Sovereign funds and institutions preparing to enter Bitcoin

Transcript

GM. Good morning. Welcome to the Milk Road Show, the daily crypto show that feels like finding $20 in your old jean pockets. I'm your host, Jay Hamilton. It's Monday, June the 2nd. Today, we're talking about Bitcoin buying trends. We all know that governments are buying or interested in buying and central banks, how are they going to buy it? How are they going to buy it around the world? It's a key topic of today's conversation. Wall Street wants Ethereum. Wall Street wants Salana. What's the outlook for Ethereum and Salana? We're going to jump into these two assets. We're also going to talk about today's guest favorite trade right now. So, make sure you stick around to the end. We are joined today by Olivier Russi Newton, co-founder and CEO of DeFi Technologies, a company which is aiming to bring crypto investments, digital

asset investments, to traditional investors, both retail and institutional. Before we jump in and hear from Olivier, if you guys want to help setting up your investment portfolio, specifically your crypto portfolio, you should check out our free guide. It gives you the strategy. Uh teaches you about cycles, teach you about portfolio setup, allocation strategies, and it's free. Click the link in the show notes, you get our free guide today. Without further ado, Olivier, welcome to the Milk Road Show. Thanks for having me. Absolute pleasure. Uh, okay. I I want to start with just to give everybody an idea of uh your authority and how OG you are in the space because you've been here for a while. Um, I want to start with Silk

Road. You because Silk Road is actually where Milk Road got its name from. So, it's sort of a funny story connection there. Uh, did you ever use Silk Road? Were are you that old that you've used? Okay, great. That's amazing. tell us a little bit of a story about what you use Silk Road for and why why people use Silk Road back in the day because I think it's a it's something that the the industry forgets what what crypto was like. I mean, yeah, I was I was I was using Silk Road uh previous to entering the Bitcoin space. I was in open- source technology was working on a I came across um a JavaScript server side programming language called Node.js

that I thought was super interesting and was was building on that built you know this gaming application that uh ended up selling. Um and when I came ac across I basically was like okay you know my my parents are super academic PhDs so going to like you know uh a big university and Jay you know we learn we went to the same high school um St. George is just kind of like the setup to go to, you know, Harvard or one one of those kind of places. I was like, you know, kind of, you know, screw that. And uh I'm just going to find another open- source technology and build a business on top

of it. And I came across Bitcoin. And at the time, I believe, you know, the bit Bitcoin's primary I think 60 70% of Bitcoin's traffic was uh Satoshi dice. And so Satoshi Dice, I don't even know what that Satoshi dice was invented by Eric Vorhees and it was a gambling website. A very simple dice game um where you would put Bitcoin on and you know it would kind of algorithmically roll a dice that you would bet and you would win or you'd lose. So that was my first interaction of buying on Silk Road and forget the other Eastern European exchange. And I'm sure people were

playing on Satoshi dice with like tens hundreds of Bitcoin because back then Oh yeah, it was it was it was it was not it was nothing. So I'm sure people lost lost billions of dollars in in different. Yeah. Yeah. Well, it's always we don't get many guests on the show that had experience with Silk Road. Uh and uh it's always fun to to take a walk down memory lane and that's that's where the Milk Road name was came from was a play a play on Silk Road. Uh okay, let's let's transition from that into Bitcoin today. uh your your company DFI Technologies is an active participant in

aiming to get traditional investors particularly institutions, governments and central banks around the world into investing in digital assets. One of them obviously being Bitcoin being the largest one. talk to us about what you're seeing from your clients around Bitcoin buying trends and interest in Bitcoin growing right now and throughout this cycle. Yeah. No, so I I definitely think um inflows have been uh robust. Um it typically you know inflows go up with uh price action but you know we have a very I would say kind of hodddleminded um audience. So out of um you know we've

never had a week or a month with net out outflows in the history of of velour which is our asset management um division with within DeFi technologies. So that's give or take five years. So people people buy the dip and they also you know FOMO into price action when when things go up. So when you look at Bitcoin right now, who who are the buyers that are starting to buy that you can see that are on the sidelines? And I let's focus initially because you and I were talking before the show about how much you guys are launching ETP products or ETF products as they're often

commonly known in America. uh you're launching these products in many jurisdictions around the world and in places where quite honestly I was a bit surprised to hear that you were launching in some of these jurisdictions because to me I think until a lot of us listening to the show we say oh well you can just buy you can buy Bitcoin on chain and you can buy that permissionlessly and it's very easy to do at least for a cryptonative it is but for a lot of institutions around the world they don't necessarily want to buy Bitcoin onchain they want to buy it through more traditional mechanisms of how they currently do their investments.

talk to us what trends you're seeing here where what jurisdictions are are interested. Yeah, you know, I I think there there's definitely a trend where there's emerging markets or you might call them established markets, but for instance, um uh markets were exploring in uh Southeast Asia, Singapore for instance, uh Africa, Kenya, we're we're targeting first the largest market in Africa. and they have a very different stance on they don't want to let in Coinbase or Binance into their local economies. They see it as kind of like an untrusted uh American brand and why would they give

away profits to something when they they don't have struggling economies but they have developing economies, right? And so I think when Trump and his administration kind of propelled this Treasury crypto treasury initiative, that's when, you know, people say, well, you know, should we be buying before they start buying? How big is the buying going to be? And that starts kicking things off. And I think you've seen um somewhat unfamiliar names, but you know, just because you know, we're a NASDAQ listed company that's never raised money outside of you know, uh you know, family and friends,

myself and my co-founder. And uh so we get we get solicited by investment banks to raise money. And um what you see is um um what I would normally have thought you know the type of participants in uh micro strategy and and and companies of such are actually like sovereign wealth funds because they're only allowed to buy certain amounts of in c certain specific types of securities and and what fits the bill for them is convertible bonds. But so so that so that's an interesting trend is that if you're a sovereign wealth fund or

something like that and you want to get exposure to cryptocurrency, you're doing it through NASDAQ listed equities in the form of you know convertible bonds that you're you're you're you're safe with. But what we're seeing as we you know we essentially you know started velour five years ago in in Europe we kind of battle tested you know the model launched 65 products and now kind of the next step is is is replicating that that in in various niche markets. So what we need to do Yeah. Go ahead. Sorry. It's it's it is I just want to like double click on this because there is just I can't stress enough how much there is an

assumption within crypto natives because we all live in echo chambers and it's very easy to forget what the rest of the world sees and thinks. And so within cryptonatives there is this assumption that oh everybody can buy bitcoin and everybody can buy digital assets right now. But what you're saying and let's use Kenya as an example because this is super interesting. What you're saying is in Kenya I don't know if Kenya has a sovereign wealth fund but let's say there's I'm sure there's funds it does. Okay. So whether it's it's a sovereign wealth fund in Canada can in Kenya or large institutional funds within Canada within Kenya pension funds that sort of thing.

What you're saying is they they currently essentially either either they can't buy digital assets because they don't want to buy it through the crypto onchain rails or they um they're waiting for some sort of mechanism to come to their country which allows them to buy it through I I think I think you know yeah that's definitely correct but they they see it um bolstering their economy their stock market because there's not, you know, do you ever hear about, you know, a hot deal trading on the Nairobi stock exchange that you're gonna buy in?

Right. No, I don't I do I do not follow the Nairobi stock exchange. So, so this this this is also, you know, potentially utilized as a market accelerant for these kind of emerging market stock markets. And then that also enables the pension funds, sovereign funds, government bonds, all of these participants who would want to get exposure to cryptocurrency to do it on by the by their own means, right? They control the stock market. They regulate the stock market and we uh myself you know and yo yan my business partner have the longest track record of providing

secure uh regulated exposure to digital assets on traditional stock exchanges. So they feel comfortable doing it with us and it is it is very interesting. So they see this as a marketing opportunity for their stock exchange then as well. Well, I think it's a marketing for their stock exchange, for their nation, for innovation within the country, which which you know rightfully show within with within the right, right? Do do you think have have you launched in Kenya yet? We we are going through the regulatory processes and we're we're almost at the finish line. Do do you think

um how one thing I can't get a handle on is how many of these institutions are waiting on the sideline right like there's no data on that it's impossible to know uh but we keep hearing that there is a lot of these institutions waiting on the sideline I mean just taking Kenya as an example do you think any of these like Kenya sovereign wealth fund any of them do you think any of them have digital asset exposure yet or do you think they're all waiting until there I I think they're all waiting. They're all waiting. Wow. Wow. Very interesting. Okay. So, Kenya is one example. How many other jurisdictions are on your list and what's to come? You know, we're we're looking at I would

say what UAE Oman Qar Saudi Thailand Singapore, Korea. Okay. It's a long list. It it just it points out we're so early in this way, right? Like it we we we really are I mean what I'm hearing and and I and I do keep hearing this but you you again you only hear about the people that are buying. You don't hear about the people that aren't buying but want to buy. Right. And what I'm hearing from you is there is a lot of jurisdictions around the world that do not currently have ETP or ETF products on their local exchange and therefore

there's a lot of institutions within those jurisdictions that can't get access to an exposure to digital assets. So as as yourself and other companies bring these products to these countries, the flows I I I mean and and think of how crazy it is. Korea, right? We all know Korea is one of the biggest FOMO traders. North Korea or South Korea? Which one? South Korea. I think I think Korea's on the North Korea is on the other side of the trade. I'm sure Lazarus Group loves crypto.

Yeah. No, they they they love it. But I mean, South Korea, for instance, is, you know, but on a volume basis, one of the largest traders in the world, yet the um you know, the provisions and the regulations on their stock exchange have yet to be formalized. Um we're hoping, you know, end of the month and I'll be over there in two to three weeks um to um to check in with the regulators. Selling your Bitcoin should be a last resort when you need cash. That's why there's Leen, the trusted platform for Bitcoin backed loans. You can unlock cash in as little as 18 hours with no monthly interest payments and no prepayment penalties. They've issued

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What makes definitive different is its advanced order types. You can execute limit, T-W, and stop-loss completely onchain. Plus, you get the best prices as your order is routed instantly through every DEX and liquidity pool, getting you up to 19 times lower fees. Trusted by Funds, Wales, and the Milkman himself. Now you too can trade like a pro. Milk Road listeners get a tasty glass of milk with zero fees on your first 25,000 at milkroad.finitive.fi. [Music] interesting and and I think that the thing is it's very easy it's very easy for for everybody to generalize and say well America is the biggest ex biggest

stock exchange and the biggest capital market in the world so uh therefore these other jurisdictions are are are dropping the bucket compared to you know the Bitcoin ETF in the US which is true which is true but if you combined let's say I don't um uh ten dozens maybe even over a hundred countries around the world that do not currently have these products. You combine them all, you you you add up to quite a bit of potential that could come as they get these products. Okay, let's um let's shift uh to uh you recently launched a Bitcoin ETP product that has yield within it. Yes. First

first in the world. We have not seen this. is super interesting because we always talk on the show and I mean everybody in general always says never sell your Bitcoin, never sell your Bitcoin, right? Which I I agree with. Sounds great, but how do you get some sort of gains on your Bitcoin if you're never going to sell it? You're just going to give it to your kids one day, right? Like, yeah, okay, that would be nice, but I want some gains in the meantime. And yield on Bitcoin is a very interesting product. talk talk to us about this product, how it works and yeah, I mean obviously like in in the design of you know exchangeraded products and things of that nature every every protocol has its own algorithmic prop properties right staking and and this and that and depending on you know

the the regulatory caveats we can include them or we can include them. Core is is a team of Bitcoin OGs, like diehard OGs, and they were the first ones to create non-custodial Bitcoin staking. Bren Brendan, one of the core contributors, is also Canadian from Alberta. So that helped our our uh you know west Toronto would have been a different story but you know um you know and so so we so we kind of you know partnered up and said let's let's let's develop something interesting here and uh we basically were able to abstract the yield that

core gives into an ETP. So, you know, kind of the world's first uh yieldbearing Bitcoin ETF, right? Where you get just under 6%. So, you can hold Bitcoin and through the security of your brokerage account and earn 6%. 6%. That's good. 5.65 and sometimes fluctuates, but yeah, it um it was, you know, a market first, right? you know, yield on your your Bitcoin um why not, right?

And and do you think we're going to see more yield bearing Bitcoin products, whether they be ET? I think I think you know just just like anything in crypto when when something kind of gets gets hot, there's there's copycats and things. So there was kind of a slew of other liquid Bitcoin staking stuff and you know big you know foundations raising lots of money. And I remember I was where where was I? Um I was in Dubai when it was flooding during one of these crypto conferences in 2049 a few years ago.

Remember that? Yeah. and and and all of my, you know, friends and friends in the periphery or acquaintances were just like doing these like massive financings and I was like like you know one one day they were like you want to get in on this AI company financing hund00 million valuation and I was like like can you send me the deck? And then like I bumped into the same friend two days ago and he's like, "Oh, we just raised another 80 at 800 and I was like, "You guys are going to blow up the market." Like and and you know since then you know the like all these large VC funded token launches have have not done well. So So Core Core is the OG.

They really hold Bitcoin principles to the core of their uh foundation and we're doing a lot more with them at you know DeFi technologies um working on specifically launching uh a public company for them specifically to maximize and generate yield like think think micro strategy without the leverage with higher alpha returns. So, so we're extremely excited about that and um and so yeah, as as new protocols speak to us and engage with us, we try to you know, innovate to to the extent that we can under you know, permissible

regulatory applications in in terms of uh you know what we can and what we can't do. Okay, let's uh let's shift to Salana and Ethereum. Obviously everybody knows the Bitcoin story. I mean everybody listening to this knows the Salana Ethereum story as well. But you were you were I mean you were mining Ethereum. I mean for even just saying mining Ethereum now as a proof ofstake chain sounds funny to say because there was a point when it was a proof of work chain. So you you came up mining Ethereum. I know you were mining Bitcoin as well.

And then you were in the room early on in Salana uh as an opportunity to invest uh and and you chose not to. Maybe you can tell us that story. I don't know if you're comfortable sharing that uh on on the recording, but give us give us your thoughts. Ethereum, Salana, where where they're at and where you you see them going. Is there one that I you know, I see I see I see, you know, very similar similar kind of I would say, you know, secular evolutions to the chains specifically. Um, so you know, Ethereum was really kind of grassroots anarchist. That that what was what was cool. I was one of the only

like, you know, I would say not super super technical people in the room and I was like the guy like setting up the mining rigs, right? Like freezing my ass off in the Arctic Circle. And I'm not sure they they understood like what I was actually doing and that it was powering everything. But and then, you know, Ethereum kind of had its first, you know, jolt of excitement with um the ICO boom. That was basically, you know, that was everyone was buying ETH to buy ICOs. And then you know um we had you know you

know then the evolution of DeFi summer right where it was basically kind of you know I was when I was mining Ethereum during DeFi summer I believe it was 2020. Um, I all of a sudden looked I woke up one one morning. I think it was like early early July and and like the Ethereum mining rewards quadrupled and kept on rising and I was like, what's going on? Right. What a moment in time cuz they just needed so many miners all of a sudden cuz the demand spiked so much as Yeah, it spiked and then and and I was elated because I was like, you know, this is this is

really the first like actual use case of blockchain like traditional finance mechanisms and hybrid models of Ethereum or or sorry of you know financial mechanisms built on Ethereum that people are using. And you saw this you know, t I remember tracking the TVL go from, you know, 150 million to I forget what it was at its peak, like what 150 billion or even over over a hundred billion. Yeah. Yes. Something like that. And it happened in the span of like six months, right?

and you know really cool projects got born out of all of that with a and a bunch of cool kind of innovations and things like that. Um and and so that was cool. And then yeah, I I'm not sure if you know like I do know a lot of the you know the the Ethereum team or original team you know I'm not sure if there was you know potential fatigue or just you know not not having the right framework or a lot of people from the early ecosystem making you know billions of dollars and you know stopping to

support the the the call like you know just hey hey I'm out you know I made my money I'm I'm done type of thing right which you know happens which which which is what you're saying is like these these are the reasons that maybe the past five years have not been so great for Ethereum in terms of price action right it has much it has not captured the attention nearly as much as Salana has, but I mean Salana also has memecoins and memecoins have been the hot thing for the past. So, so and that's that's the analogy that that I'm saying they're they're similar like what two years ago Solano was like a SPF shitcoin. Yeah.

Yeah. Yeah. Yeah. Very close. People forget that. It was very close. People forget that. I'm like still like, hey, it was a it was uh it was an SPF shitcoin, right? Um and uh people for forget that and I think the the the the you know consumption of Salana and the price action um is comparable to the ICO craze in Ethereum but instead of ICO you replace that with memes and then so so I think Salana needs to you know step up its game. I think they have a you know kind of more I would say

maybe in in institutional infrastructure around the foundation and funds and all of these people being bought in. But um but don't forget like people talk their book, right? So, of course, of course. So, you know, like this this whole meme stuff could, you know, could could blow up and then what's what's Salana's use case for, right? It's I've seen like blog posts saying like Salana is like the NASDAQ of the internet and all of these things, but where where where are those projects? There's definitely tons of tons of teams

innovating and doing cool stuff on Salana and and and when you say NASDAQ and the internet tokenized stocks are already I I don't know if I know Kraken and Salana partnered up to do tokenized stocks on chain. Uh and it's it's a I think it's a limited number like Apple and a handful of maybe a few other the mag seven. It's not like full and I think it's limited access but it is happening and once we get market structure bill in the US you can imagine that tokenized stocks on chain are really going to come and I think that's huge because when you think about just 247 global trading like that is a massive use case which we don't really talk a lot about in crypto but that'll

bring a lot of flows. Okay. So if you if you had to pick Yeah. I mean I I I regret it cuz like the traditional stock market markets are like enough for me. So I I 20 add 247 and [Laughter] I hope I hope it doesn't include weekends. Of course it will. Of course it will. I'm also gonna have to find out the engineer in charge there and blackmail him. Yeah, it yeah. No, I think I think I think that's definitely a good use case.

I think there's a lot of people pushing, but I also think there's there's um there there's competitors pushing Robin Hood and Yeah. And so so there's a lot of there's there's a lot there's e Toro, there's, you know, there's there's a lot of players in equity trading, derivatives, and and things of that nature. And um and who the winner will be is it's still too early to know but there will be I think the the thing we all know is there will be products there and there will be buyers there because there are billions of people around the world who

cannot trade NASDAQ stocks and probably want access and exposure to do so. So once they have that opportunity like why not? If you had to pick Salana, Ethereum, which one would you pick for for the rest of this cycle? Which one do you think outperforms? I mean, cycle next year. For the next year, I I I could be completely wrong. My my economical brain is telling me otherwise, but I just got to say Ethereum because I was I was there and I I hope they they have a comeback and kill Salana.

Are you talking Are you talking your own bag again now in this moment? Is that is that No, no, not not not even I'm I'm pretty blunt person. So I I just uh I I believe in the authenticity of um I believe in the authenticity of the Ethereum community more than Salana because Salana was started by a guy who's in jail with PED. Wait, who who's that? SPF didn't start Salana. He was Well, he he was early of it. Yeah. A participant. He He was in the room. Yeah. Yeah. Yeah. Yeah. Yeah.

Yeah. Well, nobody could have called SPF. I don't know if we can blame anybody for that one. That one. Yeah. I'm just I'm just saying that's that's that's my what give us that's my logic. So, give us a give us another another trade. What's a trade that you like right now? I I had um recently um we did a fairly large transa uh accumulated a a fairly large position of a token but um that I didn't know anything about the token um and I um had the pleasure of meeting the team um and um I was you know

corrected for everyone out there who thinks it's sooie, it's sway. Um, and I was I was formidably impressed by the I would say cander, authenticity technical chops, and just kind of, you know, belief and and foundational structure that they had behind them. I don't know too much about um you know all of the ins and outs or their usage metrics. I haven't gone that far yet. I might not.

I um but but one one thing you know I I me and my younger brother um have had a a quantum computing company for a number of years almost 13 now. And out of all the chains, you know, like Ethereum proposed a postquantum upgrade, um, I didn't think they I don't think they have the technical chops or the people inhouse to pull it off. The the Sway team had the most eloquent eloquent, um, I would say not roadmap, but initial, you know, initiation proposal to get things started. And I, you know, agreed with with one of the co-founders that, you know, potentially,

you know, bit Bitcoin dies in in a year or two. And he agreed with me, but but more so I, you know, wait, wait, wait, let me just back up. Do you think Bitcoin could die in a year or two because of quantum computing? Basically, like give, let me just wrap this up. I'll Yeah, I'll start I'll start off with two things. two, we're in such like a narrative bubble frenzy market that h how many things how many stocks have traded down based on rumors that are not even real and stuff like that, right?

Tons. Yeah. Yeah. Sentiment so much sentimental driven and fear is one of the biggest things. Obviously, you know, quantum physics is probably the most complex um topic subject matter in in the world, right? And regardless of you know your religious beliefs if you know you know you're Buddhist or you know what what whatever there you know there are kind of similarities to quantum physics and and particle creation and and all of these things and um I personally don't believe that

um Satoshi envisioned or built Bitcoin in for a quantum world. And I think I think I think and and I would I would make the similarity to what what what was AI? I'll tell you what AI to me four or five years ago I had a few investments in random companies and the only thing I knew about AI was IBM Watson which was some box and that I think in Japan or Korea people played go which is like check I guess checkers over there against some robot that's all I knew and then overnight every you know everybody knew about it and check every

everyone knew about that I I personally um I'm I'm having some engineers build a custom AI system for myself. Um but I don't I don't interface with AI but my every time you know my wife is talking to Chad GPT and asking them legal questions and it's it's all over the place. So, I think you're going to see that exponential leap um happen in quantum and it's going to be far more exponential than artificial intelligence because it's not just going to be someone asking you where the nearest grocery store is. It's going to be far more profound in terms of applications usability. And so I

think as as kind of closer to Q day or whatever um as we call it, there will be more fear lingering on uh Bitcoin. And because of the regulatory nature of how much Bitcoin exists in these capital constructs, there's going to be, and I've been saying this for, you know, we've been working with um NIST for the National Institute of Science and Technology on their 10-year um basically um quantum encryption um progression uh roadmap. And so the NIST NIST is mandating US government

agencies to upgrade postquantum encryption. Where does that and the and the SEC overlap and and what happens when you can't upgrade Bitcoin? Do they delist the ETFs? Uh the risks are huge. The risks are huge as as the risks are huge and and the time to change is very will take a long time, right? You you Well, I mean like I mean I I've been a part of the Bitcoin Core community for for for many years. They're not the easiest people to deal with. No, everybody they're very opinionated, you know, whether it was you know all all of these kind of and and all of the upgrades like you know

that Bitcoin core guys have been fighting about for years that's like minutia compared to like how how to agree on upgrading quantum encryption. Yeah, it's a I mean there there was you know there there's there's also you know another of attack vectors you know like China controlling the supply chain of ASIC mining ASIC miners right ch China's currency being devalued China hates capital flight how easy would it be for China to print millions of of AS6 and just do a 51% attack but let we don't Uh the I think I think

I think you know it's like uh like with anything I think there will there will be so much cool innovation that happens that I'm seeing that I'm investing in on the basis of you know quantum technologies being used um as a framework for creating things um basically quantum money and things of the future um which is going to be a whole new sector. that kind of explodes and flourishes. It's uh it's difficult to wrap your head around. Olivia, it's been great to have you join us today. Really appreciate your time. No, thanks for having me, Jake. And thanks for listening. Thanks for listening in folks. I got to remind

you all, as I always do, that none of today was investment advice. I'm not your financial adviser. Lier is not your financial adviser. If you're going to do any investing, you should only invest what you're prepared to lose. Investing is risky and you should take time to do your own research and think for yourself. Stay informed, stay safe out there, folks. And as always, please hit that like button, give us a subscribe wherever you're listening. It helps the show. Have yourselves a wicked awesome day. We'll see you back again tomorrow. As always, if you liked today's episode, please hit subscribe and make sure you follow us so you don't miss out on the next one. There's also a link in the description to our free 5-minute daily newsletter where we simplify crypto for you while making you laugh. And if

you're willing to step up your crypto investing game, we're going to also leave a link for Milk Road Pro. You get access to our portfolio where you can see exactly what we are buying. This is your number one resource to help you invest successfully in crypto. One final note, this show is for educational purposes only and nothing we say is financial advice. Investing in crypto or any asset is risky and you should never invest more than you can afford to lose. Thanks so much for listening in my friends.