It's Still a Bull Market, But Not The One You Wanted

Transcript

Most of the people came here are not not coming to this conference to figure out what token to buy to figure out how to develop a strategy, how to become crypto enabled, maybe here's some regulatory um concepts. I'm seeing less and less of like like OG builders, too. Um, you know, for better or for worse, a lot of those teams have just faded. But it does it doesn't feel like a bare market at all. Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is forformational purposes only and the views expressed by anyone on the show are solely their opinions, not financial advice or necessarily the views of Blockworks. Our hosts, guests, and the Block Works team may hold positions in

the companies funds or projects discussed. >> You know, I I feel like this is Have you seen the uh Andreas Antonopoulos video 2011 [music] Bitcoin? >> That's how I feel right now. I feel very much like there's >> there's this there's this video of Andreas Antonopoulos. He's speaking in a room. I think it's 2011 or 2012 and there's three people in the audience, but they were the real believers. They were the real believers. >> We've been scammed. We brought in Rob hoping that he would bring on more of a tradey crowd, regulatory crowd. No one's here.

>> So, I saw Jason earlier for the first time in a month and a half, maybe two months, right? and he comes up and he and he hugs me and he says, "Listen, since I've haven't been on the pod, the listeners have been going this way, right?" He blamed you though. He said, "You you haven't had your >> true tells a story that when I joined listeners did went vertical and and Rob, I guess since you joined it's >> No, no, when I joined it went up too and then we lost we lost our Jason Kanis. So [laughter] that's what happened. >> Never compare me to Jason Calcanis again. Um, all right guys, I want to hear your guys' takeaway from from DS.

Um, I'm curious if there's Yeah, maybe Rob, starting with you, like just big big takeaways from this conference. Big takeaways from maybe I mean, you know, I think a lot of people here saw the stuff that was happening on stage, but maybe some of your private meetings behind the scenes. What are you uh any learned anything new? What what are the themes? What are you talking about? >> I don't know if I learned anything new, but what what I did >> Rob's like I already knew everything. >> I knew everything. Uh, no. No, no, but but what has happened is that you just continued to see acceleration of stable coin adoption, tokenization. I think, you know, there was um I was at a dinner maybe two nights ago and somebody said, "Hey, okay, um you know, 2025 was the year of stable coins and 2026 is the

year of capital markets." And I think it's still the year of stable coins, but I think it's also very true that we have seen so much interest from every traditional financial institution on figuring out ways to bring capital markets activity onchain. And that's both for, you know, call it or what it was originally for like saying, okay, I'm going to issue some token or I'm going to take one of my off-chain um assets and I'm going to then bring it on chain. I'm going to sell it to crypto natives. But now it's it's not that. Now it's okay well I'm going to enable trading for all types of assets on chain because I know that it is a better infrastructure to do 247 trading on the weekends. I cannot do collateral

management on the weekends without it right and that realization that interest I think is just the thing that continues to get driven home. I mean this is obviously a very institutional conference and so we've seen a lot of that and I think we've also seen I mean you've had several regulators here as well and it's clear that you know on the regulatory side of what's happening in Washington despite you know what's happening in the Senate right now with clarity like there is real support and a real understanding that this is happening. So I I think it's just more of an exclamation point than like net new things but that's great.

>> Yeah. Santi any takeaways? Well, I'll just fire off a couple things. I agree a lot what Rob said. Um, I was shocked. I arrived like 9:00 am on Tuesday and the line was longer than TSA at the airport. I mean, it was in all suits. I was wearing just a sweat. I I felt really out of place. Um, I mean, we always know Dow is an institutional conference, but it was just pretty amazing to see. I think I caught up with you separately, but the stats of the conference are pretty revealing. like you have most mostly financial institutions that are whereas prior years they would send four people or two people they're now sending teams of 10 to 20 that I think is indicative of like just the the hiring spree that has happened. Um so I think

that was just really exciting to see and I think we're just a reflection of where we are like adoption will is continuing uh it's just not where you want it to meaning in the token price. So, I was just at a panel with some really good investors, including Ben from Paraf and a couple others. Um, I don't think anyone disagrees the issues with tokens. Um, some here and there are excited to invest in tokens. Um, but some of these conversations are happening because token prices are down. So, you know, but I think it is a healthy debate to have um so that we don't make the same mistakes in the next cycle, in the next bowl. So, it was just a good discussion.

Uh, but really exciting to see, you know, every time I come to a new conference, I see less and less familiar faces. And maybe that's my issue. >> What What year was your first crypto conference? >> 2012. >> Yeah. >> But it was a >> 2012. 2012. >> You were in that picture in 2013, the Bitcoin picture, [laughter] >> the sweater. >> Yeah. >> I So, funny enough, I think that might have happened in in New York. And uh so I still remember the days where um uh Galaxy was had an office in Soho. I think >> Galaxy would host the Thursday parties. >> They were hosting the Thursday parties and I I was working at a health startup that had like across the street so I would pop in there. But no, my my first one was like a just a small gathering and and I I still wore a suit and tie.

It was a JP Morgan at the time and I felt totally out of place. >> Yeah. >> It's just kind of surreal to see that. >> Yeah. It's crazy. So the final stats on this on this event um so we've been block so Block Works has been around. We started December 2017. First event we had 200 people. Our second event we had 13 people. Uh yeah, it's not as tough event. We had just quit our jobs. >> We quit our jobs May 1st and then 10 days later we hosted an event and 13 people showed up. >> Just a little more than what's in the audience. >> I was like, "Mom, I've made a grave mistake. You guys were back to square one." >> My own boss. I was like, "Can I come back?" Um yeah. And then uh first D ever was 500 folks. That was uh May 2019 was

a one-day event. I think the final numbers, I haven't got the final numbers from the team exactly, but I think it's somewhere around 2,900 people. Um, we projected like I think it was somewhere I think it was 2,000 people bare market like you know bare markets usually dip um but there's still institutional interest so we thought it'd be 2,000. Yeah, 2,900 people which exceeded even our most optimistic bullcase budgets. Um so it was really good event. We also measure things by how many allocators come to the event. So first ever event we had one allocator. Uh last year we had 22 allocators come alloc like real like real allocators like sovereigns or endowments or pensions and this year we had 130 come. Wow. Which is um I think a sign of just now I'm not saying all of

them are allocating and all but yeah real real interest. Yeah. So >> it's a good way to measure I think the success of the industry. Sant, I'm curious because the um it was such a weird it was such a weird event for me because every every time we've hosted an event in my head I'm like that was a bare market conference or a bull market conference. That was a bare market dash or a bull. I have no clue at this point what is what like time of the year it is. Is it a bull or is it a bear? I mean tokens are bare but this is obviously an institutional bull market. How are you thinking about this contrast? Uh I don't think anyone that most of the people came here are not not coming to this conference to figure out what token to buy. They're figuring out

how to develop a strategy, how to become crypto enabled, maybe hear some regulatory um concepts. I'm seeing less and less of like like OG builders too. Um you know, for better or for worse, a lot of those teams have just faded. Um and and I'm seeing just, you know, a lot of this, you know, few companies that continue to come and show up. Um, but uh there's definitely folks that just are not no longer showing up. Uh, I think it's just a normal evolution, but it does it doesn't feel like a bare market at all. Like I've never seen a line in a crypto conference like a check-in line uh other than maybe token uh where it was it's just a very different crowd. I think the crowd that goes to token is more looking for like you know a lot of

a lot of BD happens there to have appreciated but it's a lot of retail. Uh but this does not feel um like a bare market at all. We had this um I think it was in October we had a podcast where the title was it's a bull market. It's not the one you wanted. And I continue to come back to that. Yeah. It just like I think that's exactly where we are still to this day. And you know I I do believe that the market's a pendulum and I expect that tokens will come back and maybe not you know in the same you know kind of correlation where everything goes together right we'll have more dispersion but I don't expect it's the end of alt tokens even though you know Santi continues to to say that I I do believe though that the amount of

acceleration that we are seeing on stable coin adoption from real businesses from tokenization from the capital markets folks who are in the space like that's not going away and that is only accelerating right now. >> Yeah. Did you guys have a meeting of the of the week or a quote of the week that you heard on a on a panel or anything like that? >> Oh, really? >> Well, on on my panel earlier, I think it was the um it was Luke Tuttle who's like the the chief technology officer and the chief product officer at at Moneygram. Uh and he essentially said, "Use stable coins or get left behind." And this is not, you know, a stable coin founder.

This is money. >> I guess I have one, which is someone said that 25 times revenue was cheap. Um, god damn. I mean, I don't know. I think we've been very, you know, like you come to crypto and you have as soon as you have the 10x, as soon as you have one 10x and maybe you're lucky to have like a 20, 30, 100x, you're hooked for life. and and you know I I think this is just it's a bit funny but it's a reflection of for better for worse retail is just moving on and chasing the lottery ticket and I think that continues to be a segment of crypto that will always like even in a recession like people actually gamble more because they want to like win win it all back um but it's I think sometimes it's just

important to reflect like okay this is not a normal return profile like I should not be expecting to get, you know, a 10x or 100x like, you know, 10% on your capital compounded year-over-year is massive and and very few investors actually do that. And so I think like I think we're in a state where my my view, not to get too much in macro, is that the world over the next two years is just going to become quite like my probability of of a recession is much higher over the next two years. and that I'm adjusting that to how I hire, how I am patient and what I willing to pay for companies. Um, but I I think that I talked about it maybe in one podcast, but my view is the risk curve has changed quite a bit. And

so when you go talk to someone and you say, okay, typically if you're a fund or you're a family office or just an investor in general, you say, I want to target this type of return per year. So if the stock if treasuries give me 4%, if the market gives me 8 to 10%, well I'm targeting maybe 12%. I think the difference where you can really lose your money is not adjusting however much risk. So the difference between getting 10% and 12% return maybe a year or two ago was not as much. the difference now I think you're taking a whole lot more risk going a little bit more like every incremental percentage point that you're hoping to get you're carrying a lot more risk given everything that's going on in

the world and that is something that um I feel that in crypto for better or for worse we're just used to the 10x the 100x and >> you know it's it's >> Are there any tokens that look appetizing to you right now take a little nibble out Sky is pretty interesting. >> Not what I thought you were going to say. >> I just like from uh I mean they just announced something interesting. I think Parker from Framework was here. We've interfaced a lot with them just from the like >> when they were maker >> maker now Sky like uh you saw a public company I think better trying to originate like basically had a facility from them. Um that's really exciting.

Like I continue to monitor public companies that are coming and using onchain for some part of their business. Um and Sky is just a interesting credit facility on chain and so like if if Sky can provide credit for better this like home then I think >> this is the the cryptobacked mortgages right. >> Exactly. >> Yeah. So is this >> no better traditional mortgage originator traditional but now they're doing cryptobacked loans I think through oh >> yeah but that's no that's the that's the coinbased thing today but better is a and I think better maybe is doing some cryptoback stuff as well but like >> they have a facility through Sky now >> Sky is just lending like and for their

>> they provide a they provide a a credit line to this mortgage originator and and the calculus for them is quite simple which is they can lower the cost of capital by using Sky, then customers didn't see any of it. Better just lowers their they think they can squeeze out 100 basis points, which is pretty material. We'll see. There's obviously governance risk. There's a couple of things that they're not from one day to the other going to totally replace their existing facility, but they're going to supplement it with onchain sources of capital, which is pretty interesting, I think.

Are you guys are you made how many angel investments have you made in crypto? >> Since I left Parfy, I was actually putting all this into my CIO, which is Claude. Uh 256 >> made 256 angel investments. Are you still are you still making angel investments? >> So I tweeted about this the other day. Uh no. Uh part of it is I'm just very focused on inversion. Um but I still I still get pinged quite a bit. Um, I haven't done that many investments. Like my my pace of deployment this year, like dollar-wise, is roughly the same as prior years, but it's very concentrated.

So, I've either invested in a couple fund managers or things that are not cryptoreated like AI or uh, you know, I've known a founder for four years, he's starting something new, but certainly number-wise, like, no. And I've talked to a lot of VCs about this, like, hey, is this an issue? Like, maybe founders just don't want to reach out because he's like, it's not long no longer investing or too bearish on tokens or whatever. But I I don't know, Rob, you and I talked about this in the podcast, like feels like the quality of founders is not that high. Uh, and I haven't seen anything truly novel. I've seen like the 10th prediction market, >> but I'm not going to invest in any of it because I'm, you know, I have exposure in part. That that was one of my thoughts is um I actually think there's

really interesting really solid companies at the I feel like all the good company a lot of the good companies used to be preed seed like they're all these hot hot companies early stage and now actually a lot of the best companies have kind of matured and reached that series B kind of maybe late A early C stage but the preede and the seed stages are they're very dry right now and it's um I was talking to an emerging manager he mainly does preede uh at this conference and he said he's he's like look the bar to get funded as an early stage >> preede founder is higher than it's ever been in the 10 years I've been investing in crypto and uh I think there's many reasons for that there's like the LP

risk like LPs kind of want you to allocate to AI not crypto right now but I do think a lot of the good founders it it it yeah feels like it's dried up a little bit >> yeah I mean I do think this all kind of flows downhill so your point about LPs There's less money in crypto funds right now. There's, you know, >> not for Dragonfly. Little $600 million race. >> 650. 650. >> Come on. >> I only said that because I knew you'd correct me. >> Yeah. Well, >> um, no, but you know, and and then obviously there was, I think, an announcement that Injuries in and Paradigm are out raising funds right now. Um although, you know, the last I think you know, maybe five or six deals that Paradigm has announced have all been non-crypto. Uh, there's >> is that is that bad for the space? Okay.

So, Paradigm, biggest crypto native fund in the world is now the six of >> Well, Dre's the biggest crypto native fund in the world, but >> second biggest then. Yeah. Um I was just saying because Paradigm doesn't do >> Yeah, they don't have the other side. [clears throat] Well, >> uh their last six deals are not crypto deals. Is this is this a bigger problem than we're letting on to be? >> I mean, to Sant's point earlier, right, there it is very clear that there are a couple things that people want to fund right now. People want to fund stable coins. They want to find tok fund tokenization. They want to fund prediction markets. Those are probably the core categories. There's a lot more and we're doing this as well of leaning into the things that are working right.

And so, you know, my panel earlier, I had Frug uh from Rain on next to me. We've put more money into that business than we put into any business ever because we've taken the perspective that we want to look at what we know is working really well. We want to lean into it and we want to continue to support Poly Market. Same thing. We've done a lot of that through four or five rounds now. And so we're seeing a lot more of that at these at a lot of the funds because there is so much dispersion right now. And I think broadly in venture, not just in crypto, but there's a lot of bunching at the top, right? There's like these names are working. We have to get exposure to this. So we're going to bunch into this thing. But then when you think about

call it the preede space, well the things I just talked about, the vertical I just talked about are getting funded. But the cryptonative stuff, you know, DeFi is not the thing that a new Stanford grad wants to do right now, right? The building a new L1 is not also what a new Stanford grad wants to do right now. And so when we look at the founders coming out of or building in those spaces, it is, you know, a different quality than it was necessarily the last few years. And also the funds because of the fact that you know other than the few people I just named have not raised new funds. I think Parapy also just announced a a new $125 million fund but you haven't seen a lot of new funds announce new uh new fund raises. And I think a lot of people are

looking around and saying there's existential risk to my business if this token market doesn't come back and I keep investing in these things that are cryptonative. How do I think about my future? Right? So there's a lot of risk. >> So a couple things there rattle off. one um I think paradigm is smart. They >> I mean obviously >> no no they're smart in the sense of like like if you're if your mandate is only crypto I've always felt that like yeah we talk about crypto and fintech and that line's blurring but like if I were to raise a fund again which I won't I would want to have maximum flexibility to invest in whatever like no one complains your LPs won't complain if you make them a boatload of money. Well, no, but I do think there's a point here

which is that >> Yeah, you've got to stay disciplined and you got to tell them your your core competency. >> Yeah. Because every GP wants as much flexibility as possible. Like that's that's obvious, right? Like it but you also have to go to market and say this is my story. This is how I'm differentiated. This is how I can go and and win a deal. And so there is that that kind of natural tension that exists time. I I can tell you it's very liberating for us as inversion to be a holdco because I don't have to have alling window dressing of you know I gotta have a big team page and I have to I'm like I'm in the business of figuring out how to use technology and I'm long I'm positioned in a way where the curve for infrastructure is only getting better for us. The cost for block

production and block inclusion is going in one direction. The cost of AI which is venture funded is like however like what you get from claude is remarkable. You used to have to pay 500k for an glorified investment banking person and now you can use claude and your your judgment is what ultimately LPs are giving you money for. Um so I think from that perspective um so so that's point number one. I think paradigm smart and saying okay we want to just capture AI in that bucket um as we go and try to invest in businesses. I mean the natural convergence of AI and crypto is real. I think like agents will use stable coins.

So you know you kind of wanted traffic in both uh topology was probably the first fund to kind of do this. The second is like I'm not too alarmed this idea that like the winners like end up capturing most of the dollars like like FTX did this like in prior cycles. The point that Rob made around the the quality of founders I think is real. Like because in prior cycles you didn't have AI and the Stanford engineer would eventually come into crypto. I don't think they're going to come back for a while. >> Yeah. It's not just the talent. I think AI is sucking up a lot of the capital. >> Yeah. Just like also the I mean SpaceX IPO at $ 1.5 trillion. That's sucking up a lot of your IPO money right there. The last thing just just around one thing I want to say is like so I I did probably

one of my largest uh investments and I've known this uh founder for a while thrivebacked business and they were doing they're a fintech company so I put in some money >> no no no it's uh it's called rentab visible so thrive kla backed they're basically trying to like um you know that team sold their business to square so really good fintech guys in the evolution of like they are now interested in using onchain financing and using stable coins whereas like 6 months ago it wasn't in the picture but I said hey guys have you looked at what figures doing have you looked at like Sky because they're paying a pretty high rate for you know credit facility and so

that to me is interesting like they're very smart fintech guys and and I'm hopeful that more of Rob you talked about on the spot like fintech companies will start thinking more closely about using crypto. >> I mean, every single one is doing it. >> It's happening right now. Yeah. >> Yeah. I mean, the to your point earlier about okay, well, AI suck in the capital and it's sucking the talent. It's absolutely sucking the talent. I think on the capital side, it's also true, but stable coins, a token is really mostly stable coins is the one place where I see traditional investors still. So, you know, when I go and I talk to a new DeFi founder, it's very seldom that they tell me they're talking to, you know, name your your traditional fund. when I go talk to the best stable coin founders,

all of them are talking to the best traditional funds. So, it's actually gotten more competitive on that side of the market. And then when I spend time now in the Bay or in the valley, um there are a lot of founders who are now saying on especially on the fintech side who are saying, I actually hate crypto. I think crypto is terrible, but stable coins like I'm going to build my business. >> Look at what we're seeing that look at what maybe talk about what [ __ ] did today. >> Yeah. I mean, they they announced that they're going to do uh 6% cash back using stable coins. WAP is one of the fastest growing. >> Yeah. So maybe I'll Yeah, we can back up. So So WAP is a marketplace business and it's a uh infrastructure and sort of, you know, call it platform business

that allows people to build small businesses on top of small e-commerce businesses. And so a lot of these businesses are things like um a lot of like it's like a lot of small e-commerce, a lot of u people who are building, you know, call it like net new training videos and I'm sure there's a bunch of other stuff and someone will yell at me. Um but the uh they they have about $3 billion of annual GMV that happens on their platform from um these companies that are currently on there getting paid by you know their customers and it's growing very very quickly. They took an investment from Tether at a $1.6 billion valuation. I think they

announced it a couple weeks ago and then they announced today that or yesterday that they're going to offer 6% cash back if you hold stable coins. right now. I think there's a lot and I understand there's a lot more to come there and how they're thinking about their stable coin strategy. And that's a marketplace business, traditional business saying we're going to do a bunch in stable coins. And I will tell you the marketplace businesses, every single one of them will probably have an real announcement this year about stable coins because they have global, you know, they've they have global customers both on both sides of the marketplace who want to be able to have US dollars and who also want to be be able to get paid without having to go through local bank accounts. And that's happening.

>> Yeah. If if your KPI internally your company is GMV, you are looking at stable coins. >> Everyone, every single one. >> ZKYNC is the bank stack of Ethereum. ZKYNC's Pervidium is the only Ethereum secured platform that is purpose-built for institutions [music] that demand privacy, compliance, and full control of their data. ZKSync enables financial institutions to thrive in the digital assets economy by launching and monetizing their own chains, tokenize real world assets, build programmable markets and settle [music] crossborder in real time. Visit zksync.io to learn more about the bankstack of Ethereum and book a demo.

Hey all, Blockworks co-founder Michael Aelledo here. Quick break to talk about something we've just launched, Blockworks investor relations. As the market shifts toward institutional capital, investors want more transparency, more standardization, and a higher level of professionalism. But the traditional IR model is slow, manual, and not built for how crypto works. If you're building on chain, your data is already live. Your business is already transparent. The challenge is turning that into a clear, credible story for investors. That's exactly what we're solving with Block Works IR. It's a single platform that brings together real time analytics, branded investor portals, and hands-on advisory support so you can communicate what matters. If you're an onchain business looking to level up your investor strategy, check out Blockworks investor relations at

blockworks.com/investor-reations. All right, back to the episode. >> Yeah, I don't I want to talk about Western Union. Um Oh, yeah. Not to call off because you know when when when Rob and I entered into a bet in November 1st >> months running of Western Union >> and how how far up is Western Union stock since we did that >> 2.86%. >> Okay. [laughter] >> Salana is down and I know this because I'm a Salana holder too much to my demise. Uh 56%. Rob, I think you're going to have to buy me dinner sometime. You wanted to bet money and I said like >> Rob was trying to bet Santi 10K that Salano would outperform.

>> No, I I tried to bet I tried to just get us a nice D. >> I tried to bet his PC. >> Is PC? Yeah. Um >> Oh, you going to give me your watch, Rob? >> Yeah, we'll trade. [laughter] Mine's worth a quarter of yours. So, >> um >> Sorry. >> I'm going to win anyways. But look, you you had This is interesting. I want to talk about Western Union because you've been asking. >> Yeah. Let me share the Western Union story. So, I interviewed the the Western Union CEO um on uh on Tuesday and was very I was very skeptical going into it because I think maybe like a lot of you guys in this room, I've heard all these CEOs of these financial institutions say these things are going to happen and then they never happened. Including Western Union, right? Western Union partnered with

Ripple in 2018 to go launch this thing and then it never happened. And then two years later they did it with Stellar and it never happened. And so I was like, "All right, let's figure out if this guy's for real." Um he basically went as far as to say uh he you know doesn't doesn't like crypto um doesn't think that you know maybe crypto investors are the smartest investors but thinks that stable coins are the most amazing thing that he's seen in 20 years of working in payments as a payments executive um before this he was at FERve and uh he walked through basically he said look all you crypto people you think that real- time payments real-time settlement is a new thing he goes I've realtime settlement at Western Union for 20 years, right? You walk into a 7-Eleven,

you get the Western Union thing, send it to your, you know, mom in Guatemala, take out your WhatsApp, send the money, boom, good. It's there in 3 seconds because we've we've had real-time settlement for, you know, 20 years. But the way that we have real-time settlement is I'm floating $3 billion a day to make this possible or $2 billion a day or four billion, I forget the actual number. He goes, "My stock is trading at someone here can pull it up. I don't It's I forget if he said $3 billion or 4 billion or 5 billion. So, let's make up the numbers here. $5 billion stock. >> 3.6. No. >> 3.6 billion stock.

>> Yeah. Prepared. >> Yeah. >> I I put in a position, man. >> Locked in. 3.6. But do the math. $3.6 billion stock. Let's say the float Let's say he's floating $1.8 billion a day to do realtime settlements. Boom. He he he now gets all that $1.8 billion back and he's going to buy back their stock. So, and then not only this for the so the customers of Western Union are the individuals, they won't know this is happening. They won't even know they're on stable coins, but then to take it a step further, he's always wanted to launch bank accounts, but it's too too big of a pain in the ass. It's too much of a hassle. The regulatory stuff, he's got he's got, you know, customers in every single, you know, 190 countries all over the world can't roll out bank accounts. But now with stable coins,

they're working with Rain, the company that Rob was mentioning as their port co stable coin backed cards, debit cards to all hundred million customers. And boom. All right. Now he just saved $2 million in the float daily starts buying back the stock the stock start stock starts going back up. Uh, you know, he gets more cash flow and he can roll out, >> you know, now essentially bank accounts to users. You know what I think is interesting about this though too is so um in the panel we did earlier we had the the money grand CTO and CPO and so Moneygram is kind of the biggest competitor to Western Union and they talked a lot about this kind of float point2 and it's better for capital efficiency but the other thing that he talked about was we have always seen our customer as the sender so the person in

the US who is sending capital to an emerging market uh and to a family member but all of a sudden we see stable coins and stable coins wallets and cards and ability to get yield on chain as a way to make the receiver a customer as well and the way to monetize the receiver. So it's not just the cowboy efficiency point. It's now this person can get US dollars they can keep US dollars in a wallet and then they can do things with that wallet that they couldn't do otherwise in that those that I had from the beginning. I mean we looked at a business that Western Union acquired called Intermex and they were smaller size for us. Um, but I mean if Rob, if I were you, I'd put the some of the 650 million and put get a board seat in Western Union because for me the real

opportunity going over what you were saying is so if you actually look at the where the P&L Western Union, they pay a ton of money in commission. So when you talk about just in time movement of money for them, instant payout, they're paying a lot to facilitate that because they're not sourcing in order for them to source the liquidity, they need to convince all the bodeas in Guatemala to have Western Union and to use part of their working capital to provide that. In exchange for that, they pay him a 40 to 60% commission. If he were smart, he wouldn't just stop with a float. He would say, "Huh, I can now become I can now have a digital wallet." And that the the receiver >> doesn't necessarily have to cash out.

>> Yeah. >> They can keep their money. But but they're not going the step further. If I were them or if I were Elliot, just take a board seat and be a little bit more >> to take it a step further. They have 17,000 not to make this a you know long Western Union podcast here. But um they have 17,000 employees. Like half of those are agents, not AI agents. Like agents like hey thanks for you know sending >> Yeah. They're people like bodegas and stuff like that. >> Yeah. Yeah. But but you >> No, no, not just the bodega people. The people you call >> people you call to be like, "Hey, my payment got stuck." >> Yeah. >> The AI that. Get >> get people out of there.

>> AI that. >> AI that. >> I think this again, not to harp on Western Union, the the key message is >> um most businesses that have distribution and our marketplaces can become banks. They can they can further entrench their relationship with a customer by offering financial higher margin financial products >> in the form of a stable coin. and and then you attach rain if they want to cash out and then and then of course you get interchange and so to me that that like Western Union if they end up executing on it or not I'm still going to win the bet Rob sorry but I think >> there's a lot of time left >> there there's [clears throat] a lot of other businesses that are going to start um basically enabling what airlines have woken up to this idea which is they make more money off of the cards.

>> Yeah. >> Yeah. There's um not to continue to to harp on this stable cocoin topic in Western Union um who's a secret uh advertiser for Blockworks apparently. >> Western Union. Yeah. >> Um >> feed us. I've not gotten a dollar out of Western Union. We're pumping them. >> Yeah. [laughter] But we um there was another marketplace company which I I can't say their name yet because they haven't announced anything but one of the largest marketplace companies in the world who uh said to me um not at this conference but at a conference I was at a couple weeks ago that what they were thinking about doing in stable coins, what they saw stable coins doing and then what they thought that they could do with stable coins also with a card attached was the most interesting thing happening in fintech anywhere in the world right

now. >> Huh. Okay. What's a let's invert. What's a bearish case for stable coins? Like like for a year from now, we're going to be sitting here pontificating about some other stuff. Like where would we have been terribly off the mark? >> Cuz we we keep rehashing in every pod like it's okay. Like >> this is a stable coin pod now. >> This is a stable cocoin pod and you know like but but where can we be very very wrong? And I'm tempted to say don't say regulation. >> Let's put that things that we can't that we can't control. I know you're now going to DC quite a bit >> including regulation. What >> what are the things that we're like could be terribly off the mark?

>> Well, I mean the thing that has happened of course is like we got genius. Genius was incredible. It was very good for getting every single boardroom to say I need a stable coin strategy. I think it uh was um Kai Sheffield who says that all the time. He's like last year was the year of of the stable coin strategy, right? This year is the year of stable coin adoption, right? But the thing that is true is every single conversation we're having about you know whether it's Western Union or Moneygram or this [ __ ] or these other people I'm talking about every single one of them are implementing this right now but most of them are actually not live in production right uh not in at least like real scale and so okay you know regulation is of course a concern but um you want to tell

me what the or you I guess if you ask like what is the risk between now and then is that well as people start to scale it doesn't operate in the way they think it will. It's not as actually, you know, they still have to do some preunding because there's still a lot of, you know, call it friction at the edges and they can't get people to actually hold the stable coins. So, they keep wanting to offramp and when those things happen, they just they don't get the consumer behavior they expect and so they have to put, you know, not as much of their business into stable coins as possible. So, that's the risk still. >> I So, here's an idea. I listened to a podcast by the uh founder of column. He was a co-founder of Brex and he he kind of made a dig not a dig but he was just

talking about like yo >> he's very he's been very skeptical of stable coins for a long time >> and but I I do think that he hit me he made an interesting point and said look we've had the ability to do a lot of the stuff that stable coins purport to do >> the reason why we don't do it is because for other reasons like fraud prevention so for instance instant payout well you know sometimes it's good if your bank account call if your bank manager calls you so you don't get scammed, right? Your grandmother, you know, may not be as sophisticated. Where I'm going with this is this year we've seen a spike in hacks. I think it's like DeFi is now you're seeing that it was dormant for a while. Most of the issues like I think there's been over 130 million of lost

capital. We're in March. Um and it's the same issues keep coming up which is there's an Oracle problem but more so vaults have become real world assets have become this topic of conversation and I feel like as an industry we hopefully don't make the same mistakes that has done uh we but again like if you look at some of the issuers like RWA protocols they have brought lowquality stuff and you kind of have this like redemption like asset liability mismatch liquidity.

>> But that but that was just that was just a V1. Like I think you got to have the crappy assets first. It's like um yeah I don't know. I think it's like DeFi summer like the the craziness of that like did lead the path for a unis swap which then turned into Morpho and like you got to have some of the chaotic stuff to actually with the crappy products like >> Yeah. Like I I like chaotic innovation I I guess it will always be a thing here. But what I'm trying to say is I think that um yes, we're in a bare market, but RWAs I think are a bit overhyped. Um I think that, you know, I'm I'm cautiously skeptically like optimistic about RWAs, but I see a whole lot of issues that I'm

hopeful we don't kind of run through the same issues that Trafi has had to learn the hard way. >> Well, I think that it's like so it's not even V1 or V. Okay, so like let's use tokenized stocks for a sec. Like nobody right now can do token is doing tokenized stocks. Like Kraken's not doing tokenized stocks. Ono is not doing tokenized stocks. >> Yeah. If you mean like direct issuance, right? There's a lot of these like wrapped. >> They're just they're just pointing they're a price feed. >> Yeah. Yeah. Well, I mean >> they're a tokenized price feed that goes to the stock. >> Sure. I I mean it's like it's Yeah, exactly. So it's but it's like it's so eventually you you got to actually tokenize these stocks and Yeah.

>> Like like Okay. So N like we just >> I mean this was but this was the NY uh the nicely securitiz announcement was that they're going to do direct issuance. is obviously saying so that's super me too like it's just really early days right now and so there's all these issues like I agree there's all these issues with >> the problem with early days and then like maturing litter more is that there's a lot of damage >> yeah a lot of capital loss and it's unlike like move fast and break things and that sucker coin >> there's a bug in Facebook maybe your photo doesn't load if there's a bug in a protocol you lose billions of dollars like >> and that hurts us to onboard users and with regulators and in that conversation so I'm just I'm hopeful that we avoid some of those mistakes.

>> I agree. I agree. We've got a couple minutes left. Anything else that you coming out of this conference that you guys are thinking about? >> Listen, I mean, this was the conference, right? It was it was tokenization of assets. It was stable coins. It was, you know, prediction markets. Like, those are the things everybody's talking about. I >> agentic payments. >> Agentic payments, which is not a thing that exists today. Um, even though we keep talking about it, like, you know, I think X42 did like $600,000 yesterday. M P M P M P M P M P M P M P M P M P M PP did like $300 >> more than L2 is making money, you know, [laughter] onesies.

>> That's definitely not true. >> $10. >> Yeah. Okay. Uh, >> what was the best panel? [sighs] >> I mean, for me it was the Western Union fireside chat was uh the most enlightening and eye opening conversation. He he's been like if you go back a couple earnings quarters ago, he was quite like he did a whole 180. >> Very anti-stable coins. I mean, he told me backstage, he's like the only reason we could do this is genius. And I think I mean I actually think clarity was like an underdised thing at this event. Um because it's kind of been talked about so much that people are sick of talking about it. But >> well, also people don't want to talk about it because I think most people feel at least what I feel which is that it's like probably not going to happen.

And >> you Yeah. What? Yeah. >> Yeah. I mean it's it's it's still 60% on poly market. So um clearly there are some people who feel that it is going to happen. >> How bad is it if clarity doesn't pass now? [sighs and gasps] >> I think it depends, right? So if you're if you go talk to the banks right now or you go talk to a lot of the asset managers, they're telling you they're they're going to go and push forward with all of this tokenization stuff. Anyways, um both the SEC and the CFTC put out J uh joint like guidance uh I think it was a week ago, maybe maybe two weeks ago and that allows for a framework and a taxonomy for continuing to push forward on these these efforts right now. But the risk is of course that you know in two two and a half

years that there's a new regulatory regime and that that regulatory regime versus course and that because and without clarity there's it's not kind of cemented into law. But you know if you go talk to the banks so I think a lot of their perspective right now is well if we build this thing for two and a half years and there's like realworld activity that's happening from real clients on chain it's even if you know there's a lot of concern about you know some of the longtail stuff in crypto there's no way that a net new even like very you know anti-inovation regulatory regime would try to reverse course and shut down all of these markets and so I think people feel that there's enough time to get ahead of it even without clarity But I I do think it is it is bad that it it doesn't happen. It does

create a lot of ability for things to get changed at the edges that are bad for I mean at least a lot of the startups. >> I will say like uh again regulation is something that we necessarily can't control. what we can't control is delivering extreme value to the end customer and and so like Uber like look at Uber like Uber was able to get these licenses and fight one of the most fiercest lobbies the taxi lobby because the consumer the constituents loved it and they would call on their congressman and say why all of a sudden like you're banning Uber like this provides extreme value so I I still think that like when you go and talk to a regulator when you go and talk to you know you say something most people hate crypto still it's not popular. You go and walk in the

street, they're like, "Oh, you know, like >> I don't think most people hate crypto. I think most people are indifferent to crypto." >> No, people hate like >> there are people who hate like, you know, they're they're they know so like someone that has made a lot of money and they hate that and and you know it's it's real. It's like oh my cousin Yeah, he's dumb as a brick. Everyone hates what he's saying and he's upset. >> No, but like when you >> like I was too successful like >> No, I mean but it's a reality of things like you know you see this in in bull markets like people just don't take us seriously because it's not relatable. Like I get that stable coins are very relatable when you can earn in dollars and get paid in dollars and you know we need more of that and I I'm encouraged

we you and I had a discussion around like what is something that we can do as an industry to improve that like prediction markets are all the rage like I see did the seed round of poly market I have a lot at stake but I wrote about earlier which is why did it take so long to be reactive to something like update your terms of service make a disclaimer in any market say if you have inside information you shouldn't be trading that it's against our terms of service if we find this out we'll kick you out >> Rob do you disagree do you agree with >> no I'm encouraged to see but by the way I'm encouraged to see >> did you listen in the pod last week we we I didn't listen >> you didn't listen to us debate this we had this debate

>> we debated and then I wrote about it and then I was like why is it Koshi actually did have it I was surprised that poly market is like why don't you have in your terms of service and I get the chain as much as I love him he said oh look uh you know these are truth seeeking machines so this is actually good but I'm like I don't think we can agree that like If you get a >> I think this is a sideeshow. This is like it's a complete sideeshow. Like >> it's a sideeshow. >> Yeah, because it just like the whatever's happening in terms of service. Terms of service doesn't really matter, >> you know. It's not a sideshow for the prediction markets is is sports gambling. >> Uh it's definitely not a sideeshow for couch. U not not for Poly.

>> They're doing the exact same thing with sports gambling. >> Uh >> it's like 80 to 90% of both of their revenue right now. >> No, that's not true. >> Of their market volume. >> No, that's not true. So for Poly Market, it's about 40 45%. For Cali, it's about 90%. >> So the Yeah. So, I mean, follow my Twitter, you'll see some some good content. Um, but the actually a lot of the um the poly market volume right now, I mean, they they own all the the politics markets. Uh, they're doing a lot of these crypto markets, which is like kind of I like their crypto market. >> Yeah. What will Bitcoin be, crypto down market, stuff like that. Um, and then they they're actually getting a lot of volume right now like the Danish election. Um, and so they there's a uh it's much more varied at Poly Market,

but Koshi, yes, is is primarily sports. We're also in the middle of March Madness, which is a big uh time of the year. >> But I think the the reality is, and I have this discussion with people all the time because we're spend so much time talking about poly market these days, which is that there's a sports was the easiest market to serve first. But it's I think very clear to a lot of people and you know you've had ICE running around here and they put a bunch of money into inpanial innovation for that can affect equities.

It can affect you know broadly you know business exposure. It can affect hedging. It can affect commodities trading and there's an expectation that these markets will get a lot bigger. It's just that hey we sports was easier to serve on day one. We haven't we just uh had an announcement this week from both Koshi and Poly Market that was FIS is going to plug into um or allow for Koshi contracts to be on their accounting system for the hedge funds. We also just had an announcement from Sesuana that they are going to allow you to post USDC collateral or fiat collateral at Bitco uh trade with you and then they'll probably offload the risk on Poly Market because this is um Sesuana crypto. And so those are the first two things I've

seen where it's like, oh well, we can make this for an institution, right? Um I know one of the big GI banks was telling me this week that they're thinking about trying to offer these types of OTC trades as well. And so we're seeing that happen. It's just it's going to be slower at the for at the big institutions. >> I'm not like I'm not I'm not disagreeing like my thesis is prediction markets are phenomenal truth machines. They can help us with insurance markets, discrete markets around, hey, like if you have a home in Florida, you want to insure against hurricane insurance, you can price that risk in real time. You don't get an insurer to do that for you. So, like we can get there. All I'm saying is I don't think we can disagree that like most people look at prediction markets today and say, "Yeah, that's gambling.

That that's Vegas." And and >> it's like 60% if you look at the latest data. >> Again, I'm not disagreeing on the data. I'm disagreeing on the perception of the industry. what you could do if you're in that seat as a founder. I think it's it's a really hard choice to do like you're not I'm not suggesting that like these guys shut down sports. Sometimes you got to do these things that will fund the other part of the business and but I do think like again um I don't want to talk too much about regulation but as an industry it will serve us well to make sure that the consumer is protected and and it's not perfect. I don't think you perfectly ever get there, but I do think you need to stand for something and you need to make sure that the perception of this

industry, whether genius pass, like whether clarity passes or not, I think that we can still as an industry make sure that we continue to level up and raise the bar around consumer protection disclosures transparency all that. >> Yeah. Yeah. Um, we're we're at time here. Content of the week. >> Did you guys stop doing content of the week? >> No. No, of course not. >> I haven't I haven't listened to you guys once. >> Yeah. I cannot believe you haven't listened once. >> I haven't I haven't tuned in at all. >> Yeah. Well, you're the reason that you know the the listen >> that the show was good. I know. I know. >> What you should have done is put us in the background. The baby would have slept much easier because we're blowing as hell.

>> I will I will tell you I uh I did a fireside chat with Amy Oldenberg yesterday. >> Amy's great. >> Yeah. She's the the head of digital assets at at Morgan Stanley. And she starts the the fireside with, you know, it's great to to be doing this because I fall asleep to your voice all the time. [laughter] And I was like, "Does that mean are you are you negging me? Like is the does that mean the podcast is bad?" Like I don't understand. Think you're trying to be nice. >> Listening is a bad >> Yeah. I don't. So, um, but can I give you one suggestion for the live pod next year? >> Yeah. Don't do it the last day. >> Yeah. Exactly. Do not make it the last.

>> We've lost. I appreciate all you guys for sticking around. Yeah. Do you guys have a good desk? >> Nice. >> How many people in here work for Block Works? >> How [laughter] many people How many people >> Don't tell them. Wait. How many people here work for inversion? [laughter] >> Si made all of his employees come here. All three of them. 100% of inversion is represented in this room. Keyman risk. Before we wrap, anything you guys want to know, thoughts, questions? >> Yeah. curious about your thoughts on the future of decentralized identity.

>> I think um like identity passporting is like obviously going to need to be part of the way we you know kind of do all of these tokenized assets and I but it's unclear to me why that needs to be decentralized. Um and it's unclear to me that the people who are going to be controlling the the kind of the ins and outs of these markets are going to care about that. Um I don't know that's kind of the >> um >> 30 seconds. The first thing well decentralized identity like Civic and all these experiments before um have not really worked as as much. Um I think the your wallet is your identity in some ways if you want to extend credit. Um and I think as more traditional

institutions that have KYC their user base start plugging in onchain, you will stitch together transactional data on chain with a KYC person that is >> Yeah, but their identity is the KYC. No, I I understand that. Well, if we want to extend credit, like a big part of your >> if you want to scale it, >> you want to like underwrite like you know, you place a lot of value on that. Um, >> but I think uh proof of humanity is going to be more and more important and you obviously have cryptograph like the only way you will be able to prove that you're human is with your cryptographic keys and that I think is something that is not talked about enough. Um, but in a world of deep fakes and AI just becoming

more and more sophisticated, um, I think, uh, that's that's where crypto really can fit um, in to to prove, you know, that's actually human. >> I I I think it'll end up being a big theme actually of the of the next couple I mean, you look at what the um, I don't know if you guys know Snowflake, hu yeah, huge software company, the Snowflake founder is now working on is is this video real or not real online, right? So this whole concept of like is this video real? Was this article written by AI? Is this person real? Like that whole theme like what world >> that's very different than just decentralized identity though. Like I think we we all agree that like there's a lot of like agentic or uh AI powered like deep fakes and things like that

that we need to have some ability. >> It's not just defakes. It's like is this person Yeah. Isn't that what decentralized identity really is? Is like is this person a credible human being or not? No, I don't think that's what he's asking. >> Well, but I will say like if if you want to in a world where you have >> Oh, yeah, it is because it's for me. So I guess we're disagreeing what decentralized identity is, but when I think about it is like so as an early investor in Filecoin, distributed file storage is important in a world where you if you want to preserve mission critical documents and files, you want to probably do it in a system of record like Filecoin where you have sufficient guarantees that that data is there.

charted and you because because you know pretty much every company has or will be hacked and so your data is exposed. Um if you want to store stuff I think you're going to want to do that in a system of record like Filecoin because you can have real cryptographic proof that your identity or your document is sharded. meaning you know not a single node can have access to the full document and can't piece it together and and you have enough economic guarantees that if you want to retrieve that file you can very quickly do so for me that that's what I mean about you know if you want to preserve

your identity and you want to store mission critical stuff we will start using something like filecoin santi started talking about filecoin a guy walked out of the room let's do let's do uh let's do content of the week. Rob, what do you got? Content of the week. >> I'm going to go back through all of the live streams of DS and watch all of them. >> That's not content of the week. I'm going to watch every single one. >> You know who does that? >> You, >> Kyle Simony. >> Wait, he doesn't that for Breakpoint Breakpoint >> and then he then he tweets about it, but I don't know if he'll do that anymore. >> Yeah, true.

>> I I'm going to cheat because I talked about it last week. Um, Born to be Wired. >> Um, John Malone. Yeah, >> cable guy >> legend. >> So there was a book about him >> acquisition a week. Acquisition every two weeks for like a decade. >> Yeah, the cable industry is fascinating. And then net neutrality and all that. Now of course he owns Formula 1 tracking stocks. Really interesting instruments. Great book. Uh fairly recent too. Uh I'd read Cable Cowboy um a while back. Also a really good book about him. But this this book he wrote it himself.

>> So really really good book. Um yeah, fascinating. Dang, I have a TV show on Hulu. It's not as informative. It's called Parasite. It's pretty good. [laughter] >> I'm I'm I'm You sort of broke the trend here. I was hoping to get a thriller so that I can watch >> I did see I did see Project Hail Mary. Um >> Project Hail Mary. Yeah. >> It's good book. Fiction. >> It's a good book and it's now it's now a movie. >> All right. I'm wrapping us. Good d everybody. [laughter] Appreciate you guys. Thanks for sticking around. Thank you everyone.