not even really entertain a spot ETF for quite a while. I think you're right. I wouldn't be that optimistic that the spot ETF is coming. I would be more optimistic that a ruling on stablecoin is coming. Stablecoin is a massive asset class. Now, if Circle has to turn itself into a bank, they'll probably do it. I'm just speculating. But the point is, I use that platform too. And that platform is, I use that platform too.

And that platform is getting better and better and better every month. And so again, it's all about compliance. When you're rolling contracts, 30-day contracts, and you've got your compliance department saying, where did that money go? Where is it right now? Where can I mark to market it at 401? The platform has to deliver that stuff. And slowly they are. Slowly they are. I'm an investor in Valkyrie, which is one of the companies that launched one of the two first futures ETFs. But even I am a skeptic of that product for all the reasons that you said. I mean, you saw when ProShares launched, they literally couldn't even buy enough contracts and had to go out two, three, four months, which obviously is just a massive, massive divergence from the actual spot price

of Bitcoin. Maybe the ESG argument is the reason, but I personally, I don't know, I find it very frustrating that they didn't just approve a spot ETF in the first place. Canada did it, right? Canada has made it happen. It's been an extremely popular product. that a lot of people don't understand because I deal with it every day. You can have a debate about it when it comes to mining coin, being awarded coin and the network fees that you get being different than the coin that's being awarded and all the rest of that. But having an ESG argument with your ESG officer about Bitcoin is pointless. They're not going to change their mind unless you can prove to them that it is done according to the rules that they haven't decided to standardize on. I find it hilarious. People say, oh, I'm going to go and talk to my ESG officer and convince him I can buy Bitcoin. No, it's not going to happen. And it isn't. And it doesn't. And so this issue is not going away.

It will come up again at Bitcoin 2022 this year in February. It'll be a huge issue because the demand is insatiable. Somebody's got to solve this. And I think as an industry, we will. I'm looking at investing in miners that can prove to me that they're keeping their coin on their balance sheet, that I can be an equity shareholder, and they're 100% zero emission, or at least have done it in a way that they can prove in an audit

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Visit thewolfofallstreets.link slash bullish for important information and risk warnings. And like you said, that will be solved. Pivoting away from crypto for a second, listen, I know that you've had notoriously great investments, a lot of them in your very long career. What was the worst investment that you ever made? And what was the key mistake that you think you made when you decided to take that investment? Well, I've had plenty of mistakes and plenty of errors. The important thing is I don't make them twice. And so as an investor, you're not going to get it right every time. I learned from every one of my mistakes. I cry like a baby when I lose money because it's hard to make it. But one of the biggest lessons I learned is I

like to put my mistakes as lessons. At a time when multi-user games were taking off, I went to one of the large telcos and I had a pretty good track record in the software business and said, look, I think there's a way to turn this into a multi-offering cable channel. So that instead of you having to buy subscriptions for one game at a time, let's give you 50. Let's aggregate it and split the proceeds across the different providers with one single streaming service. I was a little nascent a little early, but the telco liked it. I won't mention which one it was. And we spent two years and a lot of my money getting this platform up and running. The difference between a startup, an entrepreneurial startup that's able to pivot very, very quickly and a giant telco is day and night.

You can't get anything done overnight in a giant telco. It takes months. Yet we needed their infrastructure to make this thing work. That was a massive failure for me, and it taught me a lesson. I'm never partnering with a behemoth again. I'm not going to do that. I'm always going to work with my team, find great developers, build up a business, and then sell it to a strategic if they want it, but I'm not going to partner with them anymore. That's a lesson learned the hard way. It was very expensive, but I'll never forget it. That's a great lesson. And I'm really curious if they had been able to move faster, do you think that the platform would have been a success or was it one of those cases where maybe you were

just too early? As you said, it was nascent and maybe you just had an idea because now obviously we've seen this massive boom in gaming, right? It's one of the biggest industries in the world. So obviously we're on the right track. I, no, no, that, that company was going to be the first to do this and it would have been very valuable had they executed. And I look, you always blame your partner when it doesn't work out. I'm sure there's lots of fault. There's lots of fault on my hands too, but we were very, very early.

We had an incredible team. I went back and got the best developers I knew. And we built this thing out. It was nascent. But the growth was 30%, 40% a year in gaming, even at that time. And so I think it's just one of the ones that got away. But luckily, every day, right now, I've got 35 different private positions on all kinds of different companies in all 11 sectors of the economy. Some are winners. Some are losers. Each

day, and I always say this to people, I get a call in the morning, this euphoria, we're getting sold for $100 million or whatever it is. And then a minute later, somebody say, I need you to send me another half a million. I'm going bankrupt. It know, it's kind of like it's it's the passion play. It's a complete and I've grown to deal with it. It's sort of like portfolio analysis. You're not going to have only winners. You're not going to have only losers. But luckily, I've had more winners than losers, and I get a pretty good return each year off

this portfolio. What do you make of the new movement towards play to earn gaming since you've been in that space before? Is that something that's exciting to you? Do you think that it will work out or do you think it'll be a flash in the pan? No, I think it is going to work out. There's been a lot of talk about NFTs inside of gaming as well and letting you trade your token after you've been awarded it. I don't think that's going to happen the way people think because I don't think the gaming companies want their IP trading away from them. So we'll see how that develops. But the whole idea that you can use your skills

and be rewarded based on your ability to be a good performer is the essence of what gaming is all about. And now you're able to monetize it. You know, I think that will work. I think there'll be a lot of experimentation to it. And also you've got to be careful when you drift into that space that you're not breaching any of the gambling laws. And so, you know, there's a lot of that risk as well. That would be a state by state mandate, which really confuses a large gaming platform that one player in New York can do something someone else in Florida can't do. That's a problem. Yeah. I mean, that's been a problem for DraftKings, online, any kind of online gambling, poker. We've seen it in real time, especially in crypto, right? Exchanges that have the guts to

even try to operate in the United States have to go state to state. It's a very difficult system, almost impossible to be compliant everywhere. Yeah. The way it manifests itself when you look at the income statements of these companies, the extent you can see them is their customer acquisition costs keep going up every year. The complexity of know your customer and knowing how to geolock them and make sure they stay compliant off their mobile devices as they travel around the country is a nightmare, is a nightmare. And it's very expensive. Yeah. So we obviously both agree that inflation is a problem. You talked about your entrance into stable coins, trying to fight against that. Crypto aren't the only assets in the world that you can use to hedge against inflation. What other hard assets are you still interested in,

even though you've made this foray into crypto? I still have a 5% weighting in gold. I use two different versions of it, the ETF, so I can be balanced on a quarterly basis. And I also paid a store bullion. And I've had that on my book forever. Gold performs during inflationary times, but I've also looked at other hard asset classes. I've got a massive watch collection. I've been collecting watches for years now. The appreciation in the last 18 months is stratospheric. I mean, I just look at my FP Jorns that I bought some at $28,000. They're now trading $130,000 20 months later. And so some of these very eclectic, high art watches have outperformed everything. And the market's actually quite liquid. People think, oh, watches are liquid. No, they're not. There's a lot of platforms you can sell watches. The biggest problem with this space is fraud. The price of these watches, particularly like Patek Philippe, FP Journe, Rolex, Patek, EP I mentioned. There's a lot of fraud to this.

And so you have to have a way to authenticate them, which is why I think NFTs are going to come into the watch market which is called micro scanning. You can take a micron level scan of the dial, put it into an NFT and re-scan the watch years later. And it will still tell you if it was the original watch scanned off any phone. And so I think we're going to start to see that kind of link between NFTs and physical assets, because it'll also solve for insurance. Let's say I want to travel with 10 of my watches and

leave the rest in a vault, so I can self-insure the ones in a vault. I just need insurance on the 10 I'm with that week. That can be done with an NFT too, and I can bid it out to three or four insurance companies and buy insurance for that period and save thousands of dollars. There's so much use case opportunity with NFTs in the jewelry market, the car market, the real estate market, any hard asset market with a smart contract, that's going to be a very big business. Could not agree more. And I love to hear that because usually we get into the conversation about the art side and the sort of JPEGs, which I think is largely a speculative bubble. The real use case of NFTs is provenance and eliminating any third party from a transaction where they're unnecessary, right? And when you combine those two things, it's endless. I don't see how someone can't be bullish on NFTs when

they really dig in to those use cases. They're already seeing it, right? People authenticating wine, another place that there's a lot of forgery faked. But it will be very interesting to see that side of the NFT market develop. Is there a way to invest in that that you've seen? There is. There's a company called Immutable Holdings, again, was taken public in Canada on the Neo Exchange. The Neo Exchange is one of the more progressive.

It certainly supports the crypto industry. It is the owner of NFT.com. Jordan Freed is the CEO. I'm an investor there as well. He is building out a curation system for anybody that wants to issue NFTs. But because he owns NFT.com, you can imagine many of the S&P companies

would like to have NFT.com forward slash put your brand here. And so they can curate their own NFTs in their own NFT space, and he'll be doing that. So I think there's lots of entrepreneurs out there. I'd like to invest in them because you want to have multiple bets in space. I love to own the picks and shovels, always. Not just the asset. I own gold, but love to own the picks and shovels, always. Not just the asset. I own gold, but I love to supply picks and shovels. And that's why I bought WonderFi in the exchange and Immutable Holdings.

And I'm an investor in FTX. I mean, these are core assets for the long term. And I think I'm anticipating there'll be very good returns over time. More features are built in and the regulator regulates. I think that's been sort of the unspoken narrative of 2021. 2020, we talked about microstrategy, putting Bitcoin on the balance sheet. And we came into the year thinking that everybody was going to invest in Bitcoin. But what really happened was institutional money, instead of buying Bitcoin, came in through VC and is flooding the space with money in the picks and shovels. That's where people are really interested. That's where the big money is coming in.

Yeah. And I'm very fortunate because I get to see a lot of these deals. I always want to meet the team as I've done for decades and pick my teams because you're betting. I go back to what we started this conversation. It's all software. There are no coins. It's software. If you get that in your head, it's much easier to make investment decisions. Yeah, I love that position. You have this huge watch collection. They've appreciated by hundreds of percent. Do you ever get tempted to just sell some of them because maybe we're in an asset bubble? Here's the challenge with that. When you get to a level in watch collecting where you know the makers, you know the maisons, you know the brands, you know the watch makers themselves. And I'm very fortunate, it's taken

decades, but today I don't buy many production watches. I have these great maisons make me one of a kind and I fund that. I don't ask for anything for free. But many of my pieces are one watch in the world. That's it. Just one. And it's made for me, to my design. And I honor the watchmaker in doing that. And there's no such thing as flipping, while I'm alive, a one-of-a-kind watch. If FP Journe makes me a one-of-a-kind FP Journe, it's because he personally made that decision to do that for me. The chance I'm going to sell it while I'm alive or he's alive is zero. Meanwhile, people are calling me up saying, can I get an NFT of that dial? I know I'll never own the watch, but I'd love to own the NFT. And I won't issue that until the maker themselves is part of the smart contract, because why shouldn't FP Journe get a piece of that? He created it. He's alive. He's the Picasso of the watchmaking industry, or Roger Smith, or any of the great makers that I work with now

to create these remarkable pieces. But when these are issued to me, the value of these things is, well, to me, they're priceless. The one downside is I come home and my wife looks at me and says, I'm going to hire somebody. You need professional help. You have so many watches that you can't even wear 10 of them a day anymore. And you still couldn't get through your collection in a year. You got to stop. But I said, why?

I work really hard. This is the one thing that I do. She said, that's not true. You You got to stop. I said, why? I work really hard. This is the one thing that I do. She said, that's not true. You've got 50 guitars. You've got 80 cameras. It's all true. But look, I'm obsessed with this stuff. I like to collect things that are beautifully made. And that's exactly why NFTs, even in the other iteration, the art side, over time, the good stuff will succeed. People, I think it's just a part of our human nature. We want to own things other people don't own. We love scarcity and we love collecting.

I don't know what it is about human nature, but I think everybody feels it. No, it's true. But what I've learned, going back to watch market, for example, I'm really encouraging people to dip their toe into this. You do not have to spend a quarter of a million dollars to get an incredible watch.

I'll give you an example. Longines, you can spend 500 bucks and get a really high quality dial. Grand Seiko, the most underrated watch in the world. I have multiple Grand Seikos. They're as good as Patek Philippe in my view. Fantastic, just the crunch of winding then. You know, getting into these different brands,

Avanti, amazing company out of Australia. It's so much fun to work with these entrepreneurs. The same way I do with software engineers. These people love what they do. They create one of a kinds. I'm going to be wearing a one of a kind at Bitcoin 2022. It is going to blow your socks off. You have never seen anything like this. And I love doing that because there's a real correlation between the Bitcoin community and watch collecting. Yeah, because people who understand scarce hard assets that will beat inflation seem to come together. Well, where can everybody follow along with everything that you're doing after this conversation? And of course, check out Wonderfi. Yes, yes. Well, Kevin O'Leary TV is my handle on pretty well all the social media platforms. I like to have a lot of fun on social media. I share my ideas there on Instagram, on Facebook, on LinkedIn. I've got millions of followers. I love their feedback. One of the things I'm going to be doing before Shark Tank season 14 is every year I pick eight watches. There's eight different looks. I wear the same suit, so I don't have to keep changing.

But if you look at Barbara, she's got eight different outfits. Or Lori, eight different outfits. So for each one of their outfits, I wear a different watch. And I actually go out to my social media community. I pull maybe 30, 40, 50 watches out of the vault and say, OK, let's pick eight. There's no more fun than that in the world. The amount, the diversity of opinion on these watches is really fantastic. I love doing it.

I have noticed that you always have a red band. Yes, that's a remarkable outcome. It started back in season four of Shark Tank. I showed up for season four and I was wearing a different color band. And this woman named Artemis had just taken over wardrobe. And she looked at me and I was, she came in, we're doing the trial before the first rehearsals. And she said, where's the red band? I said, I'm not wearing your band this year.

She said, yeah, you are. You're wearing a red band forever on Shark Tank. You wear a black suit with a red band. That's called continuity, my friend. Now chop, chop, go get a red band. So that's all I wear now. Every single watchmaker knows my red band and they make the red bands for me because I can't wear their piece unless it has a red band on it. And so it's a crazy outcome. But she's right. Continuity really matters on television. People have a certain expectation of what they're going to see. It upsets them when it's not what they expected. She's a genius that way. But now what I do is all my new pieces that are being proposed each year, I send them to her. I have her look at

them. I say, what do you think? What do you think? What do you think? She's got a great eye. And just determining which of the dials we're going to go with. Listen, there's no more fun on earth than picking watch dials. That's as good as it gets. It may sound crazy, but it's my kind of crazy. Well, listen, it may be a small nuance, but it's something that I've noticed from watching the show from basically from the very beginning. So whatever she did, she's doing it right because I noticed that you wear a red band. I have to say that I think seeing the transition from obviously being a Bitcoin skeptic, we all watched you on TV with Pomp arguing with him, to being such a huge ambassador and proponent

for this space has been really inspirational. And I hope that other billionaires like yourself are inspired to do the same and jump in the water with us. So thank you for that. Yeah, I got to tell you about that pump video. He sticks that to me every week. He's got like this revolving loop on that thing. And he just jams it to me every time. He has so much fun with that. It's ridiculous. That was years ago on Squawk Box, right at the time of the height of the regulatory pushback on tokens, coins, and asset classes that were tokenized. It was brutal out there. And Pop was singing the merits of Bitcoin. Good for him. But believe me, he never lets me forget it. Never. RAOUL PAL, MD, PhD He is relentlessly getting after it every day,

as he always likes to say on Twitter, for sure. And listen, to be fair, yours was probably the majority opinion at that time, right? And like I said in the intro, strong opinions loosely held. Yeah, no, it's fair. But as an investor, you've got to keep your ear to the track. You have to understand when the regulatory environment's changing, which it has for crypto in many jurisdictions, it's even getting better domestically. And as an asset class, I know, I'm sure I'm going to get up to 20% by the time in the next couple of years, which is what I maxed out at. So, you know, we'll see what happens. 20% is big. We'll look forward to seeing that. Thank you once again for

taking the time. I really do appreciate it. Really enjoyed it. Take care. Thank you.