This Market Maker is Helping BIG Institutions BUY Crypto! with Josh Riezman

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
If you want it to be the financial system, we

(00:01):
want everyone to participate, and so an inclusive vision includes
the largest companies of the world as well as myself.
And what's amazing even today is one bitcoin that I
have on my own wallet is the same as one
bitcoin that Jaden Markant has, with the same ability to
transact in that asset and to move that asset around.

Speaker 2 (00:19):
It's amazing what's happening. So people are going to be
using this technology not even know it's running behind the scenes.

Speaker 1 (00:26):
I think that's where we're headed. And like I said,
it's somewhat of a trojan horse to get everyone into
the on chain.

Speaker 2 (00:37):
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to many exchanges, and all the links will be in
a description. Check it out. Hey, folks, welcome into the
Thinking Crypto podcast. I'm your host, Tony Edward and joining
me today is Josh Riiseman, who is the US Chief
Strategy Officer and head of US Legal at GSR. Josh,
great to.

Speaker 1 (02:40):
Have you, Great to be here. Thanks for having me.

Speaker 2 (02:43):
Josh, I'm excited to dive into all the great things
that GSR is doing, so many initiatives. The core of
your business is, of course you're crypto market maker, but
you've expanded beyond that, so lots of talk about there.
But I would love to kick it off with your background.
Tell us a bit about where you're from and your
professional background.

Speaker 1 (02:59):
Sure, originally from California, but went to law school here
in New York City and found my way into you know,
financial services legal field for so private practice. Then quickly
around the time of the financial crisis, headed over to
Deutsche Bank and I was a soft gen. After that
helped lead the legal team covering the prime services business.

(03:21):
So I've always had a trading legal career, and then
it got the crypto bug, found my way over to Circle,
where I was head of product and regulatory Legal ass
Circle kind of on their way up from launching USDC
the in the crazy run up there, and then I
came over to lead the US legal team at GSR.

(03:44):
In since I've taken over the role as the US
two strategy officer as well as there's a lot of
relationship between our legal strategy and our business strategy, as
you might imagine over the past three or four years.

Speaker 2 (03:56):
Yeah, for sure, I'm curious about when you got the
crypto bug and what was that aha moment?

Speaker 1 (04:01):
Yeah, so a couple of things. One is, started to
obviously invest on my own, you know, found my way
to pitcoin, then found my way to other digital assets.
But in the professional setting, we worked for a clearic
firm and we we worked as part of a trial
that was looking for ways to more efficiently settle securities. Right,

(04:24):
so going from T three to T two to T one, Right,
But once you realize and you get the aha moment
on blockchain that you can settle almost instantaneously for a
fraction of the costs and campacity, it became very clear
to me that was the direction of travel. Even even
when you see things like collateral movements in the traditional

(04:45):
finance space and you realize everyone's rushing to meet the
FED wire cut off at five o'clock, that's not ideal either.
And I think there's better ways to do things and
and and that's ultimately why I came around to blockchain
digital assets. It's a better way specifically to move around
value over the internet.

Speaker 2 (05:04):
Josh, given your background in tradfire, you're at Deutsche Bank
and so forth, you know, Bitcoin was started as this
hedge against the banking industry and the FIAT world, right,
But since then a new acid class has been created
around bitcoin with blockchain and tokenization, smart contracts and so forth.

(05:24):
But now you have trad fi institutions coming in and
using this technology. Looking back and where we're at now,
how do you feel that ethos has played out or
that you know, movement around bitcoin.

Speaker 1 (05:35):
I actually think it's amazing, right because and I think
we're talking like a lot of this gets conflated in
my personal view that you kind of have bitcoin and
you have everything else, right, I think bigcoin plays has
a special role in my heart, has a special role
in everyone that's come to digital assets as an amazing
store of value and kind of solving the double spend

(05:56):
problem right, built on blockchain rails. And then I think,
what's happened been since Bitcoin is this realization of all
the things we can do with blockchain and pretty much
every other digital asset since that of any size is
finding Okay, how do I use that same initial rails
that that that bitcoin was was delivered on uh to

(06:18):
deliver new financial services effectively and new ways to transfer, store,
and identify value over the internet. And so I think
the original cyberpunps will be pretty happy with where we are.
I think the where this getsconflated is now everything's coming together, right.
We have people who have been active for years and
years and years kind of toiling in the background now

(06:40):
being confronted with all the major institutions that are finding
their way to digital assets. And it can be a
pretty heady moment. And I think some people are asking me,
is this is this the development we wanted? Whereas I
think this is the development that was always inevitable for
success and and uh, you know, old we've been building

(07:00):
a parallel financial system. But if you want it to
be the financial system. We want everyone to participate, and
so an inclusive vision includes you know, the largest companies
of the world as well as myself. And what's amazing
even today is one bitcoin that I have on my
own wallet is the same as one bitcoin that Jaden
Workan has, right with the same ability to transact in

(07:22):
that asset and to move that asset around.

Speaker 2 (07:24):
Yeah, that's a great point because if you believe in
the free market, you believe in the democratization of you
know that this technology brings. You can't say, well, hey,
I'm going to put up these walls and these people
are not allowed to because you're kind of creating the
same problems that maybe have existed in the legacy world exactly.

Speaker 1 (07:41):
And I fact, what another area we should be championing
is Originally when institutions were looking at blockchain, they're like,
we're going to make private blockchains, right that only kind
of move our data around, move our assets around aternamiently.
Not that there's no place whatsoever for private blockchains. But
I think what we've seen is the dramatics set success
of public blockchains, just like we saw the success of

(08:03):
the public Internet and assets that move around on public
rails that had interchangeability both domestically and globally, and that's
a huge success for technology advocates generally, but also for
the just the kind of public open Internet.

Speaker 2 (08:18):
Yeah, great point. I remember in the early days certain
folks who are trying to create private blockchains and their permission,
but now they realize we got to go into public blockchains,
but they could still have the private blockchains internally, but
it needs to be a bridge. If you want to
participate in your open market. Absolutely, yeah, let's so GSR
tell us about GSR, your services and your mission and

(08:42):
so forth.

Speaker 1 (08:43):
Sure. Look, look, Gissar has been on a really fond
evolution since before I joined and ever since I've been
here almost four years ago, and that we're known as
as the largest crypto market because they're not the largest
in the world. We brought over four hundred projects to
market from a liquidity perspective, and we bring liquidity to
over two hundred and fifty tokens at any given time.

(09:04):
And what we found is our services have been in
high demand both from the liquity perspective but also as
we've gained experiences over the years in the space, generally
from a financial services perspective. So we really look at
ourselves now as a capital markets partner to our clients
and our client franchise, bringing them services along their whole journey. Right,

(09:25):
So not only do provide liquidity services, but pre that,
we can provide advisory services, we can provide OTC, we
provide venture investment, and on and on and on and
recently extending into asset management. So if you look at
all these kind of building blocks on a graph, it
looks like we're building kind of a modern web three

(09:46):
capital markets partner built on the core of our marketmaking
franchise that continues to be strong today.

Speaker 2 (09:54):
Yeah, and I want to make sure the audience and
those were new to crypto and even the con of
market making understand what you guys do. Because you're such
a critical component of the market. Markets can function without
services like yours. So you're connecting buyers and sellers, right,
and what type of institutions are using your services?

Speaker 1 (10:14):
Yeah, I think it's even more fundamental than that. And
so this is the way we ultimately talk about it is,
you know, liquidity in for nascent networks, digital asset networks
is like oxygen to those networks, right, in a way,
that for example, for ethereum, you need access to eat.
For ethereum to work, right, you need all the users

(10:36):
to have access to eat, very unlike what we're used
to in traditional finance, where you don't need access to
your Apple stock for your iPhone tool right right, and
so market Makers has kind of this connotation from traditional finance,
But we really provide an infrastructure role to the crypto ecosystem,
and that ultimately what we're doing is getting these assets

(10:57):
from wherever we need to get them, typically from the issuer,
from a foundation, from large holders, matching it with our capital,
and providing providing liquidity globally, both on centralized exchanges all
the large centralized exchanges around the world and decentralized exchanges,
so that no matter if you're transacting on chain, off chain,

(11:18):
or bilaterally OTC, you can access the tokens to participate
in the network. Actually from a use case perspective and
also from a trading and investment perspective as well. So
when I zoom out and we think about where GSR sits,
it's much more as an infrastructure provider helping move around
the different pieces of the ecosystem than it is it's

(11:40):
just like bid offer on NASDA, right, And so that's
why in crypto specifically, I think marketmakers have taken, especially
in the early days, kind of an outsized influence because
there really are greasing and providing this oxygen to the
system that really otherwise wouldn't exist.

Speaker 2 (11:57):
And what are some of the trends you're seeing this year?
You get that cryptos in a much more friendlier environment,
especially here in the United States, and you know, are
you seeing more demand from institutions, the Wall Street firms
and so forth.

Speaker 1 (12:10):
Yeah, I think there's been a real explosion in activity.
You know, if you look at you know, before the
previous election, I think a lot of crypto activity was
decidedly moving offshore, and post election there's just been a
kind of really explosion activity back in the United States.

(12:31):
It's still happening globally. But there's no doubt to me
that the US right now is the crypto capital of
the world, and probably New York where I'm sitting today,
and that you could walk down any neighborhood in Brooklyn
or in downtown Manhattan and run into ten or fifteen
different projects that are active in the space. Right So
what you've seen is that the natural growth from the

(12:52):
technology kind of where we go on escalator chase. But
now all the crossover is been beginning to happen, as
I mentioned before with small finance. So where are some
spaces you've seen in it? It kind of started over
the summer, I mean even before that, but one of
the big thing was the digital ascid treasury trend where
public companies were looking to adopt digital assets as part

(13:14):
of management of their treasure. So this is the first
time you had you know, assets really wrapped up into
into public companies accessible by investors separately. You've had the ETFs, right,
so starting with the launch of the the the Bitcoin
ETFs and the dramatic success of ibit far and away
one of the most if not the most successful ETF

(13:35):
of all time. Where you know, I think Wall Street
and financial service community generally is rushing to meet the
demand of investors, both the retail and institutional, looking for
safe and accessible ways to access crypto in rappers that
they're used to, right, So typically that's coming in securities rappers,

(13:59):
and that's really outpaced even you know, the spot markets,
and so you're saying and then on top of that, right,
so I know, this is a long answer. It's the
bilateral growth and of the derivators' markets, right, So it's
all kind of is happening all at once, where spot
markets extremely active, the securities markets energizing the spot markets,
but bringing in a lot of new investors, which is

(14:21):
turbo charging the derivators' markets, both both you know, kind
of listed and unlisted derivors around the world.

Speaker 2 (14:28):
Yeah, it's incredible to see the amount of demand. I
sometimes have to pinch myself because I've been here since
twenty sixteen and we went from Jamie Diamond bashing crypto,
calling it all this scam bitcoin of scam lowry think
at one point calling this an index of money laundering,
to now they're all launching services. Just recently, JP Morgan
said they're going to use bicoin and eight as collateral

(14:50):
for loans. I mean, it's amazing.

Speaker 1 (14:52):
Yeah, And I think one thing we haven't touched on.
I'm sure we were going to get to this conversation
to stable coins, but you know, I think it's really
the trojan horse of crypto and that if you look
at I think at recent report, I saw something like
nine trillion dollars of transactional value in twenty twenty five alone,
outpacing even traditional card networks and so and this is

(15:15):
all happening on chain and in a way that's at
some level of trojan horses that it's just a better
way to send certain types of payments, not all payments,
not everything, but especially anything in cross border or instantaneous
or off hours or anything you need, you know, to
go quickly. This is the type of activity that's really

(15:40):
bringing people on chain all of a sudden, You're just well,
I'm doing a venno transaction, now I'm doing a stable
coin transaction. It's like, well, law, you're now in the
on chain economy and you're open to everything else that
the digitalized the ecosystem has provided. And so once people
kind of get into you know, they open their wallet,
they come on chain, son is all all the other

(16:01):
things that both you can do and invest them in
the space. Yeah, it's incredible.

Speaker 2 (16:05):
And we just had the Genius Act pass earlier this year,
and it seems like everybody, well I shouldn't say everybody,
but a lot of firms are going to launch your
own stable coins, including banks. What are your thoughts on
this stable coin market? Do you think we hit one
trillion within the next two years, and could there also
be some consolidation that you know, in the free market,
there's gonna be a lot of competition, a lot of

(16:26):
people are going to launch your own stable coins, But
is there a need for a hundred stable coins? You know,
there may be some consolidation.

Speaker 1 (16:33):
Yeah, I think there will ultimately be winners. But I
think on the back end it's gonna eventually become seamless
to users, meaning just like you can go to your
bank and give them, you know, Canadian dollars and get
US dollars, you're gonna be able to come in with
your your tel and get credit, send it out at
USDC and then you know, take it in and JP

(16:54):
morgan coin right and send it out, you know, not
that they've announced it, but these are I think think
on the back end, we're going to effectively have a
clearing system, and there's several startups involved in working on
that and big traditional players as well. Such said, I
think we'll be able to support multiple coins. I don't
think we need hundreds, but it won't shock me to
see you know, a dozen stable coins out there or

(17:18):
more that get some significant volume and yes, I think
we're going to a trillion and beyond. I think there's
no doubt it's a superior form factor for transacting in
value over the Internet. And I think there's no shortage
of time people are willing to spend on the Internet,
that that amount is just going up and up, and
especially as you start to see things like I agentic

(17:40):
AI transactions. And I know I'm speaking in code and jargon,
but eventually, if the ais are going to transact on
your behalf, it would be much easier for them to
do so with stable coins than it would be for
traditional fiatrails, given how banks work and how rails work.

(18:02):
And if in that case, you could see the use
case dramatically explode and the overall volume in these assets
continue to increp.

Speaker 2 (18:12):
Yeah, it's amazing, and we've been getting like tons of news.
I think just yesterday Western Union said they're launching their
own stable coin visas expanding use of stable coins, so
is MasterCard, PayPal has their own. It's amazing what's happening.
So people are going to be using this technology not
even know it's running behind the scenes.

Speaker 1 (18:29):
That's the idea where it's you really shouldn't have to
be cryptoliterate to send a payment in stable coins or
a received one, And I think that's where we're headed.
And like I said, it's somewhat of a trojan horse
to get everyone into the on chain.

Speaker 2 (18:44):
Dumb question, do you guys provide market making services for
stable coins as well, you know, on and off ramps
types of stuff. Yeah, so historically we are active in
the stable coin market. Sometimes that might look at at UH,
you know, where you know, providing kind of that stable
liquidity for pools where you can kind of ensure that

(19:07):
that stable coin is coming out near the PEG to
the smpthy markets relatively common. Also just just as a
as part of our infrastructure, sometimes you want to use
GSR to move say large large amounts of stable cleans
around right from Exchange one to defive venue two, UH
to player three. And so our global infrastructure enables kind

(19:28):
of seamless transaction and redemption of stable glids. So people
will come to us both to provide liquidity services on
platform but then also bilaterally as well. So talk to
us about the infrastructure and like how do you custody assets?
Who do you use to custody and how do you
execute your trades and things like that.

Speaker 1 (19:47):
So most of time when we transact, it's an a
proprietary basis, and we don't generally custody for clients, but
we have our own as you might imagine, kind of
widespread custody network, and we use that, you know, we
use all the big players that you might imagine depending
on the transaction. So we're able to use uh, you
know both uh uh you know, cold in hot wallets

(20:10):
and uh you know, and transact in non custodial and
custodial environments depending on what the transaction calls for. And
so we take pride in being plugged in with effectively everyone.
That's that's a nice position that GSR is in now
and so we can we can generally participate in any
transaction that needs to have now.

Speaker 2 (20:30):
Earlier, you mentioned et apps and dats. GSR has a
lot of uh or I should say you you've expanded
beyond just market making. You're doing some venture uh launching,
helping to launch products and so forth. Someone to talk
about some of the news items I've read, such as
GSR filing of five crypto ets for SEC approval, including

(20:51):
a novel fund that invests in crypto treasury companies tell
us as much as you can about these.

Speaker 1 (20:56):
Yeah, so we're we're in a crop quiet period now
with respect to the ETS to be filed, So I
won't talk about any specific products, but I think what
you've seen is a dramatic uh, kind of unleashing the
kraken of the crypto ETF universe, and that there's a
rush to see what investors are looking for as they

(21:17):
look at ets. I think historically those products have been
around single name crypto assets, potentially lever crypto assets, and
I think other players, including GSR, are looking for you know,
what's the ryot nache. What are investors really looking for?

Speaker 2 (21:32):
And we hope to bring that And I think one
that's really a big interest to me is the advisement
of Mei Pharma, which is a light coin treasury company
and it looks like one hundred million dollar uh you
know au M of light Cooin tokens tell us about that.

Speaker 1 (21:53):
Sure now called light strategy, uh. And this is with
Charlie Lee, the founder of light Cooin, who who uh
you know, is on the board and it goes in
part of our our broader strategy is when we talk
about being a full life cycle partner. At GSR, we
at the very beginning can provide advisory and incubation for

(22:14):
teams looking to develop crypto assets. We obviously talked about
that we provide liquidity and OTC and as on the
very other end of the market, will help develop projects
kind of make their way into two NASAC. So we
look at it as kind of one long continuum as
a capital markets partner. And so in these transactions we're
able to to both advise and n act as asset

(22:37):
manager with respect to the digital acid treasuries. And so
these are companies looking to adopt a strategy and and
and kind of matching with the the right asset or
right team that wants to bring these assets to market.
And so with with Charlie uh and with the Mai
pharma looking to really adopt a like pin strategy, is
a no brainer for for GSR to be involved as the investor,

(23:01):
advisor and asset manager on those assets. And I think
more broadly, we've been extremely active in the places in
the space is we look at as one of the
first crossover moments that's happened in crypto of really even
see it in meetings where it's the crypto people the
bank people kind of meeting for the first time. Now

(23:22):
everyone knows each other, which is quite quite funny. But
when this started in April, I think most of the
bankers in New York had never heard of most of
the crypto people, and by this point they've met them all.
So it is important for us to be involved in
this transitional moment. Everyone's learning a lot, learning about how
the pipes work between both sides, and I think it's

(23:44):
just the beginning. I use this analogy elsewhere, but for
those familiar with pump dot fun on Salana, right, it
was kind of a mean coin launch pad, and people
have their own opinions, but what it definitely did was
test the resiliency of the Salona blockchain and that all
of a sudden they had a tremendous amount of volume.

(24:04):
And you know, Solana has showed that even if it
struggle with cert points, is able to handle that huge test.
So it was a great proof case for Solanas as
a network. And at some level, I see this kind
of digital ASSEID treasury as a pumped up fund moment
for autriitional finance. Is that hey, we're we're we're pushing

(24:24):
all these crypto assets into companies that want to adopt
these strategies. But it's really testing the pipes here as
we combine the digital asset ecosystem and the traditional finance ecosystem,
and I think it's between ETFs and the dats is
the first of a lot of things to come, and
we're going to see a lot more interactions and kind
of normalization of that activity.

Speaker 2 (24:46):
You know, two things stuck out to me when you
just mentioned. One was the Wall Street banking crowd getting
familiar with the crypto crowd, which is amazing. And you know,
we kind of hinted earlier about the convergence of these
two indition And then you know what you guys are
doing with expanding your businesses business services, It seems like
a natural progression or expansion of what you do and

(25:08):
kind of raising the bar here for crypto market makers.

Speaker 1 (25:12):
Yeah, I think I think what we found is because
of our client franchise, we're able to kind of bring
the traditional market expertise to crypto. So a lot of
the businesses in crypto historically are kind of bringing that.
Then I think successful today very publicly are bringing kind
of crypto to traditional finance right or to main street.

(25:35):
I think we like to focus on our client base
and see how we can best serve them. And then
as as crypto grows from a one trillion, trillion, three
trillion we think ten trillion dollar industry, they need more
financial services in addition to just the liquidity services we're
known for, and I think we have the right infrastructure

(25:56):
and team to bring those and we're excited where that
taking us over the next few years here now.

Speaker 2 (26:03):
There was also recent news of an acquisition of a
Finnro registered broker dealer, which enables you all to provide
investment banking services to both traditional companies and crypto startups
looking to raise money. What can you tell us there
about that.

Speaker 1 (26:18):
Yeah, so we announced we entered into the agreement for
the acquisition and it's part of our broader strategy kind
of as I mentioned elsewhere of being able to play
everywhere and that you know, we first came to the
SEC in twenty twenty, twenty twenty one, and effectively, if
you were a full time crypto company, they weren't very

(26:42):
interested in granting broker deuer lessons at that time. And
I understand as a somewhat novel and so most players,
like ourselves, we kind of, you know, stay to our lane.
I think now that things are coming together and you
have a different regulatory ecosystem, we're getting increasing clarity both
from this SEC and from the proposed legislation that's in

(27:04):
the pipe, and that we see a broken dealer as
a natural extension of our service being able to participate
and provide security service. So we're going to engage in
the in the process with Finner, we look to come
at of that with uh, you know, another tool in
our tool belt that will provide to our our our
customers and partner.

Speaker 2 (27:23):
Now, Josh, with the tokenization market, we see there's a
big race, a lot of firms tokenizing stocks, money market funds,
some are looking at gold and real estate. Are you
also facilita or looking to facilitate market making for those
markets or not necessarily because they're taking traditional assets that
are in the trad file world putting it on chain.

(27:45):
I hope you could share some light there because I
don't fully understand it myself. So I'm curious, how does tokenization,
tokenization of assets fit into your services?

Speaker 1 (27:53):
Sure, look, if you if you zoom all the way out,
we think ultimately everything that can be tokenized will That
doesn't mean everything that's tokenized makes it better, but there's
going to be a new way to transact in assets
on chain. Stable coins is an obviously example that's a
tokenized dollar. That's just one tokenization. And for sure we're

(28:16):
going to tokenize securities, and we're going to tokenize bonds.
I think for GSR that's less of a focus for
us on traditional public securities and bonds, where we have
you have pretty established, highly competitive market for traditional securities,
public securities and and and you know fixed income as well.

(28:38):
But we do think as more things become tokenized, and
this includes things like private securities and things that start
to look a little bit more like nascent crypto networks,
so low naturally low liquid environments, that's where we can
bring some specific expertise to the market. And we expect
and are already active in that market providing liquidity to

(29:01):
certain certain assets that are relatively low liquidity, and they're
looking to gain uh kind of more liquidity to these
private assets because ultimately, just by tokenizing something, uh, it's
not a excess. By the way, just by tokenizing something
and having liquidity doesn't mean, it's gonna happen, you kind
of need to have tokenize something that you that by
tokenizing it brings more demand, uh, in which case you're

(29:25):
gonna need the liquidity. And there's there's that cycle of
of you know, the supply of the man the liquidity
here that we're trying to fill as a specific hole
for for these assets to truly be successful. And and
we're at a pretty early stage in that process as
a lot of this is again testing the pipes and
seeing where we go. But if you take the view

(29:47):
as we do that all of these assets that can
be token I as well, we're all kind of placing
our bets on on where that's going to go and
where can we provide the most value. And I think
for us it's in the kind of a you know,
traditionally low liquidity assets that looks a lot like the
business we've been doing for past ten years plus well

(30:08):
for sure.

Speaker 2 (30:08):
In addition to the question, I asked what happens in
a world where it seems the puck is heading this
way some of these let's say private equity right as
the example you give is tokenized, and I'm an entrepreneur
and I have this new company, I tokenize it and
people around the globe, if they just have a smartphone,

(30:31):
they can access it. Right, maybe that's ten years from now.
I don't know, how does that fit or how do
you think you can execute on that? If you have
billions of people, let's say, can access these products, and
it's no longer just the United States or the EU
or specific I could be in some country in Africa
or Latin America. Are you guys thinking about things like that?

Speaker 1 (30:54):
Well, look, that's the dream, right, and there's a lot
of regulatory hurdles between here and there. But again, I
think stable coins provide a good moth that what we're
seeing is by tokenizing the US dollar, people who don't
have bank accounts in foreign countries, don't have traditional access
to US dollars are finding ways to hold and gain

(31:14):
access to dollars and effectively to potentially US treasuries in
that context. And so it's a proven use case that
if he tooke it, it's there now for access to dollars.
You still have regulatory controls and countries, but it's not
like the country by country securities law regimes. So I'm
getting onto the legal side of how I think about

(31:37):
all this, but I think getting through the legal morass
of how you make for example, an equity issued private
equity related to a private security issued in the US
available to people all over the world, it's possible. It's
much more complicated than the stable coins, and we have
to work through various challenges both securities law we have

(31:59):
Bank Secrecy Act and money laundering rules, all of these
which we have to kind of work out for how
do we apply that to this new unchain economy. What
smart changes can we make where we still are sure
to make sure we're in charge of taking control of
customer protection, we're controlling and watching out for money laundering
in any kind of financing of terrorism. And once you

(32:22):
can control these three things and address them, I think
this dream that we all have a pure democratized finance
is what comes down that if I want to raise
money for a company, I can raise from everyone in
the world tomorrow. And like I said, I think blockchains
what enables us to get there. We could effectively do
it today if we wanted to. And now part of

(32:43):
it's going to be building out the global regulatory infrastructure
around it. And so there's this race going on between
the technology which is being built and the regulations which
are happening. You know, patchworks all around the world, and
it's going to be fits and starts. But I think
people need to take this long term view of saying, Okay,

(33:03):
we're going to kind of be pushing back on each
other as we see what works, but we all have
the same goal and I think I am pretty optimistic
that whether it's you know, two years, five years, ten years,
we're going to get there.

Speaker 2 (33:17):
Yeah, for sure. And then in addition, I'm assuming the
same thing applies for existing companies. Let's say your Amazon's,
your Walmart's, if they were to issue reward tokens on
the blockchain, of course, and what need to They can
be traded in the open mark, they have value, the
holders can get benefits of holding onto it, maybe staking rewards,

(33:37):
maybe additional discounts. But if there needs to be a
market for that, that's where you guys would come in, right.

Speaker 1 (33:44):
Yeah. I think we can provide liquidity for anything that
trades on chain and some cases off chan as well,
And so it's really is where does that demand necessary
to have the liquidity. But I think just the broader
view to your point is as more things come on chain, Uh,
liquidity becomes extremely important for reasons we met before in

(34:07):
ways that's not necessarily the case in in what we
how we think about liquidity in in traditional finance, and
and that's where we think we can play a role,
especially as we think about kind of the global you know, uh,
sections of secluded liquidity. Right now, even in crypto liquidity
is very fragmented and and you know, you could be

(34:29):
on one chain and you're really only trading with the
assets and money in that one chain, even though the
on chain economy is much larger. So there's again there's
technologists working alongside GSR as a as a their kind
of finance partner, say okay, how do we solve that
fragmented liquidity problem and make everyone able to access the

(34:51):
same giant pool. And that that kind of goes to
your view of democratized finances, that we even want to
democratize across chains right and and and into and across
companies to make this all somewhat interchangeable. And that's that's
ultimately where we're headed is less, less siloing and more
and because that's going to lead to a higher volume
of transactions, which ultimately is like good for GDP, right

(35:14):
and good for growing economies all over the world.

Speaker 2 (35:18):
So I'm seeing the technology being built is bridges for
better interoperability, but also maybe atomic settlements and things like
so it's like very fast and so forth.

Speaker 1 (35:28):
Absolutely, and so one just one example is GSR partnered
with Polygon to develop a new train called Katana. It
is built on the kind of interoperability chain uh developed
by the Polygon team, and so it's trying to address
the standpoint is how do you connect various chains into
one pool of liquidity? And then increasingly uh, these uh,

(35:52):
these blockschain providers are getting that speed to where to
a point where speed is a non issue, right, So
speeds speeds are coming down, interoperability is going up with
with efforts like Tatana uh and others that are working
on the cross chain operability problem. And I think ultimately
that's going to lead to the to to better liquidity

(36:13):
for everybody.

Speaker 2 (36:15):
Absolutely. I wanted to get your thoughts because we touched
a bit on it. Dats and ETFs. You kind of
have these two avenues now that let's say non cryptos
savary people can invest in, right, so uh, you know
you don't feel like going to coinbase or whatever to
buy your crypto and you don't want to deal with
the wallet addresses, you can buy it via an ETF

(36:35):
or go through the dats. How do you think these
two avenues play out and the competition. Do you think
that's can steal some of the ETF market share?

Speaker 1 (36:45):
It's super interesting, right, because there's an argument that. So
let's just say you have an ETF for one asset
and a digital asset treasury around the same asset. Are
they competing or are they in cooperation with each other?

Speaker 2 (36:58):
HM?

Speaker 1 (36:59):
We tend to think that's level they're competing in at
some level they're cooperating that Depending on how you want
your exposure, you may go into the treasury versus go
to an ETF. So ETF is going to give you
pretty good, low cost access to the underliyer and that's
that's all you're going to get. What you get in
the digital treasury, which has its detractors and proponents, but

(37:22):
ultimately you get not only access to the underlayer, but
you get access to that company's ability to access to
capital markets. Right, and so what you hope, as as
Sailor has shown with strategy micro strategy now strategy is
that if you can draw forward some of that future
return from the ability to engage in these financial market transactions,

(37:46):
you can actually add some extra return to the underlying asset.
And I think for certain investors that will be appealing,
while for other investors the ETF for off repiling. What's
nice is both are offered in a regulated environment. One
kind of looks more active, one one looks more passive.
And we have a long history of people kind of
decide in between how they want their exposure more more

(38:09):
active and more passive, depending on fees and return profiles.
So the long answer to say is both. Yeah.

Speaker 2 (38:18):
Yeah, I mean, it's great that we have these options.
The only thing that I'm a little bit concerned about,
you know, more so on the DAT side, not the
ETF at all. But there is some risk at how
these companies are managed, right, just the nature of the
business cycle, and when a bear market rolls around. I know,
the ETF issuers they're going to be fine, but well

(38:40):
the dats be okay. Well, you know, I don't think
all of them are going to collapse, but I think
some might collapse. It might be some consolidation as well.

Speaker 1 (38:46):
Yeah, generally, if they're well run and well managed, they
should be able to survive the bear market. I think
to your point you're raising is you know, I think
in the competition among dats and ETFs, some may look
to take on leverage, and so average is the big
killer in crypto generally and in bear markets very specifically,
and so the risk is for those that look to

(39:09):
take on leverage, they may be putting themselves at risk.
You know. I think for a lot of the biggest
stats now they're at very manageable to negligible leverage risk.
So the question is does that change? Do people get
more aggressive? And we're always going to have such cases,
but that is the risk in crypto generally, for people

(39:32):
training in crypto generally, and then specifically for digital acid treasuries.

Speaker 2 (39:35):
Agreed, Yeah, for sure. We covered a lot of the
great initiatives you guys are working on expanding your business
and so forth. Is there anything else you want to
highlight that's on your roadmap?

Speaker 1 (39:46):
Look, I think generally what we want to provide is
being the full capital markets partner for crypto. So I
think what to look for from from GSR is how
do we better advise people entering this market? From the
beginning all the way to the end. And I think
for our clients and customers, we're focused on providing value,

(40:12):
you know, above and beyond where we have previously as
the market kind of grows and increases. So you know,
I think highlighting as we have here are kind of broad,
kind of beginning to end offering, but also our increasing
asset management offering, and that we think a lot of
folks are looking not only for our guidance to crypto,
but also kind of access to some of our internal strategies.

(40:35):
And we started to talk with folks, you know, thinking
about how do they invest alongside GSR as well, And
so there's more of that to come from us, and
we'll come back on to talk on the next time.

Speaker 2 (40:47):
Well, for sure, I wanted to ask you about the
Clarity Act that's in the Senate. We got the government
shut down. We're waiting for the government ton't reopen, but
you know, that could get passed by the end of December,
or shouldn't the end, but you know, but by December.
And I'm curious what you think the impact will be
on the crypto industry and even for GSR's business.

Speaker 1 (41:07):
Look, market, structural legislation is crucially important. You know, if
you go back, UH several years ago, part of the
reason there was so much kind of persecution at some
level of the crypto industry was because there were not
clear rules of the road, and so the enforcement was
able to be arbitrary. So what we want is clear

(41:28):
rules of the road and non arbitrary enforcement of those rules.
As an industry, this is not an industry looking for
for for no rules on the on the UH, totally
the opposite. I think we're looking for as clear rules
as possible. I think we're at a pivotal moment for
market structural legislation. UH that I think the the both

(41:49):
the House which which passed market relstation has been somewhat
stalled in the Senate, and it's stalled in the Senate
for a few reasons. I think One, there'sdical reasons, right
between Republicans and Democrats, although I think there's pretty widespread
belief that that crypto can be and is a nonpartisan issue.

(42:12):
But you know, the definitely the relationship between Democrats and
the administration is not nonpartisan, right, and so that could
lead to us stall and we've seed some of that
stall out the legislation separately. I think there's a big
discussion in the industry between you know, especially things like
defied decentralized finance are critical components of the on chain

(42:35):
ecosystem and need to be dealt with kind of in
a novel approach. We can't have the same rules that
we applied to wires, you know, applied to defied. That
doesn't mean we don't apply the same standards, but not
the exact same rules that you would apply one hundred
years ago to two decentralized finance. You want to apply
the same standards and try to achieve the exact same goals,

(42:57):
but we have to have that approach modified. So I
think if we can address the partisan issues and really
push through that this is a non partisan initiative. And two,
we can highlight the distinctions about this technology, what it's
able to provide, and how we can achieve the goals
of previous regulatory regimes with this technology. That will likely

(43:19):
get to know market structural legislation that can make it
out of the center in the House with brought industry
support to accept we get that legislation. I think it's
a net good for our one the industry, like everything
comes with its good and bad. It'll be hard, it'll
be expensive, it'll be complicated, and there's always a strong

(43:40):
argument that it will be overdone. But I think we'll
we'll need to, the industry will kind of suck it
up and we'll do it right and we'll get over
the line. In GSR shows that we've been kind of
you know, regulatory first since our beginning, right So we
obviously have a license in Singapore, we have the UK
money Laundering authorization, and we've we're in the process of

(44:04):
of seeing the Brocadero license in the US. We're happy
to get any license that's necessary and to kind of
level up not only our compliance but the industry compliance
to ensure customer protection and kind of you know, best
practices as it relates to a you know, anti money
laundering and similar rules. So so a lot to come

(44:24):
in that space. It'll be a big shock, But it
looks a little bit like earlier in my career, after
the Financial crisis, we did Dodd Frank and then we
did years of rulemaking from Dodd Frank and that totally
kind of redid the deroators industry in the US and
globally around that time, and I think we're going to
have a very similar process. So this this whole market

(44:44):
structure and kind of regulatory post post post potential market structure,
regulatory regime really rhymes with that with that period of time.

Speaker 2 (44:53):
I appreciate that perspective because I don't think a lot
of people talk about the execution and implementation of these
respective rules. Like you said, it's going to be hard.
I think that's you know, that's the truth, Like, because
things have been done a certain way for a long time,
and one could argue, you know, there was the wild
wild West days of crypto and there's still a little

(45:14):
bit of it there. But when the legislation comes and
then the implementation comes, it's going.

Speaker 1 (45:18):
To be a little bit hard, right, It's going to
be hard, and it's you know, I think if if
it was easy, everybody would do it, is my line
around GSR and generally, and so I think it's it's
going to be hard, but it's going to weed out.
I think the people that are committed to doing this right,
committed to growing businesses in the United States as we are,

(45:39):
and those are the people we want representing the industry
and you know, representing frankly the tech community as as
we grow here in the US.

Speaker 2 (45:48):
Yeah, well said, well said. I got some wrap up
questions here for you, Josh. First, if you could create
your own metaverse, will the theme be the theme of
my metaverse? It would be it would be in New
York forever, just an endless in New York City where
we can all play with no with no job. Yeah, well,
I grew up in New York, so I'm I'm on

(46:09):
board that. Definitely create it. Rapid fire questions. Favorite food.

Speaker 1 (46:16):
Definitely uh for Charles or keen Stick. I'll give you
an all New York answer upon you know, like Calimpornia.
Maybe I have a New York mindset right now. Favorite
musician or bad I'll give you an old one. I
was a kid from southern California. So always the softest
part of my my like one of my hero it
is Sublime, right, so a little little, a little reggae

(46:38):
punk from from my from my southern California days.

Speaker 2 (46:42):
I love Sublime.

Speaker 1 (46:43):
Favorite movie, you know what, one of the many movies
that probably made me want to be a lawyer was
a Few Good Men. Uh, So you know I'll always
remember that, and that's that one and and always the
obvious godfathers in the world. But one that kind of
I think influenced my career was A Few Good Men.

Speaker 2 (47:00):
When that movie's on TV, I still watch it. Man,
a pretty watchable movie. Yeah.

Speaker 1 (47:06):
Favorite book, Uh, that's a great question. I think one
of my favorite books was Thomas Freeman From Beirut to Jerusalem.
Kind of set me up on a kind of long
journey of intellectual inquiry into not only the region, but
generally kind of international affairs, which which pushed me to
go to school in Washington, d C. And I think

(47:27):
about it a lot. And and you know some of
his his his.

Speaker 2 (47:30):
Writing as well, very cool. And when you're not working,
what are you doing for fun?

Speaker 1 (47:35):
Well not fund full New York circle answers, I am,
you know it either catching a drink or some great
seeing some of the great restaurants in New York City.

Speaker 2 (47:45):
Uh.

Speaker 1 (47:45):
If and if not, you know, otherwise traumvel with my family. So, uh,
this is is a great place to kick it off. Well,
for sure, I can't disagree with you there. Like I said,
I grew up in New York. My wife, I have
my studio in New York.

Speaker 2 (47:58):
My wife also commutes in the city and we'll meet
for dinner, try new restaurants, and there's no place like
New York. So yeah, I'm with you, Josh pleasure. Thank
you so much. Looking forward to the future updates around GSR,
but thank you so much for joining me.

Speaker 1 (48:11):
All right. Really appreciate you having me, and people should
be optimistic about where this industry is going. And if
they haven't read they should read that A sixteen Z
State of Cryptoport just to get a broad sense of like, wow,
this is some amazing stuff happening. Kudos to them for
writing it. I think it's a good recommendation for folks
to check out on where things are headed.

Speaker 2 (48:30):
Absolutely, I'm going to link to it in the description
and the website so folks can check that out.

Speaker 1 (48:34):
Okay, great, all right, Well, really appreciate it and speak
with you se

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