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Crypto Update | Crypto, Trade Wars and a New Canada? Kevin O'Leary on What's Next
00:26:05
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- [00:00]
A
Everybody that's involved in crypto knows volatility is the hallmark of this asset class. I mean, the volume on bitcoin alone, the granddaddy asset, is extraordinary. So if you can't handle this, don't bother investing in it. I think by now everybody's learned that.
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B
Chairman of O'Leary Ventures, Kevin O'Leary has been watching how global politics and macroeconomic waves are impacting crypto markets. From the White House crypto Summit to tariffs on Canada, Mexico, China and more, how will the economy react to policy and what will that mean for bitcoin, stablecoins and real world assets? Kevin O'Leary joins the show now to weigh in. Kevin, welcome to Markets Daily.
- [00:45]
A
Great to be here. Thank you.
- [00:47]
B
Of course. Well, great to have you back. A lot happening in the crypto markets, but also on a macroeconomic level. Just tell me, what are you watching this morning?
- [00:57]
A
So on the crypto space, I think what was important over the last week really starting on Thursday night was the fact that the White House is signaling a different stance on regulation. I mean, we didn't get what we wanted if you're a crypto enthusiast for a reserve, because really they're not adding to it, they're just keeping what was actually in it already about 17 billion worth of Bitcoin. But it's the policy stance that matters the most. And so to break it down, what occurred is on Thursday night a lot of dinners happened before the White House meeting. So a lot of the business was done the evening before. And I think there's three stacks to think about. If you're a crypto investor. Number one is what gets regulated first. That's a positive thing. So is it going to be stable coins? Is it going to be a broader bitcoin? Is it going to be tokenization of equities? These are all ideas floating around. And so Senator Haggerty and Jill De Brant, you may be aware, have been working on stablecoins backed by the US Dollar for almost five years now. And so we originally had the Jill Debrant Stablecoin act and more recently the genius bill coming out of Hagerty. What's going to happen is these are going to merge. This policy is going to turn into one, as I like to say, one big beautiful bill. And it's going to be specifically for a stablecoin backed by the US Dollar. And why that's positive is that that's the low hanging fruit. That's something can actually pass. It's bipartisan. The only person objecting to it right now is Elizabeth Warren, and she is probably going to be ignored by her party on this one. And we need to get a bill done. We've been talking about getting bills through Congress forever on crypto. Let's get one done. And this one looks like it can happen. And after that, the floodgates will open.
- [02:50]
B
Now, you mentioned the White House signaling regulatory shift when it comes to crypto, but the markets really didn't react to Thursday night's meetings. They didn't react to Friday's announcement. And I believe when I checked bitcoin this morning, it dipped below $80,000, or maybe that was last night. The time is just kind of time is one thing for me these days. Why do you think that the markets are not having a positive reaction to this signal?
- [03:15]
A
Well, I think they're reacting the same way. The overall market, equity markets, bond markets are very volatile right now because of all of the policy changes going on both domestically and internationally as being debated through tariffs, everything else. And you know, the. There was a lot of excitement in the crypto market prior to the news. So buy on the rumor, sell on the news is applying here as well. But, but everybody that's involved in crypto knows volatility is the hallmark of this asset class. I mean, the volume on bitcoin alone, the granddaddy asset, is extraordinary. So if you can't handle this, don't bother investing in it. I mean, I think by now everybody's.
- [03:55]
B
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- [04:56]
A
Well, I'm glad you brought up the other countries because it's not just Canada and Mexico. Every Single country is on notice that had tariff schedules. Some of these schedules are as old as the Second World War. And so what's going to happen over the next year? Probably two years. Let's just take one that I'm very familiar with because I invest on both sides of the border, Canada and the United States. People are unaware that the Canadians have tariffs on American butter and sugar and other commodities as high as 240%. And so there's two types of tariffs going on here. One is supposedly in punishment for fentanyl coming over the border, but that's masking the real issue. What the current administration, what the Trump administration wants is reciprocal tariffs. So which I don't think are unreasonable because it's not just Canada, it's going to be England on ag goods and Germany and India on cars and all kinds of other tariffs that are imbalanced. So if you're a Canadian, you want to tariff Vermont butter at 240%, they're going to tariff your butter at 240%. And this begins what I consider to be a very healthy negotiation. And in the case of Canada, it's not just north, south. The Canadians tariff each other province to Province. There's $200 billion worth of commerce that doesn't happen in Canada because you can't sell wine from B.C. in Quebec. And so I think this is very healthy. I mean, obviously Canadians don't like being told they're the 51st state, et cetera. But that was really more of a problem between the relationship of Justin Trudeau and Donald Trump, which was toxic and non functional. I mean, and thank goodness Trudeau is gone. As of this morning, he's ancient history. And now there's new leadership in the Liberal Party. And the Canadians will probably call an election by the end of March to see who's going to actually be prime minister for the next four years. So. And what happened last night in, in electing Carney, who's well known around the world, but not so well known by Canadians, he's not even an elected official. This is almost, is. It's unprecedented. His own party, the Liberals, not a single candidate that was running for prime minister got more than single digits. That party is, is, well, there's no other word to use, is hated by the Canadian people right now. And so Freeland, the finance Minister, she got 8%. She was so incompetent in the eyes of Canadians, they wouldn't want him near the government again. And Trudeau was obviously. What happened to him? He got wiped out. But it's a new time. And Carney has to build his case. And let's see what he has. I think he'll have trouble because he's doubling down on carbon taxes. And that is not. That's what got the Canadian economy in trouble in the first place. So he may have a problem with that.
- [07:46]
B
Well, dig a little bit deeper into that for me. The Liberal Party now being led by Mark Carney, what does that mean for the Canadian economy should the Liberals win this next election?
- [07:57]
A
Well, what's happening in Canada is very similar to what happened just a few months ago in the United States. There's a sweep towards common sense, and the Canadians are pretty frustrated because their economy was absolutely decimated by every metric you can measure. GDP growth, flat capital and debt, foreign capital invested per capita down 71%. Canadian pension plans no longer invest in Canada. They can't. Under the Trudeau government, they put in place environmental policies that stop the issuance of permits for any projects, including pipelines or mining or developing any kind of energy infrastructure. All of that collapsed. And so Carney has to go convince Canadians that he's brand new and the Liberals should stay in power. I think Canadians want the pause that refreshes and that occurs. I mean, 10 years of liberals and, and the complete decimation of the Canadian economy as measured by the Canadian dollar, lost 41% of its value during the reign of Trudeau. So Canadians, technically 25% of the population, now lives in poverty. Now it's really hard to come out and say, look, I'm, you know, Carney saying, don't worry, I'll fix all this and we'll just keep all the Liberal policies, including carbon tax, in place. I don't think it's going to work. I mean, we'll see what happens. But most likely he loses to the Conservatives, who are saying, we're just going to get a spatula and scrape everything out of there, which is what Trump said. So it's the same kind of momentum that's occurring, and you'll know that probably by the end of April it's going to happen pretty quickly, and that may be a healthy thing. Then whoever is the new leader of Canada can go to Washington and start negotiating what is effectively becoming NAFTA 3 being negotiated ahead of schedule. And I think that's a healthy thing. I think that's a good thing. All the rhetoric, remarkably, right now, there's no leadership in Canada. So all the premiers of, of the provinces are sitting in Washington with their staffs negotiating, and it's Unusual because Alberta has a different mandate there around energy than Ontario has. Ontario's car parts. They have no leadership yet. And so these are very difficult negotiations. And by the way, not on the never even mentioned in these negotiations as sovereignty. So this is just rhetoric. The press is running with Canada is not for sale. Canadian people don't want to sell it, but they are interested in the economic union, common currency, maybe euro type passport and no tariffs. Very attractive. They'll be part of the negotiations.
- [10:38]
B
Now that's Canada. Let's come back to tariffs. Let's talk about the globe because there are other countries involved here. How do you see these tariffs shaking out? And I have to ask you this question again. What does that mean for broader markets and more narrowly, what does that mean for crypto markets over, I guess, let's say the rest of 2025, it's a reset.
- [10:57]
A
It's, it's a global reset. It's including China. China's a different situation because they have a lot of other pressures coming at them. Well, let's just deal with the rest of the world. Ex China, start there. Germany, England, India and others have put tariffs on for decades on all kinds of different products. They're protecting their own domestic businesses, whether it be agricultural in, in England or cars in Germany and, and technology in India as well. So what Trump is saying is, look, case by case, we're going to go reciprocal. You tariff us, we're going to tariff you. And I think that leads to a healthy negotiation. That's a positive thing. Long term. That does cause lots and lots and lots of instability. And it really focuses on commodities that we simply don't have in the United States. For example, potash. There's zero potash in the United States. That's all sitting in a province called Saskatchewan. It's not a good idea to tariff that when you don't have any of it in the US and you have to have it for farming. So that'll get carved out probably energy. The lowest cost import energy to the United States is from Alberta. It's a $13 a barrel discount. Probably not a good idea to tariff that. And I might add something which is kind of interesting. The only premier to go visit Trump in Mar a Lago before he became president, when it was no presidential record keeping, so it was an open freeform narrative, was Danielle Smith, the premier of Alberta. And she got tremendous heat for it in Canada. Oh my goodness, she got abused. She's the winner. She ended up negotiating a 10% tariff versus 25. So she doesn't look so stupid anymore. And I think that's what people have realized. If you want to get a deal done with Trump, you got to go meet him. You got to sit down at the table. He's that kind of negotiator. Foreign leaders have been lining up at the White House ever since, some with mixed results. Zelensky not so good. But others coming away saying, okay, we have to negotiate. So all these countries are going to negotiate. Now let's talk about China. That's a different kettle of fish. China is getting scrutinized not only on tariffs, but also around IP law and constitutional law in an attempt for the US to level the playing field. There's a bill that Graham Lindsay is bringing against what's called the secret share or the golden share, depending what you want to call it. Where there's a prep share in Chinese listed companies in the US that gives basic, effective control to the ccp, that's not okay. That's against the laws of the United States. And what he's recommending with this bill is, let's delist all these companies. So that's $800 billion worth of market cap. That's one issue. There are hearings on April 9 about pension investing. It's going to take place. Senate hearings. I'll be attending those. I've been asked to testify. And you know how it works with the Senate. It's a friendly ask in the beginning, but it's something you can't say no to. Obviously, I do business in China, and what's being attempted in these hearings is to talk about what it's going to take to level the plot playing field. Remember, the Chinese joined the WTO in 2000 and have never abided by the rules since then. They steal ip. There's all kinds of issues. I think the Chinese people are fantastic. They've given so much to the world's culture and science over the millennia, but the problem now is their government. And so, you know, you've heard a lot of rhetoric about who's holding cards. The US Economy is the largest on earth. And if the Chinese want to become the eighth in the G8, they're going to have to play by the rules. And so this negotiation is coming at them legally, it's coming at them through tariffs. They're in a different bucket than any other country.
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B
I guess. I got to ask you, given that you've been asked to testify, given the fact that you do business with the Chinese, what do you think it's going to take to level the playing Field.
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A
I just want whatever rules we have here that I have to abide by, I want the Chinese to abide by the same to get access to the US market. So if, if, if I have to comply with listing laws when I list a company on NASDAQ or New York Stock Exchange and I have to be transparent, I can't put a golden share on the cap table and not disclose it. I have to be compliant. I have to have complete transparency in my accounting. The Chinese do not. Then why are they allowed to list when I have to pay the fees and they don't? So that's, I think, a level playing field. I want to be able to protect my IP in the Chinese market. They get to litigate in the US I can't litigate in China. So I just, I want to compete. I want to, I really want to sell into the Chinese market. It's the largest market on earth and growing very quickly. I want to do business with them on a level playing field. The same rules everybody else has to live by. And that's what I want. And that's what millions of other investors want. And so, and I think Chi knows that it's a huge opportunity for him to play by the rules and become a major player. Now, he may not want to do that, but it's hard to understand why because the world will just get more and more and more punitive. And I think trade wars hurt everybody. Long term, I understand that for negotiating tactics, but long term, they're expensive.
- [16:42]
B
I want to come back to the crypto, the White House crypto summit that we started the conversation with. I know that you were in Washington. I know we talked a little bit about the stablecoin bill. What are the conversations that you were having at the dinner table? What were folks talking about? What are they excited about when it comes to the crypto industry?
- [17:03]
A
Well, the most interesting is the largest market. And we've talked about the FX market. So if we had a digital dollar would be really useful because it would be much faster and less expensive to do transactions globally. And so we need a stablecoin act. We need it now. And I think that will occur because it's bipartisan. You got to understand something that's disruptive to money center banks. They make so much money in FX trading, a multi trillion dollar market. I wouldn't have to. You know, I'm a watch guy. I own a lot of watches and I support watchmaking in Switzerland and I find young watchmakers and I buy watches from them. They make piece uniques for me, I have to transfer US dollars to Switzerland, sometimes as much as 100,000 at a time. And just try doing that, Just try doing that without being considered a drug dealer to start with. Getting all of the Know youw Client stuff worked out, the transference of the dollar and then the conversion of the Swiss franchise. The amount of time it takes and the fees are outrageous.
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B
The amount of. I've been there. Yeah.
- [18:05]
A
So I mean if we had a, if we had a stablecoin and the watchmaker would accept it and they would. If it was, you know, approved by regulators, I could transfer a hundred , let's say USDC, the one I use and I have to disclose I'm a shareholder in Circle, but I would transfer that in about half a second and at two to three basis points of fees, a fraction of what it cost me to do this now. So it's important. So that's one big thing discussed. The other one, and this is a very interesting narrative, the tokenization of securities on the blockchain. So if this would be very, very good for, for the issuance of capital in venture capital, democratized venture capital. If you're a small company, you're trying to raise $500,000, issue a token has to be approved and then put it on exchanges like wonderfi up in Canada which is, is the largest exchange there that's approved by the, the Ontario Securities Commission and the osc. And then coinbase in the United States would be the largest in the U.S. and so they would become your liquidity for North America and you could issue a token. Now we need legislation for that and we're a little ways away. You know, I think we could have the stablecoin act in 90 days. I think the tokenization of securities, any security, any on the blockchain would be much better than the system we use now. That's going to take probably a couple of years, but this is the direction we need to go in and providing these, these advanced products, financial services for, for all 10 sectors. Remember, financial services is one of the 11 sectors and that's where crypto and blockchain technology should live because it services all the other sectors. And so that's why I've stayed involved. I'm a very large shareholder up in Canada and wonderfi because I think they're going to service the Canadian banks and they're the largest. And I have investments that I hold in Coinbase as well. You know, I, I'm a 5% weighting in crypto. I treat it like no security more than 5%. I, I own a bunch of different ones, so. But I'm still under 20% as a sector. But it's been volatile as you, as.
- [20:24]
B
You suggested 5% weighting in crypto. I feel like the last time we spoke it was higher. I don't remember what it was. You might have said 11%. Are you reducing your crypto portfolio?
- [20:34]
A
No, I, I misspoke there. What I meant was Bitcoin. Bitcoin itself is less than 5%. But I also own HBAR, I own Ethereum, I own a lot of USDC. Right now, the sector for me and all of those are crypto assets is at around 19%. Just over 19. We did the mark to market at year end. We haven't made any adjustments and it's volatile, obviously, but that feels comfortable for me at 20% weighting across the portfolio. In, in. And that includes investments in things like WonderFi and, and, and I, I also, so, no, no one crypto more than 5%. I have gold at 5% and that's also performed well for me. But crypto is a sector to me. I think one day it will be the 12th sector of the economy. And so I, I hold it. 19.2 is the exact number. Right.
- [21:27]
B
Now, I gotta ask you, Kevin. I spoke to former cftc, CFTC chair to massad recently, and he said that Trump is a, is in a brazen conflict of interest with the crypto tokens. He owns, the crypto tokens that World Liberty Financials Defi Project owns. What do you think? Do you think it's a conflict of interest? Do you think the President of the United States should be participating in the crypto markets the way he is?
- [21:54]
A
Well, if, if you haven't gotten used to Trump over 12 years, you will not ever be used to Trump. I mean, I take him as for what he is. I've been fortunate enough to, to spend some time with him in Mar a Lago. He issued those meme coins prior to becoming president. So technically, he's probably not offside. I mean, you may not like that, but there's a lot of other things you may not like about Trump. But I stay focused on the signal, not the noise. It's the policy I care about. I don't care about all the noise. And, you know, there's a lot of noise around Trump, but it's irrelevant because the policy is very interesting. And you, you don't make money on politics, you make money on policy. So you've got to read the tea leaves. You got to understand where the puck is going and if it's crypto, it's good because we're going to have regulation and that's going to bring these sovereign wealth funds, the pension plans and financial services managers into this space and that'll create more demand. It'll be good for crypto meme coins. You know, the whole tokenization is, is an interesting asset because it's, it's level two, it's, it's blockchain and, and you, you need to be invested there if you want to be part of what's next in financial services. Now, whether you like his meme coin or not, you don't have to own it. I mean it's, it's there, there are 200,000 tokens in, you know, on chain. And so there's going to be some form of consolidation one day. You don't need to own all those. The ones that matter would be tokenization of securities for me. And I'm waiting for that now.
- [23:33]
B
I think I ask you this probably every time we talk, but you know, the times change. What are the crypto assets you're most excited about now? And it can be tokens related to tokenization projects. It sounds like you are really interested and invested in those types of projects right now. And where do you see the price of Bitcoin heading?
- [23:53]
A
I think the general trend for bitcoin will be up when, particularly when it's permitted. I'm well aware that many financial institutions that are interested in 1 to 3% weightings in Bitcoin themselves will not invest until their compliance departments agree. And they won't agree until the SEC is ruled on this. As you know, the litigation has been rumored to be dropped under the new sec. It hasn't happened yet, so we need to see that happen. Excuse me. So what we really need is, is more just policy moving towards adoption and then you're going to see a tremendous amount of capital coming in. So I would think you want to be long, probably a good entry point around here. You never know. I mean people ask me where's bitcoin price going to be next month? Anybody that says they know is full of, you know what. Yeah, no one knows it's pure Vol. And you have to, you have to be able to stomach. We mark to market our positions every day at 405, but that's irrelevant for crypto. It keeps trading so it doesn't matter. But I, I also like some of, you know, some of the Level 2 products and, and products like HBAR, which I have a pretty big position in Ethereum. You know, there's some advancement there, some, some other, you know, my interest now is more in the can I find ownership in the block and tackle. And to me, that's the exchanges. You can't do price discovery without the exchanges. And, and that's why wonderfi is so big for me. I mean, they are the de facto leader in Canada, the first country to bring an etf. You got to get price discovery. You got to do it on an exchange. And so my, my idea is that the Canadian banks will eventually want to offer crypto to their clients within the aum of the bank balance sheet. Well, there's only one place to go, and that's wonderfi, in my opinion. And so that's, that's why I'm long.
- [25:57]
B
Kevin, thanks so much for joining the show. It is always a pleasure.
- [26:00]
A
Take care. Thanks.