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Institutions Abandon Crypto?📉John D'Agostino Coinbase🚨INTERVIEW · The Paul Barron Crypto Show

0:00
Speaker 1: The market is bleeding and one of the things that
0:01
Speaker 1: everybody is asking is where are the institutions. Are they
0:05
Speaker 1: ready to jump in and wade into the waters of
0:07
Speaker 1: crypto we'll break it all down for you. Let's do
0:10
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0:38
Speaker 1: It's going to be a good one today because we've
0:40
Speaker 1: got a special guest that'll be joining us here in
0:42
Speaker 1: a minute. Before I bring him on, I want to
0:45
Speaker 1: play a clip for you by mister Novogratz. This is
0:48
Speaker 1: an interesting take.
0:49
Speaker 2: Take a look, Oh the pain, the pain, the pain.
0:53
Speaker 2: I think what happened was Post one hundred people started
0:57
Speaker 2: selling and it became a little bit of a virus.
0:59
Speaker 2: Remember bitcoin is it was like I used to call
1:01
Speaker 2: it a religion. The commandments of the religion was hoddle
1:04
Speaker 2: hold on for dear life. Now we got we got
1:06
Speaker 2: two legs, one and a half legs left of narrative.
1:09
Speaker 2: It's will market structure pass? And does that give us
1:12
Speaker 2: a little bit of juice? Listen? One thing I would
1:15
Speaker 2: say about crypto when everyone declares it dead, there's lots
1:19
Speaker 2: of opportunity.
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Speaker 1: All right, So there you've heard it. Lots of opportunity.
1:23
Speaker 1: We may meet nearing that event in terms of where
1:27
Speaker 1: the market is right now. So I wanted to bring
1:29
Speaker 1: in an expert not only in the market, but on
1:31
Speaker 1: institutional capital where that direction is going. Joining me is
1:35
Speaker 1: John Diagostino, who is the head of strategy with coinbas Institutional.
1:38
Speaker 1: How are you, John, I'm.
1:40
Speaker 3: Good, Paul, I'm not going to sing.
1:43
Speaker 1: With that. That's good. I think you've got Mooch and
1:50
Speaker 1: Mike on there really trying to sing in the blues.
1:53
Speaker 1: More likely of where the market is right now, when
1:55
Speaker 1: you look at what's happening within the market, you have
1:58
Speaker 1: to kind of consider this right here, and this is
2:01
Speaker 1: the insane drop that we're continuing to see. Remember on
2:05
Speaker 1: October sixth we saw a four point three trillion dollar
2:07
Speaker 1: market compared to where we are right now, two trillion
2:11
Speaker 1: in four months. This is, as many would say, a
2:15
Speaker 1: bloodbath out there. Let me ask you this question, is
2:18
Speaker 1: Trump good for crypto or bad for crypto? I'm beginning
2:21
Speaker 1: to question.
2:22
Speaker 3: This, So let me just talk about just addressing that
2:27
Speaker 3: those insane numbers, because in a way, the magnitude of
2:32
Speaker 3: those drops on a dollar basis is a function of
2:35
Speaker 3: how successful the asset class has been. And it sounds
2:37
Speaker 3: like opium. It sounds like, you know, just just a verbiage,
2:41
Speaker 3: but that's the reality, right. So this is an asset
2:44
Speaker 3: that probably in my lifetime will continue to exhibit significant volatility.
2:48
Speaker 3: And that's not because it's it's idiosyncratical quirker. I thank
2:51
Speaker 3: crude oil, the world's most valuable commodity, exhibits similar volatility.
2:55
Speaker 3: And then keep reminding people it went negative less than
2:58
Speaker 3: a couple of years ago. So this just may be
3:01
Speaker 3: an asset that is, that's how it trades forever for
3:04
Speaker 3: lots of different reasons, and as it becomes more successful
3:07
Speaker 3: as NASA class that notional market cap values and then
3:10
Speaker 3: keep getting bigger and bigger and bigger, and so when
3:12
Speaker 3: it drops twenty thirty forty percent, which is going to
3:15
Speaker 3: be prone to do every now and then, on an
3:18
Speaker 3: absolute basis, that number is just going to get gigantic
3:21
Speaker 3: and unfathomable, and people have to understand that. You have
3:26
Speaker 3: to think of an a percentage basis, not a notional
3:28
Speaker 3: value basis, So you'll continue to get shot over and
3:31
Speaker 3: over again.
3:33
Speaker 1: Well, I think the point you're hitting on is that
3:35
Speaker 1: the volatility is real, but that almost lends itself to
3:40
Speaker 1: the departure from store of value, which is one of
3:44
Speaker 1: the narratives that has been looked at for quite a while,
3:47
Speaker 1: especially on bitcoin. And we're talking about bitcoin here. Bitcoin
3:50
Speaker 1: crashes below sixty seven K. This is erasing all gains
3:53
Speaker 1: since the Trump election. So would a brand new investor
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Speaker 1: or institutional capital say, well, with this kind of volatility,
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Speaker 1: this is no longer a store of value. This is
4:04
Speaker 1: a speculative asset.
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Speaker 3: Look, I am very sympathetic to that view because I
4:11
Speaker 3: was I'm a classically trained finance person as well. You know,
4:15
Speaker 3: a very very dear friend of mine, Nearriel Rabini, who
4:17
Speaker 3: I respect a lot, who I disagree with but respect,
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Speaker 3: just kind of doing a victory lap recently and making
4:23
Speaker 3: that same argument, and I get it. I understand why
4:25
Speaker 3: people think that way. There's an alternative view, though, that
4:28
Speaker 3: I think is depending on your duration, which is, if
4:32
Speaker 3: we know for a fact that inflation is beating the
4:38
Speaker 3: long term accretion rates of assets we historically viewed as
4:43
Speaker 3: stores of value. If we know that for a fact,
4:44
Speaker 3: which I think we do, any reasonable comparison of long
4:48
Speaker 3: term goal trends, long term real estate trends, versus expecting inflation,
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Speaker 3: you just don't make your money back over time. You
4:55
Speaker 3: just don't beat inflation. If you believe that, as I do,
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Speaker 3: then including an idiot inclusion of an idiosyncratic asset that
5:03
Speaker 3: tends to have more upside volatility than downside volatility, and
5:06
Speaker 3: even with this drawdown, if you look over the last
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Speaker 3: ten years, it has more upside fall than downside vall.
5:12
Speaker 3: If you don't, the argument I would make is if
5:15
Speaker 3: you do not include an asset like bitcoin into your
5:18
Speaker 3: weighted pool store a value play with the goal of
5:22
Speaker 3: which is to beat inflation. That's the goal, then you fail.
5:26
Speaker 3: You just fail using traditional intersonal assets. So you know,
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Speaker 3: I think it's bitcoin. I don't think it's just bitcoin,
5:34
Speaker 3: But my counter argument to people who will kind of
5:37
Speaker 3: gloat during these times is pull back ten to fifteen years.
5:42
Speaker 3: If you go back in a time machine and you
5:44
Speaker 3: could say, create a pool of assets to hedge against
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Speaker 3: inflation over the next fifteen years. If you don't tell
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Speaker 3: me you're including bitcoin, you're lying to me. You're just
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Speaker 3: flat out lying. So sure, I get it, but I
5:56
Speaker 3: think again, you have to think longer term, and you
5:58
Speaker 3: have to think what the actual goal of a store
6:00
Speaker 3: of value is.
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Speaker 1: Well, I would say this. You know, since the fall
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Speaker 1: from around eighty K, I have had more people calling
6:09
Speaker 1: me that have been in you know, my generation Gen
6:13
Speaker 1: X and Boomers asking me, hey, Paul, do we think
6:16
Speaker 1: we'll see a sub sixty. So it's basically the sharks circling.
6:20
Speaker 1: These are guys with high net worth. They're looking for
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Speaker 1: a potential opportunity like what you're talking about, which is
6:25
Speaker 1: more long term vision. And I think this tweet kind
6:29
Speaker 1: of nailed it right here. If the boomers don't say
6:32
Speaker 1: as seventy five were cooked, But the point is is
6:35
Speaker 1: that you got Eric coming in and saying, wait, don't
6:38
Speaker 1: worry about it. Were setting on forty percent down plus
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Speaker 1: in October, but yet at the same time, ETFs around
6:45
Speaker 1: down only six percent. So that tells me that maybe
6:48
Speaker 1: long term investors are looking at this differently than what
6:52
Speaker 1: we have seen true crypto investors looking at that, And
6:57
Speaker 1: that's what I think, what you're saying is that this
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Speaker 1: is a different kind of horizon, Paul, I think.
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Speaker 3: I think that's that's a sober way to think about it.
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Speaker 3: So I don't look, I don't in these situations. I
7:07
Speaker 3: think folks in crypto should just acknowledge things are bad. Right,
7:10
Speaker 3: So one of the reactions I don't like in crypto
7:13
Speaker 3: is everything's good for bitcoin, everything's good for crypto. If
7:16
Speaker 3: you point out these things your fud you or your weekend,
7:20
Speaker 3: that's not true. These are these are very, very trying times.
7:22
Speaker 3: I would say that to anyone who was holding gold
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Speaker 3: in early two thousand and eight when it was down
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Speaker 3: thirty percent off the highs. I'd say it to people
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Speaker 3: holding other challenging voltil assa classes. So that's the first
7:31
Speaker 3: step is things are bad, but there are indications that
7:37
Speaker 3: we're not seeing a capitulation along the lines of what
7:40
Speaker 3: some of those who are sort of embarrassed that they've
7:42
Speaker 3: been wrong about bitcoin for ten years are hoping for
7:44
Speaker 3: us they can finally be proved right at the dinner table.
7:46
Speaker 3: One of those which you mentioned. And you know, people
7:49
Speaker 3: think of ETFs as institutional. In some ways they are,
7:52
Speaker 3: but in most ways they're not. They're retail driven. So
7:54
Speaker 3: there's a there's a retail component that has done the
7:56
Speaker 3: homework over time. That's holding. If you look at the
7:58
Speaker 3: open interest in volumes in the futures and derivative side,
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Speaker 3: it's not fallen off a cliff the way we would
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Speaker 3: expect if a market was just selling out and people
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Speaker 3: were leavings. That's that's hopeful. You know, polymarket today has
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Speaker 3: an over sixty percent chance and Calshi have over sixty
8:13
Speaker 3: percent chance of market structure being passed by end of
8:17
Speaker 3: the year. So you know, I step back and say,
8:20
Speaker 3: what is fundamentally different today than say one hundred and
8:24
Speaker 3: twenty days ago or one hundred and ten days ago
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Speaker 3: when Bicklim was at all time highs. You know, there's
8:28
Speaker 3: probably a different outlook on the political side. That's that's one.
8:32
Speaker 3: That's one change. October tenth shook shook people to some
8:38
Speaker 3: serious degree. But what we didn't see from October tenth
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Speaker 3: is we haven't seen a major liquidity event. We haven't
8:44
Speaker 3: seen a major dissolution like an FTX or some major
8:47
Speaker 3: fraud uncovered. Those are all positive, positive things that indicate
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Speaker 3: we're not looking at capitulation, we're looking at typical volatility.
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Speaker 1: Yeah, well, I would say for October tenth, maybe not yet.
8:59
Speaker 1: It's possibly the this is maybe still brewing in the
9:02
Speaker 1: market because many people are looking at where this market
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Speaker 1: is going. Here's the absolute blood bath lineup here. Gold
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Speaker 1: dumping five and a half. That's one point nine trillion.
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Speaker 1: By the way, Silver at nineteen eight, nine hundred and
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Speaker 1: eighty billion s and p is down, Nasdaq down, Russell
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Speaker 1: two thousand down, Bitcoin dumping eight. This looks like a
9:21
Speaker 1: Baker's dozen of not the place to be when it
9:25
Speaker 1: comes to investing. So with all of that unwinding as
9:29
Speaker 1: we go, I guess the real question is are all
9:32
Speaker 1: of these selloffs connected? Do you think or are these independent.
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Speaker 3: To some degree? Up to say yes, because let's be
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Speaker 3: and this again, it's a it's a symptom of the
9:44
Speaker 3: success of the acid class as we as we both know, Paul,
9:47
Speaker 3: I've watched your show. You you're very astute. There's five
9:51
Speaker 3: to ten prop shops and market makers in Chicago that
9:54
Speaker 3: control a significant amount of orderflow at all risk assets
9:57
Speaker 3: in the US. And when you become a an institutionally
10:00
Speaker 3: investable asset class like crypto has, you gain their attention
10:04
Speaker 3: and you gain their flow. And the reality is that
10:08
Speaker 3: when the world goes risk goes risk off, those five
10:12
Speaker 3: to ten prop shops go risk off, and that drives
10:15
Speaker 3: a lot of the activity we see in capital markets.
10:18
Speaker 3: So if you want to be a player, if you
10:20
Speaker 3: want to be an institutional asset class, you become subjects
10:23
Speaker 3: somewhat to those whims. The good news is, and we
10:27
Speaker 3: looked at this a lot because when I was head
10:28
Speaker 3: of strategy at NIMES, everyone was really upset that hedge
10:32
Speaker 3: funds and prop shops and market makers were directionally pushing
10:36
Speaker 3: the price of energy commodities in one direction or another.
10:38
Speaker 3: And we took a really close look at this, and
10:41
Speaker 3: here's the reality. These groups definitely exacerbate trends, but they
10:46
Speaker 3: do it equally on the upside of the downside, and
10:48
Speaker 3: over the longer term, they don't really control price direction.
10:51
Speaker 3: So there's no question that crypto now being institutional and
10:55
Speaker 3: in that pool of market makers, is exacerbating the trends,
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Speaker 3: it's also going to do so on the upside.
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Speaker 1: One other thing that I want to kind of get
11:04
Speaker 1: to is the impact that we've seen now with the
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Speaker 1: Trump administration that I would say is starting to unravel
11:13
Speaker 1: a little bit. And one of the things was, of course,
11:15
Speaker 1: the House lawmakers launched this probe into World Liberty five.
11:19
Speaker 1: And this is a big deal because it does now Granted,
11:22
Speaker 1: I know, listen, there's a lot of inside deals being
11:24
Speaker 1: done on traditional finance. There's inside deals being done, you know,
11:28
Speaker 1: when it comes to risk assets. But in general, do
11:31
Speaker 1: you feel like this is going to be kind of
11:35
Speaker 1: a cast around crypto that this is happening and it's
11:40
Speaker 1: so closely related to the Trump administration.
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Speaker 3: I mean, again, not a policy expert. I think it's
11:46
Speaker 3: certainly is going to be used as a weapon. There's
11:48
Speaker 3: no question it's going to be. It's going to be
11:49
Speaker 3: in the narrative, and then those in the industry have
11:52
Speaker 3: to figure out a way to answer that. My view
11:54
Speaker 3: on this is simple and not a policy expert, not
11:56
Speaker 3: responsible for coining business policy position, but just somebody stepping
11:59
Speaker 3: back and and with a lot of friends who are
12:01
Speaker 3: on the left and the right side of modern politics.
12:05
Speaker 3: It doesn't seem clear to me. We had the Disclosure
12:07
Speaker 3: Act past a number of years ago, but it doesn't
12:09
Speaker 3: seem clear to me that we as a society have
12:10
Speaker 3: decided how we want our government officials to engage in
12:13
Speaker 3: capital markets. I don't care whether it's commodities, equities, crypto, whatever. Right,
12:17
Speaker 3: you've got some people in the isle accusing other people
12:20
Speaker 3: of manipulating equity markets. You have something accusing me playing
12:23
Speaker 3: crypto markets. So what I would say is that what
12:25
Speaker 3: seems unfair is signaling out any one market. That seems unfair.
12:29
Speaker 3: That seems punitive and arbitrary and caprecious. So the notion
12:32
Speaker 3: that we should figure out how we want our government
12:34
Speaker 3: officials to interact with capital markets overall, set a fair
12:38
Speaker 3: level level, set fair rules, and that everyone apply to
12:41
Speaker 3: those rules, that seems reasonable. What seems disingenuous at this
12:45
Speaker 3: moment is using crypto specifically as a cudgel. When a
12:50
Speaker 3: couple of years ago we were having the same discussion,
12:52
Speaker 3: but it wasn't about crypto, it was about equities. So
12:55
Speaker 3: that would be my view. I think that seems to
12:57
Speaker 3: be the most fair view is don't use this as
12:59
Speaker 3: a cudgel. In a sort of really unfair attempt to
13:05
Speaker 3: win an argument right now that that you're that your
13:08
Speaker 3: lobbying groups have pitched you to win. Let's solve that
13:11
Speaker 3: problem overall. But let's have everyday investors gain the benefit
13:16
Speaker 3: of higher awards and interest rates when they can when
13:19
Speaker 3: they can get it, versus earning ten basis points in
13:21
Speaker 3: the checking account.
13:22
Speaker 1: Do you think that because this, this unwrapping of what's
13:26
Speaker 1: going on, World Liberty five could open up a lot
13:29
Speaker 1: more can of worms. I mean, we could end up
13:31
Speaker 1: like almost an Epstein level event in crypto where we're
13:35
Speaker 1: starting to see all these let's.
13:37
Speaker 3: Not connect them. Let's not connect Yeah, let's not connect them.
13:40
Speaker 3: Come on, man, Paul, I love you. Look, it's again.
13:44
Speaker 3: It's going to be used as a weapon. There's no question,
13:45
Speaker 3: and and and depending on how the elections go, they'll
13:48
Speaker 3: be will be investigations. And I'm sure, I'm sure that
13:52
Speaker 3: I don't think as an industry we should allow the
13:54
Speaker 3: narrative to be hijacked through via personal vendetta. So again,
14:00
Speaker 3: I go back to this, everyone should follow the same
14:03
Speaker 3: set of rules for every acad class. I'm just not
14:05
Speaker 3: aware that those rules exist. And if we're going to
14:08
Speaker 3: make them. Let's not make them targeting one specific ACA
14:12
Speaker 3: class that seems disingenuous and that also seems inefficient.
14:16
Speaker 1: Well, I guess the question really remains then if that
14:20
Speaker 1: is the fact, if you've got the Democrats kind of
14:22
Speaker 1: camping on this issue with policy around the Trump administration,
14:26
Speaker 1: but at the same time, senators and both on both
14:30
Speaker 1: sides of the aisle are out there trading stocks very
14:34
Speaker 1: efficiently apparently, so we've seen that for quite some time.
14:38
Speaker 1: Do you think we're at a point where institutions are
14:41
Speaker 1: trying to figure out is this something I want to
14:43
Speaker 1: be involved in? I mean, obviously they're involved in the
14:45
Speaker 1: equity side and this is going on. So are they
14:48
Speaker 1: simply saying no problem, we see this as a future.
14:52
Speaker 1: We're still all in. Where do they stand right now?
14:55
Speaker 3: So I don't know of a single what I would
14:58
Speaker 3: call institutional level investor that has done the work on
15:00
Speaker 3: this asset class, had made has made a decision to
15:02
Speaker 3: go into it, who is scared off by lack of
15:05
Speaker 3: regulatory clarity. We want the clarity active pass, of course,
15:09
Speaker 3: but there are lots of kind of niche, massive industries
15:13
Speaker 3: that exist without perfect regulatory fact I don't know an
15:16
Speaker 3: industry that has perfect regulatory clarity. There are opaque areas
15:20
Speaker 3: of every rule that comes out of Washington, So I
15:24
Speaker 3: don't think it's that. I do think the drama causes
15:27
Speaker 3: people to maybe put a hold on their plans for
15:29
Speaker 3: a little bit of time. They don't nobody wants to
15:31
Speaker 3: have the acid class they're investing in be the subject
15:34
Speaker 3: of vitriol and attacks in the newspapers every day, but
15:38
Speaker 3: that's very, very temporary. So no, I don't know of
15:40
Speaker 3: anyone who's done the work who has said, you know,
15:42
Speaker 3: we like the asset class and now we don't because
15:45
Speaker 3: we may not have this new rule again. I think
15:49
Speaker 3: we'll have it, but that that isn't required for institutions
15:54
Speaker 3: to dive in. They've done the work in an environment
15:58
Speaker 3: without that market structure built, so if they got comfortable
16:00
Speaker 3: making that decision, then they'll be comfortable regardless of where
16:03
Speaker 3: we wind up.
16:04
Speaker 1: Yeah, well, you know, clearly regulation the path that we've seen,
16:09
Speaker 1: even if you just look at the CFTC and poly market,
16:12
Speaker 1: that has kind of put poly market in a very
16:13
Speaker 1: good position. I think in general, when you look at
16:15
Speaker 1: what's going to go on with prediction markets, so regulation
16:19
Speaker 1: is very important, you know, and going forward here probably
16:22
Speaker 1: the critical point that could resurrect this market off of
16:25
Speaker 1: the floor, would you agree?
16:26
Speaker 3: Okay, Look, Poallymarck and Calchi fantastic companies, you know, Poallymarck
16:30
Speaker 3: and Calchi are both still being sued in several states.
16:33
Speaker 3: And it's not it's not exactly clear where prediction markets
16:35
Speaker 3: will wind up. But it's an exciting technology. It's a
16:39
Speaker 3: great technology, it's a great product, so it's growing. So
16:42
Speaker 3: my point being, you don't need perfect relatory clarity institutions
16:46
Speaker 3: pile in. So what's your point? You but don't want
16:48
Speaker 3: to be fair, Paul, You're absolutely right, of course, without question,
16:51
Speaker 3: passage of a fair market structure Clarity bill will absolutely
16:56
Speaker 3: go a long way. And I don't want to. I hate,
16:59
Speaker 3: I hate, I hate contingent causality, So I don't think
17:03
Speaker 3: that's going to be the thing. That's say, if we
17:05
Speaker 3: need one thing to save us as an assea class,
17:07
Speaker 3: that's problematic. What we'll save us as an asset class
17:10
Speaker 3: is the technology is superior. The Clarity Bill, passing a
17:13
Speaker 3: fair version of it at least will absolutely accelerate the
17:16
Speaker 3: bottoming out in the recovery there's no question, all right.
17:19
Speaker 1: One thing that happened yesterday was that there was a
17:23
Speaker 1: little push back here crypto industry proposed an expanded community
17:27
Speaker 1: bank involvement in stable cooins. So do you know about
17:30
Speaker 1: what happened? You know in DC where they kind of
17:33
Speaker 1: flip this across to the lobby with the banks and
17:36
Speaker 1: then all of a sudden we get a slowdown. Why
17:38
Speaker 1: you think that occurred?
17:41
Speaker 3: Politics? Not to sound shute, I mean, I mean, look
17:45
Speaker 3: at there's another issue I'm very familiar with because it
17:47
Speaker 3: goes back to my history. So the argument over exemptive
17:50
Speaker 3: relief SEC exective and people might say, well, hold on,
17:53
Speaker 3: wait a second, why is that a big deal? Why
17:55
Speaker 3: do you care crypto if you can't be given to
17:57
Speaker 3: exective relief? For those viewers who aren't policy wonks, is
18:00
Speaker 3: kind of a fancy way of the se of saying
18:02
Speaker 3: the SEC look at the technology or a product or
18:04
Speaker 3: some innovation, and they say, hey, this is really this
18:06
Speaker 3: looks really cool. We think this might be good for
18:08
Speaker 3: consumers in the US investors. However, we don't really have
18:11
Speaker 3: rules that kind of govern it. So we're going to
18:13
Speaker 3: let you do this in a kind of small way
18:15
Speaker 3: and we're going to watch it and we're going to
18:17
Speaker 3: make sure no one gets hurt. And if we like
18:19
Speaker 3: what we see, you're going to let you do it more.
18:20
Speaker 3: And while you're doing that, we're going to create the
18:22
Speaker 3: rule set. That's basically what exemptive relief is. And so
18:26
Speaker 3: a cynable view is, well, why does crypto want it
18:29
Speaker 3: like because because the other side is saying Crypto can't
18:31
Speaker 3: have it. Everyone else can have it, but Crypto can't
18:33
Speaker 3: have it.
18:34
Speaker 4: Right.
18:34
Speaker 3: The reality is, if you look back at a wonderful
18:37
Speaker 3: innovation called extreme exchange traded funds ETFs. When ETFs came around,
18:42
Speaker 3: they were the They were allowed three hundred exemptive reliefs
18:46
Speaker 3: over the first couple of years of existing. And that's
18:48
Speaker 3: largely why the US is the largest ETF market. And
18:51
Speaker 3: so we have things that we take for granted in
18:54
Speaker 3: capital markets that make us who we are, make the
18:57
Speaker 3: unianciates the most liquid and enviable capital markets in the
19:00
Speaker 3: world because of exemptive relief, because a smart SEC is
19:03
Speaker 3: willing to admit, Hey, innovation moves faster than rules. There's
19:08
Speaker 3: no way. I mean, I think I think the SEC
19:10
Speaker 3: is full of great people. I generally have been working
19:12
Speaker 3: with them for a very long time. I think they
19:14
Speaker 3: do what they think is best for the country. It
19:16
Speaker 3: is impossible for them to keep up with innovation and
19:19
Speaker 3: technology and so smart SEC staffs in the past administration.
19:23
Speaker 3: So we get this, so we're going to corral it,
19:26
Speaker 3: make sure it doesn't hurt anyone, but we're not going
19:28
Speaker 3: to stifle it. If you take away that ability. Number one,
19:32
Speaker 3: you're saying we don't trust the SEC to decide what's
19:35
Speaker 3: best for the investor. That's literally what they're there for.
19:38
Speaker 3: And the second thing you're doing is signaling out an
19:40
Speaker 3: asset class and putting your foot on its neck. And
19:43
Speaker 3: the net result of that, as we saw in the
19:45
Speaker 3: prior administration, is all of that innovation moves off shore.
19:48
Speaker 1: Sure sure, well, that's the fear I have still with
19:51
Speaker 1: where we are right now, because I'm still skeptical as
19:54
Speaker 1: to whether or not we can get through this through
19:56
Speaker 1: through DC. Speaking of that, when you look at the
20:00
Speaker 1: politics being played, we're also seeing politics being played in
20:04
Speaker 1: the finance markets. Kathy Wood went on talking about what
20:07
Speaker 1: Binance was doing and their involvement possibly in ten ten.
20:11
Speaker 1: CZ responded to that, and I wanted to get your
20:14
Speaker 1: opinion on this if you'll take a look at this clip.
20:17
Speaker 4: Sure, the highest complaint I've seen so far is on
20:20
Speaker 4: the October tenth crash. Some people say binus cost it.
20:23
Speaker 4: It's pretty clear that the tariff announcements preceded the crash,
20:27
Speaker 4: not Binance system issues. Understand that Bigcoin itself is a
20:30
Speaker 4: two trillion dollar market. They would probably have to risk
20:33
Speaker 4: in the order of hundreds of billions of dollars to
20:35
Speaker 4: try to impact the bigcoin price. For any single entity
20:39
Speaker 4: or individual to do that, they have to take that
20:41
Speaker 4: risk that they may lose a couple hundred billion dollars.
20:44
Speaker 4: I would never want to do that. If any of
20:46
Speaker 4: you guys still think that, you know anybody who still
20:48
Speaker 4: think binans deliberately cost that crash or try to sell
20:51
Speaker 4: big cooins to manipulate the price, And that's just really,
20:53
Speaker 4: really far fetched. In this world, no technologies guarantee to
20:57
Speaker 4: work all the time. The Internet can be broken. If
20:59
Speaker 4: you all those things working all the time, If anytime
21:02
Speaker 4: those things have any weakness, you go lose the oil money.
21:05
Speaker 4: Then you're probably risking too.
21:06
Speaker 1: Much, all right, So that was cz obviously the former
21:11
Speaker 1: CEO I guess of Binance. Do you think that the
21:14
Speaker 1: DOJ would possibly look at Binance again for an investigation
21:20
Speaker 1: based on anything coming out of that ten ten it'd have.
21:23
Speaker 3: To be really hard evidence. So I didn't. I don't
21:26
Speaker 3: know what Cathy said. I'm a big, big Kathy fan.
21:28
Speaker 3: I think she's a brilliant, brilliant person. I'll just go
21:31
Speaker 3: back again my history at the Ninemax. So every time
21:33
Speaker 3: the price of crude oil and natural gas would spike
21:36
Speaker 3: or volumes would accelerate, we would have functional issues. And
21:40
Speaker 3: this was an exchange that was ninety nine point nine
21:43
Speaker 3: percent of time and with a fantastic cio. CZ's right,
21:48
Speaker 3: whether it's pre Internet or post Internet, volume floods systems,
21:54
Speaker 3: and it doesn't matter how well you set those parameters.
21:57
Speaker 3: When you reach unprecedented level of volume activity, every breaks down,
22:01
Speaker 3: human systems, breakdown, technologies. Just bring that. So I haven't
22:04
Speaker 3: seen evidence of malfeasance on behalf of any exchange. I'm
22:07
Speaker 3: sympathetic as an exchange executive for twenty years. That to
22:11
Speaker 3: his argument that that sometimes things break, and and Binance
22:15
Speaker 3: being as big as they are, of course they're going
22:17
Speaker 3: to be in the center of that activity. I know
22:20
Speaker 3: people work at finance, I don't. I don't believe they're
22:22
Speaker 3: interested in manipulating at large scale this market, So I would,
22:28
Speaker 3: you know, but any you know, Kathy's a smart, smart woman,
22:30
Speaker 3: so I would say, if there's evidence, then yes, the
22:33
Speaker 3: DJ would open investigations any entity that was potentially causal.
22:37
Speaker 3: But I haven't seen anything to indicate that.
22:40
Speaker 1: John. When we saw the ONTO summit this week, we
22:44
Speaker 1: saw something that kind of showed up that I thought
22:47
Speaker 1: was interesting. And I'll show you some of these, you know,
22:50
Speaker 1: the institutional era as they're calling it right there. You
22:53
Speaker 1: recognize a lot of these guys. But the point being
22:55
Speaker 1: is that we're not seeing the kind of the status
22:58
Speaker 1: quo of crypto. We'll call it the top ten tokens
23:02
Speaker 1: out there when you look at the market as it
23:05
Speaker 1: is now, because many of these are going to end
23:06
Speaker 1: up really creating their own blockchains, all sorts of I mean,
23:10
Speaker 1: if you look at the rise of Canton, I mean,
23:12
Speaker 1: there's all sorts of potentials here. As we move forward,
23:15
Speaker 1: could we see a cycle here where the old crypto,
23:20
Speaker 1: which is kind of the current crypto, becomes maybe the
23:24
Speaker 1: no longer relevant in comparison to the growth, much like
23:27
Speaker 1: in the era of the Internet, where we had companies
23:29
Speaker 1: pre Internet, and then what came out of that was
23:31
Speaker 1: a completely different set of companies. Do you think that's
23:34
Speaker 1: possible this time around for blockchain?
23:37
Speaker 3: That's a great album. First of all, I love this
23:39
Speaker 3: I love this format. By the way, I love I
23:40
Speaker 3: love responding to tweets. I feel like I'm sitting next
23:43
Speaker 3: to my wife like sharing memes. This is great.
23:45
Speaker 1: That's good.
23:46
Speaker 3: It's a lot of fun. It's a lot of fun.
23:48
Speaker 3: So look, I actually, do you know you just framed
23:51
Speaker 3: it very succinctly and eloquently. I want I want to
23:55
Speaker 3: just be clear. So a lot of people in crypto Twitter,
23:58
Speaker 3: especially the old g's, the crypto natives, they sort of
24:01
Speaker 3: bemoan what they views the co opting, right, They would
24:03
Speaker 3: look at that list of names and say, what a
24:06
Speaker 3: shame that we don't have brand new names, What a
24:09
Speaker 3: shame that they haven't been disintermediate, et cetera, et cetera.
24:12
Speaker 3: I don't necessarily want to see current financial infrastructure burn
24:15
Speaker 3: to the ground. I want to see it replaced and
24:17
Speaker 3: evolved slowly and smartly over time. Because when you burn
24:21
Speaker 3: things to the ground, when you burn existing infrastructure to
24:23
Speaker 3: the ground, you hurt a lot of people. So I'm
24:25
Speaker 3: not interested in revolution in that way. Crypto goes through
24:28
Speaker 3: bubbly periods. There's no question gold goes through bubbly periods.
24:32
Speaker 3: Commodities go through bubbly periods. Bubbles have a bad reputation,
24:36
Speaker 3: but there is one thing that they do well. They
24:39
Speaker 3: inspire a lot of investment, and they inspire a lot
24:42
Speaker 3: of research, discovery, and innovation. Now, a lot of that research,
24:45
Speaker 3: discovery and innovation winds up being worth nothing, but some
24:49
Speaker 3: of it is worth massive amounts. And so you can't
24:54
Speaker 3: And I'll argue, I'll go and I'll go on a
24:55
Speaker 3: lim here, Paul and say, I'll argue that it's hard
24:59
Speaker 3: to really in a without something that resembles a bubble
25:02
Speaker 3: in some way. It's difficult. I don't know if we
25:05
Speaker 3: would have PayPal, Google, I don't know if we'd have
25:07
Speaker 3: that financial infrastructure if you didn't have that early Internet bubble.
25:11
Speaker 3: You need massive amounts of capital and innovation. And the
25:17
Speaker 3: great thing is the result of that is what I
25:19
Speaker 3: call productive versus inert bubbles. In nert bubbles are like
25:22
Speaker 3: you know, real estate bubbles in the middle of nowhere,
25:25
Speaker 3: and everything blows up and there's no roads, there's no plumbing,
25:27
Speaker 3: there's nothing. There's a ghost town. Right, that's an inert
25:30
Speaker 3: bubble to produce anything of value. Productive bubbles produce infrastructure
25:35
Speaker 3: that you build on for the next layer. There's no
25:38
Speaker 3: question if you just stop and look at where we
25:39
Speaker 3: are right now with blockchain and crypto versus say, five
25:42
Speaker 3: years ago, we might have gone through periodic bubbly asset
25:46
Speaker 3: price periods, but every time we're left with more resilient,
25:50
Speaker 3: ingrained financial infrastructure. Larry Fink was not saying everything will
25:55
Speaker 3: be tokenized five years ago, He's saying exactly yeah.
26:00
Speaker 1: Well, and you know, I think that is to the
26:02
Speaker 1: point is that if you just look at what happened
26:04
Speaker 1: at WEF, it was a complete flipping of the script
26:08
Speaker 1: in terms of where blockchain was just two years ago,
26:10
Speaker 1: two years ago, much less what we're seeing now. It
26:14
Speaker 1: was almost unheard of to even see a blockchain executive
26:17
Speaker 1: on a stage two years ago, and now we're seeing
26:20
Speaker 1: on the main panels. So it's it's kind of interesting.
26:23
Speaker 3: And every major exchange has basically announced the beginning of
26:26
Speaker 3: testing of either side by side or adjacent blockchain based trading.
26:30
Speaker 3: And if you think that my you know, we're again,
26:32
Speaker 3: we're both gen X. If my gen alpha daughter, if
26:35
Speaker 3: you genuinely believe that when she's our age, she won't
26:38
Speaker 3: be using blockchain rails to transfer value, yeah, you know
26:43
Speaker 3: we have an argument about that. Yeah, just like saying
26:45
Speaker 3: she won't be using driverless cars at my age. Of
26:49
Speaker 3: course you will.
26:50
Speaker 1: I've got six digital asset themes coming over from Winter Mute.
26:53
Speaker 1: Right here, everything becomes tradeable, stable coins become the trust,
26:57
Speaker 1: markets will reward durable revenue, so temporary incentives DeFi converging
27:02
Speaker 1: with fintech, privacy becomes table steaks, and then regulation matures
27:07
Speaker 1: into a distribution edge. You Do you like any of
27:10
Speaker 1: those or do you like them all?
27:13
Speaker 3: Well? I mean, like I'm not. I'm not a fool
27:17
Speaker 3: enough to argue with afgnny. He's one of the fiercest,
27:20
Speaker 3: fiercest brains, and I use the word fear some purpose.
27:23
Speaker 3: He's he's an intimidating guy. Okay, let's go through one
27:26
Speaker 3: by wear real quick. Everything becomes tradable. Couldn't agree more. Now,
27:29
Speaker 3: that doesn't mean everything becomes liquid. I think he's very
27:31
Speaker 3: very smart with his words there. Just blockchain doesn't magically
27:34
Speaker 3: solve liquidity problems. What blockchain does is make liquidity better
27:37
Speaker 3: and make value transfer better. So just if you have
27:39
Speaker 3: a bad product and you put it on a blockchain,
27:41
Speaker 3: it's still a bad product. So that's that's clear. But
27:44
Speaker 3: everything does become potentially trade a bowl. He's exactly right.
27:47
Speaker 3: Stable coins become the trust layer. Could not agree more.
27:50
Speaker 3: Biggest growth story in crypto right now. That's where we're
27:52
Speaker 3: so bullish on you on USDC markets will reward durable
27:56
Speaker 3: revenue temporary incentives. Yeah, that's obvious. I think he's a's
28:00
Speaker 3: a throwaway. I think he's right there. Of course, DeFi
28:03
Speaker 3: will converge with fintech, intucial. What I've been shocked about
28:08
Speaker 3: is I work with these very very large institutions, pensions,
28:11
Speaker 3: sovereign wealth funds, et cetera. They're very very smart, but
28:13
Speaker 3: they're very very slow, and they do the work, and
28:16
Speaker 3: then they call me and say, we want to start
28:17
Speaker 3: doing some stuff in crypto, and I think you want
28:19
Speaker 3: to buy some hold some spot bitcoin. No, no, no, no,
28:22
Speaker 3: we're going to do a swaption on Hyperlink. I mean,
28:24
Speaker 3: they they get complicated very very fast. So I think
28:27
Speaker 3: he's right there. Privacy becomes table stakes. Agree, and disagree
28:32
Speaker 3: with him. I think that privacy will absolutely become increasingly important.
28:37
Speaker 3: I do think that that's the one area that has
28:39
Speaker 3: the most conflict with government, and I think that's the
28:43
Speaker 3: one that's going to have the most friction associated with government.
28:47
Speaker 3: So while I think it becomes more important, I think
28:50
Speaker 3: it becomes harder and harder to actualize regulation matures into
28:54
Speaker 3: distribution edge. I think Coinbase prove that with the monet distribution.
28:58
Speaker 3: We distributed two hundred and seventy mini dollars roughly without
29:01
Speaker 3: the use of any underwriter or investment bank in a complaint,
29:04
Speaker 3: in a regulatory compliant way, and I do think that's
29:08
Speaker 3: the future of capital markets distribution. So I'm five for
29:10
Speaker 3: six on if Genny do not tell him I disagreed
29:12
Speaker 3: with that six to one. I don't want to get
29:15
Speaker 3: yelled at.
29:15
Speaker 1: He's probably watching the show, so hopefully we have him on.
29:21
Speaker 1: We have that team on occasionally. I've got a line
29:24
Speaker 1: list of questions here, kind of our rapid round that
29:27
Speaker 1: we fire as good guests. First one is this one.
29:31
Speaker 1: It's a big one. Should someone get fired if clarity
29:35
Speaker 1: doesn't pass, I'm like, somebody, come on, this has got
29:38
Speaker 1: to go through.
29:39
Speaker 3: If I don't have to say who, then yes, okay,
29:42
Speaker 3: And anytimes it's a big fail anytime it's a big failure,
29:44
Speaker 3: leadership should stepped down. I'm not saying who, but yes, all.
29:47
Speaker 1: Right, I got you. I think maybe I don't think so,
29:52
Speaker 1: I know, I know who. It's going to be. Coin
29:55
Speaker 1: based compromises on stable going yield, don't do it.
29:59
Speaker 3: No, all right, No, it's got to be it's got
30:04
Speaker 3: to be right, it's got to be fair, it's gotta
30:05
Speaker 3: be good for the consumer.
30:06
Speaker 1: All right, Let's look at this. When institutional chains are
30:10
Speaker 1: a hype scam if they don't connect to eth and soul,
30:15
Speaker 1: what do.
30:15
Speaker 3: You think I'm gonna say no just because I want
30:19
Speaker 3: to have the luxury of another couple of chains. But
30:21
Speaker 3: I'll I'll change if you say in social chains are
30:24
Speaker 3: hypeescam if they don't connect to the top quality a
30:27
Speaker 3: dozen or five to ten chains, I would say yes.
30:29
Speaker 3: But I'm goin to say no to just just ether.
30:32
Speaker 3: So I'm big believers in both, but I'm gonna just
30:34
Speaker 3: too tight A question for me, do you.
30:35
Speaker 1: Think custom crypto custody providers are going to unite with
30:39
Speaker 1: banks at some point? For self custody.
30:42
Speaker 3: Well, I would not to. I think I think banks
30:44
Speaker 3: are going to work with companies like coinbase because they're
30:46
Speaker 3: going to realize that it's better to white label our
30:48
Speaker 3: tech than build it themselves. But I don't not to
30:51
Speaker 3: limit self cust it. I would say not to limit it.
30:54
Speaker 3: There's no attempt to limit self custody. That is a
30:57
Speaker 3: inalienable right and wonderful option. I don't think most people
31:01
Speaker 3: will avail themselves of it. I think most people will
31:03
Speaker 3: choose a custodial response. So I'll say crypto providers will
31:06
Speaker 3: unite with banks, but not to provide more options for
31:09
Speaker 3: custodial More custodial.
31:11
Speaker 1: Options, not limitations. All right? Not who's who's more responsible here?
31:16
Speaker 1: We've got a crypto winter coming in. I don't think No, Paul.
31:21
Speaker 3: PAULI went out. I can't. I'm sorry, I can't. I
31:23
Speaker 3: can't see it again. How about this question, Paul, Does
31:27
Speaker 3: John like his job and remaining a citizen? All right,
31:32
Speaker 3: let's ask.
31:32
Speaker 1: That question Trump. Do you think Trump will make a
31:36
Speaker 1: public statement defending stable coin yields?
31:39
Speaker 3: Oh, that's a good question. I hope he makes one
31:43
Speaker 3: alluding to it, maybe not direct. I think you will
31:47
Speaker 3: I'm going to say yes too. Yeah, I'm going to
31:49
Speaker 3: say maybe not. But I think it's a general statement
31:52
Speaker 3: of Look, he's he's for the people, so he would
31:53
Speaker 3: have people should be allowed to get their interests.
31:55
Speaker 1: So I man, affordability, Is it such a peak interest
32:00
Speaker 1: right now? With that administration? This of course addresses you
32:03
Speaker 1: know a lot of that right now. What about IPOs?
32:06
Speaker 1: We saw big get or which one was it that? Yeah,
32:10
Speaker 1: big O came out. Yeah, we saw Big O come out.
32:13
Speaker 3: Uh.
32:14
Speaker 1: Do you think we're going to see other IPOs that
32:16
Speaker 1: don't perform well this year?
32:18
Speaker 3: Well? Again, So the answer to your question is yes.
32:21
Speaker 3: The answer to this question is no, because I don't
32:23
Speaker 3: think every new one will fail, all right, So I
32:25
Speaker 3: think we'll see some new ones fail, but not every
32:27
Speaker 3: single one.
32:28
Speaker 1: Some some are going to win. I like it, all right, yeah.
32:31
Speaker 3: Because because some are really good companies.
32:35
Speaker 1: Here's the big one twenty twenty six crypto market cap
32:38
Speaker 1: fully recovers twenty twenty six by end of year.
32:42
Speaker 3: What do you think twenty twenty six? Yes?
32:44
Speaker 1: Oh wow, okay, yeah, yeah, do you go, John, You're
32:48
Speaker 1: all in it? I like it. I like it.
32:50
Speaker 3: I do It's a coiled spring sortino more than focus
32:54
Speaker 3: on sortino, not sharp. That's that's what the ASCID classes
32:57
Speaker 3: delivered historically. Okay, I think we'll I think we'll clarity
33:00
Speaker 3: one way or another, pardon the pun. And I'm actually
33:03
Speaker 3: fairly blod by. If you would have told me Q
33:04
Speaker 3: one Q two, I would have said no, end of year.
33:07
Speaker 3: I'm fairly bullish, all right.
33:09
Speaker 1: I like it. John dia Gastino coming in from coinbase,
33:12
Speaker 1: Thank you so much for coming in today. We appreciate it.
33:15
Speaker 3: That was fun, Paul, thanks a lot.
33:23
Speaker 1: If you like this video, like and subscribe, drop a
33:25
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33:29
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