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] realpolitik. 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, realpolitik is really
[0:16] um predicated by a trustless,
[0:18] permissionless world. And if only there
[0:20] was an asset that was trustless and
[0:22] permissionless, I think it's going to
[0:23] have incredible utility during this era
[0:26] of human evolution.
[0:28] That's Bitcoin. What's going on, guys?
[0:30] Today we got a great conversation with
[0:31] Chris Perkins. Chris is currently the
[0:33] CEO of 250 Digital Asset Management, but
[0:36] they are being acquired by Franklin
[0:37] Templeton, and so Chris is the incoming
[0:39] head of crypto at Franklin Crypto. Now,
[0:42] in this conversation, Chris brings up a
[0:43] point that I have never heard anyone
[0:45] else talk about. It's the idea of
[0:46] unleashing American citizens in a
[0:48] privateering mechanism to go on the
[0:51] offense against all of the cyber warfare
[0:53] that's happening in crypto. It's a
[0:54] fascinating conversation. We also go
[0:56] through different geopolitical and
[0:57] macroeconomic impacts on crypto. And
[1:00] then Chris explains what Franklin
[1:01] Templeton's been doing in the crypto
[1:03] sector and what he's going to be doing
[1:04] in his new role. This conversation's
[1:06] going to make you think much more deeply
[1:07] about what's going on, why there is so
[1:09] much cyber crime that's been happening
[1:11] recently, and also where the world's
[1:13] going from an institutional perspective.
[1:14] Here's my conversation with Chris
[1:16] Perkins.
[1:17] All right, Chris. There has been an
[1:18] enormous number of hacks this past month
[1:20] in crypto, and I'm wondering how much of
[1:22] that is like driven by AI, how much of
[1:24] it is people are just getting lazy in
[1:25] the crypto 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?
[1:32] Yeah, hey, good to see you, Pomp. I
[1:34] 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
[1:43] looking very, very constructive right
[1:45] now. In In fact, the entire the
[1:47] fundamentals of the asset class look
[1:48] great.
[1:49] But there's one thing standing in our
[1:51] 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 perpetrated by state-sponsored
[2:05] actors, particularly Lazarus Group,
[2:08] which is affiliated with the North
[2:09] Korean regime.
[2:10] Um and that's a real problem. Uh it's a
[2:13] real problem for a few reasons. Number
[2:15] one,
[2:16] a lot of investors, and you know this,
[2:18] they're very comfortable taking market
[2:19] risk. That's what they get paid to do.
[2:21] That's what they get paid to underwrite.
[2:23] But they don't get paid, you know, to
[2:25] take with the risk of hacking or
[2:27] operational risk or regulatory risk or
[2:28] any of this stuff. And so as long as
[2:30] this this threat looms, it it it's
[2:34] stopping the incredible asset class
[2:36] where we operate from achieving its full
[2:39] potential.
[2:40] And so we haven't seen, you know, the
[2:43] thing that kills me about this this
[2:44] whole thing is that often times in in on
[2:46] crypto Twitter or wherever you are,
[2:49] people will say, "Oh, you know what? Um
[2:51] shame on that protocol. Shame on them."
[2:54] You know, it's like blaming the victim
[2:55] over and over again. Um and look, can
[2:58] things be done better? Absolutely. We
[3:00] see and to your to your question, a lot
[3:03] of this is due not this is frankly due
[3:06] to social engineering. They get people
[3:07] to click on the wrong link. It's getting
[3:10] very scary with deep fakes and AI. Now
[3:12] you have mythos, like all these AI
[3:14] tools. And perhaps one of the reasons
[3:16] why people are speculating why there's
[3:18] so many hacks this month is because AI
[3:20] tools are coming online and it's making
[3:21] it easier to hack. I think as we look
[3:23] longer term, the institutions who have
[3:26] more access to compute and powerful
[3:28] models will probably be able to defend
[3:31] more It It works in both directions. But
[3:33] the problem right now as it exists needs
[3:35] to be addressed.
[3:37] Now, when you look at these hacks that
[3:39] are occurring, when I hear $600 million,
[3:41] that's a lot, but also, you know,
[3:43] there's been
[3:44] billions of billions of dollars of
[3:46] trading volume on a daily basis. There's
[3:47] trillions of dollars of market cap. And
[3:49] so Uh, feels like uh, maybe some of the
[3:52] reason why it's not getting talked about
[3:53] is because it's $600 million spread
[3:55] across 29 different things. It's not
[3:57] like there was, you know, one hack of $3
[3:59] billion. That would dominate headlines.
[4:01] And it's 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
[4:10] strategy of the nefarious actor, right?
[4:12] It's like go to the smaller areas where
[4:14] the defense is probably not as strong.
[4:17] But I know you've also been involved in
[4:18] conversations in Washington D.C. about
[4:20] like, "Wait a minute. Rather than us
[4:21] play defense, what if we go on offense?"
[4:24] And can you talk a little bit about this
[4:25] conversation around the United States
[4:27] incentivizing people to kind of fight
[4:29] back in this uh, cyber warfare area?
[4:32] Yeah, so so you know, Christian Carlo,
[4:34] uh, he and I published a paper uh, over
[4:36] a year ago and we knew this was a real
[4:39] problem and we again, we a lot of people
[4:41] complain about it and they blame
[4:42] different people for it, but we hadn't
[4:43] seen an effective response.
[4:46] And I don't 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."
[4:53] And so we looked at our history and
[4:54] 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 unleashed these guys
[5:09] called privateers.
[5:10] Uh, it's a concept through letters it's
[5:12] called letters of marque and reprisal.
[5:14] You essentially uh, give them a license
[5:17] to go out and just ravage the economy of
[5:19] the other nation. And we did that and if
[5:21] you look at the headlines in London at
[5:22] the time, they're like, you know, these
[5:23] Americans are killing our economy,
[5:24] they're attacking all our ships, you
[5:26] know, it's not working. And so that
[5:28] really was a a very important reason why
[5:31] we won the Revolutionary War.
[5:33] Brits came back in 1812, Madison's like,
[5:35] "You know what? Privateers get after
[5:37] them." He launched 500, same thing
[5:38] happened.
[5:40] Europeans thought it was a dirty game,
[5:41] they got out of the business in the
[5:42] mid-19th century. Um, the U.S. however,
[5:46] loved this concept so much, it's
[5:48] actually in Article 1 of our
[5:49] Constitution. It's as American as apple
[5:52] pie. I don't know if they have apple pie
[5:53] in our Constitution, but you know what,
[5:55] they got privateers there.
[5:57] Um look it up. It's pretty fascinating.
[5:59] And so
[6:00] the problem is it's been dormant for 200
[6:03] years. And our thesis is
[6:05] okay, you have these state actors
[6:07] attacking a startup. Who's going to win
[6:10] every single time? The state-sponsored
[6:13] actor. They've got more resources.
[6:15] Our country has very good resources as
[6:17] well. And people are like, "Well, just
[6:18] let the IC do it, the intelligence
[6:20] community. Let the army do it,
[6:21] whatever."
[6:23] The problem is talent is difficult to
[6:24] retain. It's very expensive because you
[6:27] have to find specialized people with
[6:28] specialized skills. And frankly, it's
[6:31] low late It's It's It's got a lot of
[6:32] latency because if you're able to hack
[6:35] somebody, you have to go through a lot
[6:36] of like due diligence and and uh due
[6:38] process, excuse me, to be able to follow
[6:40] the law. Frankly, the surface area is
[6:43] very small. And so they can't respond
[6:45] enough fast enough because again, 29
[6:47] hacks this month. And by the way, those
[6:48] were semi-concentrated. They're two
[6:51] about
[6:54] And so
[6:55] the bad guys are getting much, much more
[6:57] sophisticated. So, the idea is
[7:00] gosh, the private sector has all the
[7:01] skills in the world. They're financially
[7:03] incented. What we can do is we can
[7:05] extend the surface area by empowering
[7:08] private citizens to go and hack back.
[7:11] Now,
[7:12] maybe politically right now in my
[7:13] conversations with some of the senators
[7:15] they're like, "You can't call it
[7:15] privateering. You got to call it um
[7:18] essentially like a
[7:20] a reclaim policy or you know,
[7:23] we'll figure out a way to to name it."
[7:25] >> program.
[7:26] >> A recovery, sorry. Yeah, like a recovery
[7:27] process. Wonderful. We can call it
[7:29] whatever you want. Um but the idea would
[7:32] be fully regulated,
[7:34] licensed to go out and recover um what's
[7:37] been stolen. Now, the way it worked in
[7:39] the history in in the past in history is
[7:41] there would be
[7:43] um the privateers would post a bond.
[7:45] Maybe in crypto we call it staking, but
[7:46] essentially they post a bond to make
[7:48] sure they stayed within the law.
[7:49] Uh and then there would be prize courts
[7:51] where they would say, "Okay, privateer,
[7:52] you get X.
[7:53] Um hey, this the house is going to get a
[7:55] little bit. You give a little bit to the
[7:56] state. And then you you return some some
[7:59] of the of the spoils, if you will." Now,
[8:02] 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.
[8:19] Um but I think as we're going through
[8:21] markups on clarity, it's very tedious
[8:23] and difficult. It would be wonderful to
[8:25] get a recovery program inserted. And
[8:27] frankly, we got a lot of precedent for
[8:28] it in in modern-day finance and
[8:30] whistleblower programs, which is you you
[8:31] give the the power to private citizens
[8:34] um to go out and address issues that
[8:36] they see.
[8:37] Uh so, that's the gist of it. I think
[8:39] it's um Again, against the backdrop of a
[8:41] very constructive
[8:43] environment for crypto at a time when
[8:45] fundamentals continue to improve, I
[8:48] think this could be the icing on the
[8:49] cake. Oh, and by the way,
[8:51] if we have this massive security
[8:52] umbrella over the United States,
[8:54] 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, I you know,
[9:02] I don't see downside to having this
[9:04] program. And again,
[9:05] you don't want to talk about legal?
[9:07] There's 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 privateering is I've heard a bunch of
[9:14] people, maybe Erik Prince is the the
[9:15] 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
[9:24] 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
[9:31] 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.
[9:40] So, almost like a reward. Hey, if you
[9:42] give us information about XYZ and it
[9:44] leads to us recovering something, then
[9:46] you would get paid for that.
[9:48] I think you could have honestly both
[9:50] types of programs.
[9:52] Um but again, the
[9:53] private sector has the capabilities and
[9:56] the tool sets to recover those assets
[9:59] and also to extend the security
[10:00] umbrella. I think it's a no-brainer. Um
[10:03] I think it's fully legal and I think it
[10:05] would it's it's time. Now, what becomes
[10:07] even more interesting is the US model
[10:09] companies seem to have had a couple of
[10:11] breakthroughs. Obviously, there's the
[10:13] whole Mythos thing. Uh chat GPT uh 5.5
[10:16] is out now and these have very
[10:19] 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
[10:35] from a technical standpoint, we should
[10:36] have an advantage and it increases the
[10:39] odds we'd be able to go and recover some
[10:40] of this stuff, right? Totally. I think
[10:42] for sure on the on the recovery side,
[10:44] but I think long-term, like I'm a
[10:46] long-term investor and I'm very, very
[10:48] bullish. I mean, as we're looking at
[10:50] this is just another example where AI,
[10:52] crypto,
[10:54] and then ultimately quantum, these
[10:55] things are all flowing together.
[10:58] AI and I think is going to be one of the
[11:00] the long-term solutions to security
[11:03] because as we as you mentioned, we're
[11:05] going to be running these models as
[11:06] effectively as the bad guys. The key is
[11:08] to have better models, faster models,
[11:10] more thoughtful models.
[11:12] And I would hope that, you know, on
[11:14] shore we're going to have
[11:16] um more resources around compute, etc.
[11:19] Um to be able to stay in front of the
[11:21] bad guys. Uh it'll always be a cat and
[11:23] mouse game. The weakness will continue
[11:25] to be humans like you and me. Um we're
[11:27] 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
[11:34] You know, people are freaking out about
[11:35] oh my gosh, we're going to get hacked by
[11:36] all this AI. Yeah, for sure, but I also
[11:38] think it's going to be providing
[11:40] beautiful defense. And maybe in the
[11:41] context of privateers, even better
[11:43] offense. Do you think that the reason
[11:45] why there was the 20-something hacks and
[11:48] you know, kind of that the higher pace
[11:49] and frequency is because of AI? Like is
[11:51] it that's actually what's driving the
[11:53] problem at the moment? I think that's
[11:55] part of it.
[11:57] Yes, I I think the bad guys are using
[11:59] tools, for sure.
[12:01] In many cases it will continue to get
[12:02] worse. I was at this
[12:05] Are you familiar with Worldcoin? I was
[12:07] at their event a couple weeks ago in San
[12:08] Francisco.
[12:10] And they literally were showing how, you
[12:11] know, did a demo of a deep fake.
[12:13] Couldn't tell, but they had their World
[12:15] ID. It was really cool, but like
[12:17] AI is definitely helping a lot of these
[12:20] um
[12:21] these bad guys.
[12:22] Let's talk a little bit. You mentioned
[12:23] clarity. I've been of the belief that
[12:26] Bitcoin in particular will be successful
[12:29] with or without that type of regulation,
[12:31] but I think that a lot of the rest of
[12:32] the industry is waiting for some of
[12:35] these milestones to happen, whether it
[12:36] is the government's participation,
[12:38] institutional participation, etc. I know
[12:41] that you've been very involved in
[12:42] understanding what's you know, kind of
[12:44] the current state of affairs. Like where
[12:45] are we and and do you have a sense of
[12:47] when this thing's going to get passed?
[12:49] Yeah, I'm a business guy, but I spend a
[12:50] ton of time on regulation. And the
[12:52] reason why I do is you have to. You have
[12:54] to understand it. And then if you can
[12:56] shape it, you try to shape it by by
[12:57] educating policy makers. Because like
[13:00] one word or one sentence of regulation
[13:03] or law translates to billions of dollars
[13:05] of downstream value creation or
[13:06] destruction. That's just how it works.
[13:09] So, I agree with you. We don't need it.
[13:13] I think we want it. And Bitcoin is a
[13:15] special animal. I think it's going to be
[13:17] fine either way. But what what's
[13:19] important for the rest 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 define it, but we need
[13:28] that taxonomy. Now,
[13:30] if we get the Clarity Act, I think it's
[13:32] going to be it could unleash at a
[13:35] certain point in time animal spirits
[13:37] because now you've enshrined crypto in
[13:39] our laws and like it's we've done that
[13:40] with stable coins. So, I think it's
[13:42] going to be nice tailwind if you're
[13:44] looking at markets. However, if we don't
[13:47] get it, doesn't matter. You've got
[13:49] Chairman Selig, you got Chairman Atkins.
[13:52] These guys are setting precedent every
[13:53] single day that's thoughtful smart and
[13:55] and it's giving people what they wanted
[13:56] the whole time, clarity. 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] Not to And by the way,
[14:06] being a security now is not a death
[14:08] sentence. In fact, it's an awesome
[14:10] unlock because you can use US capital
[14:12] markets. So, we're getting that clarity
[14:14] either way. What are What are you What
[14:16] are What should you be looking for right
[14:17] now on the act itself? This whole
[14:20] interest on stablecoin 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 kind
[14:29] of like when a satellite or the space
[14:31] shuttle reenters the atmosphere, you're
[14:32] kind of going through this crazy dark
[14:34] 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
[14:48] Trump." Uh everything is unethical, blah
[14:51] blah blah blah blah blah blah.
[14:53] And it's the complete wrong way to look
[14:55] at this thing.
[14:57] You know, do we have issues with ethics
[14:59] in trading in our government? What do
[15:01] you think, Anthony?
[15:03] I think that there is so many problems
[15:05] across asset classes and across the
[15:07] aisle of both political parties that uh
[15:10] you could pick any a topic and I will
[15:12] tell you 20 other variations of that
[15:15] same thing in a completely non-partisan
[15:17] way and across public private markets.
[15:20] >> 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. He already likes real
[15:49] estate, too, right? Like like that
[15:51] that's a problem, right? So, anyway, I'm
[15:55] a political, but let's look at this
[15:57] asset class and let's let's focus on the
[15:59] issues in the bill. That's where we need
[16:01] to be.
[16:02] When I look at uh the state of Bitcoin
[16:05] and crypto markets today, there are
[16:07] really three things that I think are
[16:08] important. The first is is the
[16:10] technology working? I think you can
[16:11] 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.
[16:18] Stablecoins have become very popular.
[16:20] Tokenization is happening. Uh
[16:21] institutions are adopting these
[16:23] technologies, trying to figure out how
[16:24] to use them, etc. So, like I think you
[16:25] can say, okay, there's always progress
[16:27] that can be made there, but that first
[16:28] bucket, you know, checks out. The second
[16:30] one is uh a lot of the regulatory, like
[16:33] DC and institutional world. And I think
[16:36] the institutions are further ahead than
[16:38] the politicians. Um the institutions are
[16:40] kind of pouring capital and uh and man
[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
[16:55] know, we'll get there, but but we're
[16:57] there.
[16:57] The third thing though is what is the
[16:59] role of Again, let's use Bitcoin just
[17:01] cuz it it'll make the conversation
[17:03] easier, but like what is the role of
[17:04] Bitcoin inside of the macro and
[17:06] geopolitical environment, right? And 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
[17:19] financial system. Now it has a lot. And
[17:23] so how do you evaluate kind of the
[17:25] macroeconomic, you know, impact and the
[17:27] geopolitical 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,
[17:34] this is an era of what we call
[17:36] realpolitik
[17:37] where nation states are acting in their
[17:39] interests, which is distinct from
[17:40] idealism, which we've you know, this
[17:42] these things go back and forth.
[17:44] And so realpolitik is really
[17:47] um predicated by a trustless,
[17:49] permissionless world, right?
[17:52] And if only there was an asset that was
[17:54] trustless and permissionless, I think
[17:56] it's going to have incredible utility
[17:58] during this era of human evolution.
[18:01] 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,
[18:11] right? It may not be the fastest, it may
[18:12] not be the sexiest, but if it can be the
[18:15] the, you know, like Bitcoin,
[18:17] resistant to censorship, that is a
[18:19] material material edge.
[18:21] And so as you look at the world going
[18:23] forward, what what is the world that I
[18:25] see?
[18:26] I see
[18:28] realpolitik continuing to dominate.
[18:30] Nation states around the world are
[18:31] trying to decouple from the dollar where
[18:33] possible,
[18:34] but it's really, really hard. And what
[18:37] they did was they they dumped some
[18:38] treasuries, they bought gold, gold went
[18:40] up, and then everyone's like, what
[18:42] happened to Bitcoin? Well, guess what?
[18:44] They they bought the gold cuz they're
[18:45] really old and and they didn't know any
[18:47] better and now they're realizing gold is
[18:49] a very difficult asset to store value.
[18:52] Um if you go into the derivative space,
[18:54] you're back into the essentially the US
[18:55] financial institution for the most part.
[18:57] Physical gold is very hard to move and
[18:59] transport.
[19:00] And now have you have you looked at the
[19:01] Bitcoin gold chart recently since I
[19:03] since epic fury began?
[19:05] Take a look if you have it. Straight
[19:06] into the right. Um it's a beautiful,
[19:08] beautiful chart. Bitcoin is now playing
[19:11] with its 150-day moving average. It's
[19:12] about to break out. That is That is
[19:14] often a sign of regime change.
[19:16] And so, it's very, very constructive
[19:18] right now in the context of of the
[19:20] geopolitical situation that we find each
[19:22] other. Very constructive. Today's
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[21:37] How do you look at the relationship
[21:38] between Bitcoin and stocks? You know,
[21:41] there was a point there when the Iran
[21:43] conflict started where there was like a
[21:44] decoupling. Stocks, gold, everything
[21:46] sold off and Bitcoin kind of held it.
[21:48] Didn't necessarily appreciate
[21:49] significantly, but it kind of held in
[21:50] there very strong. And at one point it
[21:52] was green and everything else was pretty
[21:54] much red other than, you know, oil and
[21:56] and those types of commodities. Now,
[21:58] stocks are kind of ripping back to to
[22:00] new all-time highs and Bitcoin has gone
[22:02] up, but, you know, it's not back at an
[22:04] all-time high. So, how do you look at
[22:05] that relationship? Yeah, you're seeing
[22:07] Bitcoin starting to pick up against
[22:08] major tech stocks. Now,
[22:11] the equity industry is going through
[22:12] something really, really interesting
[22:13] right now. It's tokenizing.
[22:16] And people don't really understand how
[22:17] big a deal this is. So, I'm an old
[22:19] futures guy. And back in the day, bonds
[22:22] traded on the life exchange. And it was
[22:23] these open outcry guys that would raise
[22:25] their hand and fight and like try to get
[22:27] the bid and offer or whatever.
[22:29] Eurex 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
[22:37] electronic trading.
[22:39] Tokenization is the new
[22:42] version of this. It's the next iteration
[22:44] on markets after electronification. And
[22:47] the reason why is it
[22:49] unlocks 24/7 markets.
[22:52] Think about it. Markets in their natural
[22:55] state are 24/7.
[22:57] You know, value changes if you're asleep
[22:58] or not. Nobody really cares. But 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.
[23:07] I have the ability to buy a tokenized
[23:10] stock or a non-tokenized stock.
[23:13] I have to buy that tokenized version
[23:16] every single day because I can risk
[23:18] manage it when Donald Trump invades
[23:20] Venezuela on a Friday night, epic fury
[23:22] on a Saturday night, I have to be able
[23:24] to manage my risk. Why am I saying all
[23:27] this to your question? Well, the reason
[23:28] is
[23:30] there's this dislocation now
[23:31] where crypto is active 24/7 and people
[23:35] are hedging their risk, you know, when
[23:36] they have no other way to hedge their
[23:38] risk
[23:39] uh when when when those things happen on
[23:40] on the weekend. And so they've been
[23:42] using it to to sell um which has been
[23:44] part of the price action challenges.
[23:46] But eventually, you're going to find out
[23:48] that the 24/7 crypto nativity that we
[23:50] already enjoy is going to be a distinct
[23:52] advantage. Uh and watch as you see um
[23:56] you know, this this this happen. It's
[23:58] going to be very very interesting. But
[23:59] before long, you know, this is also
[24:01] plays to the stable coin thesis.
[24:03] If the equity market is $127 trillion in
[24:06] size
[24:07] and it tokenizes overnight, how am I
[24:10] going to pay for this stuff? Stable
[24:12] coins.
[24:13] And so when you start thinking about
[24:14] numbers, Treasury Secretary threw out $3
[24:16] trillion, probably conservative. And
[24:19] that's exactly what you'd expect from
[24:20] from a government agency. So um look, I
[24:23] I I think I think you're going to start
[24:25] seeing a pivot back. Equities are
[24:27] ripping despite all the geopolitical
[24:29] stress. Um crypto stayed resilient. But
[24:32] I do think the constructive the the
[24:34] setup is incredibly constructive.
[24:36] Sentiment has been really really bad,
[24:38] slowly improving.
[24:39] Um fundamentals are getting better and
[24:41] better every single day for the tokens
[24:42] that have them.
[24:44] And uh retail come is going to come
[24:45] 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
[24:50] particular that that you say, "Hey, you
[24:52] 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 the
[25:08] 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.
[25:21] And it's a really, really interesting
[25:22] time. I couldn't be more excited. Uh
[25:25] you know, we've been operating this
[25:26] space, Anthony, for years and we took a
[25:29] lot of risk for operating in this space.
[25:32] Regulators would come after us. It was
[25:34] not an easy place to operate.
[25:36] But now as you talk to every single
[25:38] institution around the world, they have
[25:40] 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 crypto-native experience to now
[25:55] come 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 and accordance with their uh risk
[26:06] tolerance. Um and we've learned a lot uh
[26:09] in 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,
[26:18] you know, that's one of the reasons why
[26:19] to your earlier point, why people aren't
[26:21] going true native DeFi themselves on
[26:23] chain. Maybe they want to partner with a
[26:25] a trusted institution who can help
[26:27] abstract maybe some of the I mean
[26:30] everyone faces security challenges, but
[26:31] maybe you have more robust um
[26:33] capabilities at a at a big institution.
[26:35] That's one of the reasons why you're
[26:37] even seeing some of the OG Bitcoin guys
[26:39] went into the ETF. Two reasons. Maybe a
[26:42] little better security, maybe they could
[26:43] avail themselves of the entire
[26:46] robustness of US capital markets,
[26:48] borrowing and lending and and doing so
[26:50] go more safe and secure manner.
[26:52] So, um security is something I think
[26:54] that that we're always thinking about.
[26:56] Obviously, um
[26:58] fundamentals, like, you know, this idea
[27:01] of chasing the next hot meme
[27:03] um was a big part of the crypto industry
[27:05] in the past. I think going forward is
[27:07] how do we leverage our unique
[27:09] distribution to really understand and
[27:11] and capture fundamentals.
[27:13] How do we bring in, you know, the power
[27:15] of AI to to help power our our thesis is
[27:19] and our strategies?
[27:20] Um there's so much disruption, right? I
[27:23] mean, it couldn't be a more exciting
[27:24] time to be alive. You have this AI thing
[27:26] that's going to change everything.
[27:27] You've got crypto that's changing
[27:28] 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
[27:35] couldn't be a more exciting time. We
[27:37] just are excited to to to partner with
[27:39] our clients to to to navigate these
[27:41] challenges. Talk a little bit about uh
[27:43] Franklin Templeton. I know that uh it
[27:44] was just a 5-year anniversary of the
[27:46] Benji fund, and they've been kind of
[27:48] dabbling in some of these things. But,
[27:50] what is your view in terms of, you know,
[27:52] what does the next couple of years look
[27:53] like? Is it just replicate every single
[27:55] traditional fund strategy and asset and
[27:58] do it in the digital world? Is it focus
[28:00] on the more crypto-native things that
[28:02] maybe don't have a uh corollary example
[28:05] in the traditional world? How are you
[28:06] thinking?
[28:07] I think the answer is yes, um to be
[28:09] honest with you.
[28:10] Uh
[28:11] Jenny Johnson, Sandy Call, like, these
[28:14] people are not new to the space. Um
[28:16] actually, I sat next to Sandy for years.
[28:18] I think we we learned about Bitcoin
[28:20] together back in like 2013 or something.
[28:22] And um you know, we were very close at
[28:24] the time uh at Citigroup.
[28:26] And 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
[28:37] really solve clients solve their
[28:39] clients' problems. Um whether it's
[28:41] tokenization, whether it's
[28:43] crypto-native, and everything in
[28:44] between. Um you're going to hear a ton
[28:47] of announcements coming out um and and
[28:49] hopefully, you know, my goal is to
[28:51] operate on the frontier,
[28:54] focus on innovation and innovative
[28:55] solutions for our clients. One thing we
[28:57] haven't talked about is quantum and I
[28:59] think that I've heard quantum mentioned
[29:01] by more institutional people than any
[29:03] other group. How do you thinking about
[29:05] quantum? Are you worried about it? What
[29:07] can people do to mitigate that?
[29:09] I'm not terribly worried about it in
[29:11] crypto.
[29:13] Because crypto people by our nature are
[29:15] 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,
[29:31] identifying the opportunities. I mean,
[29:33] think of the compute and the power that
[29:35] that this technology will ultimately
[29:37] bring. Or these breakthroughs. This is
[29:39] not new stuff. Like, you know, you go to
[29:41] Columbia, they've been working on this
[29:42] for 100 years.
[29:44] But it feels like something like AI
[29:47] again will accelerate breakthroughs in
[29:49] quantum. Crypto is going to be the rails
[29:51] that bring it together, whether it's for
[29:53] authentication or for movement of
[29:55] capital. So like,
[29:57] while it's very important for our
[29:58] industry because crypto is the name of
[30:00] our industry and cryptography and making
[30:02] sure that your quantum resistance is
[30:03] very important,
[30:05] I'm frankly more concerned about other
[30:07] industries and this could actually
[30:08] accelerate
[30:11] crypto adoption of those other
[30:12] industries provided that crypto that
[30:14] cryptography is quantum resistant. So
[30:16] again, I think it's a forcing function
[30:18] that's going to bring more convergence
[30:20] going forward.
[30:21] Let's talk about stable coins. Those
[30:23] seem to be if there's any product that
[30:25] has as much product market fit as
[30:26] Bitcoin, stable coins have, you know,
[30:28] just grown like wildfire. How do you
[30:30] think these large institutions interact
[30:33] with stable coins? Is it, okay, let's
[30:35] all go use, you know, Tether or USD
[30:39] T 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
[30:44] got like the payment processors and
[30:46] you've got the wire houses and and
[30:48] there's just a lot of complexity and
[30:50] players. And so, what's your view as to
[30:52] where we end up with stable coins in the
[30:53] traditional world?
[30:55] I think stable coins are going to be a
[30:57] huge part of the globe going forward. Um
[31:01] if you think about it, the US greatest
[31:04] export is the greenback.
[31:06] And now, for the first time,
[31:09] people anywhere in the world with access
[31:11] to the internet are going to be able to
[31:13] buy those dollars and hold those dollars
[31:16] as a store of value.
[31:18] And this is unprecedented. I think
[31:21] you're going to see the like the dollar
[31:23] dollar dominance just continue to um
[31:26] expand across the the world. I think
[31:29] there's going to be wars fought over
[31:30] this uh to be honest with you. I hate to
[31:32] say it, but like the we're going to see
[31:34] the dollarization of of the world.
[31:37] I was talking to a really smart guy the
[31:38] other night. He's like, you know, I see
[31:40] currencies and languages being
[31:42] correlated. Over time, you know, the
[31:44] number of languages being spoken. I'm
[31:46] not saying this is a good thing, by the
[31:47] way. I'm just saying that this is how it
[31:48] is. Continues to decrease. You know,
[31:50] eventually, you know, there'll only be
[31:52] everyone's going to speak English
[31:54] um and and you know, whatever and maybe
[31:56] Mandarin and maybe something else, but
[31:58] like you're seeing them continue to
[31:59] shrink.
[32:00] I I kind of see the same trend like
[32:02] perhaps in in currencies. Um and there's
[32:05] just going to be insatiable continued
[32:07] insatiable demand for the dollar.
[32:10] Now,
[32:11] one of the problems that continue to
[32:12] arise is yield. And, you know, it is a
[32:16] deprecia- though it's a very good
[32:18] relative store of value, on an absolute
[32:21] basis, maybe not so much. So, how do you
[32:22] drive that yield to preserve that value?
[32:25] So, I'm going to ask you a question.
[32:28] What's the difference between a
[32:29] tokenized money market fund and a stable
[32:32] coin?
[32:33] Depends who you ask there, my friend.
[32:35] Now we're getting into the great debate.
[32:37] But I mean, look, it it's a very fair
[32:39] point, and I think that to the average
[32:41] person,
[32:43] other than the consumption mechanism in
[32:44] terms of being able to use it, it's very
[32:47] similar.
[32:48] Yeah, I mean,
[32:49] so there
[32:51] we the risk Which one do you think is
[32:52] more risky? A money market fund or a
[32:54] stablecoin?
[32:56] Again, depends on who you ask.
[32:59] It's like
[33:00] It's it's basically the same, I would
[33:01] argue.
[33:02] Right. So, if you have one
[33:05] that doesn't that pays somebody else
[33:06] interest, and one that pays you
[33:07] interest,
[33:08] the only difference currently is one's a
[33:10] security and one is under genius, right?
[33:14] But, if 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?
[33:24] And so, one thing that I'm very excited
[33:25] about is the tokenization of capital
[33:27] markets, the tokenization of equities,
[33:29] tokenization of securities.
[33:31] And, you know, right now, maybe it's
[33:33] time to look at a more principles basis,
[33:36] where, you know, I think we announced in
[33:37] our transaction that
[33:38] proceeds are going to be paid in the
[33:41] money market fund. So,
[33:43] lines will continue to blur.
[33:45] Irregardless, the dollar's going to
[33:46] become much more available and much more
[33:49] dominant across the world. And, I think
[33:51] that's very good for the US government.
[33:54] Makes makes sense to me.
[33:55] When you think about the liquid
[33:57] strategies that you guys were running,
[33:59] how many of these institutional clients
[34:01] that Franklin has or others, are they
[34:03] looking to buy the underlying, you know,
[34:05] Bitcoin or other asset? How many of them
[34:08] are looking to, "Hey, I want to go
[34:09] invest in the infrastructure and own
[34:11] equity almost in a venture, you know,
[34:12] public market style?" Versus, "Look, I
[34:14] want a trading exposure. I want hedging.
[34:17] I want alpha, you know, in those types
[34:19] of activities."
[34:22] You know, people will will say, and I've
[34:23] heard this come up a few times recently,
[34:25] "Oh, I like equity. I don't like
[34:27] tokens." Or, "I like tokens. I don't
[34:29] like equity." Maybe that was in '21.
[34:31] To me, that's kind of all BS. Uh and the
[34:33] reason why is that
[34:35] it doesn't matter whether it's an equity
[34:37] or a token. The token does provide
[34:40] incremental utility,
[34:42] you know, where you can move it around
[34:43] the world 24/7.
[34:45] It's about the fundamentals underneath.
[34:47] Right? And so, what is the value accrual
[34:49] to that equity? What is the value
[34:50] accrual to that token, whether it's a
[34:52] native form or otherwise? But, these are
[34:53] just effectively wrappers, whether you
[34:55] wrap a crypto asset as as
[34:57] like Bitcoin under a security as an ETF
[34:59] or you wrap a security in a token, it's
[35:02] really about the fundamentals
[35:03] underneath. And so,
[35:04] you know, like any other investment
[35:07] strategy, clients will want to
[35:08] understand, you know, basic things. You
[35:10] know, what are the investment
[35:11] objectives, the benchmarks, etc.
[35:13] Um and so, I think it's hard to talk,
[35:15] you know, every single investor has
[35:18] different objectives. I think in time
[35:20] you're going to see a lot more
[35:21] customization via things like vaults.
[35:24] Right? Think about it, you know,
[35:27] even at the retail level, your your your
[35:29] advisor, send me your data. Okay, I'm
[35:31] going to run it through an AI model to
[35:33] understand exactly what you want. I'm
[35:34] going to spit out like and very quickly
[35:37] I'll spit out a vault that's
[35:38] particularly catered to anything that
[35:40] you need, your life events, blah 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
[35:49] look at um
[35:50] all of the geopolitical stuff that's
[35:51] happening, look at all the macroeconomic
[35:53] stuff. Uh we're going to get a new Fed
[35:54] chair.
[35:55] Um and that that new Fed chair
[35:58] uh seems to have a proclivity for lower
[36:00] rates. Uh the president would definitely
[36:02] like lower rates. Uh Jerome Powell seems
[36:04] to be a little bit more resistant to
[36:05] that idea. Um what is your take on the
[36:08] Fed and their importance for crypto
[36:10] prices? Is it as simple as they cut
[36:12] rates and crypto goes higher through the
[36:14] rest of this year?
[36:15] That's definitely what the data's been
[36:16] showing. Um
[36:18] I think it's a lot bigger than that,
[36:19] though, and I think the crypto markets
[36:21] completely got worse wrong. Um when he
[36:24] was named, everyone's like, "Oh, this
[36:25] guy's going to stop QE and it's going to
[36:27] 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 advisors, but
[36:37] the guy has a pretty robust um crypto
[36:39] portfolio to begin with.
[36:41] As he's As you hear him speak, he's very
[36:44] pro-crypto.
[36:45] And
[36:46] you know, I I think what you're going to
[36:48] see at a higher level, and we know you
[36:50] know, Secretary of Treasury Bevin is
[36:51] also pro-crypto. He wants to make he he
[36:54] loves stable coins. He wants to start
[36:56] pushing stable coins out to the world,
[36:58] but
[36:59] what my thesis is is you're going to see
[37:00] a new Fed Treasury Accord.
[37:03] Where some roles that the Fed has crept
[37:05] into are going to move back into
[37:07] Treasury, and that's fine.
[37:09] Um and you know,
[37:11] the Fed can stay perfectly independent.
[37:13] Certain tasks and responsibilities can
[37:15] be moved into the Treasury, and that's
[37:17] okay because the Treasury's held
[37:19] accountable through elections. And I
[37:21] don't have a problem with that. And as
[37:23] certain roles and responsibilities
[37:24] migrate back to Bevin, it gives him a
[37:26] lot more flexibility, I believe, you
[37:29] know, to to to to pursue his agenda,
[37:32] which has been very clear from the
[37:33] president himself, I want to make the US
[37:35] the crypto capital of the planet.
[37:37] And so, yes, I do think crypto as risk
[37:39] assets are very responsive uh to lower
[37:41] rates.
[37:42] You know, we're seeing
[37:44] governments around the world right now
[37:46] 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
[38:05] a very conducive environment with
[38:06] Wurstel to Seat and him working like,
[38:08] why wouldn't we want
[38:10] uh Chairman of Federal Reserve and the
[38:12] Secretary of the Treasury to be working
[38:13] hand-in-hand and coordinated? I think
[38:15] that makes a lot better sense. Um and
[38:17] that doesn't mean no independence for
[38:19] the Fed.
[38:20] I uh I completely agree. I think that
[38:22] we're going to get uh quite a bit of
[38:23] support here, Uh um which is not
[38:25] necessarily uh because people are just
[38:27] sympathetic to crypto. It's that the
[38:29] world needs this and America wants to be
[38:30] 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
[38:47] 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
[38:54] and and uh
[38:56] and bio, like, you know, it it's these
[38:58] are really interesting verticals that
[39:00] we're going to see incredible um
[39:02] advancements. Yeah, I completely agree.
[39:04] All right, where can we send people to
[39:05] uh to find you and uh they want to learn
[39:07] more about the uh the new role and what
[39:08] you're going to be doing at Franklin?
[39:09] Where can we send them?
[39:11] Yeah, uh still on Twitter uh
[39:13] perkinscr97.
[39:15] Pump, always good to see you, man. Uh
[39:17] look forward to doing it again sometime.
[39:19] Of course. 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
[39:24] Franklin Templeton.
[39:26] All right, good to see you. Carry on.