In this insightful episode of the Crypto Trailblazers series hosted by theCUBE, Mike Cagney of Figure Markets sits down with analysts from theCUBE Research to discuss groundbreaking advancements in blockchain technology and their implications for the finance sector. This video is part of the NYSE Wired digital event, aimed at bridging the gap between Silicon Valley and Wall Street by integrating technology and finance.
Cagney, an eminent figure in fintech, shares expertise on the transformative role of blockchain in financial markets during this interview. Conducted by seasoned analysts at theCUBE, the discussion delves into Figure’s innovative contributions, including their blockchain-native loan origination and securitization process. He outlines how Figure leverages blockchain to achieve cost reductions, enhanced security and improved liquidity in financial transactions.
Key takeaways from the interview highlight insights on the evolution of the Web3 ecosystem, such as the emergence of stablecoins as pivotal to transaction processes and the rise of decentralized finance (DeFi). Oltsik states these developments signify a shift towards democratizing finance, wherein truth and transparency are foundational. The conversation concludes with a look at Figure’s pioneering efforts in creating a new financial marketplace utilizing blockchain technology.
#CryptoTrailblazers #FigureMarkets #BlockchainInnovation #Web3 #NYEWired #BlockchainFinance #DecentralizedFinance #Fintech #Stablecoins
Find more SiliconANGLE news and analysis https://siliconangle.com/.
Follow theCUBE's wall-to-wall event coverage https://siliconangle.com/events/
Learn about the latest theCUBE events https://www.thecube.net/
00:00 - Intro
00:05 - Emerging Innovations in Financial Technology and Market Dynamics
02:45 - Key Elements in Financial Ecosystem Dynamics
06:20 - Blockchain: Truth and Transformation
09:39 - Shaping the Future: Innovations in Financial Markets and Stablecoin Integration
13:15 - Enabling the Future: Navigating Disruptions in Banking and Lending
16:51 - Exploring Opportunities and Building Confidence in the Blockchain Ecosystem
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Joshua Riezman, GSR
In this insightful episode of the Crypto Trailblazers series hosted by theCUBE, Mike Cagney of Figure Markets sits down with analysts from theCUBE Research to discuss groundbreaking advancements in blockchain technology and their implications for the finance sector. This video is part of the NYSE Wired digital event, aimed at bridging the gap between Silicon Valley and Wall Street by integrating technology and finance.
Cagney, an eminent figure in fintech, shares expertise on the transformative role of blockchain in financial markets during this interview. Conducted by seasoned analysts at theCUBE, the discussion delves into Figure’s innovative contributions, including their blockchain-native loan origination and securitization process. He outlines how Figure leverages blockchain to achieve cost reductions, enhanced security and improved liquidity in financial transactions.
Key takeaways from the interview highlight insights on the evolution of the Web3 ecosystem, such as the emergence of stablecoins as pivotal to transaction processes and the rise of decentralized finance (DeFi). Oltsik states these developments signify a shift towards democratizing finance, wherein truth and transparency are foundational. The conversation concludes with a look at Figure’s pioneering efforts in creating a new financial marketplace utilizing blockchain technology.
#CryptoTrailblazers #FigureMarkets #BlockchainInnovation #Web3 #NYEWired #BlockchainFinance #DecentralizedFinance #Fintech #Stablecoins
Find more SiliconANGLE news and analysis https://siliconangle.com/.
Follow theCUBE's wall-to-wall event coverage https://siliconangle.com/events/
Learn about the latest theCUBE events https://www.thecube.net/
00:00 - Intro
00:05 - Emerging Innovations in Financial Technology and Market Dynamics
02:45 - Key Elements in Financial Ecosystem Dynamics
06:20 - Blockchain: Truth and Transformation
09:39 - Shaping the Future: Innovations in Financial Markets and Stablecoin Integration
13:15 - Enabling the Future: Navigating Disruptions in Banking and Lending
16:51 - Exploring Opportunities and Building Confidence in the Blockchain Ecosystem
>> Welcome back. I'm John Furrier, host of theCUBE. This is our CUBE's, New York Stock Exchange Studio. Of course, we have our studio in Palo Alto, California connecting Silicon Valley and Wall Street. As capital markets and technology come together, we're seeing massive innovation from trailblazers in crypto, AI coming together, but it really is found a formation of a new kind of infrastructure that will power in the next generation of applications, liquidity, money-making, and value creation and extraction. We got a great guest here, Joshua Riezman, who's the Chief Legal and Strategy Officer at GSR. These guys are pioneering cryptos, stablecoins, trading. Welcome to theCUBE. Thanks for coming in.
Joshua Riezman
>> Thank you so much for having me.
John Furrier
>> So I have to ask you, it's good to have the chief legal background, so that's one major plus because there's a lot of things you got, there's a lot of risk management going on.
Joshua Riezman
>> Yes, yes.
John Furrier
>> I want to get your take on the crypto market being the trailblazer. You guys got a lot of scar tissue, you've done a lot of work, but the world's good right now. It feels great, but the prices of all the currencies are high and we don't really get into why, but it seems that there's all the actions going down in the stack or if you will, the decentralized stack and technology. So a lot of software advancements, we're seeing even robotics and AI solutions being stored on Bitcoin, I mean, blockchain. So you're starting to see all the technology of decentralized infrastructure actually might even being a solution for the AI problems. So we're starting to see that formation. Stablecoins have been great. The GENIUS Act was phenomenal. We got a positive pro regime.
Joshua Riezman
>> Totally. What I say is sometimes you talk to a lot of people who are like, "Where are all the use cases for blockchain and crypto?" And what's funny, as I tell people, really we've had the technology, we need to do things at scale for something like 18 months. Obviously Bitcoin goes back a long time. People are very familiar with that story, but that's a ossified technology. After Bitcoin, obviously we had Ethereum and smart contracts, and those had very initially very low throughput and wasn't going to be the basis of all of finance infrastructure rails, let alone other things. And then over the years, this technology has improved. So this crypto really is a technology story of bit by bit with really strong teams, lots of funding, building up what is now pretty amazing tech. But to really build an at scale financial product, that capability has only existed for maybe 18 months. And then on top of that, we had, if you go back to the prior administration, a very anti-regime from an innovation standpoint. So now you're talking about the technology's barely there, and now the regulatory is really just barely there. But I think what people can take away from something like the GENIUS Act, as you mentioned, is once that was passed into law, this innovation in stablecoins is now everywhere. We see dozens and dozens of companies now want to offering their own stablecoin, offering stablecoin as a service, want to utilize stablecoins at the highest levels, including places where we're sitting today down on Wall Street. And it's that kind of combination of the technical capability and the regulatory clarity kind of coming together at the same time. That's really opening up what we think will be the next leg here.
John Furrier
>> Josh, I've got to tell you a story. I was in New York and I'm like, "Oh yeah, Crypto Trailblazers program on theCUBE and NYSE Wired is really popular. Oh, I'm so pumped." They're like, "Man, no, it's in the shit right now." "No, no, it's not in the shit." I'm like, "What are talking about?" So I'm like, "Oh shit. Look at the price of Bitcoin."
Joshua Riezman
>> Yeah.
John Furrier
>> The point is, the average sentiment is that they see the prices of Bitcoin and Ethereum and some of the top cryptocurrencies and go, "Wow, it's in a really downward spiral." And I'm like, "Well, I don't really pay any attention to that, because it's a long game play as we know." But you were talking before we came on camera, you have a view on this. The pricing is a different factor. It's more cyclical. You've seen that movie before. It looks familiar, but you made a comment. I want you to share that here because I think it's important.
Joshua Riezman
>> Look, I think it's not uncommon for crypto to kind of work in these kind of boom and bear markets. There's no doubt that after the 10/10 liquidation in October, we had one of the largest liquidations that crypto's ever seen, that there has been a sentiment change as relates to price. But if you take a longer view and you look at the logarithmic trend chart of most of, especially the major assets, we're still well within range and on our way to I think where we think the assets are going to grow over time. But sentiment's low, there's a lot of other very attractive pieces in the market, but we've seen this story before. But if you take a look at them, what we think is, nothing fundamentally broke. We've had other times in crypto bear markets specifically after kind of the FTX insolvency in the last bear market where it felt really horrible, things felt broken, and maybe things weren't... Here, there may have been some very large liquidations, some people may have taken too much leverage, but nothing is broken in the infrastructure. In fact, it's stronger than ever. So we will find a bottom, we will find a base, and from there our expectations is prices will recover.
John Furrier
>> Yeah, I agree.
Joshua Riezman
>> And it may be a differentiation between assets, but overall from Bitcoin-
John Furrier
>> And we're talking hundreds of liters in the Crypto Trailblazer series. We have players from OGs to modern mainstream adoption. We're seeing they're coming in. I can tell you, I've seen the movie through many cycles of innovation in Silicon Valley, and this is not one pattern that says negative. It's all pointing to growth. Because of the fundamental infrastructure, things are working. More stable startups doing hardcore tech, the protocols, everything's working, it's moving along. It's not like it's the big bang tomorrow, we're going to have this massive new liquidity thing. But all the signs point to progress in a big way, like needle moving progress.
Joshua Riezman
>> And I'd say there's actually two things happening. One is we always talked about in crypto where that we were building a parallel financial system, but at some point, at least parts of that system would integrate with a traditional system. For years that integration never happened. But now you see it in a pretty dramatic and obvious fashion. And I have a colleague at GSR, he just tracks the job openings at a lot of the large financial institutions, and you could see just huge amounts of digital asset hiring. And why are they doing that? Because they're integrating blockchain rails into standard processes in a way they never did before. But now that integration's happening. And then on the other hand, we have escape velocity of the pure, what I call pure DeFi or blockchain financial infrastructure because of where we are with the technology and scale that can kind of get to the next level. So you see things like Hyperliquid, which is doing absolutely massive volumes of on-chain derivatives that no one would've predicted two years ago. So both these things are happening at the same time and it's super interesting.
John Furrier
>> The adoption of mainstream has been the top story of all my interviews, which is why I'm excited. And I think Wall Street, I said, "Oh, this is capitalism." And Tom Lee's like, "No, it's Darwinism." I'm like, "Okay, Tom's got a good view on that. He's a little bit over the top, but that makes sense." But if you look at the end of the day, when money's on the table, dogma goes to the side. If you go back 10 years, crypto was a community. They were giving Bitcoin away, buying pizza with Bitcoin. Like, "Hey, try some Bitcoin. Get a wallet. Learn to kind of do custody." Now you have mainstream adoption of major institutions, not just leaning in, integrating in. So you have, of course, you have the skeptics that'll probably be dead at the end of the day. But that to me, with money on the table, mainstream adoption and with the advent of stablecoins and the GENIUS Ac, opened up clarity. Now the primitives come to the table and the infrastructure side's starting to see much stable infrastructure. So the question is when GENIUS Act gets finalized or there's visibility into how do you report this, I think the floodgates are going to open. I'd love to get your thoughts on that because I know startups, including ourselves that already have our coins built, we're just afraid to deploy them. And I am. I'm like, "Okay, well, I'm not that funded." But the point is, I think once that hits, the app side of it on where the smart contracts come in, will just go through the roof.
Joshua Riezman
>> Totally. So there's two big pieces of legislation that's been under consideration in the United States. The first, as you mentioned, was GENIUS Act, which passed as related to stablecoins. And what you saw when GENIUS Act passed was like I mentioned, an absolute avalanche of development around stablecoins. And I've mentioned this elsewhere, but really what we view that as is a Trojan horse for crypto. Because once you get more people into having stablecoins, what does that mean? That's just a growth of on chain wealth. And once you have this growth in on chain wealth, people are going to want to do more things with it, whether that's just use it for payments, for yield generations, for investments. And then the second big piece of legislation that's been under consideration is market structure. CLARITY passed the House and it's now under consideration in the Senate as I think most people know, we're kind of at the final yard line of a unified bill coming out of the Senate. But what the hope is is that with the market structure legislation, you get this same explosion with respect to everything else in crypto that you got with stablecoins from GENIUS. Because once you have that clarity, if you're an innovator and you have a token related to your project, that you now know what that is and you can bring it to market with certainty. So I think there's a lot of talent waiting on the sidelines for this.
John Furrier
>> So the regulatory clarity, in your opinion, you'll unlock institutional adoption at a mass scale?
Joshua Riezman
>> Absolutely, absolutely.
John Furrier
>> Okay. Now let's talk about some of the tech side of it, because if that happens, and the people I've been talking to, to whip out my old MBA finance classes, there's a lot of accounting and regulatory compliance stuff that these banks do, institutions do. How is the CLARITY Act, in your opinion, going to enlighten, train, create standards around some of the blocking and tackling stuff that's needed? How would you put those sequence of events? What's the sequence of events for the accelerating that unlocking full adoption path?
Joshua Riezman
>> Yeah, I think that obviously the most important piece is to be able to delineate what is a security and what is a non-security or a non-security commodity. Because once you know what it is you're dealing with, then you could build for that market. Right now if you think you're building a non-security commodity, but then they turn around and they say, "That's a security." You've built the wrong product, you've done the wrong work. But now going into the future, once those lines are clear, or at least there's a path to achieve that, you're going to know what regime you're building for and what plan you need to have for go to market, to gather customers. And so institutions then will know where to divvy this up, where to put their massive sales forces and what is they're selling. And then not only that, it's really about the use cases. So if I build a application and I have a token related to that application, where does that go in the stack? And can everyone be comfortable using it and not being caught off-sides? It used to be the case that all of a sudden you have this token, you facilitated a transaction on that token, if you didn't know what it was, you also took some risk. So you wipe off that whole risk kind of platform and it just becomes, "Let's do business." Like how we used to, in a really fast-growing area. And at the time when we have things like AI and you could start up a business in one day, I think crypto and AI goes so well together because there's going to be a lot of innovation in this space as well.
John Furrier
>> It's interesting, you have a philosophy of unification in some platforms and decentralization sometimes don't go head-to-head, but they're not necessarily mutually exclusive. You can have unified stuff on a platform and have decentralized benefits. So I have to ask you, from a regulatory standpoint and your opinion, what are the things that kind of fall away? Because we're now in a whole nother operating model. Because you have a lot of bespoke products, personalization. I can have a bank for me, or I could be my own bank. I've talked to Anchorage about that and they're doing banking. So you have all this new stuff. What's the legacy that goes away from the old school, we don't need you anymore because the structural change of the architecture's there? And what stays, what's needed?
Joshua Riezman
>> It's a really interesting and tough question, especially on Wall Street, because I think the first point is there's no doubt we've done it wrong for crypto if at the end of this everything looks the same, but it's on blockchain rails. Because ultimately the promise of blockchain is decentralization, is self-autonomy, is control of your own assets and you should need less intermediaries. That being said, there's always going to people that choose to interact with intermediaries. There's going to be great businesses that act as an intermediary for customers who prefer that. So what's amazing about it is it gives you the choice. I can leave my assets with Coinbase or Anchorage or I can hold the assets myself. Just that choice alone is revolutionary and I think going to open up all sorts of new businesses that can join. But I don't think we should be legislating to say everything needs to work exactly how it used. We need to use the new technology to enable-
John Furrier
>> You got to know what you're measuring.
Joshua Riezman
>> Totally.
John Furrier
>> I mean, if the value prop has change, you can't just blanketly take an old process and throw it at something completely new.
Joshua Riezman
>> Exactly.
John Furrier
>> Does that slow stuff down, or is it going to be as a wholesale replacement? I mean, we're seeing the FinTech companies try to do their bank synapse went crazy, that went sideways. But that's just evolution from, I was just talking with previous guest, debanking 1.0 was the bad actors, debanking 2.0 Was the Dragnet crypt on the name blacklisted. And then, okay, let's get our own bank and let's just try to bolt it on and not do it right. So the evolution of the progression, that's entrepreneurship.
Joshua Riezman
>> Yeah, absolutely. And I think there's a lot of room to run here is that if we can design our own interpersonal financial system from scratch, you wouldn't do it like how it was before. You'd have some new elements and we have the ability to do that now. And I think what's amazing about at least this administration now is both of the SEC and the CFTC, they're extremely pro-innovation, so even in the absence of legislation, I think we're going to see some guidance that's going to encourage innovation. Because I'll tell you what, I think the two things that we worry about coming out of previous administration from GSR, one is, have we created the platform for entrepreneurs in the US that we want? For years, entrepreneurs were leaving the U.S. They've obviously come back in a huge way.
John Furrier
>> Huge in migration.
Joshua Riezman
>> And we want to encourage that. The second piece and also relevant to where we are today, it's just for trading and volumes of activity on blockchain, so the vast majority is offshore. You see things like CME where they have a vast majority of the volume and derivatives have come into regulated institutions onshore. What do we need to get right to attract that volume to the regulated institutions in the United States? That's another issue that we think a lot about and we think we'll probably be a product of.
John Furrier
>> How's the progress on that? How would you classify the progress bar?
Joshua Riezman
>> I think we are closer than we ever been, but still far away in that I think over 80% of the volume for crypto trading activity is still done outside the United States. For other financial services, I think it's like 65, 70% is done in the United States. So something's upside down here. And I think it's a factor of the regulation by enforcement and the lack of clarity. And so one would hope is, if you fix those things in a way that allows for innovation, we can draw a lot of that back to the US. And it's not just a jingoistic thing, we just want it to be American to be American. It's that we have the institutions that have been regulated and trusted a secure for the longest amount of time, and there's some real benefit of merging those two things.
John Furrier
>> All right, so I have to ask you a personal question. So looking at your background, you've seen a lot of the before and after picture. When you go to parties, you meet people at dinners that aren't in the crypto space, when I used to be in the sidelines with my kids and meet other people from other industry, say, "What do you, . I don't get it." How do you look at where you are at now? How do you explain what you do, what you focus on, and the industry that you're in?
Joshua Riezman
>> Absolutely. I think first of all, people now at least know about Bitcoin, whereas I think five years ago you had to kind of start at Bitcoin and what is it? But for GSR, we're really a global market-making and trading firm, which looks a little bit like traditional finance, but it's different in really important ways. I think the most important way is that we work directly with the issuers as partners to help bring liquidity around the world. So in actuality, we're acting as an infrastructure partner to the token ecosystem, meaning everyone kind of just assumes the tokens get to where they need to be just by accident. But ultimately, it's market makers like GSR that are bringing the liquidity around the world so that you can get the tokens. And it's not just for investments.
John Furrier
>> You're making the market ecosystem.
Joshua Riezman
>> And the big difference for crypto is you need access for the tokens for those networks to work, you don't need access for your Apple stock, for your iPhone to work, but you do need access to your ETH for Ethereum to work. So the efficacy of a market maker is to provide not only price predictability to some extent, but also to provide that access all around the world, both on-chain and in centralized.
John Furrier
>> It's great service what you guys do, so I really appreciate that. Final question for you is, how do you spend your time? If you had a pie chart, advocacy, training people, educating people, grinding on the business, how are you spending your time these days?
Joshua Riezman
>> Well, it's actually a fun story. I would say I kind of look at all this in epochs around administrations, unfortunately, as a lawyer. In the previous administration, I'd say I spent 85 to 95% of my time in legal doing various legal activities that you might imagine and regulatory, protecting the business and thinking about regulatory strategy. In this administration, I think my time has been split much more evenly between regulatory and legal work, but a lot more about where's this industry headed? And where do we want to be as a company? And how do we best serve our clients? So what capabilities do we need to add to our business in order to serve our clients as they grow alongside the rest of the crypto economy?
John Furrier
>> And certainly it's just the beginning. The rising tide is happening. You're a Crypto Trailblazer, let's hope the foundations get set. And again, mainstream adoption is critical. Continuing to thunder away and bring mainstream in, the money's there.
Joshua Riezman
>> Yeah, absolutely.
John Furrier
>> Appreciate you coming on. Thank you.
Joshua Riezman
>> Thank you so much for having us and look forward to seeing you again.
John Furrier
>> Cool. We'll get you back for sure. Great insights here. Unpacking kind of what's going on under the covers, but also out on the market. Great market forces are in play. Entrepreneurial activity's high, the foundation of the infrastructure levels continue to rise. Nothing's really broken, but the world is turning and digital assets are coming on chain. We're seeing it on crypto. We're seeing AI, even physical AI is a big hottest story. All points to one thing, digital and physical are coming together. Money and digital coming together. All coming together once. We're doing our part here in theCUBE to bring that to you. I'm John Furrier, the host. Thanks for watching.
>> Welcome back. I'm John Furrier, host of theCUBE. This is our CUBE's, New York Stock Exchange Studio. Of course, we have our studio in Palo Alto, California connecting Silicon Valley and Wall Street. As capital markets and technology come together, we're seeing massive innovation from trailblazers in crypto, AI coming together, but it really is found a formation of a new kind of infrastructure that will power in the next generation of applications, liquidity, money-making, and value creation and extraction. We got a great guest here, Joshua Riezman, who's the Chief Legal and Strategy Officer at GSR. These guys are pioneering cryptos, stablecoins, trading. Welcome to theCUBE. Thanks for coming in.
Joshua Riezman
>> Thank you so much for having me.
John Furrier
>> So I have to ask you, it's good to have the chief legal background, so that's one major plus because there's a lot of things you got, there's a lot of risk management going on.
Joshua Riezman
>> Yes, yes.
John Furrier
>> I want to get your take on the crypto market being the trailblazer. You guys got a lot of scar tissue, you've done a lot of work, but the world's good right now. It feels great, but the prices of all the currencies are high and we don't really get into why, but it seems that there's all the actions going down in the stack or if you will, the decentralized stack and technology. So a lot of software advancements, we're seeing even robotics and AI solutions being stored on Bitcoin, I mean, blockchain. So you're starting to see all the technology of decentralized infrastructure actually might even being a solution for the AI problems. So we're starting to see that formation. Stablecoins have been great. The GENIUS Act was phenomenal. We got a positive pro regime.
Joshua Riezman
>> Totally. What I say is sometimes you talk to a lot of people who are like, "Where are all the use cases for blockchain and crypto?" And what's funny, as I tell people, really we've had the technology, we need to do things at scale for something like 18 months. Obviously Bitcoin goes back a long time. People are very familiar with that story, but that's a ossified technology. After Bitcoin, obviously we had Ethereum and smart contracts, and those had very initially very low throughput and wasn't going to be the basis of all of finance infrastructure rails, let alone other things. And then over the years, this technology has improved. So this crypto really is a technology story of bit by bit with really strong teams, lots of funding, building up what is now pretty amazing tech. But to really build an at scale financial product, that capability has only existed for maybe 18 months. And then on top of that, we had, if you go back to the prior administration, a very anti-regime from an innovation standpoint. So now you're talking about the technology's barely there, and now the regulatory is really just barely there. But I think what people can take away from something like the GENIUS Act, as you mentioned, is once that was passed into law, this innovation in stablecoins is now everywhere. We see dozens and dozens of companies now want to offering their own stablecoin, offering stablecoin as a service, want to utilize stablecoins at the highest levels, including places where we're sitting today down on Wall Street. And it's that kind of combination of the technical capability and the regulatory clarity kind of coming together at the same time. That's really opening up what we think will be the next leg here.
John Furrier
>> Josh, I've got to tell you a story. I was in New York and I'm like, "Oh yeah, Crypto Trailblazers program on theCUBE and NYSE Wired is really popular. Oh, I'm so pumped." They're like, "Man, no, it's in the shit right now." "No, no, it's not in the shit." I'm like, "What are talking about?" So I'm like, "Oh shit. Look at the price of Bitcoin."
Joshua Riezman
>> Yeah.
John Furrier
>> The point is, the average sentiment is that they see the prices of Bitcoin and Ethereum and some of the top cryptocurrencies and go, "Wow, it's in a really downward spiral." And I'm like, "Well, I don't really pay any attention to that, because it's a long game play as we know." But you were talking before we came on camera, you have a view on this. The pricing is a different factor. It's more cyclical. You've seen that movie before. It looks familiar, but you made a comment. I want you to share that here because I think it's important.
Joshua Riezman
>> Look, I think it's not uncommon for crypto to kind of work in these kind of boom and bear markets. There's no doubt that after the 10/10 liquidation in October, we had one of the largest liquidations that crypto's ever seen, that there has been a sentiment change as relates to price. But if you take a longer view and you look at the logarithmic trend chart of most of, especially the major assets, we're still well within range and on our way to I think where we think the assets are going to grow over time. But sentiment's low, there's a lot of other very attractive pieces in the market, but we've seen this story before. But if you take a look at them, what we think is, nothing fundamentally broke. We've had other times in crypto bear markets specifically after kind of the FTX insolvency in the last bear market where it felt really horrible, things felt broken, and maybe things weren't... Here, there may have been some very large liquidations, some people may have taken too much leverage, but nothing is broken in the infrastructure. In fact, it's stronger than ever. So we will find a bottom, we will find a base, and from there our expectations is prices will recover.
John Furrier
>> Yeah, I agree.
Joshua Riezman
>> And it may be a differentiation between assets, but overall from Bitcoin-
John Furrier
>> And we're talking hundreds of liters in the Crypto Trailblazer series. We have players from OGs to modern mainstream adoption. We're seeing they're coming in. I can tell you, I've seen the movie through many cycles of innovation in Silicon Valley, and this is not one pattern that says negative. It's all pointing to growth. Because of the fundamental infrastructure, things are working. More stable startups doing hardcore tech, the protocols, everything's working, it's moving along. It's not like it's the big bang tomorrow, we're going to have this massive new liquidity thing. But all the signs point to progress in a big way, like needle moving progress.
Joshua Riezman
>> And I'd say there's actually two things happening. One is we always talked about in crypto where that we were building a parallel financial system, but at some point, at least parts of that system would integrate with a traditional system. For years that integration never happened. But now you see it in a pretty dramatic and obvious fashion. And I have a colleague at GSR, he just tracks the job openings at a lot of the large financial institutions, and you could see just huge amounts of digital asset hiring. And why are they doing that? Because they're integrating blockchain rails into standard processes in a way they never did before. But now that integration's happening. And then on the other hand, we have escape velocity of the pure, what I call pure DeFi or blockchain financial infrastructure because of where we are with the technology and scale that can kind of get to the next level. So you see things like Hyperliquid, which is doing absolutely massive volumes of on-chain derivatives that no one would've predicted two years ago. So both these things are happening at the same time and it's super interesting.
John Furrier
>> The adoption of mainstream has been the top story of all my interviews, which is why I'm excited. And I think Wall Street, I said, "Oh, this is capitalism." And Tom Lee's like, "No, it's Darwinism." I'm like, "Okay, Tom's got a good view on that. He's a little bit over the top, but that makes sense." But if you look at the end of the day, when money's on the table, dogma goes to the side. If you go back 10 years, crypto was a community. They were giving Bitcoin away, buying pizza with Bitcoin. Like, "Hey, try some Bitcoin. Get a wallet. Learn to kind of do custody." Now you have mainstream adoption of major institutions, not just leaning in, integrating in. So you have, of course, you have the skeptics that'll probably be dead at the end of the day. But that to me, with money on the table, mainstream adoption and with the advent of stablecoins and the GENIUS Ac, opened up clarity. Now the primitives come to the table and the infrastructure side's starting to see much stable infrastructure. So the question is when GENIUS Act gets finalized or there's visibility into how do you report this, I think the floodgates are going to open. I'd love to get your thoughts on that because I know startups, including ourselves that already have our coins built, we're just afraid to deploy them. And I am. I'm like, "Okay, well, I'm not that funded." But the point is, I think once that hits, the app side of it on where the smart contracts come in, will just go through the roof.
Joshua Riezman
>> Totally. So there's two big pieces of legislation that's been under consideration in the United States. The first, as you mentioned, was GENIUS Act, which passed as related to stablecoins. And what you saw when GENIUS Act passed was like I mentioned, an absolute avalanche of development around stablecoins. And I've mentioned this elsewhere, but really what we view that as is a Trojan horse for crypto. Because once you get more people into having stablecoins, what does that mean? That's just a growth of on chain wealth. And once you have this growth in on chain wealth, people are going to want to do more things with it, whether that's just use it for payments, for yield generations, for investments. And then the second big piece of legislation that's been under consideration is market structure. CLARITY passed the House and it's now under consideration in the Senate as I think most people know, we're kind of at the final yard line of a unified bill coming out of the Senate. But what the hope is is that with the market structure legislation, you get this same explosion with respect to everything else in crypto that you got with stablecoins from GENIUS. Because once you have that clarity, if you're an innovator and you have a token related to your project, that you now know what that is and you can bring it to market with certainty. So I think there's a lot of talent waiting on the sidelines for this.
John Furrier
>> So the regulatory clarity, in your opinion, you'll unlock institutional adoption at a mass scale?
Joshua Riezman
>> Absolutely, absolutely.
John Furrier
>> Okay. Now let's talk about some of the tech side of it, because if that happens, and the people I've been talking to, to whip out my old MBA finance classes, there's a lot of accounting and regulatory compliance stuff that these banks do, institutions do. How is the CLARITY Act, in your opinion, going to enlighten, train, create standards around some of the blocking and tackling stuff that's needed? How would you put those sequence of events? What's the sequence of events for the accelerating that unlocking full adoption path?
Joshua Riezman
>> Yeah, I think that obviously the most important piece is to be able to delineate what is a security and what is a non-security or a non-security commodity. Because once you know what it is you're dealing with, then you could build for that market. Right now if you think you're building a non-security commodity, but then they turn around and they say, "That's a security." You've built the wrong product, you've done the wrong work. But now going into the future, once those lines are clear, or at least there's a path to achieve that, you're going to know what regime you're building for and what plan you need to have for go to market, to gather customers. And so institutions then will know where to divvy this up, where to put their massive sales forces and what is they're selling. And then not only that, it's really about the use cases. So if I build a application and I have a token related to that application, where does that go in the stack? And can everyone be comfortable using it and not being caught off-sides? It used to be the case that all of a sudden you have this token, you facilitated a transaction on that token, if you didn't know what it was, you also took some risk. So you wipe off that whole risk kind of platform and it just becomes, "Let's do business." Like how we used to, in a really fast-growing area. And at the time when we have things like AI and you could start up a business in one day, I think crypto and AI goes so well together because there's going to be a lot of innovation in this space as well.
John Furrier
>> It's interesting, you have a philosophy of unification in some platforms and decentralization sometimes don't go head-to-head, but they're not necessarily mutually exclusive. You can have unified stuff on a platform and have decentralized benefits. So I have to ask you, from a regulatory standpoint and your opinion, what are the things that kind of fall away? Because we're now in a whole nother operating model. Because you have a lot of bespoke products, personalization. I can have a bank for me, or I could be my own bank. I've talked to Anchorage about that and they're doing banking. So you have all this new stuff. What's the legacy that goes away from the old school, we don't need you anymore because the structural change of the architecture's there? And what stays, what's needed?
Joshua Riezman
>> It's a really interesting and tough question, especially on Wall Street, because I think the first point is there's no doubt we've done it wrong for crypto if at the end of this everything looks the same, but it's on blockchain rails. Because ultimately the promise of blockchain is decentralization, is self-autonomy, is control of your own assets and you should need less intermediaries. That being said, there's always going to people that choose to interact with intermediaries. There's going to be great businesses that act as an intermediary for customers who prefer that. So what's amazing about it is it gives you the choice. I can leave my assets with Coinbase or Anchorage or I can hold the assets myself. Just that choice alone is revolutionary and I think going to open up all sorts of new businesses that can join. But I don't think we should be legislating to say everything needs to work exactly how it used. We need to use the new technology to enable-
John Furrier
>> You got to know what you're measuring.
Joshua Riezman
>> Totally.
John Furrier
>> I mean, if the value prop has change, you can't just blanketly take an old process and throw it at something completely new.
Joshua Riezman
>> Exactly.
John Furrier
>> Does that slow stuff down, or is it going to be as a wholesale replacement? I mean, we're seeing the FinTech companies try to do their bank synapse went crazy, that went sideways. But that's just evolution from, I was just talking with previous guest, debanking 1.0 was the bad actors, debanking 2.0 Was the Dragnet crypt on the name blacklisted. And then, okay, let's get our own bank and let's just try to bolt it on and not do it right. So the evolution of the progression, that's entrepreneurship.
Joshua Riezman
>> Yeah, absolutely. And I think there's a lot of room to run here is that if we can design our own interpersonal financial system from scratch, you wouldn't do it like how it was before. You'd have some new elements and we have the ability to do that now. And I think what's amazing about at least this administration now is both of the SEC and the CFTC, they're extremely pro-innovation, so even in the absence of legislation, I think we're going to see some guidance that's going to encourage innovation. Because I'll tell you what, I think the two things that we worry about coming out of previous administration from GSR, one is, have we created the platform for entrepreneurs in the US that we want? For years, entrepreneurs were leaving the U.S. They've obviously come back in a huge way.
John Furrier
>> Huge in migration.
Joshua Riezman
>> And we want to encourage that. The second piece and also relevant to where we are today, it's just for trading and volumes of activity on blockchain, so the vast majority is offshore. You see things like CME where they have a vast majority of the volume and derivatives have come into regulated institutions onshore. What do we need to get right to attract that volume to the regulated institutions in the United States? That's another issue that we think a lot about and we think we'll probably be a product of.
John Furrier
>> How's the progress on that? How would you classify the progress bar?
Joshua Riezman
>> I think we are closer than we ever been, but still far away in that I think over 80% of the volume for crypto trading activity is still done outside the United States. For other financial services, I think it's like 65, 70% is done in the United States. So something's upside down here. And I think it's a factor of the regulation by enforcement and the lack of clarity. And so one would hope is, if you fix those things in a way that allows for innovation, we can draw a lot of that back to the US. And it's not just a jingoistic thing, we just want it to be American to be American. It's that we have the institutions that have been regulated and trusted a secure for the longest amount of time, and there's some real benefit of merging those two things.
John Furrier
>> All right, so I have to ask you a personal question. So looking at your background, you've seen a lot of the before and after picture. When you go to parties, you meet people at dinners that aren't in the crypto space, when I used to be in the sidelines with my kids and meet other people from other industry, say, "What do you, . I don't get it." How do you look at where you are at now? How do you explain what you do, what you focus on, and the industry that you're in?
Joshua Riezman
>> Absolutely. I think first of all, people now at least know about Bitcoin, whereas I think five years ago you had to kind of start at Bitcoin and what is it? But for GSR, we're really a global market-making and trading firm, which looks a little bit like traditional finance, but it's different in really important ways. I think the most important way is that we work directly with the issuers as partners to help bring liquidity around the world. So in actuality, we're acting as an infrastructure partner to the token ecosystem, meaning everyone kind of just assumes the tokens get to where they need to be just by accident. But ultimately, it's market makers like GSR that are bringing the liquidity around the world so that you can get the tokens. And it's not just for investments.
John Furrier
>> You're making the market ecosystem.
Joshua Riezman
>> And the big difference for crypto is you need access for the tokens for those networks to work, you don't need access for your Apple stock, for your iPhone to work, but you do need access to your ETH for Ethereum to work. So the efficacy of a market maker is to provide not only price predictability to some extent, but also to provide that access all around the world, both on-chain and in centralized.
John Furrier
>> It's great service what you guys do, so I really appreciate that. Final question for you is, how do you spend your time? If you had a pie chart, advocacy, training people, educating people, grinding on the business, how are you spending your time these days?
Joshua Riezman
>> Well, it's actually a fun story. I would say I kind of look at all this in epochs around administrations, unfortunately, as a lawyer. In the previous administration, I'd say I spent 85 to 95% of my time in legal doing various legal activities that you might imagine and regulatory, protecting the business and thinking about regulatory strategy. In this administration, I think my time has been split much more evenly between regulatory and legal work, but a lot more about where's this industry headed? And where do we want to be as a company? And how do we best serve our clients? So what capabilities do we need to add to our business in order to serve our clients as they grow alongside the rest of the crypto economy?
John Furrier
>> And certainly it's just the beginning. The rising tide is happening. You're a Crypto Trailblazer, let's hope the foundations get set. And again, mainstream adoption is critical. Continuing to thunder away and bring mainstream in, the money's there.
Joshua Riezman
>> Yeah, absolutely.
John Furrier
>> Appreciate you coming on. Thank you.
Joshua Riezman
>> Thank you so much for having us and look forward to seeing you again.
John Furrier
>> Cool. We'll get you back for sure. Great insights here. Unpacking kind of what's going on under the covers, but also out on the market. Great market forces are in play. Entrepreneurial activity's high, the foundation of the infrastructure levels continue to rise. Nothing's really broken, but the world is turning and digital assets are coming on chain. We're seeing it on crypto. We're seeing AI, even physical AI is a big hottest story. All points to one thing, digital and physical are coming together. Money and digital coming together. All coming together once. We're doing our part here in theCUBE to bring that to you. I'm John Furrier, the host. Thanks for watching.
John Furrier