Why this Avalanche AVAX Digital Asset Treasury Company is a Game Changer! with Bart Smith

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
And ETF is not good or bad. It is just
a wrapper, right, It just it's a function of what
you put in it. And the same way ah, just
US treasury is not good or bad. It's just a
function of like what is in it and what do
you do with that capital. ETFs are like one of
the most democratizing you know, structures that have been financial
services has ever created.

Speaker 2 (00:19):
Would you look to explore investing in assets that are
tokenized on the Avalanche blockchain? Potentially?

Speaker 1 (00:25):
Yeah, again, tokenization is inevitable.

Speaker 2 (00:34):
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more about Uphold and all the great services they offer,
visit the link in the description. Hey, folks, welcome into
the Thinking Crypto Podcast. I'm your host Tony Edward and
joining me today is Bart Smith, who is the CEO
and chairman of the Avalanche Treasury Co.

Speaker 1 (01:51):
Bart. Great to have you, Thanks, Johnny. Looking forward to it.

Speaker 2 (01:54):
Yeah, Bart, excited to talk about what you're doing in
building an Avax treasury strategy. I'm an Avax token holders.
I'm excited to get into the details. Well, let's kick
it off with your background. Tell us about where you're
from and your professional background.

Speaker 1 (02:08):
So I've been in you know, in finance for whatever
twenty five or thirty years almost at this point, worked
in in asset management and I worked you know, at
ubs for a while, I was one of the original
founders of an ETF firm that was eventually sold to
Columbia Funds. And then and then from there I went
to work at Susquehanna. I was at Susquehanna for thirteen

(02:30):
years collectively. Most of the time there I was responding.
I ran the ETF group. I was also responsible at
times for so in some international sales and trading stuff.
I ran our credit trading business. And then since twenty fourteen,
I was responsible for anything that was digital asset related.
And then kind of in twenty twenty two, kind of

(02:54):
giving the regulatory environment, we made the decision to create
Susquehanna Crypto, which was not part of the Susquehanna group
of companies. It was a separate entity outside of the
Susquhenda group. It was based in Bahamas and with offices
in London Hong Kong, which you know, we were a
derivative trading shop, proprietary shop, market maker, and we did
a fair amount of investing into the ecosystem and a

(03:18):
lot of DeFi so a pretty well rounded business there.
And then departed in it's late August after thirteen great
years there to lead this new digitalised treasury. That's incredible.

Speaker 2 (03:34):
You got a pretty strong pedigree. You mentioned twenty fourteen
you were looking at digital assets. What was your first
encounter with bitcoin and crypto and when did they click
for you?

Speaker 1 (03:43):
Well, yeah, it was only one right, twenty fourteen. So
effectively we were just interested in the concept of bitcoin,
and you know, we were just you know, we were
basically just like investing in bitcoin long there wasn't really
much more to do there, you know, as in the
ICO boom in the twenty on the teen timeframe, we
became very active in a limited number of tokens where

(04:04):
we were quite sure that the SEC was going to
name you know, certain commodities as commodities and not name
them as securities, and so we kind of limit our
approach mostly to those names like cooin, bitcoin, bitcoin cash, ethereum,
and theorem classic, stuff like that. And then kind of
as there was that ICO correction in twenty eighteen, you know,
we went to try to kind of expand and kind

(04:27):
of set up like a proper OTC desk, and you know,
we just really couldn't get terribly comfortable with kind of
the legal and regulatory advice that we were getting and
others were getting, and so, you know, we kind of
were very interested in the space. We made a lot
of direct investments over that time, but kind of there
was a period there for a while where we weren't
as active as maybe some of the other kind of

(04:49):
bigger US market making firms, and then kind of near
the twenty twenty one kind of run up, and that's
when we kind of made the decision that if if
we want to do this, and Susquehanna and my person
all kind of view of the world is taking a
very conservative approach towards legal and reguatory compliance, and that
just meant, you know, doing it offshore. And we knew
that people were doing it in the US and they

(05:09):
were using VPNs and you know they which really just
means they're they're you know, they are you know, they're
they're not abiding by they're terms of service. But it's
you know, just in a broader sense, if we were
going to do this, we wanted to do it in
the most compliant and effective manner, which meant, unfortunately, in
that timeframe, you know, going offshore, and that's what we did.
You know, we set up a global business that was

(05:30):
in three time zones but just not you know, in
the US.

Speaker 2 (05:34):
BART things have changed so much drastically since twenty fourteen.
We went from being taboo and the stigma of this
being used by criminals to this full blown asset class
that now Wall Street firms are jumping all in. They're
going neck deep adopting, launching, crypto trading, custody, tokenizing stable coins,

(05:54):
and much more. Plus we have some legislation like the
Genius Act. What is it like looking back and seeing the.

Speaker 1 (05:59):
Growth it, you know it it felt really bleak for
a while there. And while there has been a tremendous
amount of progress in the last twelve months, uh you
clarity Genius Act, you know, and we're not We're not
through the woods on that. I not to take a
somewhat more parish view than many people, but like, there's

(06:21):
still a lot of work that needs to be done,
and we need to codify clarity, right because you know,
if you don't create laws that you know that and
rules to follow that are very clear, well then you're
just subject to the same kind of you know, regulatory
arbitrage that has existed historically. So that's something that you know,
in twenty twenty five, we need to kind of close out.

(06:41):
It's kind of difficult right now with the government being
shut down. So those are things that i'm i'm i'm
looking at. And then what you're going to need to
have some sort of harmonization of regulatory rule making around
the globe, right, and you've seen a little bit of
like kind of things to be excited about. The US
is working with the FC in London, which has always
been like a fairly difficult and slow moving regulator, to

(07:04):
maybe harmonize some of their rulemaking. But then you have
all these other money centers you're going to have. You know,
you have mic ou to for for broad EU, you
have you know, a lot of people going to UAE,
and then you have all the money centers you know
in in in the far East, right, so you have
like Singapore, Hong Kong, Soul, Tokyo. So there's a lot

(07:25):
of things for global firms, particularly global banks, to make
sure that they, you know, that they are harmonizing the
rules so that they can run businesses globally and they
don't have to have a different set of rules and
a different set of groups and and and groups that
can't really function, you know, globally, because there's different rules
and reanks in each locale. So I think we've made

(07:47):
a lot of progress. I think institutions are very interested.
What we haven't solved for is kind of this, you know,
banks being able to be kind of prime brokers for
are for liquidity providers and market makers in the space.
I think, you know, the events from a couple of
weeks ago, that was the function of that. Like there's

(08:07):
just there isn't enough capital that's fungible and and where
you can arbitraze price differences and different platforms and in
different in different areas, so that stuff it still needs
to happen. But like from where we were twelve months ago, yeah,
it's you know, we're white years, so that that part's good,
but we still have a lot of work to do.

Speaker 2 (08:28):
Yeah, it's a great point because I've been hearing some
folks are, for example, not happy with the EU and
the MECA regulations there and there's some departures. But then
you know, you have the United States getting ready to
pass the Clarity Act once the government opens up. But
to your point, how does this all mesh together? And
with these big jurisdictions. So, like you said, this is work.

Speaker 1 (08:48):
To be done here. Correct, Yes, I agree.

Speaker 2 (08:51):
All right, let's talk about Avalanche treasury. Cope, give us
the full rundown, the history, the mission, and much more so.

Speaker 1 (08:58):
So in my previous firm, you know, we were we
were looking a lot of these digitalistic treasuries, and you
know there's there's some are good, some are you know,
we're less attractive to us. We were very interested in
like different structures. Right, there's a lot of firms that
are just taking kind of an existing OpCo and they
just do a pipe into it. And you know, oftentimes
that company that's pivoting from a you know, a failed strategy,

(09:20):
whether it's you know, gaming or betting or like it's
like a hemp manufacturer. There's like, you know, there there
are you know, the different like medical failed companies, and
so in my opinion, those are more problematic, right, they
have they have historical problems you have to address. They're
operating companies, they're registered, they're regulated, so you have to
kind of continue to run these often failed businesses while

(09:43):
the primary business is completely unrelated. And like to me,
that was always kind of difficult. And so when the
concept of an Avalanche digitized of treasury came along. You know,
people reach out to us because in the last round
of Avalanche raised money, we were one of the largest
participants in that race. So there, you know, people knew

(10:05):
that that we were constructive on Avalanche, and I was
personally constructive. And then as you know, it was kind
of in the early stage of thinking about what that
might look like. You know, I had some very strong
opinions about you know, what would lead to success and
what you know, the next generation of these debts are
going to look like. And the more that I was
thinking about it, the more I thought, you know, this
might be a unique opportunity to do something different. And

(10:26):
you know, there's going to be a lot of these
digitalass of treasuries, and I think, just like in every
other part of the capital markets, you're going to have
winners and losers. And you know, if you built one
that was you know, purpose built to do uh to
provide you know, exposure to the avalanche ecosystem, but you
could go beyond, you know, what you might be able

(10:46):
to get by just owning the underlying spot commodity or
an ETF. Like I think there's a unique opportunities that
this type of structure provides. And so the more you know,
I thought about it, the more excited I got, and
you know, ultimately I ended up here.

Speaker 2 (11:00):
And there's going to be the question that folks have is, well,
why not Bitcoin, why not eat? Why not Salona? Why
avax or Avalanche?

Speaker 1 (11:07):
So I do think that one of the benefits of
the regulatory clarity that we've had and the excitement they
have around it is that like, finally, institutions, governments, you know,
are going to be able to implement blockchain technology to
make their businesses better, right, and so at its core,
you know, blockchain technology is is software and so so

(11:31):
now if you say, okay, well how are businesses going
to implement blockchain technology? I do feel like Avalanche has
a very strategic advantage in like a kind of government
and business vertical that it's you know, it's not the
mag one, right, the mag seven. So like throughout the
last couple of decades, there have been many winners in
technology put through software. They had different approaches and so

(11:55):
you know, you had you know, telecom, you have Internet,
you have SaaS, you had all these different areas. You
could have a winner or multiple winners. I think as
people look to implement blockchain technology into businesses, one of
the difficulties they have is that businesses don't want to
take their private information, all the customers private information, and
put it in a public blockchain. It's just like it's

(12:16):
not it's not it's not starter, right, So you know
what a lot of people have done is is maybe
looked at like ethereum and building you know, kind of
an L two. Like the unique structure of the Avalanche
chain is if they have this kind of three chain
approach and and one of them, the C chain, allows
people to build their own l ones kind of out
of the box in a way that's supported by this

(12:38):
broader network. And you know, you don't need to have
like an army of software developers to develop that. So
you see in companies like Robinhood or uh you know that,
you know Google, they're gonna build their own They're gonna
build their own change, which makes total sense because they
want to implement k y C and a m L.
They don't want to put their their customers you know,
private information on public lock chain. But most importantly, like

(13:01):
they want to own the entire financial stack, right like
they want to be able to customize it and so
but then at the end they want this kind of
base layer, you know security, and that's where you've seen
Ethereum have success. Right There's all these L two's that
are building on top of the Ethereum and they're basically
just paying for THEEUM level one, you know security. And

(13:21):
so for me just looking at all of the companies
that have already been building on Avalanche because they have
the capacity to customize an L one, but then you know,
into a the security of the Avalanche, which is also
EVM capatible, so you can you can connect out for
the rest of the world like KKR, Polo, Toyota, FIFA,
like big brand names are utilizing Avalanche today to build

(13:47):
for a myriad of reasons. Avalanche team has really built
in Japan and in Korea and other parts, Like they're
kind of market leaders in a lot of these spaces,
and you know, I just don't think people really understand
how differentiated AVAX and Avalanche is. So like when I'm
looking at kind of an opportunity, you know, it's it's

(14:09):
you have all of this stuff here and really you
just need to be able to package it and market it.
In a way that people can understand the opportunity, and like,
what a better way to do that than to create
a regulated public company that's audited that you can go
out and basically reboot, you know, the marketing, you know,
in in partnership with all of people from the ecosystem

(14:30):
to kind of make people aware of like what's going
on in Avalanche and why they might want to own
a little bit of exposure to the ecosystem in their
investment portfolio.

Speaker 2 (14:40):
Yeah, that absolutely makes sense. And uh, obviously I'm an
AVAC tookenholders. I'm very much aware of all the adults.

Speaker 1 (14:47):
But I don't mind the bias. I don't mind the bias.
It's okay.

Speaker 2 (14:49):
Yeah, but I wanted to make sure that question was
answered for people who don't hold avacs already, having they
don't know much about Avalanche. So I think it's important
to outline now which you did. So you know, you
mentioned that this this is not only about holding AVAX
but also participating in the ecosystem. Let's double click a
bit into that, like, how what are some of the

(15:10):
initiatives you'll be doing as far as supporting the ecosystem?

Speaker 1 (15:13):
Right, so you know we're going to take a lot
of keys from the regulators. Right, So there's there's been
a wave of these dead Lasha treasuries and so we
you know, we're as we're going through our own s
four and we're our goal is in the first quarter
of twenty twenty six to successfully merge with Mountain Lake
Acquisition Corp. Will be a listed company. We are going

(15:35):
to There's a lot of things that we can do
and that I believe we're going to be able to do,
but we have to also just kind of go through
this process and make sure that that everything that we're
doing is aligned with the you know, the SEC and
other regulators. So I think that's an important point that
you know that we are going to continually evaluate that.
So let's putting that aside. There's a lot of things

(15:57):
that happen in an ecosystem that have value that doesn't
fully or a majority kind of a crewe down to
the token. So like so if you think about Ethereum, right,
which is you know, the largest non bitcoin blockchain, and
I always have kind of thought, like, you know, bitcoin
is digital gold, right, it's over here, and there's a
world where people might build applications on bitcoin but it

(16:17):
feels like pretty far away from that. So excluding that
in Ethereum you've had, you know, it's the largest blockchain,
it's the oldest, and there are a lot of applications
that have built on top of Avalanche right Ave Right,
it's worth four billion dollars, it's seen one of the largest.
It's not the largest lending protocol you have like Uni
swap right, which is a trading platform decks that it's

(16:38):
on top of the built primarily on top of Ethereum.
That's worth a four million dollars. You know. A lot
of the value of those companies doesn't go down to
the Ethereum network. Some does, but like it wasn't as
if if you owned you know, Uni swap, or if
you owned ave, you know, you've got a different kind
of return than would trickle down to Ethereum. You know,

(16:59):
the the value of you know, fully diluted value of Ethereum,
you know, give or take, you know, rounding broadly, it
is probably like five hundred billion dollars. Right. A lot
of the excitement around Ethereum is stable coin usage, right,
and Tether's the bigges stable coin in the world. Teather's
worth five hundred billion dollars, right, So like teather being
you know, and and some of that crews down to

(17:20):
Tron because you know, there's a lot of tether on TRON,
So like some value accrue down to ethereum from tether,
but like how much you know, and like how much
accrued from AVE and how much accrued from uh, you know,
all of these other platforms out for the unisops of
the world. So like there's definitely a network effect that
will happen that will creue more value. So if you're

(17:42):
looking to get exposure to implementation and growth of the
avalanche ecosystem, you can own AVAX and like that should
work to some degree. But all of these l ones
that are being built on top of avalanche, where you
have these kind of private companies or governments or different
you know, uh kind of news, like builders that are

(18:03):
building applications on top of avalanche, some of that will
crew down because there will be a network effect. But
if you could get a little piece or you could
invest in, you know, some of those companies, that probably
gives you a much better exposure to the growth of
the ecosystem. So you know, we're going to own evacs,
We're going to stake it. You know historically, you know,
very conservatively, you know that's gotten you know, mid single

(18:26):
digits to like high single digit kind of yield returns
from from you know, taking the AVAX and using it
to secure the blockchain. So we can do that. There's
other things that we would love to be able to do.
Can we you know, buy a validator and run our
own notes and you know, could we lend our avax
to builders and applications and l ones that are building

(18:48):
on avalanche right, and can we work with them to
help them kind of with their staking, you know, with
their their the avax they need. Can we work with
them to make their businesses better? Can we do you know,
DeFi activities in the space. Can we there are derivatives obviously,
you know, coming from Susquehanna, like, there's a lot of
driven activity that you do with options and future strategies

(19:11):
that can generate diversified and maybe in some cases higher
levels of income. So what you end up getting is,
you know, this this diversified pool of of exposures that
should do better. If the ecosystem does really well, then
if you just owned the token seuth so like you
know that that that is the thesis that we're going after, sure,

(19:34):
is that we can provide a much better kind of
holistic exposure for value accrual for uh for individuals in
a way that is the access they want, right Like
many you know, many high net worth individuals and institutions
like they just they're either can't or do not want
to buy you know, spot commodities, digitaliztic commodities on unregulated exchanges.

(19:58):
That's it's not how they want to interact. So if
I can create you know, a public company where people
can invest through convertible bonds or through preferreds or through
straight equity, and they can hold it in the brokerage
account and they can they can invest in it just
like they invest in everything else. And then you have
this exposure where we can take you know, that capital
and then we can put that into the enterprise that

(20:21):
is avalanche and you know, you would imagine that that
that capital coming in should provide you know more you know, uh,
you know, gas for the fire, so to speak. Right,
You're gonna you're gonna help to like to to implement
more capital into the ecosystem, which should you know, you
would hope help the ecosystem grow. So that's kind of
like the dual nature, right, So like you you allow

(20:43):
regulated exposure for people in the way that they want
to invest, and then you take that capital and you
invest it into the ecosystem, which you would hope benefits
the growth and is mutually beneficial for for for the whole,
you know, for both parties. So that that's the concept
as I think about it.

Speaker 2 (20:58):
And then for this thinking rewards and the DeFi yield
and so forth, will that be potentially paid out in
dividends or reinvested.

Speaker 1 (21:07):
Again we you know, we haven't gotten that far in
the strategy. And mean I would think I think that
you know, dividends and paying out dividends is something that
you know companies do when they're kind of in a
later stage of growth. Right. So like typically when you
have kind of you know, growth companies, particularly like you
know high growth companies, like, the best use of that
capital is to continue to reinvest it because your kind

(21:28):
of expected rate of returns are going to be higher.
So I would my guess is that the best use
of you know, whatever capital we have would be to
continue to try to find the best returns. But like, sure,
if it you know, if there are certain situations where
you know, it would make sense to pay a dividend
or a special dividend. But yeah, I think you know,
right now, we're, like I said before, we're going to

(21:50):
kind of take the cues from the SEC and make
sure that we you know, we're disclosing risks and we're
and we're setting this up in a way that is compliant.
And then yeah, well as a lot of just Trypto
in general is like not being overly prescriptive and and
just kind of taking what the market gives you. And
so you know, we're gonna we're you know, Lane Littman

(22:12):
is my CEO, who he was the president Hidden Road
and and spent many years you know, working at ad
Vertue and and and you know Coleman and but banks,
like we've seen a lot of iterations of this, and
so you know what we're gonna do is we have
a strategy. We're going to communicate, you know, owning and
staking Avax is going to be a very large portion
of it. And then to the extent that we can
have other additive sleeves of our strategy that are smaller,

(22:36):
but we we believe would offer a diversified, better exposure
and you know, hopefully provide kind of risk adjusted you know,
good rates of returns for investors. Like that's that's the plan,
oh for sure.

Speaker 2 (22:50):
And as far as your au M, I read that,
uh looking to buy a billion dollars of AVAX tokens,
Is that right?

Speaker 1 (22:57):
I mean yeah, Ultimately, you know, we have we close
a private placement and then we have this you know,
pending business combination with Mountain Lake ac Position Corp. You know,
at that point, depending what the market does, that that's
going to be somewhere in the mid hundreds of millions,
if not higher. But yes, the idea is to as

(23:19):
the as avalanche continues to grow, is to continue to
try to seek out capital again in ways that people
want to invest in the market, to help inject more
capital into the space. The thing that's interesting to me
is that and you know if over time, you know,
sometimes you'll hear me save this over and over like

(23:41):
every other industry was allowed to grow this way, you know,
software SaaS, you know, telecom, the Internet, and that you
created a public company and you wrote you raised money
through debt or through converts or through equity, and you
took that money and invest in the enterprise. The enterprise
did well, bondholders and equi holders did well, and this

(24:01):
industry was specifically not allowed to do that. And so
this digitalized a treasury structure allows for that to happen. Right,
you can go, you have a public company and you
can raise money in you know, in the public markets
in a variety of ways, and that could be issuing equities,
but that you know, there's other things that you can
do that might be attractive to both a different type

(24:22):
of investor and we might be more attractive in trying
to generate more AVAX per share for our shareholders. And
so that to me is what I find most exciting
about this structure. And then obviously because you know it's
not a mutual fund or an ETF, like, you don't
have to prepare yourself for the possibility of deploying money

(24:44):
on any given day that you weren't prepared for or
having to redeem money. Right, so if you if you're
open to a mutual fund redemption or an ETF redemption
and having get any given day, that's very limiting in
what you can do to provide exposure to you know,
your yes, because in theory, you know you hope this
doesn't happen, but on some given day, everybody could come

(25:06):
and rush to want a redeem and so you need
to be able to meet those redemptions. And that is
very limiting in what you can do to try to
maximize a longer term strategy. So yeah, I think I
think that's the I think that in the evolution of
kind of these digitous of treasuries, I think that's the

(25:26):
most compelling argument that people will come to realize with like,
this is just a better structure to invest in an
early what is still, in my opinion, a very early
emerging technology.

Speaker 2 (25:37):
So on that note of being an early emerging technology,
I wanted to get your take on this trend and
how long you think it lasts. You know, where this
asset class grows and there's maybe less volatility, but there
is this staking and the you know, DeFi component where
you can do a lot more with the asset right.
But you know, let's say a bear market or a

(25:58):
market downturn rolls around. How are you preparing for that?
And do you see other dats failing you know, maybe
some consolidation and things like that.

Speaker 1 (26:07):
Yeah, I mean, I can't speak to how other people
are thinking about it. But like the thing that I
found most surprising about that, you know, that sell off
you know whatever at this point, it was like three
Fridays ago. Was how surprised that people were right? Like,
it's like these asset classes are very volatile because their
early stage, all good new ideas are volatile, right, and

(26:29):
so you know, you have to have the expectation that
that you know, when volatility or when you know, a
sell off happens, like you need to be prepared that
that could be, you know, a pretty meaningful sell off
and it could last for a long time. My first
job out of college, I worked at Payne Weberg, which

(26:51):
was later acquired by UBS. And you know, the market
was at the very end of the like the internet
dot com bubble, and so for the first like four
or five six months i work there, the market just
went up, right, and then it went down for three years,
so you know, two thousand and two thousand and one,
two thousand and two, all negative years de s and P.
Five hundred. So that was like a very formulative experience

(27:11):
for me. So like you have to you know, we're
thinking about these this vehicle as a long term vehicle,
but like it's the idea here is not to try
to take incremental risk that is unwarranted. The idea is
to take a long term approach that is prudent, that
provides kind of the best exposure you can for your shareholders.
And so as we're thinking about in this, you know,

(27:33):
this strategy going forward, you always in the back of
your mind have to keep thinking like, well, you know,
like if you have this massive people are coming into
the space because they think they have a one, two, three,
five X. You know, I don't have any forecasts of
of you know, where the market capitalization is going to go.
But it's like it's you know, if you're buying this
is because you think that there's an opportunity for to

(27:53):
go meaningfully higher like that. There's no free lunch, right
like that that's going to come with periods of doubt
and periods of fear, and that's when you're gonna have
you know, market selloffs and the and the best thing
that you can do is to position yourself to benefit
from those moments and not to be the person who's
being harmed by those moments. So, you know, I think

(28:14):
that that will be a key component of of how
we think about it. And then yeah, you have like
you said, there's there's all of these digitals of treasuries
out there. They're gonna have to distinguish themselves, right, They're
gonna have to. They're gonna have to you know, they're
gonna have to capture mind share from people, and they're
gonna have to be able to communicate like an effective
strategy and and then deliver on that. So like the

(28:35):
capital markets, if nothing, are very efficient and so over time,
I think you will see kind of winners and losers
that that that kind of show up, you know, over time.
And you know, I think that that we're excited about
our ability to to to navigate that.

Speaker 2 (28:52):
Yeah for sure. And uh, I'm just curious to see
how things play out. And and uh I believe in
the digital asterid treasuries of course, and I think it's
a great approach, great a hybrid approach of crypto and
the trad fire world and you know, allowing folks to
get exposure. But you know, I guess, as with all
things in the free market, you're going to have companies

(29:12):
that are well run and some that are poorly run.
And uh, you know, the tips are going to fall
with a fall in the volatility hits or at the
bear market, so we'll have to wait and see.

Speaker 1 (29:22):
Yeah, I mean, I think that was part of the
reason why we went the route we did, which is
to kind of set up a purpose built company from scratch.
Right so you know, when when you when you you know,
when you look at the company, it's called the Avalanche
Treasury Company, right, Like, there is no doubt in kind
of what we're doing. Our sole focus is going to
be on delivering kind of value to customers and in

(29:45):
shareholders in a in a in a way that that
you know, we feel like can better represent the growth
of the ecosystem. And and yeah, and I think that
you know, we we like there's gonna It's not like
I'm not worried about well, you know, an alternative investment
per se. It's just like there's a whole world of investments.

(30:06):
Like they don't need to own crypto at all, right,
they don't need to own blockchain technology. So can we
effectively communicate a value proposition of owning you know, this
asset versus any other asset? And now, and I think
if you're listed, you know, on a public stock exchange
in the US, you are now competing against basically every

(30:28):
asset in the world. And so I think that that's
what we're focused on, is providing you know, a structure
and a company and an exposure that people are interested in,
and then being able to communicate that effectively. Yeah.

Speaker 2 (30:41):
Absolutely, And then on the communication of communicating that effectively.
You know, you have ETFs out there, right, there's going
to be a vx boty tfs and so forth. So
I'm curious, you know, how would you'll be what would
be your elevator pitch to say, hey, this data is
better than just buying an ETF.

Speaker 1 (30:59):
Well, you know what's funny is that, you know, treasuries
as like every kind of uh, you know, anytime there's
like a new vehicle or something that's in favor, you know,
there's a lot of criticism that comes with that. Back
in like the two thousand and eight time frame, two
thousand and seven, two thousand and eight, there was a
ton of criticism about ETFs. The ETFs provided like a
systematic risk and that the creation redemption, uh, you know,

(31:22):
mechanism was going to fail under a massive amount of
like market drests, and that you know that that ETFs
were creating it impossible for small and mid capitalization companies
to seek capital that can differentiate because people were just
buying the index. And there's just like there was a
lot of fun around ETFs and how was it was

(31:43):
a you know, this like this really risky, dangerous, unproven
structure and then here we are, you know, fast forward
to twenty twenty five and people are saying, oh, these
digitalts of treasuries, you know, have all of these shortcomings.
You should have been putting it into a ETF, right,
And so it's just funny how like things evolve over
time as people become familiar with structures. And ETF is

(32:05):
not good or bad. It is just a rapper, right,
It just it's a function of what you put in it,
and the same way a dies US treasury is not
good or bad. It's just a function of like what
is in it and what do you do with that capital.
ETFs are like one of the most democratizing you know
structures that have in financial services has ever created. Right,

(32:25):
It Like it allowed people to get exposure to gold
and to a whole host of things that in average
small you know, institution or high not worth investor didn't
have access to and so if people want to use
ETF to get exposure to avax or any other crypto like,
that is net positive and I'm very supportive of that.
I would argue to the points I made earlier that

(32:48):
just owning the avax token itself and then staking that
for whatever amount that they're going to be able to stake,
given the fact that they're going to have to respond
to to you know, daily creation redemn requests, and then
the ability to trade that asset and keep that in
line you every day in the marketplace, like it could
be an expensive proposition. I think by and large, market

(33:10):
makers in the competitive marketplace will figure it out. But
it's not totally clear to me how efficient a vehicle
you're going to have for uh, you know, avax or
some of the other tokens that aren't Bitcoin and aren't
ethereum right, And so to me, I think that there's
you know, we've seen these digitalish treasury structures over you know,

(33:31):
the last couple of years, and so there's like I
think in my mind, there's probably more certainty in my
in my from my position of of what, you know,
what that looks like day to day, and less so
in all of these new ETFs that are coming out,
like managing that asset day to day and having market
makers keep that price in line with Spot like could
be problematic. And and then again you're just kind of

(33:53):
because you have to have daily redemption and creation requests, like,
you're just going to be very limited as owning the
spot market. And so our hope is that for people
who would like to get you know, a differ, a
different exposure and maybe something that I would think would
be hopefully more of a true exposure of the growth
of the ecosystem. I think you put those two things

(34:14):
side by side, and I feel very good about the
value proposition that that we put forth. And and for
a lot of people that might just seem too complicated
and that can buy the ETF and that's fine, right,
you know. I I don't know over time if that
will get them what they're looking for, but I certainly
understand why people would want to own it, and people
in general buying a BAX is good for the ecosystem,

(34:37):
and you know, we're obviously very supportive of it. So
you know, like I'm you know, I spend a lot
of time in that industry, you know, and I like
you know, a lot of my friends are still working
at you know, all of these firms. Bit Wise are
three guys that I've known for you know, over a decade,
if not longer, And so they're gonna bit Wise is
going to launch an avax ETF And if you want

(34:58):
to buy an a bax ETF, you should the bit
wise etah for any of these other companies that are
listing them. So yeah, I think I think we're We're focused,
like I said, on putting our strategy together and putting
forth the best strategy we can and then making sure
we're doing it in a prudent way gives people the
best exposure. And you know, there's gonna be a lot
of other investment opportunities beyond crypto that we're also competing

(35:20):
for mind share. And so I'm in reality, I'm probably
more thoughtful about how do we distinguish the opportunity versus
like the field versus you know, a comparable passive exposure
or you know, owning spot on you know, coinbase or
robin Hood or something like that.

Speaker 2 (35:37):
Yeah, yeah, that definitely makes sense. I'm curious. You probably
can't talk about it. You mentioned go other investments. I'm
assuming that's under wraps right now.

Speaker 1 (35:46):
Right yeah. I mean again, we're like we're still going
through kind of the registration process, and so you know,
we will be in communication with with the regulators about
you know what what we'd be interested to do. You know.
The the the wonderful thing about the SEC and EDGAR
is all these filings are public, so you know, we

(36:08):
also get the benefit of people who started before us,
and so you know, every time you know there's another filing,
you know, an updated regulatory uh kind of response to
another one of the digitalist of treasuries, it's just an
opportunity for us to kind of clean you know, what
is you know, what is in the gray area and
what is not and then you know, like I said,

(36:28):
like we're going to take a very conservative approach towards
regulatory and legal compliance and we're not gonna go anywhere
near gray areas. I feel pretty confident that the the
from from what I'm seeing in the market to date,
like the these structures will be won't be very limited.
You know that they that that you know, as long
as you're disclosing and you are doing all the things

(36:51):
that you're supposed to be doing, you know, from from
that perspective that you should have a you know, the
ability to do whatevery other corporate treasury in America has
been able to do. And I think sometimes people act
like these are new vehicles, right Like Berkshire Hathaway and
Apple and Microsoft are like the largest corporate treasuries in
the world. They just have this massive operating business alongside

(37:13):
of it. But Berkshire Hathway doesn't. Berksure Hathaway just buys
companies and they invest in other companies and then they
have this huge pile of cast they use. So like
the concept of a corporate treasury and corporate treasury management
is not new, It's just it was taken and kind
of implemented by Michael Sailor and micro strategies, and the
benefits from being able to use that capital structure to

(37:37):
invest with a whole slew of people who today have
not been able to access you know, this asset class
the way that they wanted to. And I think everyone said, wow,
that's that's actually that's a great evolution of something that
already existed. I would like to apply that to this
ecosystem and see if I can provide, you know, a
better you know return or a better exposure for investors,

(37:59):
and so that's that's kind of how you know, we
ended up here today.

Speaker 2 (38:03):
Byway, that's a great example that you gave with Berkshire,
Hathaway and Apple because of to your point of their
corporate treasury, right, it's loads of cash they're sitting on.
So's that's a great, great example in regards to your
timeline and roadmap, what are you expecting for the remainder
at the end of this year excuse me, and going

(38:24):
into twenty twenty six.

Speaker 1 (38:25):
So the next step for us is obviously to you know,
our registration in this business combination with with m LAC
that we are you know, we're working through and the
hope is that that would be you know effective or
closed in the first quarter of twenty twenty six. We
absously need the government to open for that to happen,

(38:48):
and so you know, I don't expect at this point
in time to have to adjust that that timeline. But
we're you know, we are subject to you know, the
things that are out of our control. And so once
that that, you know, once that business combination, uh, you know,
hopefully gets approved and closes, and then you know, then

(39:09):
it's it's you know, the strategy will go from there.
And at that point we had, like I said, this
permanent capital vehicle where you know, our investment timeframe is
just way longer, right, and so you know we're looking
at you know, the opportunities that are in there that
could supplement just owning AVAX and staking it, which again

(39:31):
is going to be you know, a large portion of
what we're doing. I just want to you know, I
don't want to think that this is going to be
like you know, a venture funt right. You know that
this the idea is to have that at its core,
you know, is trying to return more avacx per share
for you know, our shareholders. And then if we could
have sleeves that are diversifying or a creative or provide

(39:53):
different exposures, you know that I think that is going
to be the differentiator. So you know, I would I
look at it kind of in a two step process,
like we need to meet the obligations of of our
regulator and and and hopefully have this close you know,
that requires the government to reopen and then and then
beyond that, I think then you know, then we're taking
this kind of longer view, Okay, Okay, how do we

(40:15):
how do we represent the opportunity set? Uh, you know
that that this ecosystem provives, you know, in this vehicle.

Speaker 2 (40:23):
Something came to mind as you were talking about you're
making those statements. We've seen a massive race kicking off
with the tokenization market where a lot of firm looking
to put stocks and different assets, money market funds and
so forth on the blockchain. Would you look to explore
investing in assets that are tokenized on the Avalanche blockchain potentially?

Speaker 1 (40:45):
Yeah. Again, that's that's something that's been you know, a
big point of discussion over recent weeks and months, particularly
as you know in the digital ass of treasury world.
You know, I think that there is a lot of
discussions about like, you know, what is security and what
is not a security? And so if you do it
on an L two is it is it actually security

(41:05):
because it's not really decentralized Versus if you do it,
you know, in a broader ecosystem, you can you can
demonstrate sufficient you know, decentralization and that would meet different
rules for the SEC Like I think, I think tokenization
is inevitable and so you know, having worked in traditional
finance for all you know the bulk of my career,

(41:26):
Like even today it is it is insane to me
how manual stock trading is right. And so, you know,
I think that there are certain parts about you know, blockchain,
moving things on blockchains that requires like a very specific
set of skills and make sure like you're very you're

(41:47):
being very diligent at how you how you manage things
on chain, you know, because in in in you know,
the trictional finance world, if you send Google to the
wrong you know, broker dealer, like you're getting that, you're
that back, right, you know, like they will they will
reverse that back. And so the thing to me that
is shocking is that how dated the infrastructure is in

(42:11):
in traditional equities, you know, globally, and like just how
much inefficiency there is there. And so I think just
from like a basic like just modernization of the underlying
structure and plumbing of of traditional finance like bond trading
and equities, it's like it's really just like this cobble
together kind of plumbing. That's that it's existed for over

(42:34):
one hundred years. And like you have this opportunity to
like start clean and like start you know, if you're
going to build the best way for people to exchange value,
you know, over a blockchain, Like, I think that is
a tremendous opportunity and an avalanche. The community has been
focused on toganization, you know, you know from from the outset,
that was kind of the the like the core motivation

(42:55):
of launching of this chain. So yeah, I think I
think that kind of antiquated plumbing mixed with like people
want twenty four to seven everything, and so you know,
in many cases we are limited to the trading hours
that we have in all of these different old money
centers because of this plumbing, right, and so you know,

(43:16):
the as people are going to demand a higher layer
level of access and liquidity, it just seems inevitable that
it goes to tokenization.

Speaker 2 (43:26):
Absolutely. You know something I forgot to ask you earlier
as far as the purchasing of these tokens and the
custody of them, which institution or platform are you going
to be using?

Speaker 1 (43:37):
So we're going to be using a myriad of different
of different solutions. At this point, everything we're using is
a qualified custodian. You know, in crypto, you know, we
don't talk too much about custody. So what I would say,
is like, we are expecting that the the regulators in
the US are going to demand, you know, a very

(44:00):
regulated solution, and so our strategy has been to utilize
that as such. So everything we're using now are you know,
qualified custodians. And I would imagine over time, you know,
if we were to deviate from that, it would come
after you know, a pretty exhaustive, uh set of conversations
with you know, our regulators.

Speaker 2 (44:22):
Oh for sure, Bart, great stuff. Looking forward to the
future updates around the Avalanche Treasury co. But thank you
so much for joining me. I got some wrap up
questions here for you. First, if you get great Drown metaverse,
would the theme.

Speaker 1 (44:35):
Be, Oh boy, you know, I'm a big sports fan,
and so I have like a college sports team, and
I have you know, professional sports teams in the US.
My my my son is a is a a big
Liverpool fan, and so you know what you're seeing and
particularly on Avalanche right now, one of the areas of
growth in Avalanche has been uh, you know, the FIFA

(44:59):
World Cup in twenty two twenty six. They're they're they're
trying to build ticketing solutions and fan engagement on top
of Avalanche right now. So that so that you have
this situation where you know, you go to sell a
ticket and some bot buys it up and it's a broker,
and they post out two hundred and three hundred percent
you know, above the price they paid with consumers paying
this excess price right And so you know, blockchain technology

(45:20):
where you can obscure private, you know, customer information, but
you can still verify that person is like a verified
purchaser and user of the ticket. That that's one technology
you know that that Avalanches is implementing with with with FIFA.
And then fan engagement tokenizing you know, your rewards or

(45:40):
you know right now they have a there's a partnership
they have with the LSU football team, and so if
you go and you're using your card and you can
like get you know points that a crew for like
a Tiger token, they call it a go token. You know,
you can spend that on you know, memorabilia or like

(46:01):
you know, a team T shirt or something like that. So,
like if you could go into a metaverse where you
combine the ability to purchase ticketing right in a safe
place where you know you're buying you know, the actual
ticket from someone that's verified, and then you're also you know,
crewing all of these other tokens that you can use
kind of in a metaverse to to purchase memorabilia or

(46:24):
other kind of you know, fan things, and you have
this like world where I could go from like one
team to another in a different sport, in a different league.
That to me would be like a pretty cool start.
So there's probably people out there who could come up
with something a little bit more imaginative than that, but
just being able to kind of go into one kind
of metaverse where I'm surrounded by, you know, all the

(46:45):
sports teams and I can engage in them in a
in a different way. I can purchase tickets, I can
purchase memorabilia in a safe way. That to me would
be would be pretty cool.

Speaker 2 (46:54):
Yeah, as a sportsman myself, I would love that. So
I'm all for that. Rapid fire questions, favorite food, steak,
favorite musician or band.

Speaker 1 (47:04):
Over time, I'm I'm I'm a little i' a little
older than a lot of people in crypto. I'm still
a pretty big youtwo fan. Oh yeah, favorite movie, favorite movie,
Shawshank or Goodwill Hunting. I'll go Shaw Shank.

Speaker 2 (47:17):
Yeah, Shawshank's great favorite book.

Speaker 1 (47:21):
Oh there's a great book that I was given when
I first came into working in finance, and it was
a book that was called Never Eat Alone. And it's
a lesson that I've learned over the years of like
when you know, people come in and they work really
hard and they kind of like wake up, you know,
thirty years later and they've wasted all this time. And

(47:42):
so you know that nothing is replaced by by you know,
interpersonal kind of relationships. And so it's it's it's taught
me like a lesson over time to like the interactions
you get from just having sitting down and having a
meal with someone just kind of provides like a you
know a wealth of different benefits. And so that was
a book that I learned on, you know that that

(48:03):
I learned from very early on in my career.

Speaker 2 (48:06):
And when you're not working, what are you doing for fun?

Speaker 1 (48:10):
I don't I'm working a lot. I spend time with
my kids, you know, I have my kids sports and
that takes up, you know a lot of my time.
If I'm going to get out and do a little leisure,
like I'd like to be on the water, So like
being out on a boat is great, or you know,
the you know, the few times where I can get
you know, a four or five hour window, maybe I
can squeeze in around the golf, but in general, you know,

(48:34):
when I have some free time, I just kind of
want to be out in a in a nice kind
of stream place. So a lot of times that's kind
of on the boat.

Speaker 2 (48:40):
Awesome, Bart, pleasure chatting with you. Looking forward to the
future updates. Thank you so much for joining me.

Speaker 1 (48:45):
All right, Tony, congrats on being an AVAX holder.

Speaker 2 (48:48):
Yeah for sure.

Speaker 1 (48:49):
All right,

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