On Location at the SALT Wyoming Blockchain Symposium: Special Summer Episode

Summary

Capital Decanted: On Location at the SALT Wyoming Blockchain Symposium

Host: John Bowman
Guests:

• Anthony Scaramucci, Founder & Managing Partner, Skybridge Capital; Founder & Chairman, SALT
• Jenny Johnson, CEO, Franklin Templeton
• Dan Moorhead, Founder & Managing Partner, Pantera Capital
  Date: August 26, 2025

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Episode Overview

In this special summer edition recorded on-location in Jackson Hole at the SALT Wyoming Blockchain Symposium, John Bowman hosts a roundtable discussion with three asset management heavyweights. The episode centers on the rise of blockchain and crypto within institutional investing, charting its journey from fringe curiosity to mainstream acceptance. The guests discuss regulatory shifts, technological breakthroughs, and the tensions between traditional finance (TradFi) and the decentralized ethos of digital assets. Listeners gain firsthand insights into capital allocation, tokenization, market democratization, and the future of investing.

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Key Discussion Points & Insights

1. The Origins & Evolution of the SALT Wyoming Blockchain Symposium

[02:37–04:35]

• Anthony Scaramucci: The idea sprung from a desire to create a "decentral bank conference" to rival the Fed’s central bank gathering; the first event saw rejection from major regulators but attracted politicians like Senator Lummis, which paved the way for broader regulatory engagement this year.
• Growth in both attendance and quality of attendees (from 300 C-suite participants to major figures like SEC Chair Atkins this year).
• Scenic Jackson Hole plays a not-insignificant role in attracting attendees.

Quote:
"My colleague John Dorsey...said, 'Hey, the Fed does a big meeting in Wyoming. They're a central bank conference. We should do a decentral bank conference.'" – Anthony Scaramucci [02:37]

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2. Personal Journeys into Crypto & Blockchain

[04:35–07:01]

• Dan Moorhead: Shifted from global macro trading to crypto in 2013 after recognizing its immense asymmetrical opportunity. Emphasizes early adoption and evolution of Pantera’s product suite to stay ahead of cycles.

  "I went in [to discuss Bitcoin] for a coffee that lasted like five hours...this is the biggest trade of all time. And I haven't done anything other than crypto since then." – Dan Moorhead [05:04]

• Jenny Johnson: As a technology leader at Franklin Templeton, identified blockchain as a massively efficient back-office solution—not just a speculative asset. Her push toward blockchain was driven by its potential to reduce cost and create investment opportunities, focusing on utility over hype.

  "You have to just remember blockchain is a technology...this is naturally going to be cost effective. It's going to create innovation, it's going to create investment opportunities. We better understand it." – Jenny Johnson [07:01]

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3. From Resistance to Momentum: The Changing Regulatory & Political Landscape

[09:01–14:23]

• New technologies historically face resistance before adoption (horseless carriage, aviation, Uber).

• The 2024 elections marked a turning point as anti-crypto stances contributed to major political losses, forcing greater bipartisan engagement.

• Urgent need for permanent, bipartisan regulatory structures to outlast election cycles.

  "The industry got big enough to browbeat the regulators...The people wanted Uber and so the people pushed the politicians around. That’s what happened in 2024." – Anthony Scaramucci [10:19]

• Blockchain seen as a progressive tool for financial inclusion, but ironically became a partisan issue in the U.S.

  "If you asked a progressive think tank to design a financial inclusion tool... it is Bitcoin. Bitcoin is literally the progressive’s dream and somehow it got partisan. It’s just technology." – Dan Moorhead [13:17]

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4. Blockchain & Bitcoin: Asset Class Debate and Institutional Adoption

[15:22–24:18]

• Many initial institutional objections (regulation, lack of custodians, volatility) have been diminishing; SEC is the last holdout for true U.S. clarity.
• Blockchain as a new asset class offers high uncorrelated returns compared to traditional assets, despite residual volatility concerns.
• Blockchain is argued to be more of a new infrastructure ("rails"), with new business models arising from that foundation, while assets like Bitcoin are debated both as currencies and diversifiers.

Quote:
"Blockchain is going to be an asset class... it’s just a different new thing... very low correlation with the S&P 500. The irony is you get amazing returns, very low [volatility], very low correlation." – Dan Moorhead [15:22]

• Discussion of Bitcoin as a store of value and the evolving thesis as institutional ownership grows.

  "As institutions really do...invest in it, in 20 years it will be highly correlated with the S&P and everything else. But right now...it can trade on its own. So I think it is still a very good alternative diversifying asset to have in a portfolio." – Dan Moorhead [22:11]

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5. Tokenization: Real-World Implementation & Democratization

[24:18–30:12]

• Jenny Johnson: Franklin Templeton pioneered a tokenized money market fund, achieving cost savings and investor access ($20 minimum via blockchain vs. $500 traditional minimum).
• Node validation grants unique research and transparency advantages for asset managers.
• Future vision: Most mutual funds, ETFs, and possibly public equities will be tokenized, trading 24/7.
• Market democratization: Tokenization paves the way for lower investment minimums and broader inclusion, but further needs credible market makers and prime brokers.
• Anthony’s firm tokenized a $300M fund as a strategic first step, foreseeing cost reductions and easier capital raising.

Quote:
"We actually run [our money market fund]...on the public blockchain. Others are shadowed on it. We actually run it...We couldn't believe how much less expensive." – Jenny Johnson [24:40]

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6. Rethinking Financial Infrastructure: Will Banks & Credit Cards Be Disrupted?

[30:12–34:16]

• Prospects for blockchain fundamentally changing payment rails ("We're not going to pay 300 basis points to do an electronic payment in the near future." – Dan Moorhead [30:55]).
• Stablecoins poised to replace significant bank deposits, but legacy advantages (like FDIC insurance and credit card lending/buyer protection) remain factors.
• Shift in banks’ business models anticipated—from fee collectors to new value-added services or data mining.

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7. Centralization vs. Decentralization: The Inevitable Middle Ground

[34:16–35:25]

• The "wild west" libertarian vision is fading—most value the safety of regulated platforms like Coinbase over the true decentralization (self-custody).

• The core principle remains a separation of money from state, a hedge against fiat debasement.

  "For all the libertarian ethos...Coinbase is probably not going to lose your Bitcoins. And so a lot of people value that more." – Dan Moorhead [34:24]

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8. National Competitiveness and Policy Inflection Point

[35:42–38:33]

• Renewed regulatory clarity will encourage startups and innovation to remain U.S.-based, promoting U.S. competitiveness and stablecoin usage benefiting U.S. debt.

• The meta-opportunity: blockchain could force governments toward better fiscal discipline by providing citizens alternatives to inflationary fiat.

  "If you're a political leader, you could say to yourself, I want this space to grow, mature. I want Bitcoin to become something people look to as a store of value." – Anthony Scaramucci [36:21]

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9. Investor Protection, Regulation, and the Role of Education

[38:33–41:06]

• Past regulatory avoidance left consumers vulnerable (e.g., FTX collapse, GBTC mispricing).
• Constructive regulation and mainstream participation safeguard investors; education remains crucial.
• The convergence of TradFi and digital assets should yield better long-term outcomes.

Quote:
"No different than I think any asset class. It's about education and understanding the true risks...If you bring this constructive environment...then we’ll be able to provide a certain amount of protection." – Jenny Johnson [39:16]

• Moorhead: Sensible regulation always trumps repression—otherwise, risk moves offshore to less accountable jurisdictions.

  "The previous regulatory repression...did the opposite. It forced all the trading to go to the Bahamas and Sam Bankman Fried stole money from 5 million people." – Dan Moorhead [40:31]

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10. Final Takeaways & Calls to Action

[41:06–41:22]

• Anthony Scaramucci:
  "Get off zero. If you're listening and you're on zero, get off zero and be incremental...it's still early." [41:06]
• The message: Don’t wait on the sidelines—start learning and gain exposure, but do so thoughtfully.

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Memorable Quotes

• "You really don't want to miss this. I think the message for your podcast listeners is, if you're not in the space, learn about the space, do the homework on the space." – Anthony Scaramucci [18:06]
• "Blockchain is the infrastructure...all of them are going to be expressed on chain...that is coming for sure because you can have atomic settlement." – Jenny Johnson [26:17]
• "Bitcoin is literally the progressive’s dream and somehow it got partisan. It’s just technology." – Dan Moorhead [13:17]
• "Get off zero. If you're listening and you're on zero, get off zero and be incremental...it's still early." – Anthony Scaramucci [41:06]

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Timestamps for Key Segments

• Origin of SALT Symposium: [02:37–04:35]
• Dan Moorhead's Move into Crypto: [05:04–05:51]
• Jenny Johnson on Blockchain Utility: [07:01–08:22]
• Political & Regulatory Shifts: [09:01–14:23]
• Institutional Adoption & Remaining Barriers: [15:22–19:59]
• Bitcoin – Asset Class or Rails?: [19:59–22:11]
• Franklin Tokenization Case Study: [24:40–27:53]
• Tokenization’s Future & Private Markets: [27:53–30:12]
• Disruption of Banks/Credit Cards?: [30:12–34:16]
• Centralized vs. Decentralized Future: [34:16–35:25]
• US Competitiveness & Policy: [35:42–38:33]
• Investor Protection, Education & Regulation: [38:33–41:06]
• Final Thoughts – "Get off zero": [41:06–41:22]

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Conclusion

This episode encapsulates blockchain’s tectonic shift from curiosity to core infrastructure, documents TradFi’s embrace of tokenization, and highlights the regulatory, technological, and cultural hurdles that remain. The guests argue for a measured yet urgent approach: educate, experiment, and participate—because the transformation, despite bumps and political headwinds, is only just beginning.

Transcript

[A]

Foreign.

[B]

Welcome to Capital Decanted. In this show, we say goodbye to tired market takes and superficial sound bites because here, instead of skimming the surface, we dive into the heart of capital allocation, striking the perfect balance and exposing the subtleties that reveal the topic's true essence. Prepare to have your perspectives challenged as we open up the issues that resonate with the hearts and minds of those shaping capital allocation. We've enlisted the wisdom of visionary leaders in the industry. And just like a meticulously crafted wine, we'll allow their insights to breathe, unfurling their hidden depths and transforming our understanding. Well, welcome listeners to this episode of Capital Decanted. And I am just delighted to welcome you to a special summer on location edition from Jackson Hole. First time we've ever done on location. And as I'll get to in a minute, first time we've actually had a guest back on Capital Decanted. So there are a number of firsts that we'll experience today together. But we, as I said, are at the SALT Wyoming Blockchain Symposium here in Jackson Hole. I am joined around the table by Anthony Scaramucci, founder and managing partner of Skybridge Capital, the $3.2 billion firm across hedge funds, PE, public equity and digital assets. And as well as the founder and chairman of salt, who was the host of this event, Jenny Johnson, who is our very first returning guest on Capital canted. CEO of Franklin Templeton, little over 1.6 trillion, diversified asset manager. The little known secret is almost 300 billion of that is now in alts. And Dan Moorhead, the founder and managing partner of Pantera Capital. 5 billion across venture capital and early stage private token and liquid tokens. So thank you so much, all of you for joining Capital Decanted.

[C]

Thanks for having me.

[B]

Yeah, well, I want to jump right in because today is really a live experiential episode on what we're actually witnessing in the environment both here in in Jackson Hole, but maybe more importantly in Washington and across the industry that all of us work in. And I thought maybe, Anthony, we could start with you. We're going to get to some of those specific waves that have hit a groundswell and really come together to create a tailwind of a lot of momentum that's exciting to many of us. But maybe if we could step back about the origin of this event. And I'm not even sure what that year was. So tell us how long you've been doing this. And I imagine the original intent was way different than maybe what we're experiencing this year as far as who's in the room and the dialogue around it.

[D]

My colleague John Dorsey came up with the idea. He came to me last year and said, hey, the Fed does a big meeting in Wyoming. They're a central bank conference. We should do a decentral bank conference. I said, okay, and you want to link it to them? He said, yeah, it was very audacious. I said, okay, so let's do it. And we did it. The first one was last year. Jenny was nice enough to come. We had about 300 people last year. It was a pretty good group of people, C suite people, et cetera. We invited Fed officials from the Biden administration and SEC officials. They flatly said no. And so we had our conference and things went well. However, Senator Loomis came and so did Senator Scott, and I think they really enjoyed the event. So much so that they talked to their friends in Washington is that we got a good cross section of Fed representatives, SEC Chair Atkins is here, et cetera, sort of second time doing it. And of course we're doing such a good job that Dan Moorehead showed up at the conference. So something I'm super happy about.

[B]

Well, Jerome Powell, I'll be knocking on your door next year. The momentum this event is building.

[D]

So is he still going to be the Fed Chair next year? Yeah, maybe we'll bring him.

[A]

I think he matures out in March of next year.

[B]

Likely not to be there. Nonetheless, you're becoming the go to event of the week, which rather than maybe a trolling, poking event of the week.

[A]

I just have to say that when I was here last year, I was for a first conference, incredibly impressed with the quality of the people that were here last year and it's grown on that.

[D]

We've been in the conference business 15 years, so we have a good idea of what to do and how to organize the things. But by the way, it's my second time in Jackson Hole, so I think this is a beautiful place. You live out here. And so it's not lost on me, guys, People may be coming for the conference, but they also may be coming as this Jacksonville, Wyoming, than one of the most beautiful weather patterns of the year in Jacksonville, Wyoming.

[A]

Pretty sure that was also part of the Fed's decision to do their conference.

[B]

House prices are really cheap here, Anthony.

[D]

I noticed every time I see one, it's, oh, 28 million, 17 million.

[B]

Okay, yeah, Dan, let's stay with the background and level setting. Your story's just unbelievable. We'd not met till just now, but you spent as far as I Could tell your first 15 years in global macro trading FX before starting Pantera. And if I understand it correctly, even Pantera's original identity was much more in that macro hedge fund until you converted to fully tokenization blockchain in 13. So walk us through what was going through your mind, the insights that led you to that transition.

[C]

I've been doing global macro style trades for about 40 years now and always looking for a trade that has way more upside than downside. Very asymmetric. And things come along like Russian privatization or Argentine farmland or something. And in 2011 my brother told me about bitcoin and I read a little bit, but there was almost nothing you could learn about it. And then in 2013, Pete Brigger of Fortress asked me to help him think about it. And I went in for a coffee that lasted like five hours because I was like, oh my God, this is the biggest trade of all time. And I haven't done anything other than crypto since then. It's just fully fascinated by crypto. And honestly, I think we're still at the beginning stages. The median institutional investor has 0.0 exposure to crypto. So I don't think this is even started. I think there's 20, 30 more years of incredible asymmetric returns to go.

[B]

And currently the fund offering at Pantera is what?

[C]

So we offer everything from daily liquidity funds all the way through venture and private equity style funds. Just trying to help people get exposure to the markets. When we started it was Mount Gox and there were no custodians and it was pretty edgy. And so in the early days it was literally just helping people get access to bitcoins and things like that. But we invest in private tokens companies in the space. We do interesting. Like right now, digital asset treasury companies are a really cool new thing. And so we're very involved there. So every couple years things cycle and things change. So we're just trying to evolve with the markets.

[B]

Well, you've done a tremendous job and again, early mover, I think by most people's accounts the first in the institutional space. So well done. Jenny. You come at this from a very different place, a very different perch. And I've asked you the form of this question on stage several times over the last couple of years. But you were, I would say, oddly, because it goes against, I think, typical behavior of large traditional asset managers, meaning you were oddly early and innovative and aggressive in trying to build out blockchain capabilities and now actually tokenized ETFs and money market funds Et cetera. What was the catalyst for that? Why did you have the courage to almost innovate against your existing business?

[A]

Look, I ran technology at Franklin Templeton at one point, and you have to just remember blockchain is a technology. And so if you understood enough. And I ran all the back office and everything about how financial services back office. First of all, there's a huge amount of resources that go to just reconciling data between systems. They're why does the New York Stock Exchange close at 4pm oh, by the way, because most big financial institutions are probably running a mainframe that's got batch processing on things. So there's reasons in the system that are really inefficient and costly. And so when you looked at this and remember early on, everybody said, yeah, it's interesting, but it's too slow. It's only going to do 2000 transactions a second or something, and it's not going to be fast enough, honestly, for our business, that was probably fast enough. Maybe not if you did credit cards and others. But now actually even blockchain is as fast as the fastest traditional. So I looked at it and said, well, this is naturally going to be cost effective. It's going to create innovation, it's going to create investment opportunities. We better understand it move in this space. And so I was really driven by that and understanding the upside potential. And then I'd say to people, the frustration with so many people when you talked about blockchain would get into debate on Bitcoin. And that was a bit of a distraction from this technology. Bitcoin's a different conversation about it. So that's the background.

[B]

All right, so let's move into current state and let's get into the juicy hairy stuff. The manifestation of what's going on downstairs. Anthony, we talked a little bit about just the night and day change in acceptance and who's in the room downstairs, the attendees, for that matter. In your second year of running this event, you have been in several seats and capacities over the last several years. So I think are uniquely qualified to do a retrospective of the last couple years that has brought us to this what I've called gale force intersection, collision of legislative, public sentiment, regulatory support. Now that seems to have gotten this flywheel going fast. What have been those trail markers?

[D]

I mean, step back historically. So you get a technology change and then the first thing that happens is a resistance. So if you have a horse and you have a carriage and the horseless carriage shows up, that's a fad. It's not going anywhere. Somebody takes off on a plane, there's never going to be any commercial applicability of aviation. Uber, we got this ride sharing program. There was not one governmental official in any major city that wanted Uber to exist. They did everything they could to stop it. So I applaud Jenny and Dan for getting here early. They got here earlier than me. I got here in 2020 and I just want to applaud them for the resistance that they faced, which was even worse than the resistance I faced over the last five years. So you're coming in 2013. No one even understands it, doesn't know how to custody it. And no bank will look at it and no regulator will even care for it one way or the other. And then the resistance starts. To remember the Chinese, I think it was 2020, wasn't it then, or 2021. They banned Bitcoin. Yeah, they banned bitcoin mining. They kicked the miners out of the country. Now, incidentally, 10% of the mining is still happening in China. So that's the irony there. It's a hard thing to kill, bitcoin. But I just want to start with the backdrop is new technology, better technology. It's not batch transactions anymore. It's blockchain transactions, fully secure and fully verifiable without a third party. It's coming whether people like it or not. The adoption happens because the technology is better. The horseless carriage is better than the horse and buggy. And so we're now at the stage where the industry got big enough to browbeat the regulators and to browbeat the politicians. And this happened with Uber. The people wanted Uber and so the people pushed the politicians around. That's what happened in 2024. Those elections were big time. Sherrod Brown, head of the Senate Banking Committee, blown out of his seat, three term veteran of the Senate, blown out of the seat because primarily he was anti crypto. So that's where I think we are now. And I think the politicians don't want to be in front of a freight train that's going to smash them out of a career.

[B]

But taking that a step farther, the crypto capital of the world language is more than just getting out of the way or greasing the skids and letting the market run with it. This seems to be a very explicit support from Washington and the regulators. How has that changed the environment?

[D]

I want to pass it to my colleagues here, but I'll just say this. I just asked Senator Tim Scott this question. You know, place Sherrod Brown as The chairman of the bank committee. How do we make it more bipartisan? Because what we know about presidential executive orders, they're impermanent. The new guy shows up or the new woman will show up. They can revoke them or add to them, but they're impermanent. We've got to create some permitizing, if that's even a word. I'm channeling George ov But for say that.

[B]

Strategy.

[D]

Yes, strategy. Right, if that's even a word. But we want to create permanent legal structures that are bipartisan, that transcend the industry. And I think we can get there. Finally, we're not quite there. And I'll just say this. The Republicans lose the Senate in 2026, we're going to have a reversal. Elizabeth Warren hates us. I mean let's just be flat out doesn't understand it won't do the homework on it. But she's taken a very anti crypto position and she will have power again if we lose the Senate.

[A]

And the crazy thing about that is it is a technology that actually is really good for the average consumer. So if you think about the regulators, they view their job as protecting the consumer. This is a technology that is going to reduce costs, is going to increase access to things that the average investor hasn't been able to invest in the past, only institutions have. And honestly from a transparency as a regulator you're going to have so much more information to identify patterns and risk that you don't have today.

[D]

So it's just ironic Bitcoin and these assets help those people, particularly on the side of unbanking, which she doesn't want to hear.

[A]

Last one. It is our tokenized money market fund, our traditional money market fund. We have a minimum of $500 to open an account. And the reason is because you can't have the larger assets subsidizing the smaller assets. And so the board voted on that. Our tokenized money market fund is $20 to open an account. So just think about that.

[D]

The difference in being able to zero cost associated basically.

[C]

Yeah. I think on that point if you asked a progressive think tank to design a financial inclusion tool with all these attributes, it is Bitcoin. Bitcoin is literally the progressive's dream and somehow it got partisan. It's just technology. There's no partisan view on the cell phone or whatever. And if you think about the US government, it's the polar opposite on the rest of the protocols that we call the Internet. Blockchain's just a protocol for moving financial data. They set up arpanet, they gave all these congressional safe harbors. And it's no coincidence that all of the Internet companies in the free world are in the United States. They did the exact opposite with bitcoin and blockchain. And there was a time 95% of all trading was outside the United States, in the Bahamas, in crazy places like that. So it is good that the government's coming back around to welcome. Like Anthony said, something's going to happen anyway and it's better to happen here. And the cool thing is probably half of all mining's done in the United States. We've invested in probably 50 countries, but 60% of all our investments are in the United States. And 99.6% of stablecoins are backed by US debt. It is a great thing for the United States. So I think it's great the current administration is trying to help it grow.

[D]

In the US but we're not done yet. We need to get Democrats on board and we need to create foundational principles that make bitcoin the cell phone.

[B]

Yeah. The apparatus needs to run deep or the thing will just move with who occupies certain seat. That's absolutely right. So Dan, I want to stick with you on this idea of moving from fringe to mainstream, which seems to have happened very fast from watching from even arm's length, much less a distance. And you're probably in a better position to answer this question than anybody. But when I'm on the road and talking to LPs of various flavors, they will say things like, well, the regulatory framework is not there. That gives us discomfort. Of course that's changing. As we talked about, the custody options aren't quite what I hoped they would be. It's still very volatile. I don't know what to call this. I don't know how it fits in the portfolio. And confusion around valuing it. We can't put our old DCFS on this. That we all learned. Are those still the concerns you're hearing with both current and prospective clients? And how has that changed given this gale force wind that Anthony was talking about?

[C]

I love it that you put it that way. The way I visualize it is there used to be an incredibly long list of reasons to say no. Most are crossed off. There's great firms like Franklin Templeton in the space, great custodians, and the last one really was the so called regulatory uncertainty. But if you're really frank, it's just one agency in one country. All 200 other countries are pretty neutral on blockchain. And Even in the U.S. the IRS ruled on blockchain in 2013. CFTC has been very progressive. They've had futures since 2017. So everything in the rest of the world and everything except for the securities and Exchange Commission in the United States has been pretty good. And so as long as that comes around and we get clarity on what is the security, what's not security, and how exchanges are regulated, that's the final unlock. And you can feel it happening now with the stablecoin legislation, with the market structure legislation. And that will allow institutions to invest in the space because that was their final excuse. And I really have always thought it was an excuse to not invest. It's an excuse to be flat crypto. But with that regulatory clarity in the US a lot easier for people to get invested. And I think your other question about volatility and what is it? It's a new asset class and we just have to be frank. It's just a different new thing. Blockchain is going to be an asset class and it's like private equity. It's like currency, but it is its own new thing. Something about volatility is funny. People say, oh, it's too scary. We've been investing in space for 12 years, in venture and in normal venture, 70% of things go broke. A couple do okay, and one makes your fun. We've made money on 86% of our venture investments. And part of it is we have a great team, we do really good work. But partly it's just such a rising tsunami is floating all boats. So blockchain isn't actually that risky, really. The irony is you get amazing returns, very low volume, very low correlation with the S&P 500. And actually it isn't that risky.

[D]

I was in the typewriter business. Just so everybody knows, okay, that's a fund of funds. I'm just looking at that business saying, okay, I'm going to die in this business. How do I transition? And Pete Berger is another one of the shamans that brought me along, Michael Saylor, et cetera. And I'll just tell this story quickly. When I was in the White House for my ill fated 11 days and this happened on a Wednesday. You know how I know? Because I was only there for one Wednesday. That's already enough. And two guys came in from the Fed and I was telling these guys downstairs, the two people that were here from the Fed here at Salt, and I said, they came in talking about digitizing the US dollar. And I remember thinking, okay, wow, they want to do that on the Blockchain. And I was blockchain ignorant. And I had passed on lots of meetings related to bitcoin. And I said, bitcoin's gotta be a joke. But when I saw those guys talking about the potential of digitizing the US dollar on the blockchain, and there more than one paper, frankly, that the Fed wrote about this, I went back to my firm after I got fired, of course, from the White House, told my colleagues, we've gotta get involved in this. I think we bought the URL skybridgebitcoin.com but it transformed our business. And so just think about it. From a Harvard Business School case study. I was a trade fi person in a typewriter trade fi business known as fund of funds. And we transformed the business into what it is today. And we've had more growth and more profitability. To Dan's point about the rising tsunami, you really don't want to miss this. I think the message for your podcast listeners is if you're not in the space, learn about the space, do the homework on the space. You really don't want to miss this. You don't want to be the person. Well, you know, I missed Apple. I didn't buy it after Steve Jobs came back. I missed Jeff Bezos as the IPO of Amazon or asked on it after the debacle in 2000 with the NASDAQ crisis. You don't want to do that with this. You want to participate in this.

[A]

One thing, I would say that maybe adds a little more specificity to what you guys are saying. So I think actually the blockchain technology, it doesn't become an asset class on its own. It just replaces the existing Rails that are in the system because of the tremendous inefficiencies in those. And it will be slower than it should be because there are a lot of incumbent players who will be at risk because today they take a piece of a transaction cost because they're acting in a capacity that honestly, blockchain will replace them with. So they will do a lot to slow it down. You saw it early on with the banks creating private chains. So as far as an asset class is concerned, I think blockchain, when we say that, think of that as the Rails and that the new asset class becomes the businesses and the business models that are created that are somewhat new because you have this technology that does cool things. And then I would just say you asked the question because I think we've at times gone interchanged between bitcoin and blockchain.

[D]

Here we go again.

[A]

The One thing I would say on Bitcoin, that has made it a little bit more difficult for people to think about how to put it in a portfolio. As you know, when you construct a portfolio, each asset class has risk characteristics that you try to complement in building an entire portfolio. And the challenge that people have had with Bitcoin is it has been one. It's been a little bit of a fear currency. So risk on, risk off Bitcoin tended to respond. We talked earlier about outside the US you'll talk to people. And I talked to somebody in Israel who said, my parents and grandparents had their money taken away from by the government. They always keep a percentage of their savings in Bitcoin keys, not Bitcoin ETFs, because the governments can reach into that. And so that creates a floor on that. But that investment criteria has different risk. That one specifically has certain political risks. If the US Dollar becomes threatened, the US Government goes, it's illegal to transact to Bitcoin. That's immediately what you do. Those are different risks, but they're becoming more clear and there are less of them, as you pointed out on there. And I think that's why you're starting to see it as becoming more standard. You're starting to see model portfolios come out with an allocation of Bitcoin.

[B]

Well, let's hit this, because I planned this for Dan a little bit later, but let's zoom in on this bitcoin case study and then zoom back out for a moment, because I think since Jenny was raised it, this is, I think, a sticking point. And if I may, I think sometimes the larger Bitcoin lobby does themselves a disfavor. By the way, we talk about this inconsistently. To me, on paper, the most attractive narrative around Bitcoin is the store of value. We know that it has a scarcity that's built into the code. We know that it shouldn't express characteristics on things like geopolitics and microeconomics that other risk on assets and economically correlated assets should. And yet, increasingly, ironically, Dan, as it's become more accepted, it's become a little bit more correlated. Not completely, but a little bit more correlated with the risk on assets. And so I think a lot of institutional managers, and I'm sure you have these conversations all the time, are like, I don't know what to do.

[A]

This thing.

[B]

Is it truly uncorrelated, diversified exposure, or is it just a levered risk on asset that I got to chase? How do you answer that question?

[C]

So it had a brief period of very high correlation with risk assets in 2022, 2023, when FTX was imploding and Terra Luna was imploding, all that. But over the 13 year history we've been managing money, it has a 0.17 correlation to the S&P 500. So over very long periods of time, it is actually very low correlation. It also has a 90% IRR. So capital asset pricing model theory, if you find something that almost doubles every year for 13 years long, has it very low correlates and everything else, you should probably have some in your portfolio is a way to think about it. One thought is as institutions really do address it and invest in it, in 20 years it will be highly correlated with the S and P and everything else. But right now, since not that many institutions really have a meaningful exposure, it can trade on its own. So I think it is still a very good alternative diversifying asset to have in a portfolio.

[D]

Ask Dan a quick question. So to differential dan, let's say $10 billion comes into Bitcoin. How does that affect price? Have you ever thought about the form factor related to that or 5 billion or a hundred billion?

[C]

Well, one fun part about bitcoin is the float's really small. Actually there are a lot of holders of bitcoin that literally couldn't care less about the price. Satoshi has a million bitcoins doesn't care.

[B]

We were talking about what happens if.

[C]

That hits the market and probably 20% have been lost over time. And a lot of people hold it literally for political philosoph reasons. So to Anthony's point, as money comes in, there's just not that much float. And so it does go.

[A]

Is that a risk? Then you'd look at a thinly traded stock and say, okay, this is a worry. If you just have a handful of buyers suddenly temporary demand. And normally in a case of a thinly traded stock, you understand where those pools of ownership are. In this case we don't necessarily.

[C]

Well, it's not thinly traded on it's 40 billion.

[A]

Fair enough. As far as a percentage. Yeah. So yeah, yeah.

[C]

My argument would be it's a $2 trillion asset and a small percentage trades is the float is the float. But it's 40 billion a day is so liquid because you sometimes talk to big sovereign wealth funds or something that's oh, we're so big we can't invest anything. You could put your whole thing in this in a couple of days. Bitcoin is incredibly liquid.

[B]

So was hook, line and sinker. We jumped down to bitcoin, just as you said we would. So let's zoom back out to blockchain. Jenny and I want to turn to you because we talked a little bit on stage downstairs about your pioneering at Franklin Templeton early with blockchain and with some of the operational benefits and investment strategies related to that. Can you talk the listeners through what you've done so far and what maybe that roadmap might look like going forward?

[A]

Sure. We at the SEC approved, I think it was in 2020, our tokenized money market fund. So we have a shareholder record keeping system. I think we're the only 40 act mutual fund that is actually running on the public blockchain. Others are shadowed on it. We actually run it, which by the way, is really cool. It means that your yield, we post your yield every day to your account because we're calculating it every second. You couldn't do that on a traditional system. And the SEC had us when we went through the process, they had us parallel process for six or eight months with our old transfer agency record keeping system. And we were astonished by how much cheaper it was to run it on blockchain. For all that we talked about, we couldn't believe how much less expensive. And oh, by the way, Franklin Templeton had four record keeping systems when I ran technology and it was only when we built one on blockchain that anybody cared about what the programming language was like. Nobody had ever asked on the other four. So just tells you a little bit of the political issues. Anyway, the other thing we did is we were trying for a private credit business to buy some home equity loans that were at a company that had built their system on chain that said, hey, it'd be really helpful if you guys start being a node validator for us. And so that was on figure province. And so we got a pool of hash and we became a node validator. And then we started to realize, wow, it's amazing. If you add visibility into all the transactions that go in and out of a company and you're an equity analyst, this is really powerful. We need to be a node validator. So we started we today, I think we're on eight nodes where we are acting as a validator. And then that led us into actually doing traditional research. We cover 30 of the biggest coins. If you look at our research on that, and it's a team that came out of our quant fixed income team, it would be as thorough as any research you'd find anywhere else at Franklin Templeton, maybe even more, because you have the node validation. So you see all of those transactions coming in and out. So we do that. We have a venture fund and we have 40 people dedicated to this space and the head of it reports directly to me. And we just think that it's going to essentially take over that blockchain as the infrastructure is going to take over. You're going to have mutual funds, ETFs, all of them are going to be expressed on chain. And frankly, as I've said to some of the people who run these stock exchanges, aren't you worried? Because it sounds to me like every one of the crypto exchanges intends to trade stocks and do it 24 by 7 365. And that is coming for sure because you can have atomic settlement. So that's how we got in.

[B]

I've never thought about node validation that way. I started my career forever ago as an equity analyst at State Street. And the beauty was, even as a 22 year old scrub that had no clue what he was doing, we were inevitably the largest shareholder of almost every company we held because of our custody business and the passive business. So I was in this little fundamental basically boutique buried within State street, but I could get to the CEO of anybody. And we got these reports from the custody side of flows. So I had this insight. Now we couldn't legally trade on it, but the research intelligence that we had access to just because we ran basically the global, the traditional financial systems flows, was outstanding. That's a really interesting insight. What about tokenization? Just to press on you a little bit more, what about traditional public equities, public fixed income? Are we going to see all of this shift to 7 365? Why wouldn't we? Is maybe another way to question.

[A]

I mean you're already at the SALT conference here, you're already hearing people talk about that and they're intense, their plans to move that way. A big trend in asset management is this privatization. The alternatives, markets, private markets, and democratizing those. And a lot of people will talk about, well, tokenization is going to be a great way to do that. Well, the reality is the technology exists to do it. What is missing and is starting to happen is you need market makers, you need people who create prime brokers, who create liquidity. And so as traditional prime brokers, they're starting to look at this and say, actually this is probably a space we want to be in. As that happens, I think you're going to see an acceleration of the asset assets that we're going to see that.

[B]

Are tokenized Anthony, you had a big announcement. I think it was today. So this tokenization technology helps private, too.

[D]

We took one of our funds, a 300 million fund, and we tokenized it. We chose Avalanche. I think our CTO wanted a little bit of the Swiss army knife flexibility of Avalanche, but that doesn't mean it will prohibit us from using other layer ones. We're open to tokenizing everything eventually. I think our larger funds, where we have independent board members, are going to be a little bit more reluctant, at least for now. But this one that we internally control, we tokenize, and I think it'll help us raise capital. And to Jenny's point, about having a $20 minimum on a money market fund, in a tokenized fund, you really knock the cost down substantially. So I guess the big question for the raises, access. Raises access and all, you can lower the minimums. As long as they can meet the accredited investor standards, you're totally fine. You could theoretically have a $5 fund if you wanted to on the blockchain because of the lack of incremental costs. But I guess what I want to ask my two colleagues here is how do you see this transition? And sometimes I think about where we were as kids. When I was traveling in Europe, if I wanted to call my parents, I had to get a $5 per minute card from the post office, and they hooked me into an AT&T operator, and for $15, I could talk to them for a few minutes and the phone line would cut off. Today, that call's costless. This call is costless. And we can even George Jets a TV on a Zoom if we want, but the phone company's still here. And so as we move into this world of transaction verification over the blockchain, is it going to completely wipe out the credit card companies? Is it going to wipe out the money center banks, or are they just going to morph the way the phone companies morphed?

[A]

So interesting. I was asking this question of somebody today. A lot of people for a while were talking about stablecoins and saying, is this going to be a problem for US Treasuries? No, it's a great boom for US Treasuries because that's what's backing all these stable coins. The question there is, does it impact the bank's deposits? Because if I am parking my account at a bank, I'm doing it because I'm getting these additional services. And it'll be interesting to see how some of these stable coins, do they replace it or really, does it just become how the bank handles their transactions. I don't know that I know the answer. I have a lot of faith in these banks to evolve, morph this rate. Yeah. And so I think that that's going to be interesting, but there'll be a lot more services at lower costs that I think people will get.

[D]

What do you think, Dan?

[C]

Yeah, I would say on the credit card thing, it's pretty obvious we're not going to pay 300 basis points to do an electronic payment in the near future. And when I was a kid, Visa was called Bank Americard because it was for bank of America to make money for itself. And Visa itself only gets about 15% of the cost of the swipe. It's the banks, the issuing bank and the processing bank that get all that. So I think in the long run you're going to see credit cards on the blockchain. It's all going to look the same, except it just won't say JP Morgan on the front or whatever bank used to be issuing it. So I think that is coming. And then I totally agree with continues to comment on bank deposits. We were sitting there the weekend Silicon Valley bank went under, talking to all our portfolio companies and a few of them had a lot of money in Silicon Valley Bank. And at the time circle and Coinbase's stablecoin USDC was trading at $0.87 on the dollar.

[B]

Like this is so backward.

[C]

I would so much rather have my money in USDC because it's fully backed, no leveraged, totally audited, and on a Sunday you could trade it and get your money out. You're waiting for Janet Yellen to release your funds when Silicon Valley bank goes under. So it's going to take 20 years. But I think a large fraction of bank deposits are going to be held in stable coins in the future because you're going to have a whole generation of people that grow up thinking, yeah, I do all my saving in stable coins.

[A]

And I would just say two things. One thing you do get with the bank, which I used to run a bank and I ran actually a credit card department, believe it or not, way back in my early days in the bank side, you still have the FDIC insurance for $250,000 of deposit. And the government views that as a privilege given to you and give to a bank. And so it'll be interesting to see how people weigh that as value.

[D]

I'll talk about the credit card where let's say I go to purchase something, they send me something defective. If I called you, you'll get the charge reverse. And I can now challenge it. What happens if you send them the money by stablecoin? I can't get it back.

[A]

And remember, a lot of people with a credit card carry balance. It's a lending mechanism work. The interchange portion of it is important. That'll continue to drive down. I agree. And actually, so three parties get paid. The issuing bank, the person gives you your cred credit card, the acquiring bank, the bank that signed up the merchant, and then Visa or MasterCard. But what happened with the acquiring banks when data became really valuable is that you had these firms that went in and said, you know what, I won't charge you your interchange. Just give me all that data and I'll go sell your data. And so that already drove the interchange down. And so I think you're right. That model of the interchange will change. Data will still be valuable because people like to see how payment stuff process. But that part of it, the model will change. But the borrowing port, you still need somebody to lend you the money if you're going to carry balance on it.

[B]

I want to press on this a little bit more. Maybe a variation of what Anthony just asked, which is a great question. You talked about the single tracks. We're replacing the business models on new tracks. Some of the original intent and language and posture was very maverick, liberation, decentralization. It was anti government in many ways. Ironically, not so much the white paper originally, but a lot of the early movers had a lot of that language in there. Things like Coinbase have pulled it back a little bit. So it's got elements and apparatus of centralized capability. And then again, I keep pressing on this downstairs. What Anthony's put together is this strange collision of pretty traditional asset management, banking, finance, and the maverick, the original mavericks. And you can even tell by their outfits which side they came to. Are we moving to the middle? Is this one track that eventually will merge or will this be two parallel worlds that will exist?

[D]

For those of you listening, I'm wearing a James Bond tuxedo.

[B]

So I was talking to Brad Kings.

[D]

That pink tux, but go ahead, keep going.

[C]

Well, I think it will be fairly centralized because the early libertarian ethos, a lot of those people lost their bitcoins and hard drives. It's just not that easy. There's a famous case of a CTO of a big crypto company has half a billion dollars on a hard drive one guest left on his password, he's got to go pet's name or wife's birthday. For all the libertarian ethos in the beginning Coinbase is probably not going to lose your Bitcoins. And so a lot of people value that more.

[A]

It doesn't protect it.

[C]

But the important thing is not the storage of your crypto. It's the separation of money and state money used to be separate from the state, gold or other things like that. Then princes and kings and presidents now started printing paper money backed by those things. And then they stopped having it be backed by those things. And they're printing 2 trillion extra pieces of paper every year now in the United States and probably forever. It seems permanent. So being able to save in something that isn't being debased is hugely important. So I think that is the libertarian ethos that we started with is separating money and stake. But using Coinbase or something like that to store your crypto is probably okay.

[D]

Just think about the magnitude of what Dan just said. We're going to print $2 trillion every year. If you go to truflation.com, the US dollar has lost 28% of its value in five years. Just think about that. When you think about the dollar as a store of value.

[B]

Economics 101. Yeah. You know which way that's going to blow? Anthony, I want to go back to the political element here. Somebody joked on stage earlier, maybe it was Atkins himself, that they just dropped this White House crypto working group paper. It's a short piece, 150 pages. I'm sure you've read it a few times already, but I'm curious. We already mentioned crypto capital, the world. We already mentioned that this is more than just getting out of the way. This is about blessing, competitiveness and incentives. And we want to return this innovative spirit that America's been known for in this particular space. What do you think this does to us? Competitiveness? Is this an important inflection point for crypto and blockchain innovators to return?

[D]

Well, I mean, this may not be the answer you want, but I want to think about it like a political leader for a second. Given what Dan just said, and given this train is not stoppable, nothing's going to stop the train. If you're a political leader, you could say to yourself, I want this space to grow, mature. I want Bitcoin to become something that people look to as a store of value, asset. And at some point, as a political leader, in order to get good corporate like governance of my government, I need to transition to this, to provide discipline to. Everybody's in the mix, because what we know about our political leaders is they're going to over promise, they're going to overspend and they're going to under tax. But guess what happens? Milton Friedman said it better than me, so I'll quote him the deficit spending is unfunded tax liability and so you're going to pay the piper one way or the other. And what we do in our society is we pay it with the most regressive form of taxation, which is inflation and we kill the middle and kill the lower middle class, which is why we have this systemic rise of populism. But if you were really thinking about this long term, say you're Paul Atkins, SEC Chair. I want this to proliferate, I want this to become competitive, I want my citizens to adopt it and ultimately it could push the politicians into a long term course correction. So it's a big meta thing to say. But that's what I think some of these leaders are quietly saying to themselves.

[B]

How about on the VC space? Dan, as you're hunting and gathering and fishing, I'm mixing metaphors but I imagine that this is very good news for someone that's looking for early stage founders who suddenly feel much more confident and protected going forward here.

[C]

I think you're right. It's allowing people to want to create companies in the United States because for several years a lot of founders would select Switzerland or Singapore or someplace. Frankly that's dangerous. The SEC was very scary. The SEC was suing the best companies in the space, Coinbase, Ripple Labs. They're great American companies. If they're getting sued, what could a little founder do? That's very scary. So I think that will bring companies back to the US again. It's great for US debt because almost every stablecoin earn is backed by US debt. So it is very good for the US.

[B]

I want to close with just a question that obviously is near and dear to Kaya's heart. Jenny, you've been like minded with me on this for over a decade that we've known each other. Anthony, you've been a big supporter of Kaya for a long time too. Obviously we exist because we believe that this new spirit of innovation and momentum is a good thing and we want to see that in all forms. But we also want to make sure the investors protect it along the way. Anthony, you talked about a couple previous bubbles and that's a great, I think illustration to think through. Anytime you've got a bubble and new innovation, a new platform that's replacing an old platform, you have both wealth creation and wealth destruction. It's just, that's what happens. And so how do we ensure that the little guy, if you will, is protected along the way in this very new frontier of opportunities?

[A]

No different than I think any asset class. It's about education and understanding the true risks. I think the unfortunate thing about what happened in the prior regulatory environment is because the regulators were so afraid of making a mistake that they chose not to regulate it. And if anything they took the best companies and went after them and beat them up. And what did that mean? That meant that the consumer had no protection whatsoever. There was nobody looking at it and you didn't have comfort that the education was actually accurate. Now you bring in both, I think constructive regulation and honestly people who are genuinely looking to sustain over long term. Franklin templet is around 78 years. My dad said the one thing you never get back is your reputation. So always think about the client first. I think if you bring this constructive environment, that's why I think trad fi and digital assets start to converge to some extent then we'll be able to provide a certain amount of protection. However, there will be companies in the digital asset space that will completely blow up that probably nobody should be invested in. You probably know Dan, you're probably close enough that you'd look at some of you like, oh boy, that's going to happen. True. I personally believe in always having good financial advice from a good financial advisor and be educated around it. And Kaya does a great job on that. As far as education, yeah, I think.

[C]

Jenny's spot on that. The previous regulatory repression of our industry didn't protect the consumer. It did the opposite. It forced all the trading to go to the Bahamas and Sam Bankman Fried stole money from 5 million people. If that was happening in the United States by Coinbase or Kraken Bitstamp or well run regulated honest exchange, those people wouldn't have lost their money. And the same thing, prohibiting the ETF for 10 years. They're buying GBTC at double the price of a bitcoin and then it went to 50 cents on the dollar. How is that helping the consumer? So sensible regulation is way better than repression.

[B]

Anything to close us with happening.

[D]

I would just say get off zero. If you're listening and you're on zero, get off zero and be incremental. You don't have to go crazy because I think the three of us do agree, despite the growth and what we've seen over the last 15 years, it's still early. So just get off zero and be incremental.

[B]

Fantastic. Well, to the three of you, thanks so much for joining us here in Jackson Hole. It's been a great event. It's been an awesome conversation, listeners. I hope you enjoyed that as much as we did. And we will see you next time on Capital Decanted.