Latest / The Paul Barron Crypto Show / Crypto Yields vs Bank Chains🔥Vault Adoption SURGE!🚀 Veda CEO Interview

Transcript

Crypto Yields vs Bank Chains🔥Vault Adoption SURGE!🚀 Veda CEO Interview · The Paul Barron Crypto Show

• 0:00
  Speaker 1: Banks are coming for yields and they're coming for them
• 0:02
  Speaker 1: in a new way as they start to challenge maybe
• 0:04
  Speaker 1: the vault market. Well, today we're going to break all
• 0:07
  Speaker 1: of that down with a special guest. I want to
• 0:09
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• 0:45
  Speaker 2: And let's just get started.
• 0:46
  Speaker 1: I want to bring in Sun Raghupathi, who comes in
• 0:49
  Speaker 1: as the CEO of Vita.
• 0:51
  Speaker 2: You guys have seen Vita out there. So how are you, Sun?
• 0:54
  Speaker 3: Doing great. Thanks for having me, Paul.
• 0:56
  Speaker 2: Excellent.
• 0:56
  Speaker 1: So first up, I want to hit on it for
• 0:58
  Speaker 1: some of those that don't understand Vita. Before we even
• 1:02
  Speaker 1: show TVL, I want to kind of learn a little
• 1:04
  Speaker 1: bit about what you guys are doing in the market.
• 1:07
  Speaker 2: Where do you find your place?
• 1:09
  Speaker 4: Yep.
• 1:10
  Speaker 5: Let's maybe start with the question of what vaults are.
• 1:13
  Speaker 5: I think that's central to everything we're going to talk about.
• 1:16
  Speaker 5: So we've seen an evolution of financial products over the
• 1:20
  Speaker 5: past few decades from funds to ETFs, right? And vaults
• 1:25
  Speaker 5: are the next progression of infrastructure for financial products. So
• 1:30
  Speaker 5: a vault is a way of packaging up different kinds
• 1:33
  Speaker 5: of tokenized assets into a single consumer product that people
• 1:37
  Speaker 5: can very easily deposit into.
• 1:39
  Speaker 3: And withdraw from.
• 1:40
  Speaker 5: And target a specific risk return profile. So think of
• 1:43
  Speaker 5: Vault as infrastructure for creating new financial products on crypto rails.
• 1:48
  Speaker 5: Where VEDA enters the picture is we are a platform
• 1:50
  Speaker 5: for creating Vaults. And so we provide the infrastructure layer
• 1:55
  Speaker 5: that asset managers, curators, or this term that get used
• 1:59
  Speaker 5: in crypto, fintechs, anyone who wants to offer their customers
• 2:03
  Speaker 5: exposure to on-chain yields can use our platform to build
• 2:07
  Speaker 5: products that meet their customers' risk return needs.
• 2:11
  Speaker 1: What would make you different than, say, something that Morpho
• 2:15
  Speaker 1: and Stakehouse Financial are doing when it goes into putting
• 2:19
  Speaker 1: your assets to work for yield, mostly in the credit market?
• 2:22
  Speaker 3: Yeah, great question.
• 2:23
  Speaker 5: Let's start with something like a Morpho, which is an
• 2:26
  Speaker 5: on-chain lending protocol. You can think of it as a
• 2:29
  Speaker 5: credit network. So Morpho creates markets on-chain that different borrowers
• 2:34
  Speaker 5: and lenders can come to and transact with each other.
• 2:37
  Speaker 5: And it's doing all of this in an on-chain native way.
• 2:40
  Speaker 5: So Morpho is actually one of the yield sources that
• 2:43
  Speaker 5: VEDA vaults can tap into, but there's a much larger
• 2:46
  Speaker 5: universe out there. When you look at the trend of tokenization,
• 2:49
  Speaker 5: where you're taking things like, you know, treasury bill products,
• 2:53
  Speaker 5: cash products, private credit funds, right? The whole universe of
• 2:57
  Speaker 5: assets that currently live off chain, but are moving on chain,
• 3:01
  Speaker 5: that sits outside of lending protocols like Morpho. And these
• 3:04
  Speaker 5: are the kinds of products that can go into a
• 3:07
  Speaker 5: vault built by VEDA. So think of VEDA as neutral
• 3:11
  Speaker 5: infrastructure that can access credit markets from Morpho. We can
• 3:14
  Speaker 5: access RWAs. Anywhere where you find on-chain yield, our infrastructure
• 3:19
  Speaker 5: can give you exposure to that.
• 3:21
  Speaker 1: Son, do you think that we are dealing with a
• 3:24
  Speaker 1: sophisticated enough investor now to where they can really understand
• 3:28
  Speaker 1: vaults in general, at least in the early stage? And
• 3:33
  Speaker 1: how quickly do you think we'll see uptake, adoption in
• 3:36
  Speaker 1: the next year?
• 3:39
  Speaker 5: This is a more philosophical question, even just thinking of
• 3:42
  Speaker 5: crypto and DeFi and the on-chain world. What we're seeing
• 3:45
  Speaker 5: with on-chain finance is a lot of the technical details
• 3:50
  Speaker 5: are hiding behind the scenes and being abstracted in normal
• 3:55
  Speaker 5: consumer and institutional experiences. And so this is just a
• 3:59
  Speaker 5: broad trend. So, you know, when you ask the question of,
• 4:02
  Speaker 5: do people understand vaults? I don't think consumers understand vaults.
• 4:07
  Speaker 5: And frankly, I don't think it's really important for them
• 4:09
  Speaker 5: to understand.
• 4:10
  Speaker 3: Vaults at a deep level.
• 4:11
  Speaker 5: But it is really important for the institutions and the
• 4:14
  Speaker 5: enterprises that are using this technology to build consumer products.
• 4:18
  Speaker 5: It is super important for them to understand it. And
• 4:21
  Speaker 5: I've been very, very impressed over the last 12 months
• 4:24
  Speaker 5: with how quickly traditional institutions have started to really grok
• 4:27
  Speaker 5: this technology. The largest banks in the world, the largest
• 4:30
  Speaker 5: asset managers are all extremely excited about vaults, and they
• 4:34
  Speaker 5: understand it far more deeply than you might expect.
• 4:38
  Speaker 1: So to put it into deployment cycles, because everybody looks at, well,
• 4:43
  Speaker 1: how fast do you see uptake? Obviously, we'll talk a
• 4:46
  Speaker 1: little bit about clarity because you have banks forming a
• 4:49
  Speaker 1: very interesting conglomerate now.
• 4:50
  Speaker 2: We'll talk about that as well. Before we jump to that.
• 4:53
  Speaker 1: Just to look at the TVL, this is a VEDA
• 4:56
  Speaker 1: right here just over the last few months, June into
• 4:59
  Speaker 1: where we're running. Obviously, there is some movement upwards on this.
• 5:03
  Speaker 1: The likelihood, though, of what we'll see in the coming months,
• 5:06
  Speaker 1: Morpho still leading the, you know, when you look at
• 5:09
  Speaker 1: vault infrastructure, Morpho still kind of at the top of
• 5:13
  Speaker 1: the heap, but you guys right there behind them. What's
• 5:17
  Speaker 1: the opportunity here in terms of a market? You know,
• 5:19
  Speaker 1: if you look at total addressable market, for any major
• 5:22
  Speaker 1: product or project that's out there, something like Aveda, where
• 5:27
  Speaker 1: will you guys be in a year?
• 5:30
  Speaker 5: Let me start at the end game of Vaults, and
• 5:32
  Speaker 5: then there's path dependence for how we get there. So Vaults, again,
• 5:36
  Speaker 5: are the next generation of asset management. It's what happens
• 5:40
  Speaker 5: when you take asset management and you build it in
• 5:42
  Speaker 5: an on-chain native way, which means it's cheaper to create products,
• 5:46
  Speaker 5: it's better UX, it's higher yield because you can build
• 5:49
  Speaker 5: more interesting products. So I fully believe the trend of
• 5:53
  Speaker 5: progress is going to be all of asset management moving
• 5:56
  Speaker 5: on chain through vaults. And that's a multi trillion dollar market.
• 5:59
  Speaker 5: That's hundreds of trillions of dollars. Right. But that's that's
• 6:02
  Speaker 5: the end game. Maybe that's 10 years, 20 years away.
• 6:04
  Speaker 5: Right now, in the short term, where we're seeing the
• 6:08
  Speaker 5: most adoption in this category is actually with fintechs. So
• 6:12
  Speaker 5: these are companies that have stable coins and they have
• 6:15
  Speaker 5: a global user bases who are sending money around.
• 6:17
  Speaker 4: Right.
• 6:18
  Speaker 3: They want to save in dollars.
• 6:19
  Speaker 5: And so vaults have emerged as a really powerful tool
• 6:23
  Speaker 5: for offering those global users who previously maybe haven't had
• 6:26
  Speaker 5: exposure to like great assets, even to U.S. dollars, frankly,
• 6:30
  Speaker 5: and giving those users a way to earn yield. And
• 6:33
  Speaker 5: so that's what most of the growth in the category
• 6:35
  Speaker 5: has been. These are users who can't just, you know,
• 6:38
  Speaker 5: buy U.S. treasuries off the market.
• 6:39
  Speaker 3: Right.
• 6:40
  Speaker 5: Like they don't have traditional financial infrastructure. And so stable
• 6:44
  Speaker 5: coins with vaults following very closely behind. allows anyone in
• 6:47
  Speaker 5: the world to have an on-chain savings account where they're
• 6:50
  Speaker 5: earning good yield. So that's the short term. In a year,
• 6:53
  Speaker 5: I expect a lot of growth in this category. Some
• 6:56
  Speaker 5: of the largest fintechs on the planet are building vault
• 6:59
  Speaker 5: products today. And so I expect to see multiples in growth.
• 7:04
  Speaker 5: But the bigger picture really is where trillions in AUM
• 7:08
  Speaker 5: exists is in traditional finance. And upgrading all of those
• 7:11
  Speaker 5: products is really the long game for this category.
• 7:15
  Speaker 1: What about you look at, obviously, we'll talk about the
• 7:18
  Speaker 1: Kraken partnership, and I want to learn more about that.
• 7:20
  Speaker 1: But when you look at something that even Robinhood is
• 7:22
  Speaker 1: doing right now, they're offering their stablecoin USDG with these.
• 7:28
  Speaker 2: Unusually high yields right now.
• 7:30
  Speaker 1: I think it's 7% in the app. It's putting it
• 7:33
  Speaker 1: to work through the channels of Morpho and Stakehouse Financial,
• 7:36
  Speaker 1: et cetera, to be able to yield that. They tack on,
• 7:39
  Speaker 1: I think it's a Lloyd's of London insurance policy. So
• 7:42
  Speaker 1: there's kind of a pseudo security blanket there. Do you
• 7:47
  Speaker 1: think that kind of activity is going to put pressure
• 7:51
  Speaker 1: on vaults, especially when you see those kind of yields
• 7:53
  Speaker 1: coming in?
• 7:55
  Speaker 5: Yeah, so that product is a vault product, right? This
• 8:00
  Speaker 5: is exactly the kind of product that there is universal
• 8:03
  Speaker 5: demand from. Now, 7% is really high, right? Like there's...
• 8:08
  Speaker 5: sort of no free way to get those yields. It's
• 8:11
  Speaker 5: either going to be some form of marketing subsidy or
• 8:14
  Speaker 5: users are taking a little more risk to get that return, right?
• 8:18
  Speaker 5: And so I think what's really important is that different fintechs,
• 8:22
  Speaker 5: different companies, different user bases all have different requirements for
• 8:25
  Speaker 5: risk return. There are users out there on fintechs, not
• 8:29
  Speaker 5: on Robinhood, because Robinhood has great investment products, but take
• 8:32
  Speaker 5: payment companies that specialize in cross-border remittances, right? Their users
• 8:36
  Speaker 5: are earning nothing And even giving them access to a
• 8:39
  Speaker 5: money market fund product through vaults is an infinite improvement, right?
• 8:44
  Speaker 5: So I think Robinhood is one sort of market participant type.
• 8:49
  Speaker 5: It's an archetype, right?
• 8:50
  Speaker 3: These are sort of brokerages who.
• 8:51
  Speaker 5: Have tons of assets on platform, and they need really
• 8:54
  Speaker 5: differentiated products for it to move the needle. 7% is
• 8:58
  Speaker 5: a great way of differentiating, but I don't think that's
• 9:00
  Speaker 5: the whole market, right? There's just so many different types
• 9:02
  Speaker 5: of players who benefit from this technology.
• 9:05
  Speaker 1: How quickly, Sun, do you think we'll see it in
• 9:07
  Speaker 1: something like a Revolut, a SoFi, those kinds of products
• 9:11
  Speaker 1: that are out there that aren't full-fledged banks, kind of
• 9:14
  Speaker 1: a neobank layer to traditional finance? Do you think they'll
• 9:18
  Speaker 1: make it first, or do you think the efforts of
• 9:21
  Speaker 1: the banking industry might get there first?
• 9:23
  Speaker 4: Yeah.
• 9:24
  Speaker 5: I think neobanks are already there, frankly. Some of the
• 9:27
  Speaker 5: largest users of vault today are neobanks. And the big
• 9:31
  Speaker 5: dogs are going to be doing this very quickly. It's just,
• 9:34
  Speaker 5: it's a very intuitive, right? FinTech moves a lot faster
• 9:37
  Speaker 5: than TradFi. We're going to continue to see that play out.
• 9:40
  Speaker 5: But I'm sure you agree, right? This creates a lot
• 9:42
  Speaker 5: of pressure, right? Banks are clearly very concerned with yield.
• 9:46
  Speaker 5: This is why it's central to the issue of clarity.
• 9:49
  Speaker 5: And vaults are that core primitive for generating yield. So
• 9:52
  Speaker 5: I fully expect to see TradFi move faster as these
• 9:55
  Speaker 5: products gain adoption in FinTech because that's an existential risk
• 9:59
  Speaker 5: to them.
• 9:59
  Speaker 2: Yeah, for sure.
• 10:01
  Speaker 1: I want to play a clip off the tokenized pod.
• 10:04
  Speaker 1: I think you responded to this clip. And it's talking
• 10:07
  Speaker 1: about vaults because you're looking at a risk versus reward.
• 10:11
  Speaker 1: And I think this is something that even sophisticated investors
• 10:15
  Speaker 1: will start to question.
• 10:16
  Speaker 2: Let me go to that clip.
• 10:17
  Speaker 6: I think that the big question is how you scale
• 10:20
  Speaker 6: the actual collateral forms in the ways that these vaults
• 10:24
  Speaker 6: function over time. And it feels like a lot of
• 10:28
  Speaker 6: the early iteration of what's behind these urn products and
• 10:33
  Speaker 6: vault products It's basically CBBTC. It's Coinbase's Bitcoin as collateral.
• 10:39
  Speaker 7: I'm not very relaxed when I see this phenomenon. Even
• 10:42
  Speaker 7: the super safe version, I'm pretty sure that if you
• 10:44
  Speaker 7: could choose, are you going to give money directly to
• 10:46
  Speaker 7: the government for 3% or are you going to invest
• 10:50
  Speaker 7: in a permissionless, over-collateralized BTC margin lending vault curated by
• 10:57
  Speaker 7: an unknown entity for the same amount?
• 10:59
  Speaker 2: What would you do? All right, so you had a
• 11:02
  Speaker 2: response on that.
• 11:04
  Speaker 1: And just to show people kind of the comparing yield
• 11:07
  Speaker 1: volatility with counterparty risk, these are some of the examples
• 11:11
  Speaker 1: right here. And looking at Treasury bills there, like up
• 11:15
  Speaker 1: to three and a half, low risk, very low counterparty.
• 11:19
  Speaker 1: You can see the rundown even down into money markets
• 11:21
  Speaker 1: right now, around 5% at the high, very low, very
• 11:24
  Speaker 1: low counterparty. But then you get into staking on USDC.
• 11:30
  Speaker 1: staking on Bitcoin, staking on Ethereum, all of these starting
• 11:34
  Speaker 1: to layer in much higher yields, there's a lot more
• 11:37
  Speaker 1: risk on this.
• 11:38
  Speaker 2: So risk to reward. Sell me on this one, son.
• 11:43
  Speaker 4: Yeah.
• 11:44
  Speaker 5: So love that clip. I think there's a lot of
• 11:46
  Speaker 5: truth in that, right? The spirit of this is that
• 11:51
  Speaker 5: some of these vault products, some of these DeFi products
• 11:54
  Speaker 5: don't even materially get you higher than.
• 11:58
  Speaker 3: The risk-free rate. government and treasuries.
• 12:00
  Speaker 5: Right and so there's a really valid existential question are
• 12:03
  Speaker 5: those should those products even exist but i would actually
• 12:07
  Speaker 5: argue this is a false dichotomy it's not like one
• 12:10
  Speaker 5: is strictly better than the other in all ways so
• 12:13
  Speaker 5: as an example yes you could argue u.s treasuries for
• 12:17
  Speaker 5: many people it's like the perfect product but most people
• 12:20
  Speaker 5: in the world don't have access to u.s treasuries right
• 12:23
  Speaker 5: if you're someone in you know venezuela whose currency is
• 12:28
  Speaker 5: just going to zero, right? And you don't have dollars,
• 12:32
  Speaker 5: you clearly don't have traditional banking infrastructure, US banking infrastructure
• 12:36
  Speaker 5: to be able to access treasuries. You're not deciding between
• 12:39
  Speaker 5: these two things. You may only have the option of
• 12:42
  Speaker 5: getting a low yield, highly liquid savings account built on
• 12:47
  Speaker 5: DeFi infrastructure. And so that's one sort of response to this.
• 12:51
  Speaker 5: It's like, this is a totally false dichotomy. For the
• 12:54
  Speaker 5: people who have access to great assets, Some of this
• 12:57
  Speaker 5: stuff doesn't matter, but billions of people in the world
• 12:59
  Speaker 5: do not have access to good assets. And what we're
• 13:02
  Speaker 5: building here in crypto, in DeFi and on-chain finance, is
• 13:05
  Speaker 5: a way to bring good financial products to the rest
• 13:09
  Speaker 5: of the world.
• 13:10
  Speaker 3: Okay, so that's one point.
• 13:11
  Speaker 5: The other point I'll make is that I see these
• 13:14
  Speaker 5: things as two different asset classes. So everything that's happening
• 13:18
  Speaker 5: in on-chain finance with these on-chain native lending protocols, lending
• 13:22
  Speaker 5: against Bitcoin, which is what Kai was talking about in
• 13:24
  Speaker 5: that clip, that is a different asset class than something
• 13:28
  Speaker 5: like a U.S. Treasury, than something like a traditional credit fund.
• 13:31
  Speaker 5: And we're going to see the lines between these things
• 13:33
  Speaker 5: blur over time as more of those traditional products move
• 13:37
  Speaker 5: on chain. And so I totally reject the idea that
• 13:42
  Speaker 5: traditional finance is already meeting all of the needs for
• 13:45
  Speaker 5: people and these products provide no value. I think there's
• 13:48
  Speaker 5: risk involved, but at the end of the day, people
• 13:50
  Speaker 5: don't have access to good assets. What we're doing here
• 13:53
  Speaker 5: is we're trying to bring billions of people financial, you know,
• 13:57
  Speaker 5: exposure to good financial assets.
• 13:59
  Speaker 1: What do you make of the announcement? We had the
• 14:02
  Speaker 1: Bank Chain Alliance formed, 39 U.S. state bank associations now
• 14:06
  Speaker 1: launching this.
• 14:08
  Speaker 2: There's almost every.
• 14:09
  Speaker 1: Major bank out there, including J.P. Morgan, who also is
• 14:12
  Speaker 1: trying to launch a stable coin. All of this in
• 14:16
  Speaker 1: timing with the fact that we've got the Clarity Act
• 14:18
  Speaker 1: coming up, hopefully in September, whether we get a vote
• 14:21
  Speaker 1: or not. but it's clear that the banks are moving forward.
• 14:25
  Speaker 1: How much of an impact does this have in the
• 14:27
  Speaker 1: structural framework of how they're going to build to compete
• 14:32
  Speaker 1: with products like Veda?
• 14:34
  Speaker 5: Yeah, first of all, I think this is amazing, right?
• 14:37
  Speaker 5: Like if the only outcome of what we've all done
• 14:40
  Speaker 5: as an industry is we have forced incumbents to innovate
• 14:45
  Speaker 5: and give their customers better products, that alone is worth.
• 14:48
  Speaker 3: The effort, right?
• 14:50
  Speaker 5: I also think this means there's a large opportunity for
• 14:52
  Speaker 5: infrastructure providers in the space like VEDA, because the customer.
• 14:56
  Speaker 3: Base has evolved drastically over the last couple of years.
• 14:59
  Speaker 5: It has evolved from DeFi native, crypto native protocols, and
• 15:03
  Speaker 5: at best, very innovative exchanges like Coinbase to now customer
• 15:08
  Speaker 5: base can be traditional institutions who have millions and millions
• 15:11
  Speaker 5: of users and potentially trillions of assets. I think this
• 15:14
  Speaker 5: is really exciting. I'm excited to see more competition in
• 15:17
  Speaker 5: the space. I think banks and TradFi institutions have advantages
• 15:21
  Speaker 5: and disadvantages. We'll have to see who wins, but I'm
• 15:24
  Speaker 5: excited to help everyone who's interested bring their assets and
• 15:27
  Speaker 5: their customers on chain.
• 15:29
  Speaker 1: I want to bring in Senator Lummis, a clip from her,
• 15:32
  Speaker 1: because this gets into the point that you're kind of
• 15:34
  Speaker 1: making here is that TradFi has finally woken up to
• 15:38
  Speaker 1: this idea and maybe is trying to get the rules
• 15:41
  Speaker 1: of the game changed a little bit.
• 15:43
  Speaker 2: Let's go to that.
• 15:44
  Speaker 4: The banks... want changes to the Genius Act, which was
• 15:49
  Speaker 4: the stablecoin bill that passed last summer. They want the
• 15:52
  Speaker 4: changes in the Clarity Act. And so they've been working
• 15:57
  Speaker 4: hard on the Republican side of the aisle to scuttle
• 16:00
  Speaker 4: our bill until they get what they want. Now, Senator
• 16:03
  Speaker 4: Tillis on our side, and Senator also Brooks, they came
• 16:08
  Speaker 4: up with a compromise with the banks, with their lobbyists.
• 16:13
  Speaker 4: The banks later fired their lobbyists and now want a
• 16:16
  Speaker 4: do-over because they didn't get everything they wanted.
• 16:20
  Speaker 2: All right, so there you have it.
• 16:23
  Speaker 1: Banks now starting to flank around this, coming into, I think,
• 16:28
  Speaker 1: the comparison of where TradFi is going to be.
• 16:31
  Speaker 2: Then you could also look at even what.
• 16:34
  Speaker 1: Commissioner Hester Pierce talks about, and she's getting to the
• 16:37
  Speaker 1: point of that crypto vaults and on-chain lending strategies may
• 16:41
  Speaker 1: fall under securities law. This could change things dramatically as well.
• 16:46
  Speaker 1: When you look at the positioning here from the SEC,
• 16:50
  Speaker 1: you look at what the banks are doing and where
• 16:53
  Speaker 1: currently vaults reside today. How do you think this is
• 16:57
  Speaker 1: going to play out in the next few months? Because
• 16:59
  Speaker 1: obviously September is a big month.
• 17:02
  Speaker 5: So the thing that banks are the most terrified of
• 17:06
  Speaker 5: is paying dollar rewards to customers who are just holding
• 17:11
  Speaker 5: dollars in their account.
• 17:12
  Speaker 3: They think this.
• 17:13
  Speaker 5: Totally undermines the value prop of banks. There are concerns
• 17:17
  Speaker 5: about how this affects the monetary state of things. That
• 17:26
  Speaker 5: is actually very.
• 17:27
  Speaker 3: Bullish on vaults, in my opinion. What vaults are is a.
• 17:30
  Speaker 5: Way for people to productively deploy their assets on chain.
• 17:34
  Speaker 5: And banks are not fighting against that. In fact, if
• 17:36
  Speaker 5: banks have their way, This will be the only legal
• 17:39
  Speaker 5: way to actually earn on idle stable coins is to
• 17:42
  Speaker 5: put them to work. So it's clearly, you know, we
• 17:46
  Speaker 5: could talk about this. It's like Taylor's as old as time, right?
• 17:49
  Speaker 5: Banks are protecting our interests. They're worried about this technology
• 17:52
  Speaker 5: eroding their value prop. And they're free to do that, right?
• 17:55
  Speaker 5: But there are alternatives. And crypto is always, our goal
• 17:59
  Speaker 5: is always to provide access to the widest array of people.
• 18:01
  Speaker 5: And so people are going to, fintechs and, you know,
• 18:04
  Speaker 5: financial institutions are going to find a way to do that.
• 18:07
  Speaker 3: So that's on the one hand.
• 18:09
  Speaker 5: In terms of what the SEC is doing, this is
• 18:12
  Speaker 5: not only inevitable, paying attention to this category and trying
• 18:16
  Speaker 5: to set some.
• 18:17
  Speaker 3: Rules of the road.
• 18:18
  Speaker 5: It is actually really good for the category. I can't
• 18:21
  Speaker 5: tell you how many traditional institutions are really, really bullish
• 18:26
  Speaker 5: on vaults and in the on-chain world in general, but
• 18:29
  Speaker 5: they don't know how to interact with these products in
• 18:31
  Speaker 5: a compliant way. And so getting answers to these regulatory questions,
• 18:36
  Speaker 5: when are these securities going What are the requirements of
• 18:39
  Speaker 5: the technology that differentiate one offering from another? This is
• 18:43
  Speaker 5: going to open up the space 100x or more. And
• 18:45
  Speaker 5: so I think the SEC we have today is one
• 18:50
  Speaker 5: of the best equipped to do this job. And so
• 18:53
  Speaker 5: I fully welcome more attention on this space because I
• 18:56
  Speaker 5: think it's better.
• 18:56
  Speaker 3: It's best for everyone.
• 18:59
  Speaker 1: So you have a lot kind of facing the SEC potentially,
• 19:03
  Speaker 1: especially if the Clarity Act does not go through. Clarity
• 19:05
  Speaker 1: Act now dropping down to 15% chance of probability for 2026.
• 19:11
  Speaker 2: So that puts a lot of.
• 19:12
  Speaker 1: Pressure on the SEC and the CFTC to do rulemaking.
• 19:15
  Speaker 1: And with that in place, we'll kind of throw the
• 19:20
  Speaker 1: political arena that is about to happen if the Democrats
• 19:24
  Speaker 1: take the Senate. and what that's going to look like
• 19:27
  Speaker 1: for crypto in the next six months, 12 months down
• 19:29
  Speaker 1: the road. But one thing is for sure, the SEC
• 19:32
  Speaker 1: and the CFTC are going to go to work. Where
• 19:35
  Speaker 1: do you think they set up the guardrails for vaults
• 19:39
  Speaker 1: based on a clarity act not going through?
• 19:43
  Speaker 5: What I would love to see, and for the record,
• 19:46
  Speaker 5: VEDA has been engaging with the SEC for the last
• 19:49
  Speaker 5: six months. So none of this is surprising. I think it's, again,
• 19:53
  Speaker 5: great that they're paying attention and they've been really willing
• 19:57
  Speaker 5: to learn about this category at a deep level. What
• 20:00
  Speaker 5: I would love to see are concrete rules about the
• 20:05
  Speaker 5: requirements of the technology, right?
• 20:08
  Speaker 3: Because here's the thing.
• 20:08
  Speaker 5: People say a vault to me a hundred different things.
• 20:11
  Speaker 5: This is one of my biggest gripes with vaults.
• 20:13
  Speaker 3: As a category.
• 20:15
  Speaker 5: You have vaults that are clearly just like hedge funds
• 20:18
  Speaker 5: that are on chain and are absolutely should be, you know,
• 20:21
  Speaker 5: treated that way.
• 20:22
  Speaker 3: And then you have.
• 20:23
  Speaker 5: Products that are truly non-custodial, right? They have cryptographic guarantees
• 20:27
  Speaker 5: for users and nobody's taking custody on behalf of users
• 20:31
  Speaker 5: or is taking discretion with assets. That's a very, very
• 20:34
  Speaker 5: different setup.
• 20:35
  Speaker 3: And it should be regulated differently.
• 20:37
  Speaker 5: So this is the thing I would love to see.
• 20:38
  Speaker 5: It's like, how do we classify these different products? How
• 20:41
  Speaker 5: do we come up with a framework where you want
• 20:44
  Speaker 5: to build a certain financial product and you know what
• 20:47
  Speaker 5: the requirements are for who you want to distribute that to?
• 20:50
  Speaker 5: And I think it's very plausible. This is one of
• 20:52
  Speaker 5: our biggest goals. We're just here to help and educate regulators.
• 20:56
  Speaker 5: And I think they're doing a good job in understanding
• 20:59
  Speaker 5: the technology.
• 21:01
  Speaker 1: So a couple of things to kind of compare, because
• 21:04
  Speaker 1: I think a lot of our viewers are trying to
• 21:05
  Speaker 1: figure out, you know, what's the best route to take.
• 21:07
  Speaker 2: I'm in crypto today.
• 21:09
  Speaker 1: I'm starting to do things with these vaults and I'm,
• 21:12
  Speaker 1: you know, loaning out my assets via Morpho. I've got things,
• 21:15
  Speaker 1: you know, that I'm playing with. You have DeFi hacks
• 21:19
  Speaker 1: absolutely getting annihilated right now. They hit 942 million in
• 21:22
  Speaker 1: TVL collapses. And then you look at in Q2, 85
• 21:29
  Speaker 1: exploits alone, $ 775.
• 21:31
  Speaker 2: Million in losses. This is the real concern.
• 21:34
  Speaker 1: And I think to your point is that the fact
• 21:36
  Speaker 1: that TradFi is now putting an envelope around these, kind
• 21:40
  Speaker 1: of like what Robinhood has done, Bitwise has started to
• 21:43
  Speaker 1: go in this direction. Fidelity, I don't know if they're
• 21:46
  Speaker 1: there yet, but definitely Franklin Templeton and some others that
• 21:49
  Speaker 1: are probably going to be moving in this direction. Very vault-oriented,
• 21:53
  Speaker 1: structured capital that's kind of putting an insulation around these vaults.
• 21:58
  Speaker 2: Do you think that is the track?
• 22:00
  Speaker 1: And if it is, who's the next to move in
• 22:04
  Speaker 1: really launching something innovative?
• 22:06
  Speaker 4: Yeah. Yeah.
• 22:08
  Speaker 5: So the DeFi hack point is really interesting. I think
• 22:11
  Speaker 5: this is one of the biggest plagues on our industry, clearly.
• 22:14
  Speaker 5: And these hacks are a function of having permissionless access
• 22:20
  Speaker 5: to on-chain protocols that are managing, you know, tens and
• 22:24
  Speaker 5: hundreds of billions of dollars, right? And it's a function
• 22:27
  Speaker 5: of that open access where any threat actor can come
• 22:30
  Speaker 5: and if they win your keys, they win the money.
• 22:33
  Speaker 5: That's clearly not a sustainable equilibrium, right? There's interesting questions
• 22:37
  Speaker 5: with AI creating load on cybersecurity and what agents mean
• 22:40
  Speaker 5: in this question. But I think increasingly we will see
• 22:44
  Speaker 5: guardrails form around this in the form of more permissioning.
• 22:48
  Speaker 3: It's just how it is, right? The dream of DeFi
• 22:50
  Speaker 3: was anyone can use whatever you want.
• 22:52
  Speaker 5: If you can ring fence these things and you know
• 22:54
  Speaker 5: who's transacting, that adds some safeguards. Okay, in terms of
• 22:58
  Speaker 5: who's moving next, the big asset managers have been very,
• 23:01
  Speaker 5: very actively exploring the space, but they have not entered
• 23:05
  Speaker 5: yet in a meaningful way, right? They're tokenizing their funds,
• 23:08
  Speaker 5: they're moving them on-chain, but they have not yet distributed
• 23:11
  Speaker 5: those funds through vaults. So that's what I see as
• 23:13
  Speaker 5: the next big unlock here. It's you have all these
• 23:17
  Speaker 5: users coming on-chain through fintechs, right? They're holding stable coins,
• 23:20
  Speaker 5: they want yield. And you have all the asset managers
• 23:22
  Speaker 5: on the other side of this sort of marketplace that's
• 23:24
  Speaker 5: forming who are issuing funds and issuing tokenized assets on chain.
• 23:29
  Speaker 5: So vaults bridge this gap, right? They allow people on
• 23:32
  Speaker 5: FinTechs who have stable coins to get exposure to this
• 23:35
  Speaker 5: growing universe of on-chain products. I'm really excited about that.
• 23:39
  Speaker 5: I think this is going to happen over the next
• 23:41
  Speaker 5: six months. Uh, Veda is doing a lot of work
• 23:43
  Speaker 5: in this category. We're working a lot with different asset
• 23:46
  Speaker 5: managers and issuers to enable distribution through our vaults. Um,
• 23:50
  Speaker 5: So I'm excited about that. Beyond that, which is a
• 23:53
  Speaker 5: huge opportunity, is getting these products into regulated channels like brokerages.
• 23:58
  Speaker 5: And that's a big challenge. It's going to require regulatory clarity.
• 24:01
  Speaker 5: It's going to require buy-in from TradFi. But that's the
• 24:04
  Speaker 5: trillion dollar opportunity. And I think we'll see meaningful progress
• 24:07
  Speaker 5: in the next 12 months.
• 24:09
  Speaker 1: You look at a statement you guys made here, Bitcoin's
• 24:13
  Speaker 1: market cap over one point. Actually, it's more than that now,
• 24:15
  Speaker 1: but a number that is more than twice the size
• 24:17
  Speaker 1: of deposits at Capital One. Letting Bitcoin set idle is
• 24:21
  Speaker 1: a missed opportunity. Here's my question. Because I feel like Bitcoiners,
• 24:26
  Speaker 1: you know, is in general kind of, I.
• 24:30
  Speaker 2: Think they're the least interested in vaults.
• 24:32
  Speaker 1: But tell me why a Bitcoiner, because I mean, I
• 24:35
  Speaker 1: feel like the Bitcoin community seems to be very concerned
• 24:39
  Speaker 1: about this, you know, in the sense of whether a
• 24:41
  Speaker 1: vault is and should be active with my Bitcoin.
• 24:45
  Speaker 2: Do you think that, you know, that idea is going
• 24:47
  Speaker 2: to change?
• 24:49
  Speaker 5: There are two kinds of Bitcoiners. There are the Bitcoiners
• 24:52
  Speaker 5: who have put their hardware wallets. They have their Bitcoin
• 24:57
  Speaker 5: in cold storage. They put it in a safe and
• 24:59
  Speaker 5: they put that safe at the bottom of the ocean.
• 25:02
  Speaker 5: And their great, great, great grandchildren might be able to
• 25:06
  Speaker 5: open it and get some Bitcoin.
• 25:07
  Speaker 3: They don't want to touch it.
• 25:09
  Speaker 5: And that historically has been the most vocal group who
• 25:12
  Speaker 5: represent Bitcoin.
• 25:13
  Speaker 2: I would agree.
• 25:14
  Speaker 3: Bitcoin is powerful.
• 25:15
  Speaker 4: Yeah.
• 25:16
  Speaker 5: But Bitcoin is mainstream now. Like most of them, it's crazy,
• 25:18
  Speaker 5: but most of my family holds Bitcoin. And this is
• 25:21
  Speaker 5: not in like hard self-custody. It's through platforms that they trust.
• 25:26
  Speaker 5: It's through the ETFs.
• 25:27
  Speaker 3: Right.
• 25:28
  Speaker 5: And so Bitcoin has now gone mainstream, whether Bitcoin is
• 25:31
  Speaker 5: like this or not. And there's a large number of
• 25:33
  Speaker 5: people who would love yield.
• 25:35
  Speaker 3: On their Bitcoin. Very simply. Right.
• 25:38
  Speaker 5: And so I think there is clearly an opportunity. There's
• 25:41
  Speaker 5: hundreds of billions of dollars of Bitcoin sitting on these
• 25:44
  Speaker 5: platforms that doing nothing. And if you're one of those idealistic,
• 25:49
  Speaker 5: very opinionated Bitcoiners, you're probably not holding your Bitcoin on
• 25:54
  Speaker 5: Coinbase anyway. So there's just clearly an untapped opportunity. I
• 25:58
  Speaker 5: don't think this is applicable to all Bitcoiners, but as
• 26:01
  Speaker 5: this asset gets into the hands of normal people who
• 26:04
  Speaker 5: are not ideologues, they're going to want to do finance
• 26:08
  Speaker 5: with Bitcoin. And so yield is one of just the
• 26:10
  Speaker 5: basic building blocks.
• 26:13
  Speaker 2: You know, this was news that happened this week.
• 26:15
  Speaker 1: We had BlackRock offering up now Tender, where you can
• 26:19
  Speaker 1: basically convert Bitcoin into iBit shares, the ETF, without a
• 26:25
  Speaker 1: taxable event. So this is a big deal against capital gains.
• 26:28
  Speaker 1: But the news was dropping from $ 25 million as the
• 26:32
  Speaker 1: barrier down to $ 1 million. So anybody holding a $ 1
• 26:36
  Speaker 1: million Bitcoin out there in terms of portfolio could flip
• 26:40
  Speaker 1: that right into iBit. No questions asked, no capital gain.
• 26:45
  Speaker 1: What kind of efforts do you think we would see
• 26:47
  Speaker 1: from the industry if more ETFs are doing this? And
• 26:51
  Speaker 1: would that have any impact on maybe the direction of
• 26:54
  Speaker 1: where vaults might head with those kind of activities happening
• 26:57
  Speaker 1: in TradFi?
• 26:58
  Speaker 3: Yeah, this is fascinating. I think there are implications here.
• 27:03
  Speaker 3: If most of.
• 27:04
  Speaker 5: The world's exposure to Bitcoins comes from ETFs, that clearly
• 27:09
  Speaker 5: has an implication on market structure, right? Now, my view,
• 27:13
  Speaker 5: given that I've been building in this industry, is that
• 27:16
  Speaker 5: it is always better to hold Bitcoin, even if it's
• 27:19
  Speaker 5: on an exchange, than it is.
• 27:20
  Speaker 3: To get exposure through these wrapper vehicles. It's cheaper.
• 27:24
  Speaker 5: You don't pay fees on it. You have a little
• 27:25
  Speaker 5: bit more control. You have more control over your own fate.
• 27:31
  Speaker 5: I personally haven't thought through the implications of exposure to
• 27:34
  Speaker 5: crypto being intermediated through these products.
• 27:39
  Speaker 3: But it is interesting. I think there is some bearing there.
• 27:42
  Speaker 1: Well, it's going to be something to watch if we
• 27:43
  Speaker 1: start to see that playing out down the road. Let's
• 27:48
  Speaker 1: look at future next three to six months. I'll kind
• 27:51
  Speaker 1: of zoom in on that. You guys have VEDA's pipeline
• 27:53
  Speaker 1: shifted to over 80% non-crypto native enterprises. And you kind
• 27:58
  Speaker 1: of mentioned this earlier, is that you're seeing more innovation
• 28:02
  Speaker 1: in TradFi. Explain to me what your next goals are
• 28:06
  Speaker 1: right now, other than obviously onboarding a lot of these
• 28:09
  Speaker 1: TradFi organizations for infrastructure, but what else?
• 28:14
  Speaker 4: Yeah.
• 28:14
  Speaker 5: So top of mind is really getting more people on chain,
• 28:17
  Speaker 5: more businesses. As stable coins proliferate, and they are, it's
• 28:21
  Speaker 5: just amazing. You can't find a fintech that isn't looking
• 28:24
  Speaker 5: at stable coins. And that happened so quickly, right? In
• 28:27
  Speaker 5: the last five years or less. So everywhere that stable
• 28:31
  Speaker 5: coins go, that's sort of like a wedge, right? You
• 28:35
  Speaker 5: start with stable coins, you're able to hold and send
• 28:38
  Speaker 5: money around the world. And the next question is, what
• 28:40
  Speaker 5: do you do with it? You want to do finance
• 28:43
  Speaker 5: with it. Maybe you want to access credit. Maybe you
• 28:45
  Speaker 5: want to earn yield. And so this is the big opportunity.
• 28:50
  Speaker 5: My goal with VEDA, with Vaults, is to bring on-chain
• 28:54
  Speaker 5: finance to every fintech on the planet. And I think
• 28:57
  Speaker 5: that's actually a short-term goal because stablecoins are just being
• 29:01
  Speaker 5: adopted so quickly.
• 29:02
  Speaker 3: So fast. So that's really.
• 29:03
  Speaker 5: What our six to 12 months look like. I still
• 29:07
  Speaker 5: view it as a wedge. Traditional finance. getting the trillions
• 29:10
  Speaker 5: of dollars that are currently on legacy rails onto better,
• 29:14
  Speaker 5: more efficient, cheaper rails is the ultimate prize.
• 29:19
  Speaker 2: Listen, I did a, and I want to kind of
• 29:21
  Speaker 2: get your opinion. I did a poll this morning. This
• 29:23
  Speaker 2: was in reference to X money.
• 29:25
  Speaker 3: Okay.
• 29:25
  Speaker 2: And it was simple.
• 29:27
  Speaker 1: You know, what would make you use it? And one
• 29:29
  Speaker 1: was allowing stable coins. You had number one, two was
• 29:32
  Speaker 1: holding crypto and then you had 25%. So basically 75%
• 29:34
  Speaker 1: are saying they'd use this thing. if crypto was engaged.
• 29:41
  Speaker 1: I mean, this sounds like a phone call that you
• 29:42
  Speaker 1: need to make to Elon.
• 29:46
  Speaker 5: I think he's bullish, right? He might prefer Doge over stables.
• 29:50
  Speaker 2: Yeah, there you go.
• 29:51
  Speaker 3: Yeah.
• 29:52
  Speaker 1: But I think that's the point, is you're going to
• 29:54
  Speaker 1: see a lot of these, I don't know if you
• 29:56
  Speaker 1: would call X money a fintech, but you might call
• 29:58
  Speaker 1: them that now, as they start to go in this direction.
• 30:02
  Speaker 1: And I think we're going to see a lot more
• 30:04
  Speaker 1: companies kind of.
• 30:05
  Speaker 2: Going in this direction as well.
• 30:07
  Speaker 3: Yeah, this is fascinating, right?
• 30:10
  Speaker 5: The financialization of everyday applications is something we will increasingly
• 30:15
  Speaker 5: see because everyone wants to be the everything app, right?
• 30:18
  Speaker 5: Even if you're a marketplace or a social media and
• 30:21
  Speaker 5: you're doing payouts, right? You want your customers to stay
• 30:25
  Speaker 5: there and live the rest of their financial lives. And
• 30:27
  Speaker 5: stablecoins are a perfect way to do this. So I
• 30:30
  Speaker 5: fully expect X to continue going down this way.
• 30:33
  Speaker 1: All right, son, it's been good having you on today.
• 30:35
  Speaker 1: Thank you so much for coming in. We appreciate it.
• 30:37
  Speaker 3: Thanks, Paul.
• 30:45
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• 30:47
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• 30:50
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• 30:51
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