From NYSE to Crypto: The Next Financial Revolution | Raoul Pal The Journey Man with Tom Farley

What the hell's blockchain? And he came and sat on my porch and he told me all about it. It'll disintermediate entities like the New York Stock Exchange. And I was like, I don't know what the hell he's talking about.

Fast forward, CZ's in jail. Sam's going to jail. Do Quan's going to jail. You couldn't say crypto in public. I remember my father at one point was like, "Hey, what are you doing?" I'm like, "I'm talking to these bullish guys." He's like, "Wait, you were the president CEO of the New York Stock Exchange and now you're going to double down in crypto at this moment?"

What fires me up is exactly the stuff we're talking about. Can we create a new model for global financial markets, US equities, global equities, global fixed income, mortgages, run it on the blockchain, and reduce the cost, increase the access, bring more liquidity and capital formation into business building. Yeah, it's going to disintermediate finance as we know it. And it feels like we're on the cusp.

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Hi, I'm Raoul Pal and welcome to my show, The Journeyman. The Journeyman's where we travel to that nexus of understanding between macro, crypto, and the exponential age of technology. I like to move all these themes along as we get new information from participants and experts in the market and it gives us this whole understanding of where things are going and that's the important thing here and how to navigate them. So, today we're going to focus on crypto again. Um, and today we're going to speaking to uh Tom Farley from Bullish. So, Bullish is the new exchange that was launched um well, IPOed this year or last year. Um and a lot of people don't really know much about Bullish. So, I want to sort of dig in and find out what they're up to, where they see the opportunities in the marketplace and particularly on the institutional side because I think that's the big story of the moment is the institutional side of crypto and where the adoption is and who are the players and where it's all going. Anyway, let's sit down and talk to Tom.

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Join me, Raoul Pal, as I go on a journey of discovery through the macro, crypto, and exponential age landscapes. In The Journeyman, I talk to the smartest people in the world so we can all become smarter together.

Tom, good to see you on Real Vision.

>> Good to see you. Thanks for having me.

>> Yeah, we were just talking off camera that we both well I live in the Cayman Islands. You you guys are based there and we don't get to see each other, which is crazy. So, we have to rectify that somehow.

>> I may even be coming more because I I go for business three or four times a year, but I brought my wife and one of my daughters last year and they loved it. So, we may have to spend more time down there.

>> Yeah, exactly. Particularly this time of year. It's kind of that November to March in New York is just not the place.

>> Yeah. Yeah. Exactly.

>> So Tom, as ever, I'd love to get your story beforehand because you got a very interesting story and how the hell you ended up in crypto doing what you're doing now. So take us back to the beginning. What was your career?

>> Yeah, sure. I I'll do it. Warp Speed. Um I I I was born in Bowie, Maryland, just outside of Washington DC. went to uh grade school and and and high school and uh college in that area in DC in particular for high school and college and then moved out to San Francisco and did a few things. Um really loved everything I did. I I love business. I'm a business junkie. I did investment banking for two years and I was the, you know, finance nerdler staying up till 2 in the morning making pitch books. Um, I even love that. uh I didn't like the lack of sleep but just the learning and you know the getting the the finance underpinning did two years of private equity and then I I shifted to a far more engaging part of my career which was being an entrepreneur uh started a risk management software company it was cloud-based before that was a thing and that was really fun and um through that process met a guy named Jeffrey Sprecher who was starting exchanges and that's a name that I suspect you'll hear more and more regularly now in crypto. So he he recently put two billion into PolyMarket and and and did an equity investment into OKX. Um, but I was just a young man when I met Jeff and he's a bit of a swashbuckler and and allowed me to take a lot of risk. Threw me in as the the president and and chief executive of the New York Board of Trade, uh, the World's Futures Exchange Exchange for Sugar C sugar, coffee, cocoa, cotton, orange juice, bunch of other products when I was in my 20s and then threw me in to run the New York Stock Exchange when I was in my 30s.

>> Wow.

>> Um, it was all kind of bananas and and fun. Uh, but I I, you know, I tried to stay sane and

>> You had to go through massive transformations at that point as everything was becoming more electronic and different user base, you know, high frequency traders become a much larger part of the exchanges, all of this stuff.

>> Well, yes, I mean, it was even it was it was even more dramatic. Um, and and and I'll come back to this because I see some corollaries now perhaps uh with this coming tokenization wave in digital assets. But when I got to the New York Board of Trade, Raul, like there was no electronic trading. I'm outing myself as granddad here. So when I when I showed up, it was, you know, McGillicuddy and Veto were down on the floor and they were they were trading with hand signs and gang signs and uh I walked out I walked down onto the floor. By the way, I love these guys. Um, the feeling was not always mutual because, you know, imagine me, I'm 20. I'm 29 and this business is 140 years old. There's 500 employees, 400 employees, something like that. There's a thousand floor traders and I come up. I come show up and they say, "Who are you?" I said, "I'm the boss." And they were like, "Wait, what? What's your job?" And I'm like, "Oh, I'm going to introduce this thing. It's awesome. It's called electronic trading." And Cliff, your customer can now trade directly with your customer, Johnny. and and and you won't even realize it and they were like, ah.

>> Yeah, I like that.

>> So that was that was so yes, absolutely um, it was cool and it was scary at times um and it was sad at times because I'll tell you what like there's a lot of people that came out of those floors. Paul Tudor Jones was a cotton trader. Vinnie Viola who who uh owns the Florida Panthers and Veru, he was an oil trader and so these are super smart. All of them are very high IQ. They didn't necessarily graduate college, some cases high school. Um, but they were smart as [ __ ] And it was a little sad because I'd say 70, 80% of that community really got eviscerated. Um, there there wasn't a there wasn't kind of a next step for them. Now, a handful of them went on to be wildly successful. Uh, but a lot of them, you know, ended up in the trades.

>> Yeah.

>> Construction or plumbing or or what have you. Um, so that so there were times where it was tough just just seeing how people adjusted. So yeah, NYOT, that was my job. Introduced electronic trading at the New York Stock Exchange, that was a different thing. Old Labyrinthian systems like mainframes, stock IBM mainframes and the job was go in and just make this thing look like an actual, you know, modern exchange. Um, which was a privilege every single day. Loved working there. And to stay sane, I would go up to Cape Cod where my wife is from. Uh, my wife's parents live year-round in a little town called Falmouth. Great town. One of the first towns when you go across Cape Cod. And I grew up there across the street from these four boys that are always roughhousing and fighting and this kind of thing. But one of them was always carrying like Java coding for dummies. And so I said to him, "Hey Danny, where are you going back to Duke?" And he said, "No, no, I graduated. I'm moving out to California. I'm I'm going to help start a blockchain company." And I was like, "That's amazing. What what the hell's blockchain?" And he came and sat on my porch and he told me all about it. And he was like, "Yeah, it's going to disintermediate like finance as we know it." And and it'll disintermediate entities like the New York Stock Exchange. It's going to create this layer of programmable finance, this immutable ledger. It'll just make everything more efficient. And I was like, I don't know what the hell he's talking about, but I know he's a lot smarter than I am. And I want in. And so we ended up, I don't know, a week or two later, agreeing to put maybe $10 million bucks, uh, it was either $10 or $11 million bucks into what was pre-revenue or early revenue, Coinbase. And

>> And that's what really got me into digital assets, you know, negotiated board information, right? So we could kind of watch this sucker grow and see how Brian and Fred operated. U, my neighbor Danny Romero was there for a long time. He's done a lot of cool stuff. um he he subsequently built Farcaster. He's now at Tempo. He's the one who introduced me to to blockchain and always wanted to get back into it. I I suppose I was 12 years too early on the investment because the thesis was institutions are going to come. There's going to be disintermediation at DTC or Broadridge or transfer agents or exchanges, whatever. It didn't happen. Obviously, it was a good investment. Some of that was just dumb luck. Um, but it does feel like it's coming back around and um I don't know that was like a 10-minute filibuster. Sorry about that, Raoul. I'll be I'll be more concise. Go.

>> It was perfect.

>> So, talk to me about joining Bullish because I remember you joined and there was the opportunity to go public and then it wasn't and then eventually you got it across the line.

>> So, Oh, it was a nightmare.

>> Talk about the Bullish journey.

>> Yeah, that whole thing was a nightmare. So, I left the New York Stock Exchange after five or six years. Um, had a blast every single day. Loved working with my colleagues there. Loved working with my ICE colleagues, Jeffrey Sprecher, Ben Jackson, many others. Um, I just needed a change. I have three daughters. I had basically forgotten their names and it it was it was time to be a dad. Uh, so I I kind of stepped back a little bit and then started doing these SPACs and this before they were a thing. um and acquired a company called Global Blue VAT tax refund in the airports. You've probably seen it with all the travel you do. re uh so I was a chairman of that business for for six years but then did another SPAC wanted to do crypto with that first SPAC but it was just too early.

>> Did another SPAC really wanted to do crypto. In fact, I called Brian uh and and and and pitched the idea which he rejected out of hand. Um, this is well well before Coinbase being public but then met the Bullish guys and the Bullish guys had this idea which was really all it was it was an idea of hey let's use automated market maker technology and embed it in a central limit order book. traditional exchange like a New York Stock Exchange but with automated market maker technology so customers can rock up and they can have the market making technology that here to four was just the, you know, sophisticated sort of province of the citadels or Virtu's of the world and the second concept was and let's do it in a really adult compliant way uh perhaps ala Coinbase but do it globally outside the United States so have a you have funny things like an audit which even today many of the biggest name exchanges don't have uh most I would say uh have a headquarters for example um and actually seek out regulatory approvals so that when this wave of institutional adoption comes you'll be there kind of with a catcher's mitt for that for that type of business. Well, that reverberated with me uh because uh or landed well with me because it was the exact same reason I had invested in Coinbase in the first place was, "Oh, this wave is coming." Yet again, I was a little early. That's fine. But agreed to merge my SPAC with Bullish, go to this guy Gary Gensler, who had been my regulator in futures when he was at the CFTC and equities at the SEC. And we we just got smoked. You know that the the we got a lot of um obfuscation. We got outright uh extra-jurisdictional behavior, illegal behavior, I would argue. And um it was a tough time because, you know, my father's a federal servant. He worked for the federal government his whole career. In fact, still does. Um, I admire the the hell out of people who devote their careers and and and and go every day to to work as part of the federal government. Um, and many many of them have options to go make millions elsewhere. And to see upfront the shambolic way that that SEC was run was was was painful. So anyway, that deal never happened. And what happened Raoul? So you can imagine I'm running this back. These Bullish guys are stitching together business, but they had never built an exchange. Um and and and so the deal falls apart and they go, "Wait a minute. Not only did we want to do a deal with this SPAC, but we were actually looking for you, Tom, who spent your whole career in exchanges to come in and run the thing. Would you mind joining?" And so f like fast forward to that moment. CZ's in jail. Uh Sam's going to jail. Do Kwon's like going to jail. The the three Three Arrows guys are literally on the run. uh crypto. You couldn't say crypto in public company, right? It's like I remember my father at one point was like, "Hey, what are you doing?" I'm like, "I'm talking to these Bullish guys. Maybe I'll go work there." And he's like, "Wait, so >> you were you were running the you were the president CEO of the New York Stock Exchange and now you're going to double down in crypto at this moment?" And I'm like, you know what? If ever you're going to double down, now's the moment. That that's what doubling down's all about. And I still believed in this institutional layer in this financial this programmable finance layer for institutions. And so my colleague Dave and I who's been my partner since 2018, we doubled down. We joined Bullish. We said to the Bullish board, we don't need a huge balance sheet. We would like a billion dollars so that we're credible when we rock up to, you know, Societe Generale and we say we want to be your institutional home. And so we started with a billion dollars mostly in Bitcoin May 1st, 2023. And it's gone great. We now run a global exchange for spot futures, uh, per options. Uh, we run a a news business, CoinDesk. If you've read an article about crypto today, we probably wrote it. And and we run a conference business, Consensus. Um, which we kind of have two temple events, a Hong Kong event and then a Miami event, which is coming up. And I think the timing of it is absolutely perfect, but we can get into that.

>> I think I'm speaking at it as well.

>> Yeah. Thank God. Appreciate.

>> I'm there as well. So, so a lot of people don't see Bullish because it's institutionally based. So, talk talk us through, you know, who it serves and in what way currently.

>> Yeah. Yeah. It's interesting. We um we do like name brand recognition kind of kind of deals and people really know CoinDesk.

>> Oh, yeah.

>> Uh it punches above its weight and and and I think that part of that is it's been around over a decade. I think part of it is Lobe Award, Poke Award, broke the FTX story. Candidly, I think part of it may be Coinbase, CoinDesk, very similar names. Um, but that business is is super recognizable to the point where people will ask me, "Oh, what do you do? What's Bullish?" And I often will say, "Oh, Bullish. It's crypto exchange. We own CoinDesk." Um, you know, it reminds me of Jeffrey Sprecher at at ICE. You he would always say, people say, "What do you do?" He said, "I run ICE." Nobody's ever heard of ICE, the largest exchange group in the world. and then he would say I'm the chairman of the New York Stock Exchange. Similar here. Um similarly, a lot of people in the industry know Consensus. And then I would say third in terms of brand recognition is Bullish. And that's for two reasons. One, we to my knowledge have never spent any consequential money ever on marketing the Bullish name. Um and that's something that's just part of my DNA, having been in institutional exchanges my whole career. The the New York Stock Exchange has exactly zero retail customers. um Intercontinental Exchange has very, very few and when you're dealing with institutions you know who they are, you don't necessarily spend a lot of your money on marketing, you spend it on direct sales and on the Bullish side we have a handful of retail customers like literally a handful, I'd be shocked if it's more than 200 um because we just don't cater to them. Our customers are by and large connecting to it via APIs. Our customers are doing a lot of uh volume, they care about things like determinism of the system, low latency, that kind of thing. I I kind of think of them in three chunks. One, and by the way, the numbers of customers of institutional customers in crypto are still quite small. There's there's a hundred or fewer that account for 95% of institutional volume on any given day would be my guess. Just, you know, finger in the air. Um, but I think of our customer sets in three different ways. One is the market makers. you know, those are the names you you would you would know. I'm not saying they're necessarily a customer, but like think of like a Wintermute or a Virtu, you know, Wintermute on the crypto-native, Virtu on the on the Tribey side. And then there's there's the um there's the kind of retail customers. In other words, the people servicing retail. So, whatever. Again, I'm not saying that they're they're customers, um because I don't want to get into that, but uh, you know, internationally it would be like uh Bitpanda, eToro, you know, kind of kind of firms. Domestically, you know, recently uh there's been a lot of new announcements of electronic brokers getting in, but um, you know, I'm trying to think who who a good example like E*TRADE has said they're going to get in or Mumu is growing quickly in the US or Webull or people competing with Coinbase, let's say, in many cases. And then in the middle, the tweeners between the kind of pure market maker types and the pure retail serving types are the um I'll call it OTC desks. So that's the, you know, again, I'm not saying any of these are customers um because I don't want to get into that, but you know, that's the Galaxies and FalconX's and and those those sorts of those sorts of firms. And our whole thing is really great liquidity at a low cost, compliant, regulated, predictable. And how do you how do you create the liquidity? Because as you said, you've got your own sort of AMM within it.

>> The beg, borrow, and steal to get going. Um,

>> so for for example, we've we've uh we have a perpet we have perpetual futures and it's been frustrating to me because our liquidity is good, not great. And so we turn to the market makers and say, "Hey, we got to sit down with you and we got to figure out a deal to get really good liquidity here to get this thing going so it's trusted and reliable." So in our perpetual futures markets, it's either organic or almost exclusively either organic or there's market makers, traditional market makers who are coming and we will at times have incentive programs running in order to get them to make really good prices. Uh in in options, it's exclusively market makers. Our options business has taken off. We've only been live for 5 months. I think we're now 12% of open interest. Don't hold me to that. uh volume is now approaching double digits and um

>> it's good because it was too dominated by Deribit that whole business was too dominated.

>> so yeah, it's good that you're getting traction then.

>> yeah, the the market definitely wanted competition and that's a credit to our benefit, you know, Deribit's not going away um and a lot of credit to them and what they built and I think they've done a lot of things right but the market wants a Pepsi to the Coke, it does and and I saw that, I ran the New York Stock Exchange, the market wanted a Nasdaq back to the NYSE um and and and and energy wants an ICE to a CME. These aren't this this isn't coincidental that these markets uh have popped up this way these ways because order books tend towards monopoly unless acted upon, but over and over they get acted upon uh by the market kind of acting and saying hm probably want some competition here. Um, which is which which is kind of the the best the best possible outcome. So uh spot is going great on spot um similar where we'll have the market makers and then we will enter ourselves automated market making instructions in especially crypto's biggest assets like Bitcoin and ETH at the top of the book. We will actually contribute to the market making which has been really helpful to us um and then this leads to and then a lot of the tail uh assets will have market makers that are make that are making prices there by tail I mean you get outside of right you get outside of Bitcoin, Solana, ETH and you get down to the 30th token. We don't really have any edge or desire to deploy capital but this gets to um sorry again it's another long-winded answer but one of the one of the things that we've done Raoul which has been a really great aspect of our business is in Q4 2023 PayPal came in and said hey we've got this stablecoin, we're not having much luck getting it listed uh on all the right exchanges. You could imagine, right? Coinbase has a majority economic owner ownership interest in USDC. U you guys list this thing and and oh by the way, by the way, I'm kind of amalgamating PayPal and Ripple had a stablecoin in those early days. So these aren't word for word. Um, but can you also help us with some marketing? And we have the CoinDesk properties, we have Consensus, we have all the sorts of things we can do there. and can you help us with liquidity? And we said, "Wow, we have this automated market-making technology. Why don't we just wrap all that together and put in place a multi-year subscription deal? We'll call it liquidity as a service." That business uh has been excellent and and and uh we now most of the stablecoins that you've heard of uh we're working with. So, Agoracoin, which is Van and Societe Generale's Forge, USD1, uh, WLFI, uh, uh, many. So, if I'm forgetting, I'm not forgetting it, but if I'm leaving them out, doesn't mean that we don't love them just as much. We do. Fidelity, actually, Fidelity's new stablecoin. So, the other thing we will do uh, in in many of these uh, partner, we call them partner listings. um we have a subscription service and we will be providing liquidity uh for those coins which is really cool because basically what happens imagine Raoul you decide to start, you know, Cayman Coin tomorrow. How do you get that initial liquidity?

>> You need the initial liquidity. You have to be able to buy and sell the Cayman Coin over and above minting and redeeming and you have to be able to buy and sell it against let's say Tether or USDC or even Bitcoin or ETH and and you just need that initial kernel and then the market makers themselves will export that all around cryptoland. So, so what we do at Bullish is we say we'll light that initial spark and now what you'll see all of a sudden boom, a there's a lend redeem market or Morpho or Uniswap, you'll see it get listed because people are leaning on the liquidity that we have and so the value that we're providing is actually over and above the value we would otherwise receive at Bullish if if that makes sense because the fees may be on other platforms and that's why we've subscriptionized that uh and makes for a more predictable revenue stream.

>> Yeah. Feels that, you know, you've come at this with a very different angle because of where you came from. So if you think of most the existing exchanges, it's all retail-based first, then they built an institutional business. You've gone the opposite way round, which is we'll build an institutional business and think of it as a services business as well, which I think is a whole different model and is interesting and it's it makes it a lot easier for people who are coming into the business to then go somewhere where they can get kind of help getting set up in whatever it is they need to do. I guess the next extension of that is going to be listing other types of assets on-chain now because we we're going to see all the asset management firms because even in your list you didn't have asset managers because they're not huge players outside of the ETFs yet.

>> Right?

>> I mean, they're not really there. Yeah, the hedge funds are there but, you know, they're being serviced by Galaxy and others. Okay, great.

>> But the whole institutional business, they're going to come on-chain and they're going to look for the same liquidity as a service idea from real-world assets. the and and two two things on that before we get to the meat of it. The most interesting part, yeah, that the asset managers also are a little bit present with ETFs. So and and as ETFs move into in-kind where you just you take the Bitcoin and you hand that in for a share, the asset managers are getting more involved but I totally agree with you.

>> They they don't really exist in a meaningful way. The the other thing I will say is you're absolutely right um about how it came to be and it wasn't always comfortable because first of all the the original crypto you know libertarian ethos of crypto looks at someone like me who's been in regulated land my whole career talking about running a compliant exchange and they're like GTFO like do we really do we really need this guy? I get it, you know, I get it. Um, number one. Number two, the retail exchanges were the ones going to the moon, right? 2020, 2021, 2022. So, it was painful and there were some tough conversations at the board like have have we just planted the flag wrong? It does feel like it's swung back in the in the sense that first of all, the re retail competition in crypto is crazy. Like

>> As if it wasn't enough, now it's, you know, Schwab is coming in and E*TRADE is coming and Revolut is really good at at competing and even this Futu company. This company has a freaking $20 billion market cap, I think, and nobody, you know, nobody's heard of them yet. They've run Mumu here in the US. We so on and so forth.

>> So, I do think retail is going to be a tough spot. And I do think institutions are going to continue to come in in big ways, especially if and now we get to the point of your question, especially if we see more and more asset classes move move online. Um, and so let's let's talk about this tokenization thing. Is the blockch the blockchain is blockchain technology um going to be helpful and additive for the market writ large for some of these asset classes? I'm pretty sure the answer is yes. Um, and it certainly is yes in specific cases, but I think the ability to have 24/7 trading. I think the ability to more easily lend borrow these assets. I think the ability to give issuers more transparency about their holders and the patterns of buying and selling of their holders. And I think the ability to rewrite certain corners of market infrastructure to cut costs. When you package all those together, I think they're worthwhile. And so I tend not to think this is a hype cycle, but um but um but I'm also monitoring it closely because there have been some hype cycles. Like let's let's let's be clear. I mean, it was it was way back in the year 2025 when people were hyping up creator coins. So, um, so I I, you know, we're circumspect about it, but my sense is it's a big deal. And in that world, you have a perfectly established financial infrastructure for trading equities or bonds or mortgages or whatever with liquidity. And now you move that [ __ ] onto blockchain technology. Whatever blockchain wins. Uh, we work a lot with Solana, but clearly Ethereum, Cardano, uh, Ripple. I I don't know. I really I think I think there's room for several winners. Um and uh permission chains, Midnight, so on and so forth. So now this stuff moves there, you're going to have a gap in liquidity because the

>> Yeah. It's just not going to move right away. I've seen this before. I've seen it a million times. And nobody likes to trade on illiquid platforms. And so we believe there's a role for us to play. Much like today, we're providing liquidity between Fidelity stablecoin and USDC. Tomorrow we can provide liquidity between Nvidia's certificated share and their tokenized share and and a million other examples. So yeah, that that's definitely something we're keeping an eye on.

>> And do you not find that you're sort of a technology plus balance sheet business in the end? Because if you're providing liquidity, you're more of a balance sheet business than let's say Coinbase would be. So this is again a different model.

>> Yes. Um yes. However, uh we've got several billion of of net cash and all all in in terms of liquidity deployment. Don't hold me to this number. May maybe we're deploying $150 million, $200 million, something. We we disclose it. We disclose it in our financials. It's really again, Raoul, we're not trying to be the market. We're just, hey, when the markets get crazy and market makers pull out, hey, we're there with small, you know, small order size to to maintain a reasonable price. And we don't do any of the liquidity provision in options. We don't do any of it. Uh, well, don't hold me to it. We may do a little bit in perpetual futures, but I don't think so. We don't do any in dated futures. Um, and and um, so it's it's not a huge part of what we do, and I think investors kind of like it that way. Hey, if we were punting around big big values,

>> uh they wouldn't they, you know, they wouldn't love that.

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And you know when I look at the kind of institutional landscape, it's still very nascent because there's one dominant player, Coinbase, who built a great institutional business uh under Brett. Then we've got Kraken who are trying to build stuff and there's you guys. I mean, that's it. I mean, Robinhood are making some uh headway into this as well, but it's it's still very early stage considering if we look at the asset pool that is off-chain that's likely to come on-chain just because it's more efficient, it's faster, it's a better way of doing it. Well, we have to move that on-chain and we really only have three service providers to do that. Now, yes, there'll be new entrants and other people try and build consortia and all of that stuff that we've seen in the past, but it feels like the opportunity set is still very big.

>> Yeah. Yeah. I agree with that. I agree with all of it, including that there will be more competition and I never shy away from that from investors because I've just been in markets long enough and I know how big this opportunity is and when there's a big opportunity, others will come in. Now I I think in point of fact if you look at the largest exchanges of the world in the world, Hong Kong Exchange, LSE, CBOE, Nasdaq, NYSE, ICE, Deutsche Börse, by and large that group, I don't know how many I rattled off, seven, did very, very little in crypto. Very little. Um, Deutsche Börse has done a few acquisitions. CME launched the the Bitcoin futures. Intercontinental Exchange uh built back. But if you if you go back for you 10 years uh after our original Coinbase investment, that those firms didn't do anything and they're not dumb. And you know, there was just a lot of fear like you didn't want to catch a lawsuit from Gary Gensler, you didn't want to get on the wrong side of Elizabeth Warren. And so those of us who were going after institutions got a little more of a head start than we might have otherwise but I have no doubt those firms are going to look to continue to build out businesses in in that regard um and perhaps a couple others of these other exchanges out there that aren't quite legitimate or legitimized will figure out how to tread a path there. So, the competition will increase because I I I think this has a potential of being a 25, 30-year trend here uh to reshape all financial markets. So, we're definitely not betting on being the only ones.

>> Because you know I was around when Goldman when I was still working at Goldman when Goldman bought Hull Trading, everybody started buying.

>> Yes.

>> Um, electronic market making firms, electronic option and everything changed and you your career's seen that entire thing and this is just an extension of that. You know, technology is always the path and there may be some reticence but in the end because it's faster, cheaper, more effective, shareholders at the end push it as well. So it always goes this way.

>> And and also the technology by and large is fixed cost by and large in in other words, you put two of these, you know, fixed cost of $100 million here and fixed cost of $100 million here and you put it together and maybe the fixed cost of the combined business is $120. So the the industrial logic I think will be strong just like it was when Goldman bought Hull and then, you know, the New York Stock Exchange bought Arca and ICE bought IP and CME bought NAX and I think you're going to see some consolidation. We want to be a consolidator. Um, but I I do I do think that day is coming.

>> So what gets you excited? But what what part of the business are you focused on apart from just building the business as you know, getting more customers, getting more thing, but where's your real focus here?

>> So thank you for asking that. I I didn't do you know between the between the time I spoke to you Raoul on a on a podcast years ago and now I I've honestly done maybe three. Um, and this is after living in somewhat of a spotlight with that New York Stock Exchange role and doing a lot of, you know, kind of out there talks or or what have you because there was there were things going on I just wasn't excited about in in crypto. Um, and I I don't want to be specific because I I don't I don't want to be a jerk and I'm not even against it. I I tend I tend towards libertarian ideas and if people want to do certain things and trade certain things, have at it. It just doesn't get me fired up to get out of bed. What does get me fired up because I'm a I'm a friggin nerd and maybe because I've spent my whole career in it is this whole free enterprise system. Can we do it more efficiently? Because a rising tide lifts all boats. Like there is no more powerful force in the history of the world than free enterprise. And it's lifted in in our lifetimes. And we're both super young guys.

>> In our lifetime.

>> Extremely young and good-looking. We'll give ourselves that as well.

>> Yeah. The whole deal. Uh global poverty has declined something like 70, 70%. It's all part of free enterprise. And to me, you're not going to get that by some of the practices that were in crypto. You're you're not going to get that by um charging just massive fees for trading uh, you know, puppy coins. Um, you're not going to get that by offering uh 100x margin and ADL again. And I'm not I'm not against it. I'm not against it. It's just not what gets me excited. Never has been. And so I didn't want to go out publicly because everything would come off negative. What does fire me up is exactly the stuff we're talking about. Can we create the can we improve? Can we create a new model for global financial markets, US equities, global equities, global fixed income, mortgages, run it on the blockchain and reduce the cost, increase the access, bring more liquidity and capital formation into business building, which will only be a great thing in the in the free enterprise system. And it feels like we're on the cusp. And I think we had to go through this period. And by the way, I don't think frog coins were a bad thing. I think they brought people to the to the yard. I think they brought attention. They brought investment dollars. And they they allowed blockchains to break. They allowed uh uh uh uh the world to find their vulnerabilities.

>> I think memecoins are really important because A, we hyper-test everything at speed.

>> and break everything and understand what business models work. We're really good at that because we have the speculation layer that actually allows us to do this really fast. I think what we got out of it most importantly was instant capital formation.

>> Yes.

>> That's the future of VC. That's the future of how agents will raise capital.

>> In a decentralized world. That's what memecoins were. So yeah, it might not matter now.

>> But there's signal in the noise. I think.

>> I I agree. I didn't always love it in the middle of it. Um and and and and I agree with you, but like my colleagues have said >> over the last year like, "Hey, Tom, you you seem more fired up than ever." And it was so true. I remember one signal moment. Uh we have a we have a Wednesday morning management call. It's how we manage a company. And we have a crew of us. We get on and we talk about the good, the bad, and the ugly. Mostly the bad and the ugly. And we don't take a lot of time to celebrate. Maybe we should do more. But somebody after the call called me and said, "Hey, you seem really fired up. Like, are are you really excited about things?" And I was like, "Oh my god, he's right. I am really fired up." And I do think that this is to me the most interesting time in digital assets. When I I mean, I I was like first going to Bitcoin in 2013. And I think I wrote a paper back in 2015 before I even knew about smart contracts and I said the obvious thing is the entire financial industry is going to go onto blockchain rails because of a number of things. Obviously it's cheaper, everything else. The other is the trust layer of when somebody goes bust on blockchain, it's immutable. You kind of know who owns what asset. And we have so much issue with collateral where the collateral is this big and the amount of rehypothecation and lending is that big that when somebody goes bust like Lehman Brothers, you suddenly realize that nobody's got any of the collateral that they thought they had right. And so I looked at this for a long period. I thought well, blockchain sells 90% of this and the big one for me that it's still surprising nobody's gone after fully is when you think of a smart contract, where is the greatest example of smart contract use? It's OTC derivatives. It's a multi-quadrillion dollar marketplace of which when I was at Goldman and other firms, there would be boxes of ISDA docs of which nobody knew the [ __ ] what was in them because the industry was growing too fast.

>> Everyone had different conditions and you know an amendment A and yeah.

>> And then nobody knows what happens if something goes wrong.

>> They literally can't because nobody knows what's in what is the docs and that came out of Lehman too. And yes, some of that's gone on exchange now, but it's so obviously a smart contract where it just instantly settles. I just don't know why that hasn't happened yet.

>> Yeah, I bet it will. The logic's too persuasive.

>> Yeah. I mean, options are so obvious for this.

>> I mean, the the big, you know, the big players here are the big banks and they're just scared to death. I mean, Raoul, it was ugly. Like they what when if they had a meeting with a crypto company, they had to provide it to the reg. They had to do a write-up, provide it to the regulator, they had to go in front of the PCAOB to justify why they were doing business. Oh, no. This the audit firms, if the audit firms took on a crypto company, but the but the banks would have to go in front of their regulator with every with everything crypto-related, they would get threats and calls and I I think that's your answer. But they're coming in and though you know that that example you gave is a perfect one.

>> And how do you

>> But you can just enshrine all that logic in the smart contract, which is your point.

>> That's right. Um, so how do you focus your time then because you can see the opportunity set but it's a slow laborious process to get financial institutions to move. Um, how how do you do that? Do you think

About build it, they will come, or do you spend more time with them?

Well, the relationship.

Yeah. I mean, just to lay in the the inside a bullish. So, we we have a handful of priorities. And so, when I roll in in the morning, I'm just kind of looking at we have a we have a list of one, two, three, four, five, six, seven, eight goals um for for the business for for this year. Um really building out our options platform. As I said, that's going well. The the the decision we've made is to put all of our uh trading uh globally. So, so if you're anywhere in the world, even if we have a reg even if you're trading under a Hong Kong regulatory license or or maybe it could be a German regulatory license, you're interacting in the same central limit order book and you can trade any product that we offer, spot, per options, and we can provide portfolio margining. So, making sure we we continue the momentum in in options, a big one. M make sure we continue the the momentum in this liquidity services. Make sure we're ready for this tokenization wave. Um on the Coindesk side, uh it's making sure this consensus Miami conference is a home run. And I it is it is going to be a home run. The timing is perfect. um because everybody's kind of woken up to the institutional opportunity and that's that's a really strong um pillar of what what of what consensus does. So there's going to be tons of great conversation about stable coins, this Clarity Act bill and tokenization in Miami May May 7th and 8th I think or maybe fifth, 6th, 7th. Um uh the news business, we're on a roll. So we now uh have 55% market share uh as of last month of of all the what we track as kind of crypto news sites. That's up dramatically I want to say from like 30% a year ago. Um so that that's going well. We have a data business. We've just licensed uh our indices to Morgan Stanley. You may have seen Morgan Stanley is doing a suite of ETFs. They're all going to be based on the Coindesk data indices. Um, and then the the other goals are kind of internal goals I'd rather not share too much about. Um, but obviously making sure that we're husbanding our cash wisely and our balance sheet wisely. And then any anything else? Oh, and last the I I missed the eighth one which is just expanding our regulatory access all around the world. That is a forever game. a forever game truly because new >> juris you know the UK is gonna come out with regulatory approval and you know we need the mythid uplift in Europe if we want to have options in Europe and hey do we want to operate a clearing house for options in which case you have to be so that um that that's another kind of just dayto-day grinding initiative.

And how about bringing the traditional market makers into this new world because they come with a lot of capital and huge amounts of experience and risk management agement skills just you know that getting people of the scale of Virtue and Citadel and all of those guys to be more active participants in this overall new market it'll make a massive difference I mean they're there but not in the same size the capital conra constraints and the margining issues and stuff like that.

Yeah, it's it's happening, you know, Citadel for example, Veru has been a customer of ours for many years. Um, but the they were similar to the banks like if you're Ken Griff and you're running Citadel and you're and you're killing it. I mean, Citadel is terrific on both sides of their business. The Citadel Securities, um, which is kind of the I'll call it the broker, but they're a lot more than that. And then and then the hedge fund. If you're Ken Griffin and the regulators are telling you, hey, don't get involved in crypto, why are you going to fight town hall when you have a business making all this money over? You're just not. You're just not. It's not It's not like he's going to take on some religious cause when when they have that business over there. Or if you're virtue, hey, you're only going to do it out of your Singapore entity, let's say, just to have this thing outside the United States. The first thing we needed was a new regime in Washington. We got that. The second thing we need is a market structure bill. I don't know if we're going to get that, candidly.

What Yeah. What is your What are your odds?

Everyone's odds are shifting around all the time.

It's so hard because it's so close.

Yeah. It's so binary. It It doesn't feel close to me, but I'm paranoid. Only the paranoid survive. Like I think the stable coin issue is a real issue and I'm empathetic um to this view of like wait why are we the stable coins are fully reserved and they're federally regulated. Why why can't why can't I pay yield? It's fully they're fully reserved. So we'll see. um feels like a fairly important issue and I'm I'm not sure it just goes away, but it may um there may be a reasonable compromise. We we can live in either world, but just on behalf of our stablecoin customers, I'm I'm kind of empathetic with with that view. Number one, number two, honestly, Raul, maybe you're maybe you're a better place than I am on this. I'm not sure how the DeFi conversation ends up that that has yet to be resolved. So, in other words, we're going to put in place this whole rubric about regulating exchanges and brokers and in crypto and what's a what's a comm crypto commodity and what's a cryptoc. We're going to have this whole law and we're going to say you can do this and you need a paper blessing for that and you need a a different type of blessing for this other thing. Unless you call yourself DeFi.

Yeah. And then you can do what you want. In which case, you don't have any. Obviously, that's not sustainable. So, then you have to get into well, okay, what is DeFi? Maybe we can all agree that Uniswap's main protocol is indeed decentralized. What about all the other applications? What about the ones where the guy who wrote it just can publish new code? What about the one where the guy who wrote it owns 80%? What about the one where uh the guy who wrote it is the biggest trader on it and has access to the code? What are those DeFi? What is DeFi? And I'm not I don't yet know what the zone of agreement uh is on that or if the answer will be let's just punt it and let's punt it to the regulators and they can figure it out for a year and a year and a half.

And the issue is is there's too many smart people moving too fast for the regulators to actually deal with anyway.

It's like trying to regulate AI. It's literally impossible.

Because it's moving too fast. However, if you think of the density of intellectual capital because this is around capital markets, it attracts a lot of people. The moment you regulate this way, somebody finds a new answer that way.

I mean, you know, it's almost impossible to deal with.

Well, that was the point, I guess, of crypto in the first place.

Well, yeah, and with DeFi, you could you you can simply say, hey, look, you can do whatever you want outside the US, but you can't have access to the US, right? That that's one answer. But if so then that raises the question but we know people just easily download a VPN and they evade it going on a VPN but maybe we're okay with that and in fact I think we probably are. So it's not incumbent upon the DeFi protocol to make sure that people aren't lying and using a VPN login. I think that's I think that's all fine. But if you say, hey, you can do whatever you want outside the US. Um, but if you want to come in the US, then you have to do full KYC AML. Then it begs the question, okay, cool. But the person who I've KYC to AML in the US, can they interact with the nonKYC AML exus person? I think if the answer to that is cool, um I still am not 100% sure what the path is for DeFi in the future because I think the way DeFi gets super duper exciting to me is institutions feel comfortable using DeFi and I'm not sure it gets there with that pattern. So I'm hoping that there is a definition that comes out, hey, this counts as DeFi. It's perfectly okay to use that within the United States and then over time I think innovation could could go up like that. I don't know. Is that is that a bit of gobbledegook to you or did you follow what I was saying?

No, your answer is right. We don't know. My general view is if there's money and it's can be solved by technology, people will find a solution and whether that's using some sort of passport yeah ID that allows you to operate within spaces stuff like that. I think we have to go towards that anyway. We need some sort of ID system anyway because of AI and we're going to need it for some of these kind of things because you know some countries want to regulate more than others and you know capital is freer in other countries than others and it's just the way of the world and like you know you don't want to go and fight every single nation state for their regulatory terms. So you know I think it's like all of the above. I think that's the the sort of lazy answer but usually works is like.

It's no I'm at my wits and I I actually put a tweet out I've I've done two tweets just looking for answers out there in the sort of exosphere um I don't know where defi that's where I started I just don't in terms of the bill the two big issues I think the conflicts issues around Trump and the Trump family those are those are solvable th those will be solved the Dems want a bill Raul the Dems want a bill they don't want to run against crypto in the midterms. So, they're looking for a bill. So, if the industry can come to an agreement on stable coins, the two industries, and if there's a reasonable solution on DeFi, then we have a bill.

So, what else are you most excited about next 18 months? What thing now is like, okay, I can feel this. I can taste it. I'm getting excited.

You know, I think we've I think we've hit on it. Um I I just be repeating myself. I I.

Let me give you another one then. I think the the TAM of crypto has just gone to infinity because before there's like X billion people, there's X amount of capital. I just think this Agentic thing is bigger than people understand. I think it's the destruction and rebuilding of the entire asset management industry from scratch.

Well, I so I Yes, I would add to that. I agree. I would add to that. and it's happening at the same time as tokenization of major global asset classes. So, you put those two together and I I've I've said this publicly and privately that up to now crypto's really been a hobby. It's it's small. It's tiny. What What's the aggregate market cap of crypto right now? I haven't looked at.

7 billion or something. A trillion.

Yeah. So, it's it's smaller than a couple listed companies. Um.

It's it's a hobby and you're absolutely right. I think those two trends potentially uh equal in sizing could take this little teeny box of crypto and say no the TAM is all of financial markets globally. We we do have a debate though I'm I'm curious to see what your reaction is to this R. We have a debate internally. There's a there's a reasonable view by smart people that stable coins actually will not be the primary uh way of paying and receiving in Agentic Finance and that Agentic Finance will actually rely on the existing fiat rails or new fiat rails as opposed to you know whipping around stable coins. Do you have a view on that?

Yeah, I do actually. Generally speaking, you can't reduce the denominator of a dollar down to less than a cent. Right. A lot of these payments are micro payments.

Right. So, that's one.

Yeah. The other one is the speed required for some of these things is it rules out some of the ecosystems and not others. I think an agent is wildly indifferent whether it's an underlying protocol token or a dollar token as long as it's faster, efficient, cheaper. But I do get to the stage where like if somebody needs to do something in Solana world, SU world, Ethereum world, an agent is going to end up managing its own treasury.

That's an interesting world that nobody's thinking about. But they will rebalance and optimize based on profit maximalization if that's what they're there to do. Okay, that becomes really interesting. I also get to, you know, I'm a very visual person. I think about like a firm like Millennium, right? Gigantic hedge fund firm. What does Millennium actually do? Well, it has a bunch of traders in house, pods, that in the old world would have been separate hedge funds, but it's not so easy to raise capital now. So, they become pods within Millennium. So, that's a group of managers who allocate capital. All of that can basically be done on chain by agents. You've got your your relative value bond agent. you've your your you know equity arbitrage agent, your longshore agent, all of that that's all coming. So that gets rid of 90% of the costs of Millennium allocating capital. But then you look at the Millennium Mothership, what does it do? Well, it does asset allocation, risk management, regulatory compliance, and and capital raising. All of that can also disappear via AI. And then you're like, okay, then you can apply it to every asset management business and you realize, okay, the entire industry is about to go through massive change. Not today, not this week. You know, DeFi, where does it fit in? Obviously, that's how it'll work. And so, you get to a world seven, eight years where we're going to be building aic gigantic finance operations of which we, you won't even see. Well, you'll see them because it will be running through the liquidity layer and other stuff, but nobody's even going to see this. It's like an invisible economy because you've the front page of the Financial Times is not some hedge fund guy got paid, you know, $500 million this year because it's an agent. Not surprisingly, you're way ahead of me in seeing this vision. Uh, I'm looking at it. Well, I'm wondering as you're saying that, will the winners be the millenniums of the world who can disrupt themselves or will the winner be some new millennium, you know, some some new millennium competitor that a current, you know, 16-year-old is going to start when they.

It's I think it's both. Again, same answer. It's both, but you know, I I was just before you I was chatting to Yoni Asos who's a friend you from Toro.

Yeah, Yoni's basically on the side has rebuilt all of it Toro himself with agents.

Oh my god.

Separate from the rest of his you 400 person tech team. And you're like, okay, wow. You know, he's doing this. He hasn't kind, you know, he hasn't yet got the balls to kind of launch it and kind of nuke himself, but he can. So, I think it's going to come from every angle because there's a lot of smart kids with AI and agents who can build businesses really fast that can get traction and there's a bunch of businesses who see it and will will replace themselves and there's a bunch that won't there that it's much easier. So, having gone into the New York Board of Trade, or having gone into the New York Stock Exchange, or having acquired the IDC, the the bond data company, it it's hard to take businesses with old technology and migrate them to new technology. What's far easier is doing it from scratch. Um, I actually think the skills to build from scratch are going to be plentiful. And the more difficult skill will be, hey, I have millennium. I need the right team because I don't think you're going to be able to do this without with AI to say, what are all these processes and procedures and decisions and functions that we're making? How do we build them in AI? And then how do we make the leap? Because humans are involved. Feelings, emotions. This person is an employee and and they're not going to be interested in helping you do that. Why? Because they have health issues at home and their and their health care is paying for you know uh a surgery or I mean real world issues get get in the way like how do you how do you take these businesses and make the leap and that skill is not that is not so common not when we are seeing the you know crypto was the fastest rate of adoption of a new technology ever and it's dwarfed by AI now.

Um, it's dwarfed it's met's law squared it's Reed's law it's the fastest thing we've ever seen and now agents are building agents and you know it just keeps going. So I don't know how easy it is to disrupt yourself unless you're really brave.

But I just think, you know, I just go back to our conversation. I just feel like all of that is such a gigantic opportunity because it all has to run on crypto rails. There's no way around it. And whether it's stable coins or underlying tokens, nobody cares as long as you build the infrastructure for this.

Yeah. and plan for the future and not the past. I think too many people are focused on building out the past and replicating what you already built New York Stock Exchange or what ICE have built 10 years ago.

Yes, but that is not the answer. The answer is where do they need to be in 10 years time? You need to plant that flag. It's not easy, but it has to be done because if not, we're going to end up bringing the financial system into new rails which have been already superseded by technology.

Yeah. And it's not it's not easy. You know, we that you're we're all reading about all these examples of companies doing it well. What what you're not reading about is, you know, the 10% of the developers who still are saying, "Oh, I you know, I'm using it, but I'm using it in a token way." In other words, they don't really get it. And you have to you have to find who those people are and you need to say this isn't the place for you or you know uh every single function in our company you have some lites that just I don't believe it you really need the the human aspect let alone we need a whole new freaking mindset and we need to be building for 10 years from now. So that that's the that's the challenge.

Yeah. Well it it's the fun part of it. The fun part is building the future. Tom, fantastic to see you and uh hopefully I'll see you somewhere in the Cayman Islands at some point soon as well.

Good, good to see you again. I really appreciate you having me on. I appreciate everything you do for the industry and uh it's an honor to have you on and I'll buy you I don't know some sort of tropical rum drink or something when I see you in Cayman.

Perfect. And I'll see you at Consensus as well.

Excellent. Good to see you.

Good to see you. So great conversation with Tom and you can see where this is all going. We can see that the institutions are coming and people like Bullish and many others in the market are putting together the foundations for them to be able to be active within the markets in the same kind of way that they were on the NASDAQ or the New York Stock Exchange or some of these mega exchanges. I've always talked about this this convergence of traditional finance and crypto. It's all coming together in one place and everything is being rebuilt. Anyway, I hope you enjoyed it. See you next time. Today's episode is brought to you by Abra. Abra aims to provide individuals and institutions with a secure way to control, manage, and grow digital asset wealth from a separately managed account. If you're looking to gain access to additional liquidity, AB has one of the most competitive loan products on the market. You can borrow against Bitcoin, ETH, and Solana at up to 50% loan to value. Rates are in the 4 to 6% APY range and are open term. You can continuously draw down against your collateral as the price appreciates. ABRA's hosting a webinar on April 9th. Whether you're a professional crypto investor or just learning the basics, ABRA CEO Bill Barhigh and managing director Marissa Kim will provide insights on digital asset portfolio positioning, custody, and management. The session will bring valuable considerations for those managing substantial portfolio allocations. Learn the fundamental benefits of holding assets in a separately managed account and close out with a live Q&A. Sign up at realvision.com/abra webinar. So, you obviously like this video enough that you've got to the end. That's quite a big task. But listen, do me a favor, hit the like and subscribe button and also check out what videos next cuz I think you'll love it. But if you want even more, and when I'm talking more, I'm talking about memberergenerated ideas, incredible alpha research, everything there to help you in your journey, just head to realton.com/join for the best financial intelligence out there and the pure alpha that's within the platform.