Why Bitcoin, Stablecoins & Tokenization Push Prices MUCH Higher

[0:00] If you step back and you look at where
[0:01] we are geopolitically and across the
[0:03] globe, this is an era of what we call
[0:05] real politic where nation states are
[0:08] acting in their interests which is
[0:09] distinct from idealism which we've you
[0:11] know this these things go back and
[0:12] forth. And so real politic is really um
[0:16] predicated by a trustless permissionless
[0:18] world. And if only there was an asset
[0:21] that was trustless and permissionless I
[0:23] think it's going to have incredible
[0:25] utility during this era of human
[0:27] evolution. That's Bitcoin. What's going
[0:30] on, guys? Today we got a great
[0:31] conversation with Chris Perkins. Chris
[0:33] is currently the CEO of 250 Digital
[0:35] Asset Management, but they are being
[0:36] acquired by Franklin Templeton. And so,
[0:38] Chris is the incoming head of crypto at
[0:40] Franklin Crypto. Now, in this
[0:42] conversation, Chris brings up a point
[0:44] that I have never heard anyone else talk
[0:45] about. It's the idea of unleashing
[0:47] American citizens in a privateeering
[0:49] mechanism to go on the offense against
[0:52] all of the cyber warfare that's
[0:53] happening in crypto. It's a fascinating
[0:55] conversation. We also go through
[0:56] different geopolitical and macroeconomic
[0:58] impacts on crypto. And then Chris
[1:00] explains what Franklin Templeton's been
[1:02] doing in the crypto sector and what he's
[1:04] going to be doing in his new role. This
[1:05] conversation is going to make you think
[1:07] much more deeply about what's going on,
[1:08] why there is so much cyber crime that's
[1:10] been happening recently, and also where
[1:12] the world's going from an institutional
[1:14] perspective. Here's my conversation with
[1:16] Chris Perkins. All right, Chris, there
[1:18] has been an enormous number of hacks
[1:20] this past month in crypto, and I'm
[1:21] wondering how much of that is like
[1:22] driven by AI, how much of it is people
[1:24] are just getting lazy in the crypto
[1:26] world, but this feels like a
[1:27] significantly bigger problem than people
[1:29] are talking about publicly. And so, how
[1:30] are you evaluating this right now?
[1:33] >> Yeah. Hey, good to see you, Pomp. I
[1:35] would say like when you step back, it
[1:37] couldn't be a more exciting time to be
[1:39] in this crypto space, right?
[1:41] Institutions are marching in. Bitcoin is
[1:44] looking very, very constructive right
[1:45] now. on. In fact, the entire the
[1:47] fundamentals of the asset class look
[1:49] great, but there's one thing standing in
[1:51] our way as you mentioned, and that's all
[1:53] these hacks. Do you know April was one
[1:56] of the worst months in history of
[1:58] hacking? 29 projects were hacked. About
[2:01] $600 million were taken. A lot of this
[2:03] is uh perpetrated by state sponsored
[2:05] actors, particularly Lazarus Group,
[2:08] which is affiliated with the North
[2:09] Korean regime. Um, and that's a real
[2:12] problem. Uh, it's a real problem for a
[2:14] few reasons. Number one, a lot of
[2:16] investors, and you know this, they're
[2:18] very comfortable taking market risk.
[2:20] That's what they get paid to do. That's
[2:21] what they get paid to underwrite, but
[2:24] they don't get paid, you know, to take
[2:25] the risk of hacking or operational risk
[2:28] or regulatory risk or any of this stuff.
[2:30] And so, as long as this this threat
[2:32] looms, it it it's stopping the
[2:35] incredible asset class where we operate
[2:38] from achieving its full potential. And
[2:40] so we haven't seen, you know, the thing
[2:43] that kills me about this this whole
[2:45] thing is that often times in on crypto
[2:47] Twitter or wherever you are, people will
[2:49] say, "Oh, you know what? Um, shame on
[2:52] that protocol. Shame on them." You know,
[2:54] it's like blaming the victim over and
[2:56] over again. Um, and look, can things be
[2:59] done better? Absolutely. We see and to
[3:01] your to your question, a lot of this is
[3:04] due not it's frankly due to social
[3:06] engineering. They get people to click on
[3:08] the wrong link. It's getting very scary
[3:10] with deep fakes and AI. Now you have
[3:12] Mythos, like all these AI tools. And
[3:15] perhaps one of the reasons why people
[3:17] are speculating why there's so many
[3:18] hacks this month is because AI tools are
[3:20] coming online and it's making it easier
[3:22] to hack. I think as we look longer term,
[3:25] the institutions who have more access to
[3:27] compute and powerful models will
[3:28] probably be able to defend more. So it
[3:32] works in both directions. But the
[3:34] problem right now as it exists needs to
[3:36] be addressed. Now, when you look at u
[3:39] these hacks that are occurring, when I
[3:40] hear $600 million, that's a lot. But
[3:42] also, you know, there's been uh billions
[3:45] of billions of dollars of trading volume
[3:46] on a daily basis. There's trillions of
[3:48] dollars of market cap. And so, uh it
[3:50] feels like uh maybe some of the reason
[3:52] why it's not getting talked about is
[3:53] because it's $600 million spread across
[3:56] 29 different things. It's not like there
[3:57] was, you know, one hack of $3 billion.
[4:00] Now, it dominate headlines. And it's
[4:01] also not of protocols that the
[4:04] mainstream has heard of. It's not like
[4:05] Bitcoin got hacked or Ethereum got
[4:07] hacked or Coinbase got hacked. And so
[4:09] I'm assuming part of that is like the
[4:11] strategy of the nefarious actor, right?
[4:12] It's like go to these smaller areas
[4:14] where the defense is probably not as
[4:16] strong. But I know you've also been
[4:18] involved in conversations in Washington
[4:20] DC about like wait a minute, rather than
[4:21] us play defense, what if we go on
[4:24] offense? And can you talk a little bit
[4:25] about this conversation around the
[4:27] United States incentivizing people to
[4:29] kind of fight back in this uh cyber
[4:31] warfare area?
[4:32] >> Yeah. So, you know, Christian Carlo, uh,
[4:34] he and I published a paper over a year
[4:36] ago and we knew this was a real problem
[4:39] and we, again, a lot of people complain
[4:41] about it and they blame different people
[4:43] for it, but we hadn't seen an effective
[4:45] response. And I know I grew up playing
[4:48] sports, I know you did, and coach always
[4:50] used to say, the best defense is a good
[4:52] offense. And so we looked at our history
[4:54] and people don't understand this and I'm
[4:56] going to insult you a little bit as a
[4:57] Marine, but um if you look back at the
[5:00] Revolutionary War, we really didn't win
[5:03] it because of George Washington
[5:05] maneuvering on the battlefield. We won
[5:07] it because we unleash these guys called
[5:09] privateeers. Uh it's a concept through
[5:12] letters, it's called letters of mark and
[5:13] reprisal. You essentially uh give them a
[5:16] license to go out and just ravage the
[5:19] economy of the other nation. And we did
[5:21] that. And if you look at the headlines
[5:22] in London at the time, they're like, you
[5:23] know, these Americans are killing our
[5:24] economy. They're attacking all our
[5:25] ships. You know, it's not working. And
[5:27] so that really was a a very important
[5:30] reason why we won the Revolutionary War.
[5:33] Brits came back in 1812. Madison's like,
[5:35] you know what, privateeers get after
[5:37] them. He launched 500. Same thing
[5:39] happened. Europeans thought it was a
[5:41] dirty game. They got out of the business
[5:42] in the mid 19th century. Um, the US
[5:45] however loved this concept so much it's
[5:48] actually in article one of our
[5:49] constitution. It's as American as apple
[5:52] pie. I don't know if they have apple pie
[5:54] in our constitution but you know what
[5:55] they got privateeers there. Um, look it
[5:58] up. It's pretty fascinating. And so the
[6:01] problem is it's been dormant for 200
[6:03] years. And our thesis is okay you have
[6:06] these state actors attacking a startup.
[6:09] Who's going to win every single time?
[6:12] The state sponsored a actor. They've got
[6:14] more resources. Our country has very
[6:17] good resources as well. And people like,
[6:18] we'll just let the IC do it, the
[6:20] intelligence community, let the army do
[6:21] it, whatever. The problem is talent is
[6:24] difficult to retain. It's very expensive
[6:27] because you have to find specialized
[6:28] people with specialized skills. And
[6:30] frankly, it's low lat. It's it's it's
[6:32] got a lot of latency because if you're
[6:34] able to hack somebody, you have to go
[6:36] through a lot of like due diligence and
[6:38] and due process, excuse me, to be able
[6:40] to follow the law. Frankly, the surface
[6:42] area is very small and so they can't
[6:44] respond enough fast enough because again
[6:47] 29 hacks this month and by the way those
[6:49] were semi concentrated there two about
[6:51] $300 million hacks. We've seen billion
[6:52] dollar hacks with buyit and so the bad
[6:56] guys are getting much much more
[6:57] sophisticated. So the idea is gosh the
[7:00] private sector has all the skills in the
[7:02] world. They're financially incented.
[7:04] What we can do is we can extend the
[7:06] surface area by empowering private
[7:09] citizens to go and hack back. Now, maybe
[7:12] politically right now in my
[7:13] conversations with some of the senators,
[7:15] they're like, "You can't call it
[7:16] privateeering. You got to call it um
[7:18] essentially like a uh a reclaim policy
[7:22] or, you know, we we'll figure out a way
[7:24] to to name it.
[7:25] >> A recovery program,
[7:26] >> a recovery, sorry. Yeah, like a recovery
[7:28] process. Wonderful. We can call it
[7:30] whatever you want." Um but the idea
[7:32] would be fully regulated, licensed to go
[7:35] out and recover um what's been stolen.
[7:38] Now, the way it worked in the history in
[7:40] in the past in history is there would be
[7:43] um the privateeers would post a bond.
[7:45] Maybe in crypto we call it staking, but
[7:47] essentially they'd post a bond to make
[7:48] sure they stayed within the law. Uh and
[7:50] then there would be prize courts where
[7:51] they would say, "Okay, privateeer, you
[7:52] get X. Um, hey, this the house is going
[7:55] to get a little bit, you give a little
[7:56] bit to the state, and then you you
[7:58] return some some of of of the spoils, if
[8:00] you will." Now, what does this mean?
[8:03] This means not only could it be a really
[8:05] interesting business model, but you
[8:07] could also use this to fund the crypto
[8:09] reserve at no cost to the taxpayer. So,
[8:12] it's a very very interesting concept.
[8:15] The reception I've had on the hill has
[8:17] been very positive. Um, but I think as
[8:20] we're going through markups on clarity,
[8:22] it's very tedious and difficult. It
[8:24] would be wonderful to get a recovery
[8:26] program inserted and frankly we got a
[8:28] lot of precedent for it in in modern day
[8:29] finance and whistleblower programs which
[8:31] is you you give the the power to private
[8:33] citizens um to go out and address issues
[8:36] that they see. Uh so that's the gist of
[8:38] it. I think it's um again the backdrop
[8:41] of a very constructive
[8:43] environment for crypto at a time when
[8:46] fundamentals continue to improve. I
[8:48] think this could be the icing on the
[8:49] cake. Oh, and by the way, if we have
[8:51] this massive security umbrella over the
[8:53] United States, what's going to happen?
[8:56] Entrepreneurs are going to come back on
[8:57] shore because they're going to be
[8:58] protected by that security umbrella. So,
[9:00] I think, you know, I don't see downside
[9:03] to having this program. And again, you
[9:06] don't want to talk about legal, there's
[9:07] nothing more legal. It's in our
[9:08] constitution, article 1, section 8.
[9:10] Check it out. You know what's
[9:11] interesting to me about this whole idea
[9:12] of privateeering is I've heard a bunch
[9:14] of people maybe Eric Prince is the the
[9:16] number one uh person who's been
[9:17] promoting this for uh natural resources
[9:20] for dealing with cartels. Uh obviously
[9:23] there's a ton of these uh different
[9:25] situations that are happening a lot in
[9:26] South and Central America. Uh this is
[9:28] the first time I'm hearing about it
[9:29] though when it comes to digital uses or
[9:32] cyber uses. And so how much of it would
[9:34] have to be like hacking type stuff where
[9:36] Americans would basically go on the
[9:38] offense versus it's information flow? So
[9:41] almost like a reward. Hey, if you give
[9:42] us information about XYZ and it leads to
[9:45] us recovering something, then you would
[9:47] get paid for that. I I think you could
[9:49] have honestly both types of programs. Um
[9:52] but again, the private sector has the
[9:55] capabilities and the tool sets to
[9:58] recover those assets and also to extend
[10:00] the security umbrella. I I think it's a
[10:02] no-brainer. Um I think it's fully legal
[10:04] and I think it it's time.
[10:06] >> Now what becomes even more interesting
[10:08] is the US model companies seem to have
[10:11] had a couple of breakthroughs. Obviously
[10:12] there's the whole mythos thing. Uh chat
[10:14] GPT uh 5.5 is out now and these have
[10:18] very interesting cyber capabilities. Um
[10:22] whether they are actually you know a
[10:23] point where people need to be careful
[10:25] and and maybe we shouldn't give it out
[10:26] to the public versus okay they're just
[10:28] very powerful. uh if the US has those
[10:31] capabilities and another country or a
[10:33] nefarious organization doesn't actually
[10:36] from a technical standpoint we should
[10:37] have an advantage and it increases the
[10:39] odds we'd be able to go and recover some
[10:40] of the stuff right totally I think for
[10:42] sure on the recovery side but I think
[10:45] long-term like I'm a long-term investor
[10:48] and I'm very very bullish I mean as
[10:49] we're looking at this is just another
[10:51] example where AI crypto and then
[10:54] ultimately quantum these things are all
[10:56] flowing together AI and I think is going
[10:59] to be one of the the long-term solutions
[11:01] to security because as we as you
[11:04] mentioned we're going to be running
[11:06] these models as effectively as the bad
[11:08] guys. The key is to have better models,
[11:10] faster models, more thoughtful models
[11:12] and I would hope that you know on shore
[11:14] we're going to have um more resources
[11:17] around compute etc. um to be able to
[11:20] stay in front of the bad guys. Uh it'll
[11:22] always be a cat-mouse game. The weakness
[11:24] will continue to be humans like you and
[11:26] me. Um we're fallible. Um, we can be,
[11:29] you know, we can be tricked and messed
[11:31] with. Um, but I do think AI is going to
[11:33] be a long, you know, people are freaking
[11:35] out about, oh my gosh, we're going to
[11:36] get hacked by AI. Yeah, for sure. But I
[11:38] also think it's going to be providing
[11:40] beautiful defense and maybe in the
[11:42] context of privateeers, even better
[11:44] offense.
[11:44] >> Do you think that the reason why there
[11:46] was the 20some hacks and uh, you know,
[11:48] kind of that the higher pace and
[11:49] frequency is because of AI? Like is it
[11:52] that's actually what's driving uh, the
[11:54] problem at the moment?
[11:55] >> I think that's part of it. Um, yes. I I
[11:58] think the bad guys are using tools for
[12:00] sure. Uh in many cases it will continue
[12:02] to get worse.
[12:03] >> I was at this uh Are you familiar with
[12:06] Worldcoin? Uh I was at their event a
[12:08] couple weeks ago in San Francisco
[12:10] >> and they literally were showing how you
[12:12] know they did a demo of a deep fake.
[12:14] Couldn't tell but they had their world
[12:15] ID. It was really cool. But like yeah AI
[12:18] is definitely helping a lot of these um
[12:21] these bad guys. Le let's talk a little
[12:23] bit. You mentioned clarity. Um I have
[12:25] been of the belief that uh Bitcoin in
[12:27] particular will be successful with or
[12:29] without that type of regulation but I
[12:31] think that a lot of the rest of the
[12:33] industry is waiting for some of these
[12:35] milestones to happen whether it is the
[12:37] government's participation institutional
[12:39] participation etc. Uh I know that you've
[12:41] been very involved in understanding
[12:43] what's you know kind of the current
[12:44] state of affairs like where are we and
[12:46] and do you have a sense of when this
[12:48] thing's going to get passed? Yeah, I'm a
[12:50] business guy, but I spend a ton of time
[12:51] on regulation. And the reason why I do
[12:53] is you have to you have to understand
[12:55] it. And if you can shape it, you try to
[12:57] shape it by by educating policy makers
[12:59] because like one word or one sentence of
[13:02] regulation or law translates to billions
[13:04] of dollars of downstream value creation
[13:06] or destruction. That's just how it
[13:08] works. So, I agree with you. We don't
[13:12] need it. I think we want it. And Bitcoin
[13:15] is a special animal. I think it's going
[13:17] to be fine either way. But what what's
[13:19] important for the rest of of the
[13:21] cryptocurrency market really starts with
[13:23] something called taxonomy. What is a
[13:25] security? What is a commodity? The laws
[13:27] already kind of defined it, but we need
[13:28] that taxonomy. Now, if we get the
[13:31] Clarity Act, I think it's going to be it
[13:34] could unleash at a certain point in time
[13:36] animal spirits because now you've
[13:38] enshrined crypto in our laws and like
[13:40] it's we've done that with stable coins.
[13:42] So, I think it's going to be a nice
[13:43] tailwind um if if you're looking at
[13:44] markets. However, if we don't get it, it
[13:48] doesn't matter. You've got Chairman
[13:50] Celig, you got Chairman Atkins. These
[13:52] guys are setting precedent every single
[13:54] day that's thoughtful, smart, and it's
[13:55] and it's giving people what they wanted
[13:56] the whole time. Clarity that it's giving
[13:58] them taxonomy. What's a security? What's
[13:59] a And they're like, and Atkins is like,
[14:01] "No, no, no. These aren't securities. If
[14:02] you wrap a security, that's a security.
[14:04] That's a" And by the way, being a
[14:06] security now is not a death sentence. In
[14:09] fact, it's an awesome unlock because you
[14:11] can use the US capital markets. So,
[14:13] we're getting that clarity either way.
[14:15] What are what are you what is what
[14:17] should you be looking for right now on
[14:18] the act itself? This whole interest on
[14:20] stable coin stuff was such a
[14:22] distraction. We had the Genius Act,
[14:24] whatever. It's been sorted either way.
[14:26] Um, now we're getting into it's like
[14:29] kind of like when a satellite or the
[14:31] space shuttle re-enters the atmosphere,
[14:32] you're kind of going through this crazy
[14:34] dark period. The next hurdle is ethics.
[14:38] And this makes me a little bit mental,
[14:40] too, because there are people um that
[14:43] are saying, "I I can't support this bill
[14:45] because Trump and crypto are a thing. I
[14:47] if I support crypto, I'm supporting
[14:49] Trump. Everything's unethical." Blah
[14:51] blah blah blah blah blah. And it's the
[14:54] complete wrong way to look at this
[14:56] thing. You know, do we have issues with
[14:58] ethics and trading in our government?
[15:01] What do you think, Anthony? I think that
[15:03] there is so many problems across asset
[15:07] classes and across the aisle of both
[15:09] political parties that uh you could pick
[15:11] any a topic and I will tell you 20 other
[15:14] variations of that same thing in a
[15:16] completely nonpartisan way and across
[15:18] public private markets.
[15:20] >> A amen right do we have ethics issues
[15:23] across our government? Absolutely.
[15:25] Should they be addressed 100%. If you
[15:28] look at Trump's State of the Union
[15:29] address, he actually mentioned the Stop
[15:30] Insider Trading Act twice. And to your
[15:33] point, to my point, let's look at it
[15:35] holistically. This is not about crypto.
[15:37] It's about ethics. So why are we trying
[15:39] to, you know, adjudicate this here? I
[15:41] don't like it. And by the way, if you
[15:43] really hate Trump that much, then let's
[15:46] let's just get rid of the real estate
[15:48] industry as well. I already likes real
[15:50] estate, too. Right? Like like that's a
[15:52] problem, right? So anyway, I'm
[15:55] apolitical, but let's look at this asset
[15:57] class and let's let's focus on the
[15:59] issues in the bill. That's where we need
[16:01] to be. When I look at uh the state of
[16:05] Bitcoin and crypto markets today, there
[16:07] are really three things that I think are
[16:08] important. The first is is the
[16:10] technology working? I think you can
[16:12] argue that, you know, Bitcoin is
[16:13] working. There are some altcoins that
[16:15] are technically executing exactly what
[16:17] they said they were going to do. Stable
[16:18] coins have become very popular.
[16:20] Tokenization is happening. uh
[16:22] institutions are adopting these
[16:23] technologies trying to figure out how to
[16:24] use them etc. So like I think you can
[16:26] say okay there's always progress that
[16:27] can be made there but that first bucket
[16:28] you know checks out. The second one is
[16:31] uh a lot of the regulatory like DC and
[16:34] institutional world and I think the
[16:36] institutions are further ahead than the
[16:38] politicians. Um the institutions are
[16:40] kind of pouring capital and uh and manh
[16:42] hours into this that you you know
[16:44] there's pretty much an announcement
[16:45] almost every week at this point from an
[16:46] institution. uh the politicians seem to
[16:49] begrudgingly like it across both sides
[16:51] of the aisle because they realize that
[16:53] the constituents like it and therefore
[16:54] they've got to support it and so you
[16:56] know we'll get there but but we're
[16:57] there. The third thing though is what is
[16:59] the role of again let's use Bitcoin just
[17:02] because it'll make the conversation
[17:03] easier but like what is the role of
[17:05] Bitcoin inside of the macro and
[17:06] geopolitical environment right so
[17:08] whether it's the Iran war whether it's
[17:10] things going on at the Fed like it does
[17:12] feel like these assets that used to
[17:14] operate completely outside the system
[17:16] and frankly had no interaction
[17:18] whatsoever with the kind of broader
[17:20] financial system now it has a lot and so
[17:24] how do you evaluate kind of the
[17:25] macroeconomic you know impact and the
[17:27] geop political impact on this industry.
[17:30] >> If you step back and you look at where
[17:31] we are geopolitically and across the
[17:33] globe, this is an era of what we call
[17:36] real politic where nation states are
[17:39] acting in their interests which is
[17:40] distinct from idealism which we've you
[17:42] know this these things go back and
[17:43] forth. And so real politic is really um
[17:48] predicated by a trustless permissionless
[17:50] world, right? And if only there was an
[17:54] asset that was trustless and
[17:55] permissionless, I think it's going to
[17:57] have incredible utility during this era
[17:59] of human evolution, that's Bitcoin,
[18:02] right? And why did you see Ethereum come
[18:05] out and double down on what it's known
[18:08] as crops, censorship resistance, right?
[18:11] It may not be the fastest, it might not
[18:13] be the sexiest, but if it can be the
[18:15] the, you know, like Bitcoin, resistant
[18:18] to censorship, that is a material
[18:20] material edge. And so, as you look at
[18:23] the world going forward, what what is
[18:24] the world that I see? I see real politic
[18:28] continuing to dominate. Nation states
[18:30] around the world are trying to decouple
[18:32] from the dollar where possible, but it's
[18:35] really, really hard. And what they did
[18:37] was they they dumped some treasuries,
[18:39] they bought gold, gold went up, and then
[18:41] everyone's like, "What happened to
[18:42] Bitcoin?" Well, guess what? They they
[18:45] bought the gold because they're really
[18:46] old. And and they didn't know any
[18:48] better. And now they're realizing gold
[18:49] is a very difficult asset to store
[18:51] value. Um if you go into the derivative
[18:54] space, you're back into the essentially
[18:55] the US Financial Institution for the
[18:57] most part. Physical gold is very hard to
[18:59] move and transport. And now, have you
[19:01] looked at the Bitcoin gold chart
[19:02] recently since since Epic Fury began?
[19:05] Take a look if you have it straight and
[19:07] to the right. Um, it's a beautiful,
[19:09] beautiful chart. Bitcoin is now playing
[19:11] with its 150day moving average. It's
[19:12] about to break out. That is that is
[19:14] often a sign of regime change. And so,
[19:17] it's very, very constructive right now
[19:19] in the context of of of the geopolitical
[19:21] situation that we find each other. Very
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[21:36] I sent you. How do you look at the
[21:38] relationship between Bitcoin and stocks?
[21:41] You know, there was a point there when
[21:42] the Iran conflict started where there
[21:44] was like a decoupling. Stocks, gold,
[21:46] everything sold off and Bitcoin kind of
[21:48] held in. Didn't necessarily appreciate
[21:49] significantly, but it kind of held in
[21:51] there very strong. And at one point, it
[21:53] was green and everything else was pretty
[21:54] much red other than, you know, oil and
[21:56] those types of commodities. Now, stocks
[21:58] are kind of ripping back to new all-time
[22:00] highs, and Bitcoin uh has gone up, but,
[22:03] you know, it's not back at an all-time
[22:04] high. And so, how do you look at that
[22:05] relationship? Yeah, you're seeing go uh
[22:07] Bitcoin starting to pick up against
[22:08] major tech stocks. Now, the equity
[22:11] industry is going through something
[22:13] really, really interesting right now.
[22:14] It's tokenizing and people don't really
[22:17] understand how big a deal this is. So,
[22:19] I'm an old futures guy and back in the
[22:21] day buns traded on the life exchange and
[22:23] it was these open outcry guys that would
[22:25] raise their hand and fight and like try
[22:27] to get the bidden off or whatever.
[22:30] Your ex behind the scenes developed
[22:31] electronification,
[22:33] turned it on, and then one day all that
[22:35] liquidity moved from open outcry to
[22:38] electronic trading. Tokenization is the
[22:41] new version of this. It's the next
[22:44] iteration on markets after
[22:46] electronification. And the reason why is
[22:49] it unlocks 247 markets. Think about it.
[22:54] Markets in their natural state are 24/7.
[22:57] You know, value changes if you're asleep
[22:58] or not. nobody really cares. Well, we
[23:00] never had the technology to keep up.
[23:03] Now, tokens uh allow you to do that. And
[23:06] so, I'm a fiduciary. I have the ability
[23:08] to buy a tokenized stock or a
[23:11] non-tokenized stock. I have to buy that
[23:15] tokenized version every single day
[23:17] because I can risk manage it when Donald
[23:19] Trump invades Venezuela on a Friday
[23:21] night, Epic Fury on a Saturday night. I
[23:24] have to be able to manage my risk. Why
[23:26] am I saying all this to your question?
[23:28] Well, the reason is there's this
[23:30] dislocation now where crypto is active
[23:33] 247 and people are hedging their risk,
[23:36] you know, when they have no other way to
[23:37] hedge their risk uh when when when those
[23:40] things happen on on the weekend. And so,
[23:42] they've been using it to to sell um
[23:44] which has been part of the price action
[23:45] challenges. But eventually, you're going
[23:47] to find out that the 247 cryptonativity
[23:50] that we already enjoy is going to be a
[23:52] distinct advantage. uh and watch as you
[23:55] see um you know this this this happen.
[23:58] It's going to be very very interesting.
[23:59] But before long, you know, this also
[24:01] plays to the stable coin thesis. If the
[24:03] equity market is $127 trillion in size
[24:07] and it tokenizes overnight, how am I
[24:10] going to pay for this stuff? Stable
[24:12] coins. And so when you start thinking
[24:14] about numbers, Treasury Secretary threw
[24:16] out three trillion probably
[24:18] conservative. And that's exactly what
[24:19] you'd expect from from a government
[24:21] agency. So, um, look, I I I think I
[24:24] think you're going to start seeing a
[24:26] pivot back. Equities are ripping despite
[24:28] all the geopolitical stress. Um, crypto
[24:31] stayed resilient, but I do think the
[24:33] construct the the setup is incredibly
[24:35] constructive. Sentiment has been really
[24:37] really bad, slowly improving. Um,
[24:40] fundamentals are getting better and
[24:41] better every single day for the tokens
[24:42] that have them. And, uh, retail come is
[24:45] going to come back.
[24:47] >> What are you worried about right now?
[24:48] You know, there's a lot of positive
[24:49] things to point to. Is there anything in
[24:51] particular that that you say, hey, you
[24:53] know, you're stepping into this new role
[24:54] at uh Franklin Templeton and uh I think
[24:56] that you've probably more so than most
[24:58] in the industry have to think about risk
[25:00] management and think about how do you
[25:01] mitigate a lot of the concerns that
[25:03] these institutions would have. So maybe
[25:04] talk a little bit about the role that
[25:05] you are stepping into and then also how
[25:07] you're thinking about, you know, the
[25:09] negatives or things that we need to
[25:10] mitigate.
[25:11] >> Yeah, so Franklin Templeton announced um
[25:13] that they're going to be acquiring our
[25:14] liquid strategies. We're super excited
[25:16] about it. Um once we close I'll be the
[25:19] head of Franklin Crypto and it's a
[25:22] really really interesting time. I
[25:23] couldn't be more excited. Uh you know
[25:25] we've been operating this space Anthony
[25:27] for years and we took a lot of risk for
[25:30] operating in the space. Regulators would
[25:33] come after us. It was not an easy place
[25:34] to operate. But now as you talk to every
[25:38] single institution around the world they
[25:40] have risk if they're not in this space
[25:43] because they see the value creation.
[25:45] they see the fundamentals continuing to
[25:46] improve. And so it's the most perfect
[25:49] time for, you know, a guy like me to
[25:51] leverage that and my team to leverage
[25:54] that cryptonative experience to now come
[25:56] in and help shepherd them on this
[25:57] journey. Um, you know, help them find um
[26:00] the solutions that they're looking for
[26:02] uh the exposures that they're looking
[26:04] for in accordance with their uh risk
[26:06] tolerance. Um, and we've learned a lot
[26:09] uh in in in the last few years. Now, as
[26:11] far as risk goes, we talked about it up
[26:13] front. we have to address the security
[26:15] issue. Um, again, you know, that's one
[26:18] of the reasons why to your earlier point
[26:21] why people aren't going true native DeFi
[26:23] themselves on chain. Maybe they want to
[26:25] partner with a trusted institution who
[26:27] can help abstract maybe some of the I
[26:29] mean, everyone faces security
[26:31] challenges, but maybe you have more
[26:32] robust um capabilities at a at a big
[26:34] institution. That's one of the reasons
[26:36] why you're even seeing some of the OG
[26:38] Bitcoin guys went into the ETF. two
[26:41] reasons. Maybe a little better security,
[26:43] maybe they could avail themselves of the
[26:45] entire robustness of US capital markets,
[26:48] borrowing and lending and doing so in a
[26:50] more safe and secure manner. So, um
[26:53] security is something I think that that
[26:54] we're always thinking about. Obviously,
[26:57] um fundamentals like you know this idea
[27:01] of chasing the next hot meme um was a
[27:04] big part of the crypto industry in the
[27:05] past. I think going forward is how do we
[27:07] leverage our unique distribution to
[27:10] really understand and and capture
[27:12] fundamentals? How do we bring in, you
[27:14] know, the power of AI to to help power
[27:18] our our our thesises and our strategies?
[27:20] Um, there's so much disruption, right? I
[27:23] mean, it couldn't be more exciting time
[27:24] to be alive. You got this AI thing
[27:26] that's going to change everything.
[27:27] You've got crypto that's changing
[27:29] everything. And then we got quantum
[27:30] eventually that's going to change
[27:31] everything as well. And Elon's going to
[27:33] do it all in space. So like it couldn't
[27:35] be a more exciting time. We just are
[27:37] excited to to to partner with our
[27:39] clients to to to navigate these
[27:41] challenges.
[27:42] >> Talk a little bit about uh Franklin
[27:43] Tubson. I know that it was just the
[27:45] 5-year anniversary of the Benji Fund and
[27:47] they've been kind of dabbling in some of
[27:49] these things, but what is your view in
[27:51] terms of, you know, what does the next
[27:53] couple of years look like? Is it just
[27:54] replicate every single traditional fund
[27:57] strategy and asset and do it in the
[27:59] digital world? Is it focus on the more
[28:01] cryptonative things that maybe don't
[28:02] have a corlary example in the
[28:05] traditional world? How are you thinking?
[28:07] >> I think the answer is yes. Um to be
[28:09] honest with you, uh Jenny Johnson, Sandy
[28:12] call like these people are not new to
[28:15] the space. Um actually I sat next to
[28:17] Sandy for years. I think we we learned
[28:19] about Bitcoin together back in like 2013
[28:21] or something and um you know we were
[28:24] very close at the time uh at Croup and
[28:27] Jenny and and Sandy and the Franklin
[28:28] team have been in the space since 2018.
[28:30] So this is not new for them. Um what
[28:32] they really want to do is just galvanize
[28:34] their focus, galvanize their teams to to
[28:38] really solve clients, solve their
[28:40] clients problems. Um whether it's
[28:42] tokenization, whether it's cryptonative
[28:44] and everything in between. Um, you're
[28:46] going to hear a ton of announcements
[28:47] coming out. Um, and and hopefully, you
[28:50] know, my goal is to operate on the
[28:52] frontier. Um, focus on innovation and
[28:55] innovative solutions for our clients.
[28:57] >> One thing we haven't talked about is
[28:58] quantum. And I think that I've heard
[29:00] quantum mentioned by more institutional
[29:02] people than any other group. Uh, how do
[29:04] you thinking about quantum? Are you
[29:06] worried about it? What can people do to
[29:08] mitigate that?
[29:09] I'm not terribly worried about it in
[29:12] crypto because crypto people by our
[29:15] nature are very focused on cryptography
[29:18] and cutting edge innovation. And so as
[29:21] you look across the ecosystems,
[29:24] it's very apparent to me that we're
[29:26] focusing on addressing the challenges
[29:29] and perhaps even, you know, identifying
[29:32] the opportunities. I mean, think of the
[29:34] compute and the power that that this
[29:36] technology will ultimately bring or
[29:38] these breakthroughs. This is not new
[29:40] stuff. Like, you know, you go to
[29:41] Columbia, they've been working on this
[29:42] for 100 years, but it feels like
[29:45] something like AI again will accelerate
[29:48] breakthroughs in quantum. Crypto is
[29:51] going to be the rails that bring it
[29:52] together, whether it's for
[29:53] authentication or for movement of of of
[29:56] capital. So like while it's very
[29:58] important for our industry because
[29:59] crypto is the name of our industry and
[30:01] cryptography and making sure that your
[30:03] quantum resistance is very important.
[30:05] I'm frankly more concerned about other
[30:07] industries and this could actually
[30:09] accelerate
[30:11] crypto adoption of those other
[30:12] industries provided that crypto that
[30:14] cryptography is quantum resistance. So
[30:16] again I think it's a forcing function
[30:18] that's going to bring more convergence
[30:20] um going forward.
[30:21] >> Let's talk about stable coins. those
[30:23] seem to be uh if there's any product
[30:25] that has as much product market fit as
[30:27] Bitcoin, stable coins have, you know,
[30:28] just grown like wildfire. Um how do you
[30:31] think these large institutions interact
[30:33] with stable coins? Is it okay, let's all
[30:35] go use, you know, Tether or USD um uh T
[30:39] or USDC or or is it they build their
[30:42] own? It seems like everyone's got kind
[30:43] of different strategies and then you've
[30:45] got like the payment processors and
[30:46] you've got the warehouses and and
[30:48] there's just a lot of complexity in
[30:50] players and so what's your view as to
[30:52] where we end up with stable coins in the
[30:54] traditional world?
[30:56] >> I think stable coins are going to be a
[30:57] huge part of the globe going forward.
[31:00] Um, if you think about it, the US
[31:03] greatest export is the greenback. And
[31:07] now for the first time, people anywhere
[31:10] in the world with access to the internet
[31:12] are going to be able to buy those
[31:14] dollars and hold those dollars as a
[31:16] store of value. And this is
[31:20] unprecedented. I think you're going to
[31:21] see the like the dollar dollar dominance
[31:25] just continue to um expand across the
[31:28] the world. I think there's going to be
[31:29] wars fought over this. Uh to be honest
[31:31] with you, I hate to say it, but like
[31:33] we're going to see the dollarization of
[31:35] of the world. I was talking to a really
[31:38] smart guy the other night. He's like,
[31:39] you know, I see currencies and languages
[31:42] being correlated over time. You know,
[31:44] the number of languages being spoken,
[31:46] I'm not saying this is a good thing, by
[31:47] the way. I'm just saying that this is
[31:48] how it is, continues to decrease. you
[31:50] know, eventually, you know, there'll
[31:52] only be everyone's going to speak
[31:53] English um and and you know, whatever
[31:56] and maybe Mandarin and maybe something
[31:57] else, but like you're seeing them
[31:59] continue to shrink. I I kind of see the
[32:01] same trend like perhaps in in
[32:04] currencies. Um and there's just going to
[32:06] be ins continued insatiable demand for
[32:08] the dollar. Now, one of the problems
[32:12] that continue to arise is yield. And you
[32:15] know it is a depreci though it's a very
[32:18] good relative store of value on an
[32:20] absolute basis maybe not so much. So how
[32:22] do you drive that yield to preserve that
[32:24] value? So I'm going to ask you a
[32:27] question. What's the difference between
[32:29] a tokenized money market fund and a
[32:31] stable coin?
[32:34] Depends who you ask there my friend. Now
[32:35] we're getting into the great debate. But
[32:38] I mean, look, it it's a very fair point
[32:39] and I think that uh to the average
[32:41] person um other than the consumption
[32:44] mechanism in terms of being able to use
[32:46] it, it's very similar.
[32:48] >> Yeah. I mean, so there we the risk,
[32:52] which one do you think is more risky, a
[32:53] money market fund or a stable coin?
[32:56] >> Again, depends on who you ask, but
[33:00] >> it's it's basically the same, I would
[33:01] argue,
[33:02] >> right? So if you have one that doesn't
[33:05] that pays somebody else interest and one
[33:07] that pays you interest, the only
[33:09] difference currently is one's a security
[33:11] and one is under genius, right? But if
[33:14] you go back to principles-based
[33:16] approaches,
[33:17] you know, why should you not be able to
[33:19] give that yield bearing asset more
[33:22] easily to somebody else? And so one
[33:24] thing that I'm very excited about is the
[33:26] tokenization of capital markets, the
[33:27] tokenization of equities, tokenization
[33:29] of securities. And you know right now
[33:33] maybe it's time to look at a more
[33:34] principles basis where you know I think
[33:36] we announced in our transaction that
[33:38] proceeds are going to be um paid in the
[33:41] money market fund. So lines will
[33:43] continue to blur um irregardless the
[33:46] dollar is going to become much more
[33:48] available and much more dominant across
[33:50] the world and I think that's very good
[33:52] for the US government.
[33:54] >> Makes uh makes sense to me. Um, when you
[33:56] think about the liquid strategies that
[33:58] you guys were running, uh, how many of
[34:00] these institutional clients that
[34:02] Franklin has or others, are they looking
[34:04] to buy the underlying, you know, Bitcoin
[34:06] or other asset? How many of them are
[34:08] looking to, hey, I want to go invest in
[34:10] the infrastructure and own equity almost
[34:11] in a venture, you know, public market
[34:13] style versus, look, I want trading
[34:16] exposure. I want hedging. I want alpha,
[34:18] you know, and those types of uh,
[34:19] activities.
[34:22] You know, people will will say, and I've
[34:24] heard this come up a few times recently,
[34:26] oh, I like equity, I don't like tokens,
[34:28] or I like tokens, I don't like equity.
[34:29] Maybe that was in 21. To me, that's kind
[34:32] of all BS. And the reason why is that it
[34:36] doesn't matter whether it's an equity or
[34:38] a token. The token does provide
[34:40] incremental utility, you know, where you
[34:43] can move it around the world 24/7. It's
[34:45] about the fundamentals underneath,
[34:47] right? And so, what is the value acrruel
[34:49] to that equity? What is the value
[34:50] acrruel to that token whether it's a
[34:52] native form or otherwise but these are
[34:53] just effectively rappers whether you
[34:55] wrap a crypto asset as as like bitcoin
[34:58] under a security as an ETF or you wrap a
[35:00] security in a token it's really about
[35:02] the fundamentals underneath and so you
[35:05] know like any other investment strategy
[35:07] clients will want to understand you know
[35:09] basic things you know what are the
[35:11] investment objectives the benchmarks etc
[35:13] um and so I think it's hard to talk you
[35:16] know every single investor has different
[35:19] objectives
[35:20] I think in time you're going to see a
[35:21] lot more customization via things like
[35:23] vaults, right? Think about it. You know,
[35:27] even at the retail level, you're you're
[35:29] an your adviser. Send me your data.
[35:31] Okay, I'm going to run it through an AI
[35:32] model to understand exactly what you
[35:34] want. I'm going to spit out like and
[35:36] very quickly I'll spit out a vault
[35:38] that's particularly catered to anything
[35:40] that you need, your life events, blah
[35:41] blah blah blah blah blah. So,
[35:43] customization will also be a very
[35:45] important form factor going forward.
[35:47] makes uh makes sense to me when you look
[35:49] at um all of the geopolitical stuff
[35:51] that's happening. Look at all the
[35:52] macroeconomic stuff. Uh we're going to
[35:54] get a new Fed chair. Um and that that
[35:56] new Fed chair uh seems to have a
[35:59] proclivity for lower rates. Uh the
[36:01] president would definitely like lower
[36:02] rates. Uh drone Powell seems to be a
[36:04] little bit more resistant to that idea.
[36:06] Um what is your take on the Fed and
[36:09] their importance for crypto prices? Is
[36:11] it as simple as they cut rates and
[36:13] crypto goes higher through the rest of
[36:14] this year? That's definitely what the
[36:16] data has been showing. Um, I think it's
[36:18] a lot bigger than that, though. And I
[36:20] think the crypto markets completely got
[36:22] worse wrong. Um, when he was named,
[36:25] everyone's like, "Oh, this guy's going
[36:26] to stop QE and it's going to be over."
[36:29] The guy, you know, has a pretty amazing
[36:31] portfolio. Now, I don't know how in the
[36:32] weeds he is. Maybe he's outsourcing that
[36:34] to some some some advisers, but the guy
[36:37] has a pretty robust um crypto portfolio
[36:40] to begin with. as he's as you hear him
[36:43] speak, he's very pro crypto. And you
[36:47] know, I think what you're gonna see at a
[36:48] higher level and we know, you know,
[36:50] Secretary of Treasury Besson is also pro
[36:52] crypto. He wants to make he he he loves
[36:55] stable coins. He wants to start pushing
[36:57] stable coins out to the world. But what
[36:59] my thesis is is you're going to see a
[37:00] new Fed Treasury accord where some roles
[37:04] that the Fed has creeped into are going
[37:06] to move back into Treasury and that's
[37:08] fine. Um, and you know, the Fed can stay
[37:12] perfectly independent. Certain tasks and
[37:15] responsibilities can be moved into the
[37:16] Treasury and that's okay because the
[37:18] Treasury is held accountable through
[37:20] elections and I don't have a problem
[37:22] with that. And as certain roles and
[37:24] responsibilities migrate back to
[37:25] Bessant, it gives him a lot more
[37:27] flexibility, I believe, you know, to to
[37:29] to to pursue his agenda, which has been
[37:32] very clear from the president himself. I
[37:34] want to make the US the crypto capital
[37:36] of the planet. And so yes, I do think
[37:39] crypto as risk assets are very
[37:40] responsive uh to lower rates. You know,
[37:43] we're seeing governments around the
[37:45] world right now saying, "Wait a second.
[37:47] You know, I don't I have this huge issue
[37:49] with oil. It's skyrocketing. I'm going
[37:51] to have to raise rates." Um I think
[37:53] there's a real conundrum around the
[37:55] world which direction to go. Um but the
[37:58] US is different. We're energy resilient.
[38:00] We're independent. And I I do think
[38:02] you're going to see very conducive a
[38:05] very conducive environment with worse in
[38:06] the seat and him working like why
[38:09] wouldn't we want uh chairman of the
[38:11] Federal Reserve and the Secretary of the
[38:12] Treasury to be working hand inand
[38:14] coordinated. I think that makes a lot
[38:15] better sense. Um and that doesn't mean
[38:18] no independence for the Fed.
[38:20] >> I uh I completely agree. I think that
[38:22] we're going to get uh quite a bit of
[38:24] support here. Um which is not
[38:25] necessarily uh because people are just
[38:28] sympathetic to crypto. It's that the
[38:29] world needs this and America wants to be
[38:31] a leader and so no different that we
[38:32] want to be a leader in AI and space and
[38:34] crypto and you know genetic uh DNA
[38:37] sequencing or self-driving cars or
[38:39] whatever. It's an innovative technology
[38:40] that is good for uh people to use in
[38:43] various ways. And so uh why should we
[38:45] not be the leader, right? I don't think
[38:46] we ever set out to be, you know, number
[38:48] 10 on the list. We want to be number
[38:49] one.
[38:50] >> That's what we're here to do. And I'm
[38:51] glad you mentioned uh DNA uh and uh and
[38:56] bio like you know it's these are really
[38:59] interesting verticals that we're going
[39:00] to see incredible um advancements.
[39:03] >> Yeah, I completely agree. All right,
[39:04] where can we send people to uh to find
[39:06] you and uh they want to learn more about
[39:07] the uh the new role and what you're
[39:09] going to be doing at Franklin. Where can
[39:10] we send them?
[39:11] >> Yeah, u still on Twitter. Uh Perkins
[39:14] CR97 Pop. Always good to see you, man.
[39:17] Uh look forward to doing it again
[39:18] sometime.
[39:19] >> Of course. So, I'm I'm super excited for
[39:20] you. Congratulations on uh the
[39:22] acquisition, the new role, and I'm
[39:24] excited to see what you guys do at
[39:25] Franklin Tempmpton.
[39:26] >> All right. Good to see you. Carry on.