The Clarity Act, crypto regulation and tokenization: GSR's Joshua Riezman

Transcript

And so it really is a parallel financial system where we've been kind of testing and building the infrastructure for the past 10 plus years. And it's only really in the past two years where the speed and scale is getting there for the mass migration of the financial system. And we think things like the Clarity Act will be an accelerant to that process. >> Bitcoin is fighting to hold on to the 65K price level as odds of the Clarity Act passing seem to be coming back to life. But will this actually finally happen or are we all about to get rugpulled again? Hello and welcome to the Milk Road Show. The podcast is here to remind you that nobody remembers where Milk Road and GSR got their names, but they both have great crypto podcasts. I'm your host, John Gillan.

Today is Monday, July 27th, and today we are joined by Josh Ryman. Josh is the chief legal and strategy officer at GSR. Previously, he was the assistant general counsel at Circle. And GSR is one of the largest and longest running crypto market makers and liquidity providers in the entire industry. It has traded over $1 trillion in digital assets. It operates globally with regulatory licenses and has expanded into advisory with plans to become a cryptonative investment bank. But what does that mean? Joshua is going to tell us all about that. He's going to share a lot of alpha with us in this episode. So, if that sounds good to you, make sure you like and subscribe. Share this episode with somebody who's going to enjoy it. A reminder, our podcast today is free and that would not be possible without our wonderful partners at Securitize the

regulated rails for tokenization. You keep an ear out for some more information about them later in the show, but for now, welcome to the Milk Road Show, Josh. How are you, sir? >> Great to be here. Nice to see you, John. >> Well, I'm glad to have you. Josh, there's a lot to cover today, but I wanted to start the conversation um with some just information and context about GSR. Uh we can come back to the legal side later, but as far as the strategy aspect of your role goes, how would you describe the overall market strategy at GSR? What differentiate different differentiates you from other players in the market?

>> That's a great question. First of all, thank you very much again for for having us here today. It's exciting time to talk. So much happening in the markets and in DC. So uh never a dull moment in crypto. But [clears throat] you know, so from GSR's perspective, right, we've been around uh you know, for for nearly 13 years. We we've been in the market for some time and our business has evolved kind of with the crypto market and we think kind of grown with the ecosystem. And if you think about what's long differentiated us and I think it maybe even took us a a while to realize it was we we've really built a a client franchise um over time. And so you when you think about you know the the term even market making and market makers in crypto it can have several different

meanings. And you know you you could your focus of your firm could be on um you know exploiting uh you know arbitragees and trading amongst the kind of major crypto assets that trade in a lot of volumes or I think what what's historically been the focus of GSR is working with crypto projects and entrepreneurs from the ground up to to help bring effectively liquidity to nent networks. Um and that liquidity comes more than just in the kind of bit offer spread type liquidity. We really do view view ourselves as kind of infrastructure partners where you can deploy on top of GSR's infrastructure across centralized exchanges, decentralized exchanges to get assets where they need to go, right?

And so, you know, our guiding light and and I've people have probably who've heard me speak before have heard me say this, but but our our guiding light is is a lot like why is market making so important for kind of nent crypto projects. It's because you know the you know the very different than in traditional finance where you do not need access to your Apple stock in order for for your iPhone to work. You generally need access for your tokens uh for your network to work and you see that with Ethereum and uh you know all the all the networks and kind of applications that have been built since then. So you need to get the tokens to the users and and so often we view it as a partnership between us and projects

and and exchanges that that need that capability and and you know liquidity is very fragmented across the world of of crypto and we've built the infrastructure on which uh we we look to kind of bridge that that uh that fragmentation. >> Hi everyone, this is John. Listen, our Milk Road pro analysts nailed this AI bull market. They had dozens of calls pay off in a big way for our community. If you want to see how our entire team of analysts are positioning for the crypto bull market that's going to come after this bare market finally ends, you can join us now at Milkroad Pro. It's just a dollar. Link is in the description. You'll get access to all of our analyst trades, their watch list, and see how they're navigating this in their portfolios and get access to ask us questions in Discord anytime, day or

night. It's just a dollar. Link's in the description. Milk Road Pro. Join now. I'll see you there. Okay. So, that gives us a little bit of the liquidity provider aspect of this. Um, but I want to ask about this. Back in March of 2026, GSR announced that there was an acquisition of Autonomous and Architect, which are two firms. Um, and GSR in this public announcement said that they were creating a cryptonative quote unquote investment bank. Uh, what does that mean and and talk us through a little bit of the strategy here in these acquisitions and and what GSR is going for here? >> Absolutely. So, you know, kind of in connection with our strategy of being a client service franchise. Um I think historically we've been kind of adding services as our clients uh kind of need it and and request it. And one of the

things that we we kind of always did but probably um never as organized as it could have been was provide various levels of advisory service to uh both you know labs and foundations and crypto startup projects that that were getting started on the whole life cycle of their journey. Right. So from uh from the very beginning um where they're seeking kind of capital and venture support all the way through you know the end or the progression where they're a major uh asset and they're looking for um you know kind of new levels of capital market support. And so what we've been working on over the past you know uh four or five years really is developing the set of capabilities both from a regulatory corporate uh trading

capabilities to say h how can we best support the full life cycle of of crypto projects and and this is where the kind of you know investment banking um similarities alike. I think we're very specific to the crypto market, but it's pretty similar in that we want to work with projects from the very beginning of their journey and help them through all the way through kind of uh maturity. And so the acquisition of autonomous and architect brought us really we think the kind of the leading teams in the space to provide advisory and then kind of foundation token services. So, uh, if you're a new crypto project and you're establishing yourself, we can advise on tokconomics, you know, help you, uh, with your go to market, get exchange listings, um, uh, and then also kind of

manage the underpins of the foundation as you work to grow. And then obviously where where GSR is known, then provide the secondary liquidity, um, and OTC capabilities. And so, we've been kind of adding these capabilities. If you look at it, we kind of even have this chart internally where it looks like kind of these like building blocks that build on each other over time. And so you start with a market maker, right? Then you add OTC, then you add venture investment, and then it's uh you know uh asset management, now it's advisory and uh and foundation services. All these kind of build upon you can't kind of start a day one being able to provide those services. But by being in the market as long as we have and working with as many projects as we have kind of having a

sense of what projects need and how can we we best deliver it and it's a constant kind of work in pro progress to uh make that full service offering um coherent um uh and and efficient for the market. Uh but we now we think we've really brought together kind of unique pieces in the market that differentiates um GSR from kind of other players. Another thing I wanted to ask about this is you all recently got a license from FINRA to act as a broker dealer. Uh for those who maybe aren't familiar, what is a broker dealer and what does that look like in crypto and how does that factor in? Why is that an important part of you know all these building blocks you're putting together like you said?

>> Yes. So there's actually a really long and interesting story here that goes to the core. You may not have been expecting that with that question that kind of goes to the changing in market structure in crypto. If you if you go back four or five years um especially in the United States but really even globally around the world, I think there was still this uh uncertainty around how regulators are going to treat crypto assets uh which which have a set of unique properties that make them neither really pure commodities or pure securities in in their kind of uh structure and regulators and markets kind of grappled with how they were going to classify those instruments.

And so just to be on the safe side, many years ago, GSR approached regulators in the United States to say, "Hey, look, we're going to trade in these instruments. We want to be compliant whether or not you think they are uh commodity securities. We obviously think they're commodities in the vast majority of cases or non at least nonsecurity instruments. But just in case you think uh regulators uh or courts come to the conclusion that certain these assets are securities while while we engage with them, we want to be ready to engage with those assets. And so we we approached the SEC at the time to uh to obtain or file for a broker dealer, which is the registration you need to either to broker or deal in securities in the United States. And I think the reception

at the time towards crypto firms as is well documented now was very very cold. And and the view was that um you know uh we don't know what what cryp what these assets are um but we don't think you should be regulated uh or that you have what it takes to be regulated for the securities market. So we're going to leave that with traditional securities players and and the market and and regulatory space has changed so dramatically since then. It's kind of hard to imagine but you know now we're in this new world where uh I think it's much clearer to the market what are nonsecurity crypto assets and this is something we'll talk about I'm sure as we talk about clarity but then we are tokenizing real actual securities in the world now right um and uh these are are

are securities in the enumerated sense we talk about in the securities regulations so stocks bonds indentures investment contracts uh things that would be investment contract uh generally securities as you'd understand them historically and we need to be in the place field to deal with those both in the United States and and around the world. So we uh purchased a broker earlier and filed for a change of control that we've completed. So GSR securities is now live. The initial business of that entity is is less about um tokenized securities although it it prepares us for that journey but it also enables us to kind of engage in the fundraising aspects that we talked about at the beginning. So for our projects

and partners that are looking to raise capital, we can engage as a broker dealer where that's also a regulated service as well. So it's been a big addition to our stack. We've also filed for securities license in the Cayman Islands that will allow us to deal kind of globally across uh you know securities and commodities and derivatives as well. So you know crypto is very global. The regulations are very different depending on which jurisdiction you're looking at. But the United States is a crucial has been and always will be a crucial jurisdictions for the United States. And so we we we hope to be kind of you know best-in-class uh from regulatory preparedness and a broker dealer is kind of the first um step on that journey. We also have entities that are regulated as money transmitters and and uh you know

money service businesses and this this is all part of our our kind of regulated approach to the industry. >> Okay Josh, I really appreciate you walking us through some of these things because I've I've known about GSR for a while but you guys do so many different things. I think, you know, just having some context for people is helpful there. I want to pick up on a thread that you mentioned, which is this idea of token taxonomy. Um, and I'm curious your take on how the Clarity Act, if this bill actually does get passed into law, how this will impact token taxonomy in the United States. Um, and just how does this bill classify different digital assets? Why do these definitions matter? What what's what's what do we need to know about that?

>> So, kind of going back to what we were talking about before, right? The issue specifically in the United States has generally been um you know how do we classify uh tokens in the United States as either commodities or securities. the argument that um in in some cases they may be considered securities relies on you know longterm judicial precedent namely the Howie case and whether the kind of efforts of others right have led to um you know the expectations by investors that there'll be you know a rise in their investment and and you know it's a reasonable construction but I think what is attempted by clarity is is to kind of uh answer the question once and for all and ultimately that the

tokens themselves are what they call ancillary assets or network tokens. Uh depending on the definition, we can go into that in some detail. But the tokens themselves are not securities, but that if you sell a token in an investment contract where you make certain promises that that that transaction that fundraising transaction should be regulated as a securities transaction. And this is something I think most lawyers in the space have long kind of argued that for sure if you engage in in a fundraising transaction that should be governed by the securities laws, but the tokens themselves representing kind of the these uh these networks are are generally not um securities although they may have certain characteristics that we need to evaluate um under the

securities law. So what the um uh clarity act says is we kind of fall into let's call it three baskets of tokens. One is securities tokens. So tokens that look like enumerated securities that we've known for a long time. Stocks, bonds, if you if you make a a security that's really just like a a share of stock in your private company, that should be regulated like a security. Uh that's something we all agree in. But now we've created two new concepts called network tokens and ancillary assets. And so you can think about network tokens like Bitcoin and like ETH where there's really no centralized company that's responsible for the value creation of that ecosystem. And it really has reached, you know, we can call it decentralization or we we could

just say a level of of of of kind of maturity whereby the the team behind it is not ultimately responsible for its its uh you know successes or or failures. And they've created a third set of tokens uh called ansur assets. And this is the case where you know I think it's yet to be certified um as a network token but a type of tokens where there probably is a team. So most startup crypto projects probably look more like ancillary assets and network tokens although it's not possible to u you know to launch a fully decentralized network token into the wild with code and just see how it does. But for projects that raise money and want to build a project, they very well may

start up as an ancillary asset. And what the legislation will say is okay that nothing wrong with that. That token itself is not a security. Obviously, if you sell it in a securities transaction, that should be regulated under the securities law. Nothing controversial there. But what we what we will require is before you you sell those tokens um to the public that you make certain disclosures to give information to investors. And again, I think that's something that should be relatively non-commercial. Now, the what's in those disclosures, how complex they are, how how costly it is to comply with this type of legislation are all reasonable requests.

Um, but I think the idea that if you're going to sell uh instruments to the public as a investment or quasi investment that it comes with certain level of disclosures from a customer protection standpoint um and that you don't you you don't create the setup for too much insider dealing, right? So it puts restrictions on insiders uh selling those tokens and this is kind of all standard customer protection uh that we think is really important. So clarity provides those kind of two concurrent goals. One is to give guidance about what these assets are, who regulates them at any given time, whether it's the CFTC or the SEC. But I think most important and what goes kind of under reportported is it's it's more than

clarity. This is a full customer protection regime to protect investors engaging this market to bring additional transparency guidelines and regulations around who can interact and with whom. Real world assets like funds, treasuries, and private credit are still running on rails built decades ago. Gated, paperwork heavy, slow to settle. Everyone's talking about tokenizing them, but far fewer can actually do it and do it without cutting regulatory corners. Securitize can. It's the SEC regulated infrastructure bringing real world assets onchain. Nine years in native tokenization not wrapped backed by Black Rockck, Morgan Stanley and Kathy Woods Arc Invest and chosen by the New York Stock Exchange, VanbNy and Apollo to do it at scale. It's the

regulated bridge between traditional finance and crypto tokenize the world at milkroad.com/securitize. Okay, so there's a lot in there to unpack. Um, but let's like narrow this down to what this looks like in practice. If you're a company, a project trying to launch one of these ancillary assets in the United States, what is it about Clarity Act that is so important? How does this change how you go about doing that? And how do you think about how this actually gets applied when people are trying to launch tokens and do business in digital assets in the US? >> Well, this goes back into, you know, the prior administration. The fundamental reason it is so crucial and so important is because entrepreneurs building crypto business in the United States need to know that what they're building is in

compliance with the law so that they can deploy those investments, grow teams and hire people. I think what happened in the prior administration is there was um you know probably purposeful confusion about how to comply with the regulations such that you could be the most well-meaning entrepreneur in the world. desire to be regulated even um but not have a path to uh to regulatory certainty meaning here are the rules I apply uh that apply and if I apply if I comply with those rules I will not be prosecuted by the United States government and so what clarity gives to the market is that certainty for entrepreneurs to say here's the rules of

the road so long as you comply with them uh you are not at risk um of of kind of you know regulatory action by the various agencies in the United States government. That's part one. Part two and I think this is the big hope of the industry and we think is really important for you know real institutional investors the the large players in the financial ecosystem for them to engage in this market they also need that same certainty which is if I'm going to invest if I'm going to build if I'm going to use those tools I also need to be certain that I'm not tripping up uh a rule that would that would put me into regulatory jeopardy and this uh guidance provides that uh that clarity um that would allow institutions to now

use these tools, build these tools, and engage with these tokens both from an investment perspective, but also from a utility perspective. And so I think what's really instrumental if you looked at what happened with the Genius Act, which was the stable coin legislation uh passed into law that was bipartisan uh and now governs the the issuance of distributions of stable coin in the United States. We've just seen a proliferation of payments businesses, right, built on top of stable coins and neo banks. um and it an an immense amount in investment in the space because why? Because now the rules are clear on what's necessary to engage in stable coin which is obviously better infrastructure for transacting in

certain use cases. You know a lot of people talk about uh stable coins but there is no doubt it is a faster and cheaper way of transacting uh in US dollars amongst like-minded counterparties over the internet. Um, and that is proven by the rapid kind of adoption, but I think even what we're seeing now. And so the the the hope for clarity and I think the best argument for it now is the success of genius for stable coins. You would hope gives some of that to the broader crypto market is that a lot of these assets and and tokens have kind of been in limited, let's call them sandboxes.

um where uh it's been a lot of you know uh first adopters and crypto folks and clarity gives the blessing for larger institutions to engage in this market where they might be more riskadverse and so it's it's a it's a super positive development of the market but it's it won't be the determination of whether crypto wins or uh fails but it it may very well have a lot to say whether a lot of that growth happens in the United States or does it happen outside the United So Josh, I I appreciate you laying all this out for us. I wanted to ask you about this. You all sent a letter of public comments to the chairman of the SEC specifically on this issue of token taxonomy and why it's so important. I want to get your thoughts on project

crypto. This the SEC and the CFTC have been collaborating on trying to give the industry some regulatory clarity. Do you think that's going to be enough to give the market what it needs here or do we really need to get the Clarity Act passed in order to get something legislatively done to sort of cement all of this stuff into concrete? What's your view on that? Do you think that's possible? No, I think it's a great question and that's perfect timing for this question as clarity is up for consideration, but we also have a lot of action at the agency level and what we've seen um in this administration is a really proactive um you know SEC and CFTC to address how do we in the context of the existing legislation not create a permissive environment for crypto but effectively allow um you know uh the

industry to to grow and flourish but still protect customers um and uh and address kind of the the issues around introducing this new asset into very old uh legislation and they've made tremendous progress. So, we're we're big fans and supporters of Project Crypto and I think what's very clear um engagement at the commissioner level in in both agencies. Uh and so the the problem with relying on agencyonly action is you don't get that kind of uh in-law protection that I think industry participants are looking for. Uh because even if you get guidance from the SEC or

the CFTC, that guidance can change in the next administration um it doesn't necessarily solve the issues around private litigation. It doesn't necessarily uh uh solve the issues around state law enforcement. And so what you're looking for is uh federally preempted legislation that provides you know 50 state uh clarity for engaging with these assets. Absent that I think project crypto is going to provide um some amazing uh interpretations that will uh again allow us to be a little bit more clear on how do we engage at least for so long as this administration but then potentially in in into the next administration and and where they make joint rulemakings. specifically. Those

are things that are that are harder to roll back even in a a a different and counter administration, although not not obviously impossible. That being said, like even in the guidance that's coming out, again, like I said, this is not permissive guidance. This is interpreting the law as it applies to try to provide some of that clarity. And so the guidance that came out from the SEC, for example, that GSR responded to um talks about this issue about when do we think about um tokens and and do they ever are they ever securities? uh a and and in that release um you know to kind of summarize it and not not go into too much detail, they're making a very kind of educated analysis

of how applying it and saying, "Hey, if you you make promises about your token and you're a centralized team and someone invests reliance on those promises, that token could in fact be considered a security and those and that security effectively attaches to that asset until such time as those promises are kind of fulfilled or abandoned. And we think this is kind of a nuance thoughtful approach to Howie, but it does create real problems for especially the secondary market participants when thinking about these assets. And so in our comment letter, what we say is, hey, look, that that's again, like we said, a very smart educated take. But as a secondary market

participant that deals with hundreds, if not thousands of different crypto assets, how do I know if uh those promises have been made in the first place or if those promises have been fulfilled? And it's very difficult um for a third party to know. And so if that but what's in crucially important is we know whether that asset is considered by the agencies as security at any given time so that if it is we deal with it out out of our regulated securities entities rather rather than our uh kind of entities that deal in in non-security assets uh and comply with the securities laws related to those assets which were h again going back to the very beginning everybody wants to comply they just want to know how to

comply and when um and and so what we've asked for And I think uh they're very willing to engage on these type of topics is um is that's a thoughtful approach. But then how do we how do we apply that to the secondary markets and I think that's the next piece of that specific SEC guidance. But just to give you a sense that guidance from project crypto is not a panacea. But what's still amazing and shouldn't be lost by anybody is uh an engaged uh um uh agencies that want to work with the industry to figure out these hard questions. That's more than half the battle and that's where we're at now. So we expect um you know further engagement and you know a lot of these issues even absent clarity will be will be worked out to some degree.

>> Okay that's encouraging to hear. Um the clarity act seems like it's actually finally coming to a makeorb breakak moment here. Do you think the clarity act is going to pass and why? >> It's anyone's anyone's guess at this point because >> not what I want to hear Josh. Yeah, it's I mean it's this has been well reported so I'm not going to say necessarily anything breaking new, but I think it comes down to about three or four senators um that if they want and these are Democratic senators if they wanted to pass this legislation it would um they have um you know raised throughout the process been super engaged and raised some very legitimate concerns. A lot of the concerns from the Democratic side have made their way into the bill.

Um this is definitely while not you know a fully equally maybe bipartisan bill. This is a bipartisan bill that include that is not just kind of a one-sided piece of legislation as it should be. Crypto is really a nonpartisan and should be considered a nonpartisan uh you know you know industry and and we we definitely like to think of it as such. Um, but they have political concerns and you know and and with the with Trump and and his family's engagement in the crypto industry, it's a it's a political liability for some Democrats to engage in this uh legislation and to push it over the line. But the reason we kind of retain this optimism is throughout the process there has been deep commitment and engagement at the staff level to

engage in this process and they've spent countless manh hours on on both sides of the aisle working on this legislation. And the truth is and and this is known in DC is if we don't pass clarity act it's not as if this issue goes away it just comes back again. And so, you know, how there there's an element of exhaustion on an issue like this that is often the key to success in DC is that once you beat everything to death for so long, I think ultimately you reach a level of compromise that both sides can live with and you pass the bill. And that's where we hope we are here in the in the you know in the month of August, right? Um going into September and and we we hope the kind of the main issues that can that is holding back those

three or four senators can be addressed. And if it's not, we come back and fight again. But every, you know, our view is as we continue to delay, it's really delaying investment into United States of America. So there aren't that many positives that we see for not passing legislation like the Clarity Act. Um uh other other than we'll have to come back and and address it in a different shape or form. >> I like the framing of politics in Washington is fighting a battle like a war of attrition. Um so that's I think yeah, it can feel that way sometimes. Uh Josh, I want to pivot this to kind of broaden the aperture here on the benefits of clarity because this is not just going to help, you know, cryptonative companies, but there's a broader impact here. I want to talk

about tokenization. This is something else that GSR has been focused on. Um and something you tweeted last week I think is a great way into this conversation. You said on X um that low float and high valuation delays retail access and it isn't just a crypto problem anymore, it's becoming a problem in equities markets, too. and you said that tokenization gives us a chance to rethink equities markets with broader ownership and earlier access for the public. I'd love to hear you elaborate on this for our audience and explain how things like the Clarity Act tokenization can help benefit not just digital assets but all assets and just explain a little bit of that for our audience.

>> Yeah, this is a pretty nuanced topic. So let's let's unpack it a bit. But what what what was fundamentally kind of becoming an issue and is still to some extent an issue in the crypto markets is you'd have you'd have early investors in an asset that have privileged investors. This is normally you know venture and and um you know other early investors and the team um you would then kind of release a very small amount of that asset um to the public on exchanges. So that's the low float, right? So a large percentage of that those assets stay in private hands and a small is made available to the public which creates a de uh potentially a supply um uh demand valuation and you could it would

generate um what would maybe would be a higher valuation for those assets flow and then you know people with the private assets could sell into that that higher valuation. It's it's not something gerine to crypto. This happens in all markets. Um but what what we're seeing specifically in the US equity markets is something that rhymes a lot like what we've seen in crypto right um that if you look at the I think the what my my tweet related to a chart that my colleague Frank Chaparo um posted as well that I think originally comes from Apollo. So, let's give them the credit on this kind of interesting chart was that if you've invested in in IPOs over over the past x period of time, most of those are now

trading below their issue price. And a big reason for that, not the only reason, there's all sorts of market dynamic reasons and uh you know, we don't have all the answers here, but uh companies are staying private for longer, right? So, um, that's that's that's keeping those assets in private hands, not making them available to the public. They're then releasing a small fraction of those, uh, assets for sale. So, those securities come out in a relatively small percentage VCV, the overall valuation of the company. And that's that's giving retail the first first access to buy at an extremely high valuation because again, you end up in you release into a supply demand

valuation. Then as insiders kind of um get unlocked and start releasing their securities into the market, you've seen kind of an overall price decay, probably to the benefit of long-term holders, but maybe to the detriment of of retail or those that are buying once these assets become public. And so, how do we fix this? It's a big problem. Um, and I think this is why there's some concern generally about um, accredited investors rule, retail access to invest in these companies that are really driving the growth of America, right? We're seeing just tremendous growth. And what the hope is by everyone is that that growth

is not being captured only by a select few, but being captured by the broader investing public to have access to these amazing engines of of innovation and capitalism coming out of America. And so with tokenization, the hope is that we have more mechanisms to distribute ownership to more buyers at at different levels. And so, you know, just for example, if I tokenize my company today, um you know, I I still have to comply with securities law, but it's easier for me to distribute to more investors than it would be had I uh you gone it through the traditional route of of sh you know, subscriptions and private shares. And so as you look to tokenize, that is one of the biggest

hopes is it's proven itself as an amazing fund raising mechanism. Um I can distribute those assets and attract buyers from a much more geographic and and income as first pool while still complying with the what the applicable um securities regulations may have things like accredited and investor test which we also hope is potentially addressed in this overall fix. Um but that that's that's the big hope is using tokenizations to find new buyers at at earlier points of a company's existence. Uh such that you can benefit uh you know there's a there's a higher riskreward in those type of investments but you have the chance to to benefit from the growth of these companies rather than coming in

only once they've kind of reached full maturity. So, we'd like to see kind of earlier access across the board and that that's crypto and um and now uh very specifically equities. >> Yeah. And I thought that that framing was really helpful because that there there are a lot of other problems in the market that digital assets can help with beyond just you know having this bill just be for crypto. So, I think that's helpful there. Um I've heard you say Josh that you think we're moving quickly towards a world where all assets are tokenized um and everything is onchain. Onchain finance kind of like becomes finance. What does that look like? What do investors need to know about that world as we transition in that direction? Who are the big winners and losers of that? And just what are your thoughts on that?

>> Yeah, and we're not the only ones saying that now. I saw Vlad from Robin Hood was was saying the same thing because I think once you see it you can't unsee it in that you know if you are so you know for example GSR's trading platform is the ability to trade all tokconized assets and we can basically trade assets all over the world simultaneously at amazing speed and a way you it it would take you the investment to to do that in traditional assets would would be you know many many multiples of that so it's a better and more seamless technology for transferring value over the internet. It's as simple as that. So, as is the same for stable coins being better than sending a bank wire. It's just much easier to uh uh transact uh

you know a stable coin visa via a tokenized security than to buy a share of stock that takes x days to settle uh into your account before you realize the value. Um and that's okay. We've just built new rails. doesn't necessarily mean it's going to acrue to one asset. This is why it's such like a it's just hilarious when this this issue becomes partisan because, you know, it's just a a different type of uh database to some extent that works better and is faster and is more internet native. Um and and so on once you see it, you realize, well, we're really just going to tokenize everything. Uh because it's a better way again to transact on on kind of these these, you know, large uh

amounts especially and globally, right? Cross borders, cross financial systems, I think is where you especially see the benefit rather than intra right now. you sign on to your Schwab account, you buy a stock, they kind of they front you the value, it kind of all works and so you don't see it, I think, as an everyday kind of United States citizens engaging with your stock, but you know, as for multinationals and for international transactions, uh it's just a no-brainer that most assets will be tokenized and will be transacting in wall. So you know I think from a value capture perspective it's very unclear where the value is going to acrue in that process but as we engage as more wealth comes into the

onchain economy it's hard not to be long crypto right and to think about crypto as we're going to be building on these rails uh the foundation for the movement of all value transfer and once you have that the the opportunity to build additional onchain businesses is extremely high And so it's kind of taking that forward look as more wealth comes on chain with stable coins, we're going to be buying and investing in more things on chain. And then as more of that wealth is generally on chain, more businesses will transact generally on chain um in and individuals will will uh transact and uh onchain and then it's just a whole new ecosystem. And so it really is a parallel financial system

where we've been kind of testing and building the infrastructure for the past 10 plus years and it's only really in the past two years where the speed and scale is getting there for uh you know kind of the mass migration of the financial system and now we're starting to see that bit by bit and we think things like the clarity act will be an accelerant to that process. >> I really appreciate you framing that. That's really bullish. It makes me want to stand up and salute. Um, I want to get your thoughts on how GSR is preparing for this tokenized world that we're, like you said, we're moving in this direction very quickly with or without the Clarity Act. Does that change the strategy? Are you preparing for both scenarios? And how do you think about the the the two different outcomes

there? >> Yeah. Um, it's a core part of how we think about the future and that, you know, we want to be able to uh provide the same type of services for anything tokenized everywhere. So the first step in that kind of strategic point and where I spend a lot of my time thinking about is first first things first let's get the regulatory strategy right. Right. So if we want to engage in assets beyond nonsecurity crypto assets we need to be regulated in the jurisdictions around the world. Um right so we we're applying for licenses in the UK and in Cayman and in the United States and we're engaged as we as we discussed and we have an NPI in Singapore. So first you set the foundation and that's really led by this overall business strategy that we should be able to trade anything

tokenized anywhere especially you know GSR with their derivatives capabilities really to engage in everything everywhere and we will continue to uh you know build out the infrastructure necessary to do that and work with our partners to provide that. So when we we back up, we look at where where is the value created in quote unquote tokenization and you know we have our own internal view you kind of tokenize something you can use it to raise money there's secondary liquidity right so where can GSR provide the most value we've recently completed an investment for example into Libera which is a standard charterbased tokenization company uh mostly outside the United States tokenizing um you know funds and other uh security instruments and so We

want the ability to uh you know help help uh you know both uh entrepreneurs but also funds tokenize assets uh and then provide secondary liquidity to those assets and be able to trade them um all around the world and and that's the capabilities we're building um uh for the next phase and we think you know tokenization uh is happening with or without clarity is not a guardrail because even within the existing rules and especially offshore um again just trend so long as you comply uh with the existing rules. We think it's going to happen and and what's been announced, for example, in the United States is uh the SEC is separately working on an innovation exemption that would allow you to take tokenized securities and and make them potentially

more uh of utility in in DeFi. And so I think that's one of the big unlocks we're going to see is having these assets uh uh mean more utility, right? where you can post them as collateral, you can use them as loans, um you can you can generally transact differently so long as you're in compliance with the obligations. So again, a forward-looking SEC is going to go a long way in helping to unlock a lot of the value around tokenization that I think the whole industry sees. Now, >> Josh, I really appreciate you coming on the Milkroach show. I could keep you a lot longer, but we're we're getting up to time here. So, one final question.

Where can we send people to find more of you and your work online? So you can you can see me at X at joshr uh gsr or or come to gsr's website gsr.io. Uh but follow along as we kind of go through this really fun transition uh in crypto and we hope to play a big part in it. >> Josh, thanks so much for being on the Milkro show. I'm looking forward to catching up with you later down the road as we continue to follow along all this together. >> Awesome, [snorts] John. Thanks for having me. >> Thanks for joining us everyone. I hope you all learned something today. So until next time, stay safe, stay educated, stay bullish, and we will see you all on the next episode of the Milkro Show. Thanks for being here everyone. Bye. Want insights on what's moving crypto markets and [music] how

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