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- [00:00]
Bobby Zagata
Foreign.
- [00:10]
Brendan
Everybody. Welcome back to another episode of the Crypto 101 podcast. We got a high caliber action packed episode planned for you today. I'm super pumped about this. I love whenever we get to kind of peek behind the curtain behind exchanges because there's always so many, you know, questions about, you know, what really goes on in exchanges, how do they operate, what are they beyond just, you know, the things that we, you know, as a retail trader can see. So we're, we're really excited to dive into the mechanics. We've got a great guest. I'm going to introduce him in just a moment. But, but Brendan, how are you doing? Things are good in your corner of the world?
- [00:48]
Bryce
Things are good. You know, I'm happy as a clam with all this volatility. You know me, I like my trading. The volatility always adds a bit more. Just chaos, but also a little bit more fun to the market. So I'm hanging in there, having a lot of fun. And you know, man, we brought in a global presence for today's podcast and I'm excited for it.
- [01:08]
Brendan
I, yeah, I'm pumped up, especially during all this market volatility. Who better to discuss it with and break it all down than Bobby Zagata, who is the CEO of bitstamp USA and the global Chief Commercial officer. Bobby, thank you so much for joining us here at the Crypto 101 podcast. How are you doing?
- [01:27]
Bobby Zagata
I'm great, I'm great. Thank you guys for having me.
- [01:29]
Brendan
You bet. Oh, it's our pleasure. Thank you for joining us. Like I said, I'm really excited to talk all about exchanges, how they work, the mechanics there. But let's actually peel back the curtain just a bit on who you are and how you kind of came into the role of, you know, global Chief Commercial Officer for bitstamp and really, you know, the chief executive at bitstamp usa.
- [01:50]
Bobby Zagata
Yeah, great. I have kind of a twisted career path, but just to take the last couple of things, I've been with bitstamp for almost three and a half years and we're really, really excited about our future, which I'm sure we'll talk about. Prior to this, I was at Kraken. I was Chief Commercial Officer there for three years. Also had a great experience there, learned a ton. And prior to that I was at CME Group, which is on the traditional financial services side, as you may know. So it's a Fortun 500 public company and one of the largest global derivatives marketplaces in the world. I was a member of the leadership team there. And I ran a couple of different divisions. One of my responsibilities there was also for our venture capital arm, CME Ventures, which reported into me. And it was those guys who set me on a crypto path really. They started pitching me on, on blockchain and crypto investments back in late 2013, and we started investing in 2014. I was fortunate enough to be a board observer on some of our portfolio company investments, including Ripple back in the day. And that experience, among others, really opened my mind to the possibilities of this technology and the implications not just for companies like CME Group, but for citizens and companies all around the globe. So I was fortunate enough to join the industry full time back in 2018 and it's been no looking back ever since.
- [03:37]
Brendan
That's awesome. And yeah, the CME futures I remember, I think it was December 2017, if my memory serves me correctly. I remember this was like the big thing, you know, Bitcoins finally traded on the Chicago Mercantile Exchange. Did you play any hand in that or were you in kind of like right after that?
- [03:55]
Bobby Zagata
No, I was there then and, and you know, myself and a few counterparts who were, were going deep on the crypto front, you know, made that proposal, if you will, for bitcoin futures. And I won't say we were laughed out of the room initially, but let's just say it was not, you know, it wasn't a concept that, you know, got immed immediate traction, as you can imagine. Think about the world back then and you know, the CME Group, which is a, you know, a great company, but it's a 160 year old institution and its reputation is, is stellar. So their first thought was like, why would I, you know, put our name on a product that, you know, is, is associated, rightly or wrongly, with all this illicit stuff going on around the world. And so it was a, you know, it was a whole series of conversations. But you know, ultimately and, and I would say this is my, my own personal opinion and having been in those conversations, I don't think I was able to convince them that bitcoin was going to be important in the future, which was my point of view. But I was able to convince them that it might be. And if it might be, you know, for a, for a business such as an exchange which has a, a kind of a fixed cost infrastructure, the incremental cost of putting, you know, putting a, another contract on into the marketplace is small. So they made the right choice to accept the potential risk given the uncertainty at that time. And that's been a super successful product for cme, which is, which is great and as a result it's been great for the whole ecosystem.
- [05:35]
Tebow
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- [08:32]
Bryce
What made them eventually come around? Because like you said, he kind of presented this idea to them. Maybe they laughed at it at first, but surely enough they came around and they opened up to the idea. And even more so than just bitcoin, we now see that CME has looked into all sorts of other crypto products as well. So, like, what was that turning point, not only for bitcoin, but what made them go a step further down the road and say, hey, let's actually look at like altcoins and different crypto products beyond that?
- [09:01]
Bobby Zagata
Well, at the time, you know, again, my perception was that firstly, the, the CME does have a real live reputation for innovation, right? So, so this is, again, going back 100 years plus, CME has fairly consistently, you know, opened up new asset classes and new avenues for, for, you know, hedgers and for traders in the, in the space, which is really, really a vital, vital role, as you guys know. So I think that was part of, you know, what ultimately, you know, got them to invest. And then the other is what I alluded to, which is the relative cost of incrementally adding a contract to the platform was small enough versus the potential upside, which, if myself and my colleagues who were working on this were correct, was potentially massive. Now, since then, to your point, they've added a lot of really great variations in terms of both tokens and, and like tenors and sizes for those contracts, which, which is great. That, that's after I was long gone. But they're doing a really good job of growing that family of products.
- [10:21]
Brendan
Wow. I love it. It's. It's so interesting to see the cme, you know, get deeper and deeper into crypto. I think eventually one day, you know, maybe they'll even be running their own CME blockchain or settling trades on Ethereum or Bitcoin or something. I mean, that would be kind of the, the end game. I'm curious if, if. What is it? Terry Duffy is the, is that the gentleman who still runs it? Wonder if he.
- [10:45]
Bobby Zagata
Yeah, Terry's the chairman and CEO today. Yeah. And I, I know that again, at the time when, when I was really becoming deep in terms of my own understanding of blockchain technology. So back in the 2015, 2016 time frame, you know, one of my thoughts was like, wow, the, the whole clearing, the whole concept of clearing, clearing of trades and clearing houses could actually change pretty dramatically based on this technology and what you can do with it. And, you know, as an executive and a member of the leadership team at cme, I took note of that. Wow. We really need to get involved in this now so we can anticipate how this could affect our business model going forward. Now, again, I'm quite confident Terry and the team are think about these things as well. Although I'm not. I'm not connected to it.
- [11:38]
Brendan
Awesome. Well, I want to make sure we spend plenty of time talking about the most important name in the room right now, which is bitstamp. And I see your, your bitstamp hat. That's an awesome one.
- [11:51]
Bobby Zagata
Yeah. Never leave home without it.
- [11:53]
Brendan
Yeah, that's. That's exactly right. I do want to know kind of, you know, what is it that you're working on right now that is, you know, kind of getting you really excited that you guys are building there at bitstamp usa?
- [12:08]
Bobby Zagata
Yeah. Well, let me first, if it's okay, let me just give you my 60 seconds on Bitstamp. Because Bitstamp is one of those brands everybody knows, or at least everybody in this space knows, but might not know exactly how we got to where we are. Right. And it's an awesome story. It's the longest running exchange. It was founded in 2011 in Europe. And you know, that kind of track record obviously is meaningful in this space.
- [12:37]
Brendan
I always use bitstamp to do my long term charting because it's the only one that has Bitcoin's price history going back to 2011. So I have, you know, it's the best chart.
- [12:46]
Bobby Zagata
Yeah, exactly. I'm thrilled to hear that. And that's absolutely true. Now what, what I love about bitstamp is way before my time at the company going back to the founders, you know, they made some, you know, very prescient choices early on that set us on a path that is really, you know, great for us and great for our customers today. Specifically what I'm talking about is I think they in kind of the 2015, 2016 timeframe. So that is, you know, the wild west when it comes to the crypto space. You know, they anticipated this moment, I think, I think they anticipated the time when mainstream adoption would happen for institutions in particular, but also other others, individuals and retail investors. And so why do I say that? Because they made some decisions back then. So in 2016, first of all, they made a decision to get a license. So they were the first ever bitstamp was the first to get a license. It was in Luxembourg. And you know, at the time, the ethos in the crypto space was not let's go get regulated, it was quite the opposite. Right. So that again is a level of forethought that I really admire. The second thing, thing they did was they made the decision to separate custody from the exchange. So you know, we had good technology for, for custody, but they anticipated that institutions are not going to like it. They're not going to like the counterparty risk associated with custody and trading and execution all on, all on one platform as one, one single point of failure, if you want to think of it that way. And then the third thing that they did in this, in this vein was they also outsourced our matching engine to nasdaq. And we had good matching technology as good as anybody in crypto at the time. But they foresaw that, you know, eventually institutions are going to want low latency and high uptime. And that exists already. And so, you know, so we were able to, and we still benefit from industrial strength matching technology. And then there's one other piece I'd like to share, which is it just blows my mind, right? So in 2016, our founders made the decision to start getting global financial audits, not only global financial audits, but from a big four accounting firm. So again, at the time, nobody in crypto was thinking about this and how important that would be, that trust factor and that proof point, particularly for institutions that want to participate. So today we're the only crypto company on the planet that can say we have eight years of clean audit opinions from a big four accounting firm. And that to some degree has created us right? So we just do things right. We know we have to do things right. And, and you know, for that reason we're a little bit different than some of the others.
- [15:41]
Brendan
That's awesome. And it really is kind of what sets you apart. You know, I've noticed as well, like, never been hacked. Right? Never had, you know, some of these other issues that we've seen with others. What kind of, you know, I mean, that you kind of just explained all the different components of, like, you know, what, what makes an exchange, right. Custody, matching, you know, audits for, you know, client money and all that kind of stuff. Walk us through maybe, maybe some of the other things that go into, like, you know, running a crypto exchange. And then also, like, you know, frankly, like, what is the business model? Like, how do you guys make money? How do you guys stay in business?
- [16:19]
Bobby Zagata
Yeah, sure. So. So first of all, exchanges are. Are unique businesses and I think really important in any financial, you know, marketplace. Why? Because they are. They are a space where buyers and sellers can come together with. With transparency of pricing. So, so, you know, in an exchange environment, when you come to buy or sell, it's the market that's determining that price. It's not some vendor or someone who's got a serious profit motive that is trying to get whatever they can out of you. Now, exchanges are for profit companies. We do have a profit motive, but we just get paid on execution, right? So, so when, when a transaction happens, we, we get, we get some points on that. And so because of that, they play a role in the ecosystem around price discovery, like where. What is the actual price of bits of Bitcoin? You know, you have to look at an exchange or even a group of exchanges to find out with confidence what the supply and demand are dictating to the marketplace. And then, you know, at a more broad level, what we try to do and what all exchanges try to do is create very healthy marketplaces. And from our standpoint, that that's built on diversity. So we like lots of different types of participants. We like retail, you know, simple buy and hold kind of participants. We like traders who are sophisticated and using a lot of, you know, algorithms and trading methodology to provide liquidity. We like institutions, you know, institutions that are either making markets or taking markets on behalf of their customers. So it's that diversity creates a lot of, you know, reliability and healthiness for the marketplace.
- [18:14]
Brendan
That sounds awesome. And I take it, you know, bitstamp kind of has a good blend of all these different traders or do you find, because, you know, we've spoken to some in the. Some exchanges in the past where they only have institutions, you know, and so, so is bitstamp something that our crypto, one on one listeners, they could go home, they could download it, they could trade, they could, you know, get a good experience that way.
- [18:38]
Bobby Zagata
Yes, absolutely. So, you know, we have, we have the bitstamp app and we also have our web UX available to all and all of the above. Basically our business from a revenue standpoint is almost exactly 50, 50 between revenue participants and institutional participants. And you know, that fluctuates a little bit with market conditions, but it's, it's quite even, which we again think is optimal from a health standpoint. Ye, the types of transactions that retail investors typically engage in are really useful market dynamics for institutions who are looking to speculate and to make liquidity or provide liquidity in the space. So we try to support both very, very well. And we try to create first of all great product, just simple to use. Whether you're a sophisticated institution or pro trader or whether or not you're, you know, I'm going to buy and sell every once in a while, we want that to be a simple and straightforward process. And then when it comes to institutions, well, both really, but there's a lot of trust factors. You know, we have all kinds of ISO certifications. You know, I mentioned our audit. We have over 60 regulatory licenses around the globe. You know, we definitely have leaned into being the most trusted and regulated in the space because we know that's the future. We know that, that that's, you know, that's where the market will end up.
- [20:15]
Brendan
I actually have one more question on this. How does the ETFs kind of change your business? Do you guys see more trading on your exchange because of these ETFs and like these people need to hedge somewhere and, or do you see less trading?
- [20:29]
Bobby Zagata
Yeah, it's, it's, the answer is more and it's a classic, you know, example in my mind of, of the pie growing. Right. So the ETF approvals in the U.S. you know, it just can't be understated how important that was for the whole ecosystem and industry. But both because it created a level of confidence, you know, among, among many people and institutions. But it also just gave a very easy access point for people to use a method to participate that was very familiar to them and tried and true and, and, and so they come in and more, more buying and selling, whether it's an ETF that then creates more buying and selling of Bitcoin, all kind of flows through the ecosystem. Now bitstamp is in a pretty special place in that we are A primary liquidity provider to some of the, you know, authorized partners to, to ETF issuers. So we're kind of like behind the scenes the go to marketplace for those liquidity providers to make, to make sure their as liquid and as balanced as they need to be. So we, we do benefit direct well, semi directly to that phenomenon. Which is great.
- [21:45]
Bryce
Yeah, I mean man, it, it really is impressive how much, it's, how much it's grown. And I think you made another good point in there and that you have to be focused a little bit on security and compliance and a lot of these things if you're going to be around since 2011. And for people who, who maybe weren't around or don't remember, crypto was a different animal in 2011, 2012. I mean, heck, any time between, I would say like 2017, 2018, it was not easy to use and interact with crypto. And almost every exchange that existed back then just is not here today. Or if they are, they're a shell of what they were because all of these new players have come in, they've revolutionized the game and they've made it a lot easier. And bitstamp, to my knowledge, is the only player that has been able to survive since then through all that, like being able to adapt, adding new services, adding new altcoins, creating mobile apps, like all these different things. And that's not an easy feat to accomplish. So I just want to say, you know, that is a big deal and that's why bitstamp has been on my radar so long. I'm in the same spot is Bryce where I've been using bitstamp to do a lot of my like old school charting. Because you all are one of the only players that can support that on things like trading View and, and other sources. But I think one of the big updates came last year and last June. And in last June we saw Robinhood acquired Bitstamp in a $200 million deal. So my question there is, you know, did anything change with that acquisition?
- [23:25]
Bobby Zagata
The answer is not yet. So we're still in the process of getting all the regulatory approvals needed and we have not yet achieved the actual change of control. What we said last June when we announced is that we expected for that change of control to happen in June of 2025, which is still the timetable that we're working towards. And it's all going fine, it's progressing as expected. We just, as I mentioned, we have a lot of regulators over 60 that all have the opportunity to approve this transaction, it's important that they, that they do for us to go forward. And so we're down to the, you know, the last few, and, and we're really excited about the possibilities there. You know, Robinhood is a, is a super interesting company that has an incredibly large and diverse retail customer base and a very large and respectable crypto business. So, so we're very excited about the possibilities with that, with that transaction.
- [24:29]
Bryce
Yeah, and I saw a really cool article from Fortune that was saying that Robin Hood's quarter over quarter crypto revenue, or crypto service revenue, jumped 500% in Q4. And so I view this whole thing as a net positive. Right. We're having Robin Hood, who's already and has been a pretty big player in the tradfi space, especially in the mobile industry. And we have bitstamp, one of the, the longest lasting, more reputable names in the crypto exchange face. And we have both of you guys coming together here. So I view this as a positive again. Robinhood is continuing to dive their feet into crypto. We've had them on the podcast. We like what they're doing over there. Clearly we like what, what you all are doing as well. And so we're getting like two of the leaders in the space to, you know, essentially come together and team up here. And I think what this does is it spreads adoption to a whole lot more people. It allows a lot more people to get serviced. And kind of going back to that original ETF question, Bryce, this is where I see, like, people get the benefit. People get to go and buy Bitcoin by itself, like spot trading, and that a lot of people can do that through bitstamp. But also even on the ETF side, you know, people can do that through Robinhood. So we really are getting the best of both worlds here. And we're seeing crypto accessibility just skyrocket, especially in comparison to where it was a couple of years ago.
- [25:50]
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- [26:46]
Bobby Zagata
Yeah, sure thing. Hey, you sold that car yet? Yeah, sold it to Carvana. Oh, I thought you were selling to that guy, the guy who wanted to pay me in foreign currency, no interest over 36 months.
- [26:59]
Tebow
Yeah, no.
- [27:01]
Bobby Zagata
Carvana gave me an offer in minutes, picked it up and paid me on the spot. It was so convenient. Just like that. No hassle? None. That is super convenient.
- [27:11]
Lathe
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- [27:14]
Bobby Zagata
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- [27:46]
Brendan
Yeah, it's, it's spot on, it's. And it's well said. And I guess my question was from bitstamp's angle, what was the, the desire to be acquired like? Kind of, what was the aim that you're hoping to achieve from this? Because you know, from Robinhood's perspective it's like, yeah, you want to acquire the best crypto exchange and you know, they'll get maybe a lot of user and security and all that. Track record. Was there a certain driving force behind the management team at bitstamp for the acquisition?
- [28:15]
Bobby Zagata
Yeah, you know, I really can't talk too much about the actual transaction because it's still, it's still live and it's still, it's still progressing, you know. But suffice it to say we're really excited. The potential synergies here, the complementary nature of the combination is really exciting and hopefully short order order, we'll be able to talk a lot more about it.
- [28:40]
Brendan
Well, well, I've got a, I've got my follow up action item for after this is. We'll, we'll make sure. That we bring you back on after that transaction's finalized. We'll unpack that for us, for our audience. But, but let's, let's pivot the conversation just a little bit, you know, to, to kind of the market today. You know, we're, we're in a volatile market. There's a lot of, you know, uncertainty going on with kind of the changing global order with, you know, tariffs and, you know, new allegiances and wars starting and stopping. So there's a lot of volatility and kind of a change of regime with, you know, the new president who's going to be, you know, wanting to do all sorts of different new stuff. And so obviously this comes to bear on, on the S P. And you know, crypto is kind of correlated with risk assets. So we've been selling off and I, I guess, you know, is there something that, I mean, I guess I already know kind of the answer to the question is probably a no. But like, does bitstamp, like change their business at all during, you know, bull market or bear market or range bound market? Or is it kind of just you guys are there facilitating things, rain or shine?
- [29:49]
Bobby Zagata
Yeah, great question. And you know, I would say this, this speaks to our longevity to some, to some degree, right? What, what we have learned and is, is this market cycles, right? It's always up and to the right over time, but there are cycles, individual cycles, as you guys well know, in the interim. So in bull market cycles, we try to be very disciplined, right. So in other words, not to over hire or over invest or become deluded into thinking that this is now going to be a permanent market condition. And therefore in the bear market cycles, we also don't have to like lay off a third of the workforce or what some of the others have had to deal with. And you know, we've learned that over over a few, you know, a decade plus. And because of that, we can kind of stay long term focused in terms of our strategy and in terms of what we're trying to deliver for customers. So now to answer your question more directly, we certainly make different investment decisions in a bear market cycle versus a bull market cycle. We are also quite disciplined when it comes to managing our cost base and making sure that we're positioning ourselves for the next upcycle. So that's our real focus in a bear is like, okay, how can we improve our scalability now? How can we make our products more accessible or easier to use now so that when we upcycle we can take full advantage of that moment?
- [31:33]
Bryce
You Know, outside of just the macros and all kind of the traditional financial drama that we've seen here, why do you think that the crypto market has been so choppy despite having so many positive catalysts on the horizon?
- [31:49]
Bobby Zagata
Yeah, so it's a great question, you know, and obviously we're all thinking about this and Bryce just mentioned a bunch of factors that are super relevant here. And from my standpoint, it's positive that the crypto marketplace is not completely independent from the macroeconomic set of forces. Sometimes we wish it was, but the fact is it's a super legitimate asset class and it is treated as such. It does have some different characteristics which serve it well, I think, think obviously over the long term. But I wouldn't expect a reason for Bitcoin or the crypto marketplace in general to be independent of the items that Bryce mentioned. We have some major macro factors here that create uncertainty, specifically the tariffs, the tariff regimes and the sociopolitical stuff that's going on. It just creates uncertainties. And what do investors do when it's uncertain? They pull back. And that's what we're feeling, I think, in the price of Bitcoin today. Now, to your point, Brendan, there are things on the horizon that are quite optimistic and everything that the Trump administration is putting in place is very exciting because if we can get, this is my opinion, if we can get a clear framework or code of law in the US to, to govern and regulate this space, it will enable an entirely next level of participation, particularly amongst institutions who have been on the sideline while we've been living with this very uncertain and kind of not transparent, let's say, method of management. Antagonistic comes to mind. Yes. So that's out there. But if I'm an investor today, you know, I don't know when that's happening and to what extent and exactly what the response will be. So I might, I might be pulling back.
- [34:01]
Bryce
Yeah, you know, I guess that begs an even an even deeper question, like is that even possible? Is it even possible to see crypto become its own independent market and de correlate from more traditional risk assets like the stock market? Because that's something I think a lot of people want to see. And it's something, I truly do believe that we can get to the point where crypto is independent. But like, what do we need to do to get there?
- [34:27]
Bobby Zagata
Yeah, good question. I mean, I think the answer lies in use cases beyond store of value. Right. So you know, a store of value is a store of value. It's a bar of gold or it's some kind of equity product or it's a crypto product. And you know, to the extent that we think of Bitcoin only in that way, it's going to behave in that way. It'll be subject to market forces just like any other store of value type asset. Now it'll, it won't. It should not be 100 correlated to gold or to, you know, equities. It should have its own level of independence. But a risk asset is a risk asset. Now, use cases are something that bars of gold don't necessarily have. Right. So when you look at different protocols and blockchains that have tokens attached to them, they're also trying to accomplish something and they're also trying to solve a problem, most of them. So that, I think, could also affect the value equation around these crypto markets over time.
- [35:44]
Brendan
Time, yeah, you're, you're totally spot on. And, and maybe it's just, it's. Brennan, It's a good question. Maybe it's a function of size. As it gets bigger, it maybe could move in its own way and be a little bit more resilient to the flows and. But yeah, for now, it does seem like they trade, you know, you know, pretty, you know, positively correlated. Except then there's altcoins. And sometimes these altcoins just, the market's going up, altcoins go down, the market goes down, altcoins go down more. And it's like, well, again, give me a break. And it's, I think it's a lot of that is like, you know, these are super speculative, like far out of the money, sort of like what private equity should be like. But, you know, private equity is like super volatile. But the marks, it's not volatile because the marks don't fluctuate. But in reality, you know, that company, you know, their, their revenues are going up, they're going down. It's a startup, right? And so we just get to see all of that volatility play out in, like, startup world now in these liquid markets. And so it's like, like they could go up a hundred times. They could go down 90%. Because in reality it's like pure, you know, speculation until you kind of hit, you know, some kind of product market fit or some kind of use case. And what comes to mind for me and Bobby, this is going to be a question leading into you, but like the stuff with Defi seems like there's, there's a real product market fit. They're, you know, doing billions of Dollars, you know, maker, aave, uniswap, like these are real business models, you know, all that kind of stuff. And maybe there's a world in which, you know, those assets, you know, might have some kind of, you know, idiosyncratic buyer who's just, you know, based off of these cash flows. And I'm just curious, kind of like your thought around like altcoins, like this whole universe of altcoins relative to bitcoin.
- [37:28]
Bobby Zagata
Yeah, yeah, good question. We think, we think about this a lot. And you're absolutely right. When the market cycle to a great degree determines how the altcoins perform against, you know, bitcoin or call it the blue chips. Right. So, and I think again, this might be an oversimplification, but in, in a, in a situation where there are a lot of market headwinds, I think people, you know, gravitate to the, the, the higher market cap or the more blue chip kind of longer track record assets like Bitcoin, like ETH and a few others. Because in, in a market headwind environment, some of these smaller tokens and communities who are looking for explosive growth, you know, are concluding there's not probably going to be explosive growth in this whatever market cycle that they're experiencing. So I think in addition to the overall kind of crypto marketplace, you know, being a function or being affected by macro factors, the altcoins are affected more because people can go to the, to the higher market cap assets and feel safer.
- [38:39]
Brendan
Yeah, So I guess it's beta, right? I mean, it's.
- [38:43]
Bobby Zagata
Yeah, makes sense. That's exactly right. And then, you know, Meme coins is a whole nother story, you know, which is, which is interesting and it's going to be interesting to see how the space plays out.
- [38:58]
Brendan
Yeah, I couldn't agree more. And what does it kind of look like for cryptos to get listed on bitstamp? I'm just kind of curious. I know the whole listings process for every exchange is different, but is there kind of like a 30 second or a high level how to pass muster? I guess for bitstamp?
- [39:17]
Bobby Zagata
Sure. Yeah. And actually we'd love to talk about this. We view being listed on bitstamp as kind of a seal of approval that a lot of token products projects are interested in because we're a little bit more conservative than the others. There are exchanges out there where they just list anything and everything. Anything that is listable, they list and they let their customers decide what gets traction. We have a fairly rigorous process where we look at each token, new token Opportunity, firstly from a technology and security standpoint. So we don't want to put anything on our exchange, make it available to our customers if it could blow up or, or be compromised in some obvious way. Secondly, we look at it from a regulatory standpoint. Right, that's a really important screen. How will this token be viewed vis a vis security laws? How will it be viewed vis a vis other kinds of legal risks that are associated with an asset? And then finally we look at it from a commercial perspective. What is the demand or likely to be for this project? Is this something that our customers would benefit from? And so not a ton of tokens make it through that process compared to a Binance for instance. But we've got going on 150 or so globally. The number is much less in the US So in the US we've been much more conservative, particularly based on the securities regime we've been under for the last four years or so.
- [40:57]
Brendan
Yeah, and it seems like things are certainly changing. You know, I know the OCC just came out with a notice the other day for banks that, you know, they're saying, hey, banks hop on board with stable coins and custody of different crypto assets. I know the SEC is now being run by, you know, I think five commissioners that, that are all pro crypto. And so I think things are really, really, really, you know, fundamentally like the, you know, looking so great for our industry. It's just just little turbulence on this regime change that I don't think is going to last forever. So I'm in the camp. Of course, never financial advice, never, you know, anything you guys hear on this is never investment advice. I think it's just an incredible opportunity to kind of lower my sort of, you know, short term, sort of average cost basis on, on some shorter term positions. I think it's a really compelling time in the market. If I look out six to 12 months. I just have a hard time believing that things are going to be, be, you know, incredibly much lower. And you know, I, I just kind of want to ask you Bobby, just as we wrap up in closing, what's next for crypto markets broadly and then you know, what's next for bitstamp? As much as you can say, I know we don't want to touch on the transaction, but kind of what are those two in parallel look like for you?
- [42:13]
Bobby Zagata
Sure, sure. So you know, from the crypto markets perspective, as I alluded to, the, the, the biggest kind of fundamental change that I believe is happening right now is regulation in the U.S. right. So it's a double positive in that in the last regime, not only was there no clear rules of the road, the method of addressing it on the part of the regulators or the SEC was by enforcement. So it was like two reasons for a traditional financial services company, for instance, to stay on the side guidelines. So I think that will be solved. I think, you know, I think it will require legislative action and then really good collaborative work across the cftc, the sec and I believe the leadership is in place to do that. And that will, I think, activate lots of companies and individuals who have just been waiting for like, I don't want to mess around, I don't want uncertainty. I don't know exactly what the rules are. So that's exciting because not just for this marketplace in the US but as you guys know, right, there's, there's giant ripple effects all, all around the globe based on what's, what's happening here. So that's, that's super fundamental and very exciting. Now just one piece of that to illustrate, you know, is banks. So, you know, banks in the U.S. you know, have been completely locked out of the process and, and not even allowed really to bank crypto companies in, in any, you know, serious way in the past regime, which creates, frankly creates a lot of risk in the system. In Europe, by contrast with the MICA framework which is coming into play right now, but has been, was adopted two years ago, there's enough clarity that banks in Europe can actually participate. They can enable the buying and selling of crypto assets, for instance. Many of them do that with via bitstamp as a white label provider. Right. So why would a bank want their customer to have to leave their ecosystem to buy some Bitcoin? They wouldn't. Right. And they don't want to build the regulatory stack and the tech stack. We have it and as others do. So I expect that to happen in the US too. Once the laws get defined and the frameworks get defined, once banks are involved, the whole ecosystem, banks are just the traditional source of money management. And that's really going to open up a lot of new possibilities by virtue of getting more people involved. So. Sorry to ramble. You want to talk about this Sam, for a minute?
- [45:00]
Brendan
No, that's great. No, it did make me think of one additional question that I've gotten in the past as well. When I start talking about the ETFs and people are like, Bryce, five years ago you were so anti banks and anti BlackRock and here you are saying that these are going to be know they've co opted and I'm like, well think about it. But like, how do you think about like, you know, bitcoin and crypto is really about disintermediation and peer to peer and now it's being intermediated and you know, not peer to peer. And like that's one segment of the market. That's what I say. It's like, well now we have options because guess what, my dad for the very first time is now buying crypto. He's doing it through his, you know, Fidelity account and that kind of stuff. But he was never going to go to Coinbase and download that and get a wall it and figure that out. He's like, you know, just not going to do it. And so I'm like bifurcated in my mind. Like I still think there's a future for decentralization, disintermediate. Like people have that option. But Also, you know, 90% of the wealth in the world will never go over there. So how do you kind of take that in your mind?
- [46:03]
Bobby Zagata
Yeah, you know, I know exactly what you're referring to and I feel it too, you know, moral dilemma a little bit. Yeah, but, but at the end of the day, I think of it like Greece and Rome. Rome, you know, like so, you know, Rome was this gigantic empire. They quickly took over Greece. But then the Grecian culture, the Grecian values, the, the Grecian rules of law all be. You know, were adopted by Rome. You know, so, so I do think that even when, and it's not if, you know, when, when all of these large traditional financial services company, many of whom have, have, have, you know, issued crypto for a long time, that they're, they're not going to be able to deny the innovations. Right. They're not going to, they're not going to be able to walk away from 24 7, you know, access. They're not going to be able to go back to like T +2 settlement of things. They're not going to be able to hopefully go back to charging egregious amounts to move money from one place to another or across borders, you know, so, so, you know, I, I choose to view it as like the more the merrier and let's just grow this pie bigger. But I, I recognize that there's some, there's some challenges associated with that.
- [47:20]
Brendan
I like that actually. It's the grease. The Rome analogies made me think of the Trojan horse and that might be what bitcoin is. It's, you know, looking like a nice Gift on the outside. Hey, we're going to make so much money off this. These crypto trader nuts we're going to crush. And then bam, it just takes over the system as their customers realize there was a back door. But anyhow, we'll see. The, the future's still being written, Bobby. All we know is you're going to be here at the forefront writing it along with, with all of us as well. And we can't thank you enough for, for spending the 45 minutes with us here on the Crypto 101 podcast. Before we let you go, are you like a Discord guy? Are you on Twitter? Where can our listeners kind of stay up to date with everything you're working on?
- [48:07]
Bobby Zagata
Yeah, we're, well, first of all, bitstamp is everywhere and I, I, I try to focus all of my, my kind of social interactions through bitstamp. And yeah, I, I've done my time on Discord, but that's not a primary focus for me right now other than for fun. But, but no, like, keep up with bitstamp and you get, you will find me awesome.
- [48:31]
Brendan
I love it. Thank you so much everybody. Please check out the show notes. We'll have all those relevant links so that you could download an account and get started over at bitstamp. Bobby, thank you so much and everybody at home watching, thank you for your attention and for your support. We'll see you back same time, same place next week with some more awesome guests. Take care.
- [49:01]
Bobby Zagata
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- [49:32]
Brendan
What is Dax, Are you tracking all.
- [49:34]
Bobby Zagata
Our cars on Carvana Value Tracker on all our devices? Yes, Kristen, yes I am.
- [49:39]
Lathe
While I've been looking for my phone.
- [49:41]
Bobby Zagata
For in Dax's domain we see all so we always know what our car cars are worth. All of them? All of them. Value surge trucks up 3.9%.
- [49:51]
Brendan
That's a great offer.
- [49:52]
Bobby Zagata
I know. Sell.
- [49:54]
Brendan
Sell.
- [49:56]
Bobby Zagata
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- [50:01]
Lathe
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