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Educational Alpha
S2: Conversation with Keith Black, PhD, CFA, CAIA, FDP, CDAA, Managing Director, RIA Channel
00:33:47
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- [00:05]
Bill Kelly
Welcome to Educational Alpha. I'm Bill Kelly, CEO of CHI association and your host. Bringing you on the ground conversations with business leaders, educators and industry colleagues from around the globe. Educational Alpha is sponsored by iCapital, the financial technology company with a mission to power the world's alternative investment marketplace. Part innovator, part educator, and part navigator of the alternatives industry, iCapital offers intuitive, scalable digital solutions that have transformed how private market and hedge fund investments are bought and sold. With iCapital, financial advisors, wealth managers and asset managers around the world now have access to everything they need to deliver the return and diversification potential of alternatives to high net worth investors. To learn more, visit icapital.com in this.
- [01:03]
Keith Black
Episode, Bill welcomes Keith Black, a longtime colleague and cryptocurrency expert, to discuss the rapidly evolving world of digital assets. Keith shares insights from his extensive career, including his early work in commodity derivatives, hedge funds and institutional consulting, as well as his role in the Chartered Alternative Investment Analyst Association. The conversation dives into Keith's move toward digital assets and cryptocurrencies, highlighting key topics such as the current state of institutional adoption, bitcoin's rise, and the role of stablecoins. Listen in.
- [01:45]
Bill Kelly
Keith Black, welcome to Educational Alpha.
- [01:48]
Keith Black
Thanks for having me, Bill, Longtime friend.
- [01:50]
Bill Kelly
And colleague and I joined kaya just about 11 years ago. As you know, I'm stepping down at the end of this year. But you were there when I walked in, running curriculum, did a lot of things for us, quasi business development, traveled around the world. I think my very first trip to China and India might have been with you in both cases. So a lot of great history there and somebody I have a lot of respect for. And you've left Kia a little while ago in pursuit of a lot of things, but you've gone into cryptocurrencies and digital assets and have written a book which prompted me to reach back out to say, hey, I find this interesting, but before we get to that, maybe a little bit on your background. And I've always admired the fact that you have somebody who you look at somebody like a Keith Black and say, wow, this is a very smart guy, all these credential degrees, Ph.D. he's an academic. And you've worn a lot of different hats, but not the least of which was you were a practitioner in Chicago at the very beginning of your career. So you don't have to start in elementary school, but maybe the beginnings, because I think that defines the professional you've become.
- [02:50]
Keith Black
Right? Thanks, Bill. So I was in Chicago for 20 years before I moved to Amherst, Massachusetts to join the KAYA Association. So I spent about half the time in Chicago as a practitioner and about half as an academic. So I started off in commodity derivatives. Upstairs we were trading energy and metals products for corporate clients, bundling them into financing products with the Money Center Bank. And then I moved downstairs to trade equity derivatives. So I was an options trader on the floor of CBO with the colorful jackets and the hand signal and the raspy voice and all of that. Then I built some quant equity models which we sold to hedge funds and mutual funds, and spent some time as a institutional consultant working for large pension endowment plans on their hedge fund allocation. So I did hedge fund manager research. And along the way I earned a PhD at the Illinois Institute of Technology, where I taught for a number of years. And I was the representative for both the CFA and CAIA academic partner programs at iit. So I taught the traditional investments as well as the alternative investments in the Master's Degree in Financial Markets program.
- [04:02]
Bill Kelly
And then your trip to caia, I think some people, maybe I at the time thought as well that you were in that very first class because you were part of caia, but you were not there yet. So maybe what got you to caia and then we can pick it up from there.
- [04:14]
Keith Black
So I am Kaya charter holder number 19. So I was in that first class in 2003. So while I was a PhD student in Chicago, while I was an institutional consultant, I had the CFA and the KAYA Charter to go along with that. And so when the consulting firm I was a partner in sold out to a large insurance company, it was natural for me to look for the next step. And at that time, most of the colleagues leaving that firm left Chicago. It's declining as a financial center. And I ended up with CHI association because I already knew Kai and Kai already knew me. I had worked with Nelson for many years on curriculum and exams as a volunteer grader and curriculum writer.
- [04:58]
Bill Kelly
And you certainly set us up for great success. And that program continues to push on and to show that we take all comers. You personally inspired me to become a candidate myself during the COVID bubble, where I finally was able to get off a plane. And I felt finally like a member of the club when I came through successfully, level two in March of 2022. So thanks for that motivation.
- [05:20]
Keith Black
I'd like to congratulate you on that, if I haven't already. And that was perhaps the best use of downtime during COVID You hear some hobbies that other people got into and I definitely respect that you took the time to sit down and interact with the curriculum and you were able to pass the exams on the first try, I think as well I was, thanks, Keith.
- [05:37]
Bill Kelly
And I guess it was maybe more beneficial than a pretzel maker. And it served me very well then. And as I speak and write, it's been a tremendous asset. So thanks for that. So, Keith, one last stop inside of Kaya, which you were at the coal face with myself and Hossein, and that was the formation of the FTP Institute and a credential by the same name and we were trying to solve for a data scientist communicating in Python or R with an analyst working on Excel spreadsheets and maybe macros and how do they communicate? Communicate and a coherent investment process. And out of that was born fdp. And if memory serves me correctly, you might have to remind me, charter holder number one for FDP was.
- [06:18]
Keith Black
That was me, Keith Black.
- [06:19]
Bill Kelly
So you muscled Dick Fister out?
- [06:21]
Keith Black
Well, he was early on in Kaya, he beat me on that side, so I had to be before him on the FTP side.
- [06:27]
Bill Kelly
Yeah, maybe that's a good stepping off point in that you helped run FTP. Our ability to grow that inside of Kaya was a challenge coming out of the other side of Kofu. We've now signed on Alpha to development, and then that next cycle is opening up. And I know you, and I certainly wish that credential well because I think its founding principles even more alive and well today. But I don't know, Keith, if FDP was the catalyst, and I know you've always been just curious by nature about what's next, what's around the corner, and I know you were focused on cryptocurrencies long before you left Kaya, but what was the catalyst to maybe move more toward that space? Because it's one. Even before you wrote the book, I've been following you a bit, and this is an area you spent a lot of time and a lot of focus on.
- [07:11]
Keith Black
Yeah. So, you know, I was at Kaya for 12 years and I helped write three iterations of the Level 1 and the Level 2 book. And my charge at Kaya was to be a year ahead of the rest of the world on alternative investments. Right. And so my job was to write a chapter and have a presentation about private credit before the world starting asking questions about private credit. And I think that tipping point of the world being really interested in NASA class ends up being right around a trillion dollars at 300 billion. Nobody knows about it. And at 3 trillion, everybody knows about it. And so there's that sweet spot around a trillion dollars in assets. So after we did that work on the private credit side, interest naturally turned to cryptocurrencies and digital assets as the next big thing in alternatives. And it's amazing the size of crypto today, depending on the day, it could be 1 trillion or 3 trillion. But that rivals the size of the private credit market and it's more than half the size of the hedge fund market. And so the cryptocurrency market is perhaps an asset class unto itself that deserves the sober study of both the upside and the downside of the tokens as an investment class.
- [08:20]
Bill Kelly
And I know we have, at least in the level two that I studied, we talked a little bit about digital assets and blockchain, but as far as I know, and I'm sure it's changed, I'm not a student in this part of the market, but the kayak curriculum never really covered digital assets or cryptocurrencies for many reasons, not the least of which is did not have institutional adoption. The market did not have enough liquidity that a cowpers could go and make an allocation to a cryptocurrency. But Bitcoin itself, I believe, is over a trillion dollars. Now in terms of an asset class, and you just said a moment ago the space is up to three. And Kaya's role is to never be for or against a specific asset class. We're absolutely for discovery and transparency and then let the investor make their own decision. But what is the size of this asset class More specifically, if 3 trillion is the right number? And where are we with institutional adoption?
- [09:16]
Keith Black
So obviously it depends on the day. You could have 10%, 20% monthly or even daily volatility. As of the day we're filming this, crypto is worth 2.24 trillion. You could go to CoinGecko.com, you'll see there's almost 15,000 coins. But what's interesting is out of those 15,000 coins that are worth 2.24 trillion, Bitcoin and Ethereum on their own comprise about 70% of that value, with Bitcoin at about 1.2 trillion at 61,000 and Ethereum almost 300 billion on its own. And so it's a highly concentrated market. So even though there's thousands of tokens at this point, there's certainly less than 50 that are truly investment grade. The Bitcoin market started as anti institutional. It started about decentralization. And so the idea of Decentralization is lessening the influence or lessening the power that any one institution has over your financial life. And so we start off by talking about a centralized ledger. And so if you have a bank account or a brokerage account that's basically private between you and that bank, or you and that brokerage firm, and they're the only ones who have access to those records, and there's a concern about the central point of failure. And in the US we're very blessed. We have a strong currency, strong banking system, we have FDIC and SIPIC insurance, but the rest of the world doesn't necessarily have that. And so the innovation of blockchain specifically is to move from that centralized ledger, centralized counterparty, to a decentralized ledger and decentralized counterparty. So rather than having your financial records stored at one bank or one brokerage firm, it's saved on thousands of computers around the world as a fault tolerant mechanism that lessens the influence of any one counterparty. And in the US we don't really need crypto, right? It fits nice in investment portfolios and people like to speculate with it. But if you live in Ukraine, you really care about a specific point of failure of a physical banking or computer infrastructure. If you live in Venezuela or Zimbabwe or Turkey or Argentina, you care about the difference between your home market currency and a hard currency like the dollar and the euro. So there's some very fundamental implications moving from that single point of failure, whether it's a central bank, a fiat currency or a bank or a brokerage firm, and then moving into that distributed ledger where we're moving to have the ability of making peer to peer financial transactions and allowing people to easily access gold or dollars or euros, even if it's not necessarily fiat currency in their home country.
- [11:57]
Bill Kelly
So a couple of things, and maybe for my own education, Keith, so I get almost all of that and certainly there are a lot of developing economies where vast majority of the citizens are unbanked. So there is no central point to failure. But even if there was, that's a concern too. But if I'm going to be contracting any transaction on a distributed ledger, and am I doing it in Bitcoin now, I've got a lot of currency risk because I'm dealing with a very volatile medium of exchange versus if somebody could create a stable coin where I don't have to worry about it before the goods get to me and the currency settles that, maybe it's traded up 10, 15, 20% have gone in the other direction. So why can't it be more of a stable coin? Why does it have to be a cryptocurrency like a Bitcoin or ETH that's got all this volatility attached to it. It.
- [12:47]
Keith Black
Right. So we see that the volatility of Bitcoin or Ethereum is on the order of five times higher than that of a stock market index. And so we think of equity volatility maybe 15 to 30% range. Bitcoin and Ethereum, we have to think of volatility in the 60 to 120% range. And so those are historically volatile. It'll go up 600% and then it'll go down 60%. There's a number of 50, 60, 70% drawdowns in the price of Bitcoin and Ethereum in recent years. So there is a historic level of volatility in Bitcoin and Ethereum, but we also have stablecoins. And so tether is tied to the US dollar. There's about $120 billion worth of tether outstanding. And then there's USDC, which is also a stable coin that's pegged to the dollar, which is about $35 billion. And so there's $150 billion of US dollar equivalents that are held in these tether or USDC stablecoins. That allows global citizens to hold tokens that are pegged at US$1. And so they might want to be in Bitcoin or Ethereum for the potential upside return. Or they might simply say, if I could just hold dollars or if I could just hold Euros or gold, that's going to be much more stable than my home market currency.
- [14:08]
Bill Kelly
And maybe tying this back to the book. So you could tell me about the book, but one thing I like at the get go is the title and the very first word, investing as opposed to trading. It's maybe a small distinction, but to me and maybe to you, it's a rather large distinction in that investors buy and hold, traders speculate. But investing in cryptocurrencies and digital assets, and maybe starting with my premise, which you can reject, but I think a lot of the challenge around what Bitcoin really is is there's a lot of speculation, a lot of day trading, and you can trade at 24,7 to a large degree. And I don't know how many investors there are versus traders. So you probably use the word investing by design more than trading. But is most of the value that people are trying to extract from Bitcoin is really a trading mechanism as opposed to an investable asset, right?
- [14:57]
Keith Black
So the title of the book is Investing in Cryptocurrencies and Digital Assets. A Guide to Understanding Technologies, Business model, Due diligence and valuation. And so the idea is, I have 30 years of experience in the financial markets, which the crypto people would call cefi, right? Centralized finance. So what's interesting about the crypto market is there's a lot of influencers, a lot of speculators, and as you said, traders. And there's been a tremendous amount of risk tolerance for good and bad in crypto. You see people running $100,000 up to 3 million and then going all the way back down to zero. And so what I try to do is not write a technical book and not write a speculative book. But as you know, in the work we did together at Kaya, we're like, this is how hedge funds work. This is how private equity works, this is how real assets works. And here's where it's good and here's where it's bad, and here's how you do the due diligence. And so that's how I wrote this book. I wrote it from the view of an investor, right? So what does an investor need to know about cryptocurrencies and digital assets? And the number one thing an investor needs to know about cryptocurrencies and digital assets is this is not a YOLO trade, right? And so one of the tables from the book looks at asset allocation with Bitcoin. And I started In January of 2018 into 2024, and over that six and a half year period, the volatility of Bitcoin was 73%. Volatility of the S&P was 17.8%. And you know, we all like to pick on the 6040 portfolio, which is 60% in stocks and 40% in bonds. So if you invested in that 6040 portfolio for the six and a half year period, you would have earned 7.3% on your stocks and bonds, the volatility of 11.8% and drawdown of 20.1%. But the number one thing you need to know about crypto is trade it small. So I built this model portfolio in increments of 1 to 10%. And most investors shouldn't put more than 3% of their assets in crypto. And that's the number one lesson of the book. But if you put a small amount in crypto, even though it's volatile, the exciting part is, is it hasn't historically been correlated to financial markets. So that 60, 40 portfolio has a return of 7.3, standard deviation of 11.8, and a drawdown of 20.1. If you put 3% in Bitcoin, the standard deviation moves from 11.8to 12.3. The drawdown moves from 20.1% to 21.2. You barely see that volatility, but over that six and a half years, you were able to increase your return from 7.3% to 8.6% just because you had that 3% allocation.
- [17:45]
Bill Kelly
And obviously due diligence is a critical component about where you're going to make that allocation. We had Zoe Cruz on this platform before, and she's very much of a tradfi person, but with Manai very active in the space. And she said something that I remembered when I was listening to you speak right now, which is 10% is not the right allocation, but 0 is not I that you got to kind of get in the game. And unlike a lot of other asset classes, 1 or 2% is not going to make a difference. But the numbers you just put out in terms of volatility and drawdown risk versus 150 basis points of incremental return is a pretty compelling argument. So a couple of the other challenges, Keith, which I'm sure we've solved for them to some degree, I won't name the name, but a friend of ours had some bitcoin that, you know him well, too, on an old laptop and lost a password and couldn't get it out again. So custody has always been a bit of a challenge. And I think institutional investors, and maybe you and I, as well as we're used to drawdowns, we're not used to something going to zero because we lost it. So where are we in the current state of custody and cold storage and never being in that dilemma like our friend, where he simply can't get his holding back again.
- [18:53]
Keith Black
You might remember we were in a meeting with some institutional investors, and Campbell Harvey from Duke was there talking about his book on Defi. And there's a couple dozen professional investors in the room. And we asked how many of you have a personal investment in cryptocurrencies and digital assets? And I think this was pre Covid and it was about half the room had personal investments in cryptocurrencies and digital assets. And then you say as a pension fund, as a super fund, as an endowment or foundation, how many of you have professional investments in crypto? And I think it was zero people or maybe one or two in the room. And so there's a big difference between a personal investment and a corporate investment. And historically there's been very little ability or tolerance of institutional investors to buy Bitcoin or ether tokens directly. Right. This custody is too difficult of a thing to solve, or at least it was pre Covid. But what was interesting, and you know all about alternative investments and everybody has their asset allocation and you'd have to go to your investment committee and ask to invest in Bitcoin or Ethereum and what's the weight? And that could be a difficult discussion. But what we saw is the first time that pensions and endowments were going into crypto, they were allocating to hedge funds or venture funds within their existing asset allocation. And so the hedge funds and the venture funds were already there, they've already been approved by the investment committee. But they used a portion of their hedge fund and their venture allocations to invest in crypto focused hedge funds and VCs with the idea that those hedge funds and VCs had that professional custodian who would take care of that. So it's still relatively difficult and risky to custody your tokens yourself, whether it's on a PC, whether it's on your phone, it could be directly connected to the Internet, could be in cold storage, or it could be on an exchange. And all of those have their pluses and minuses, which is a couple of chapters in the book. But the big watershed moment for crypto was in January of 2024 when the SEC finally said, fine, go do what you're going to do. Right? The SEC lost a lawsuit to Coinbase, who had a long standing closed end fund of Bitcoin, physical Bitcoin, and they were trying to convert it into an etf. And there was many rounds of litigation and finally the court sided with Coinbase. That said, there's no reason why there should be a difference between the spot between the futures Bitcoin ETFs you approved in 2022 and the spot Bitcoin ETFs we're trying to hold now. But you know, in futures you have that contanguan backwardation and some basis risk relative to the cash. And so there are some key lawsuits that the sec lost in 2023. So in January 2024 we saw the launch of the spot Bitcoin ETFs. And just in August of this year they relented and allowed spot Ethereum ETFs as well. So BlackRock and Fidelity quickly each raised over $10 billion in their spot Bitcoin ETFs in a matter of weeks, the fastest ETF launches ever to hit $10 billion faster than GLD, which held the record for many years before that. And so what we're seeing with the BlackRock and the Fidelity Bitcoin ETFs, and of course there's a grayscale Bitwise and others, but what we're seeing is there's a rapid institutional adoption of that ETF format. And so they trust blackrock, they trust Fidelity, they trust the coinbase or the custodian that's holding those Bitcoin. And so now that you could hold this in an ETF format, now you could hold it in your IRA as an individual investor, you could hold it in your account with the registered Investment Advisor or as a pension fund, you could hold this in custody at BNY Mellon or Schwab or Pershing or wherever. And now it's another financial asset that's as easy to buy as any other fund.
- [22:58]
Bill Kelly
So I just want to go back to the approval of the Spot Bitcoin etf. And as you pointed out, Keith, it was quite contentious. And Gensler and company, the SEC chair was not very happy. And even after it was approved, he grudgingly accepted the outcome, but still maintained that it was this cryptocurrency is used for mostly nefarious activities. I think you even have a chapter in your book on privacy tokens, which we can get to if you want. But then there was some criticism of Larry Fink that he broke with the never bitcoin crowd like Warren Buffett and Jamie Dimon. And that may or may not be true. But I did follow this a little bit and if I remember it correctly, I think Fink was pointing to the power of distributed ledger and less about maybe the value proposition of spot Bitcoin ETFs. Although it's obviously been very, very good business for BlackRock. But maybe if you had any thoughts on that. But I do want to talk about blockchain and the power that that has and what we're seeing in the private markets today as well.
- [23:58]
Keith Black
And it's certainly ironic that BlackRock and Fidelity are big players here because Bitcoin started off as an anti establishment experiment. It started off with a mistrust of commercial banks and a mistrust of central banks. And the idea was to be a peer to peer digital cash that would allow people to exchange value worldwide outside of the existing government, outside of the existing banking system. So it is somewhat ironic that the big banks and asset managers are taking share here in something that was meant to be Kind of underground and subversive in the beginning. But the idea of this distributed ledger and this could be used for anything and a lot of people focus on the value of Bitcoin or the value of Ethereum. But we just saw the California DMV just put 20 million car titles on the Avalanche blockchain. We see the Kenyan government tracking the performance of millions of school children using the Cardano blockchain. And so this distributed ledger can be used to track any records. Right. We've chosen to start off with financial records but the killer app of blockchain might be what they're called, tokenization or real world assets. Right. It might be a much bigger opportunity to tokenize car titles and real estate and maybe your brokerage account than investing in Bitcoin or Ethereum directly.
- [25:21]
Bill Kelly
And something we've covered on this platform a couple times, Keith, but I'd like to get your views on it as well. Is that bringing it back to the heat here now for Kaya and Alternative Investments, Hamilton Lane and KKR have the traditional Cayman based fund wrapper for a private offering. But there's a feeder fund on the blockchain and I don't know what the currency is, maybe it's a stable coin or not, but the reference asset is something that's off chain and is the identical nav of what I'm getting in the Cayman Islands. So I see this as a pretty powerful way of maybe moving toward a wrapper that is maybe even far superior than the Interval fund. Because now you could have if you wanted to and I don't recommend this because now you're getting back to trading versus investing. But you could have transactions intraday between a buyer and a seller. But that feeder fund itself does not have to raise any liquidity when the underlying is illiquid. So I find that pretty interesting. Early days. I don't know if you followed this story at all or have any views on it. Securitized seems to be the quote unquote category killer in this space. But your views would be great.
- [26:29]
Keith Black
Right. So it's not as simple as it seems. Right. You have to trade these as a security. They have to be kind of approved by the sec. You have to trade them in an alternative trading system, do the KYC for accredited investors. You still have to go through all of those hoops that you'd have to do with other alternative investment funds that draw down private equity funds. But what's interesting is BlackRock and Franklin Templeton have money market and government funds on chain. And when I was speaking with them. They said that the current application of it isn't for people like you and me to put our money into the tokenized money market fund or government fund, because there's $2 trillion of crypto money and that crypto money likes to stay on chain. And so a lot of the assets that are coming into that venture fund, that private equity fund, that money market fund, those are assets that are crypto wealth that people made money on these coins and they want to take a step back, like a money market, park it somewhere. Now, if you invest in the Tether or the USDC stablecoin, you don't earn any yield. Tether earns that yield. And Tether made more money last year than BlackRock simply by running the stablecoin and getting $100 billion of notional treasury interest. But this is a way for the on chain community to earn yield in a regulated fund.
- [27:48]
Bill Kelly
I was going to go right there and you served up the opening. Regulated. And we talked about Gensler a moment ago. But as we go forward and more and more financial transactions are happening on distributed ledger, and this is maybe crashing into democratization where the average person has access to very sophisticated product. All things being equal, I think we need to have more, not less. Regulation needs to be sensible. It needs to be wrapped in maybe more teaching the investor about the asset class as opposed to watering it down in the first place. But where do you see regulation going in this space? And it's got to be enlightened. And maybe that's an oxymoron when I put that next to Washington D.C. but what are your views on where we're going with regulation?
- [28:32]
Keith Black
Yeah, so the crypto community is not best friends with the sec. And the crypto community is like begging for rules. Just tell us what the rules are and we'll follow them. And the SEC says, we told you the rules in 1946. Right. The rules are according to the Supreme Court and the Howey test, where there's orange groves in Florida that was a sale lease back and that ended up being a security according to the SEC and the Supreme Court. And now 80 years later, we're using that as the definition for digital assets. And so the crypto community says, please give us rules. And the SEC says, We gave you rules 80 years ago. And so there's a disconnect. There's. But what the crypto community is worried about is regulation by enforcement. And there's not clear modernized rules that they need to follow. But then the SEC will come in and give you a fine of millions of dollars and shut down your business because you didn't follow the rules that the crypto community said weren't clear. And so what ideally would happen from the point of view of the crypto community is to have something like the crowdfunding rules, right? So under the Obama administration, they said, here's how retail investors can invest up to $5 million in a crowdfunded venture capital opportunity. Right. You don't have to be an accredited investor, you don't have to be a venture capital firm. Anyone can invest in crowdfunded assets. Anyone can invest in venture capital, non traded companies if you limit the amount they can invest relative to their income or their net worth. And if there's disclosure and somebody's keeping track of the amount that they invest. And so it's interesting that they made this crowdfunding regulation for a market on the order of $50 billion and they haven't made any regulations on digital assets.
- [30:18]
Bill Kelly
Yeah. And I think to be pointing back to something that is decades ago in an industry that's changed so dramatically just in a handful of years simply doesn't work. Maybe. Last point, Keith, before I let you go. And maybe it's tied to regulation a little bit, but you've got young kids moving into adulthood, as I do, and I look at them and their concept of privacy and maybe our view of ethics are very different than perhaps this next generation, but there is this concept of a fiduciary duty in financial services and that gets into privacy as well. But the more you have assets out in a distributed ledger, will these blockchains have to be more permissioned and maybe more closed, which maybe runs against the grain of why they were created in the first place. But once you start to move this away from virtual yachts and into trading shares in a real life private equity fund, it is a very different beast.
- [31:13]
Keith Black
So one of the key words in the crypto landscape is permissionless. Anyone with an Internet connection and some funds can participate in this global network, this global exchange of value. And the founders of it said, hopefully without kyc, we don't care what country you're in or who you are. And it's the ultimate in democratization. But we need to think about the security of that system and the privacy of that system. And so if you're in any type of product that requires you to be an accredited investor, a qualified purchaser, if you're trading any kind of securities, now that's going to be on a permissioned blockchain. So as I said, with those tokenized offerings, you can't go onto Coinbase and buy shares in that KKR fund. You have to have a relationship with somebody like kkr. You have to prove you're a credit investor, go through the KYC and then you trade that on a FINRA registered alternative trading system. And so that is the idea of a permissioned blockchain. Right. Which takes us closer back to the original idea of the centralized counterparty. Right? You have to trade on that ats, you have to do the deal directly with that counterparty or the counterparties that have been pre approved within that permission system.
- [32:26]
Bill Kelly
I think these are very good tools and sometimes they have to be adapted to the use case. And financial services remains a pretty highly regulated industry and hopefully we can find a sensible marriage between the two. So Keith, as a good friend, I don't mind a little bit of a commercial plug at the end and you can drop a link, but remind us again the title of the book and where a listener could find it.
- [32:46]
Keith Black
So the books available on Amazon came out as the number one new release in financial services. Investing in Cryptocurrencies and Digital Assets. A guide to Understanding technologies, business models, due diligence and valuation.
- [32:59]
Bill Kelly
Well, well done Keith. I appreciate you always being curious and maybe helping to explain the unexplainable to people like me and it's a space that does interest me a lot. So I personally will pick up a copy and give it a shot and come back to you with some questions and maybe a follow up interview. But great to see you again. Thanks for all you do and hope to see you when I'm next in Nashville.
- [33:19]
Keith Black
Thanks Bill. And I'd be glad to come back and answer any questions you have after you take a look at the book.
- [33:24]
Bill Kelly
All the best. Thanks Keith.
- [33:25]
Keith Black
Thanks Bill.
- [33:28]
Bill Kelly
Thank you for listening to Educational Alpha. I'm your host Bill Kelly. Learn more about the Kaya association and subscribe to the show@caia.org that's C A I A dot org. See you next time.