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- [00:18]
A
Today's show is brought to you by Betterment. What growth Strategy are leading RIAs using that most firms don't? Segmentation. Some clients needs are sophisticated and require deep ongoing planning. Some clients needs are simple like those in the wealth accumulation stage. The smartest firms know planning shouldn't look the same for every client. But the experience should always be exceptional. Now it can be with Betterment Advisor Solutions. It's the platform built for segmenting your book and streamlining those smaller and simpler accounts. The the onboarding experience is automated and paperless. The portfolio management is streamlined and tax efficient. The client experience is consistent and modern. And the impact isn't just felt by your clients. It's felt across your entire practice. Imagine a back office that's humming, a team that's thriving, and a service model ready to scale. Betterment Advisor Solutions. Your biggest regret will be not doing it sooner. Learn more and more betterment.com advisors what is the future of college? Why is financial planning almost impervious to AI? And what the hell is going on in crypto? We are going to cover a lot of ground today. My friend Rick Edelman is back. Rick is one of my favorite repeat guests here on the show. He is the founder of Edelman Financial engines, managing roughly $300 billion for over 1.3 million clients. Rick stepped back from day to day leadership at the firm and is now serving as a strategic advisor and board member. Rick has written 13 personal finance books and is an outspoken advocate of crypto and investing in exponential technologies. Rick, thank you so much for coming by.
- [02:07]
B
Great to be with you as always.
- [02:08]
A
Josh, you like New York?
- [02:09]
B
I love New York. I have an apartment here in the city. I'm here as often as possible.
- [02:12]
A
How often do you come in a given year?
- [02:15]
B
Oh, at least once a month and for anywhere from several days to a couple of weeks.
- [02:20]
A
Okay. Well, we're thrilled to have you here in New York. You're here at a pretty. You're here at a high point for the city for sure.
- [02:27]
B
Coming off the watch the parades.
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C
Yeah.
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A
Okay. People are feeling pretty good about New York right now and glad to see it. All right. I want to talk to you about the future of college. You have a new book. Is it out today?
- [02:37]
B
It came out in December. It debuted at number one on Amazon. Number 14, by the way.
- [02:41]
A
I haven't read it yet, but I've read a bunch of your books. Why should I read this one?
- [02:46]
B
You need to read it as an advisor because you have clients who have children of college headed age. They're teens or tweens or you're a grandparent of such kids. And we need to reevaluate the entire college question, which no college book on the market does, which is why I wrote mine.
- [03:01]
A
Okay, what is it called?
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B
The Truth About College.
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A
Okay. What is the truth about college? In 2026?
- [03:07]
B
It is that we, parents, grandparents, are viewing college incorrectly. The motive in American society is to get your kids into college. And every book, every tutor, every high school guidance counselor, every parent is all focused on how to get the kid in, how to choose the right school, how to pay for it, how to Prep for the SAT, how to prepare the application, etc.
- [03:28]
A
You're describing my life over the last three years.
- [03:30]
B
It's all designed about college. High school guidance counselors are often evaluated on how many high school seniors go to college. So there isn't an idea of any other course, of any other path. And yet what we need to recognize is that for today's environment, college is not the way it was when you and I went or when our parents went. Today, college is broken, meaning the fundamental assumption that kids ought to go is fundamentally flawed. And I've got the statistics to prove it. 24% of college freshmen drop out. Less than 60% graduate within six years and 10 years after graduating. Less than half are working in a job that required their degree. In fact, most are in a job that didn't require any degree. And yet the average cost of a school today is facing a quarter of a million dollars. The average undergrad graduates with 30,000 in student debt. It is severely interfering with their ability to buy a home, buy a car, live independently, get married, have children. We're seeing declines and delays in all those statistics. And here's the worst one of all. 50% of today's college students have been clinically diagnosed with depression.
- [04:43]
A
Can I argue with you on all this stuff?
- [04:45]
B
Absolutely.
- [04:45]
A
Okay. My household is singularly focused on getting both of my kids into a school, and not just any school, but a big school or a good school. And a lot of the reason why is the social opportunities that are created.
- [05:04]
B
Yes.
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A
I want my kids with other kids who have worked hard.
- [05:07]
B
Yes.
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A
And didn't just wake up and happen to be in an institution, but really had to fight to get in there. I think there's character that's built as part of that process, and I think there's a certain level of kids that I want my kids to associate with because it'll put them in a better position to begin their adult life.
- [05:27]
B
No argument.
- [05:28]
A
If I were to take your stats and then redo them for the types of schools that I want my kids to be at, would the outcomes change?
- [05:37]
B
No. That's the crazy thing is that even if you send your kids to the elites, to the Ivy Leagues, et cetera,
- [05:43]
A
we're not Big Ten schools or D.C.
- [05:47]
B
schools, you're going to still find those statistics. In other words. I'll give you two answers to this, Josh, because you're raising a really valid point. Number one is this. And you'll resonate with this a whole lot. An average kid who goes to a great school will have an average life. A great kid who goes to an average school will have a great life. In other words, it's more about the kid than the school. The second element is do you create
- [06:10]
A
above average kids by putting that goal in front of them when they're in ninth grade?
- [06:14]
B
No, not necessarily. If the child. No. We know it from the statistics. 85% of incoming freshmen are undeclared, undecided. And this is why over 80% change their majors and 60% change schools. Because what the the parents and they thought was the right place to go, the kid discovers in their second or third year. This place isn't right for me. It doesn't meet who I am or what I am not at a cost.
- [06:38]
A
Isn't the kid finding themselves.
- [06:40]
B
It's perfectly fine for you, Josh. Your family, the wealth you have. Sure, it doesn't matter in that sense. But for the average student who is massing massive amounts of debt and recognize that whenever you change majors, you end up having to take extra credits cause the old credits don't qualify. Or if you change schools, the new school rejects 43% of the credits from the old school, which means you have to go to years five and six at more expense, more time. So for most Americans who are challenged financially, this is a path toward a problem. And therefore, here's the conclusion. While I painted a statistical picture of really bad issues, the real message is this. For most kids, you're right, College remains the best path. I'm not trying to say no to college and my book is not anti college. My premise is this. If you do it correctly, college is the greatest choice. The problem is too many parents are allowing too many children to go about it incorrectly. They're going to the wrong school, they're choosing the wrong major. They're going about it in the wrong way, amassing too much debt and emerging unprepared for today's workforce. So the book has a simple premise to teach the kid how to graduate in 4 years debt free on the dean's list with a degree ready for them to enter a field they love.
- [07:59]
A
So somebody buying this book will get that roadmap from you?
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B
Yes.
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A
How do I achieve an actual college education? That matters?
- [08:07]
B
Yes. And it shows you how to minimize the cost of college to avoid going to debt, how to choose the right major, how to determine if college is right for your kid right now, and alternatives if not, such as the vocations or a gazillion other options that frankly didn't exist very much when you and I were in college. So it's basically a simple point of saying to the parent, it's different than it was when we were in school. And we can't assume that your child's experience will match yours because the environment is different.
- [08:33]
A
One of the things that's funny about the fact that it's different, it seems as though the schools that are the biggest are getting the highest amount of applications now.
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B
Yeah.
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A
And a lot of that is sort of like the polarity is shifting south, at least where we're from. Kids from the Northeast are increasingly choosing schools like Alabama, Clemson, University of Georgia, Tulane. These schools always got kids from New England and the New York metro area, but now I think they're getting a lot more. I don't know what that's about. And then I contrast that with Syracuse, which says it's not gonna hit any of its goals in applications this year or in enrollment this year. I've always thought of Syracuse as being on roughly the same tier as a Tulane, but there's a difference in preference. Why does that difference in preference exist? Is it about the weather? Is the thing that I keep hearing, Is it about post Covid, just different lifestyle choices? Is it the Instagram effect? People seeing much better visuals for a Southern school than a school that's in upstate New York? Or is it some combination of all these things?
- [09:50]
B
It's no doubt it's some combination. I'll add another factor, and that's sports. Kids want to go to a school that has a great sports program.
- [09:56]
A
They always did. But more now?
- [09:58]
B
Yes, I think so. And for all the reasons you cited, and yet we have to recognize that the cost of going to that school, especially out of state, the tuition is so much higher that half of parents today and half of high school seniors today say college is simply not worth the cost.
- [10:16]
A
Okay, what do you make then of the statistic that people will show where it's sort of like two lines and they diverge of income throughout your lifetime. People with a college degree versus people without. How do you explain that?
- [10:31]
B
These are some of the big advantages and the reasons for going to college. College graduates earn on average a million dollars over their lifetime, more than non grads. College grads are more likely to have stable marriages. They're less than half as likely to divorce. They live longer lives, they live healthier lives, they live happier lives. They have greater support and involvement in their communities. Their children grow up better because they're living in better neighborhoods, they're living in safer neighborhoods. The children are generally involved in a two parent household as opposed to one. And we have seen lots of studies showing the advantages to children of that. So there are tremendous advantages for going to college and graduating with a degree. The challenge is that today it's not so much getting into college that's increasingly easy because enrollment is down nationally by about 15% compared to 10 years ago. So schools are accepting far more students than ever. It's easier than ever to get in, but it's harder than ever to stay in and graduate. And that's the point of the book. It's not a question of going to college, It's a question of graduating from
- [11:34]
A
college, which is the point.
- [11:36]
B
Right.
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A
Okay. You said you had a fireside chat and you told students that institutions should have a fiduciary obligation to their students, but they don't. Right. So that's a pretty damning thing to say when you're speaking at a school that you yourself are help. Which we're gonna get to in a minute. You yourself are endowing. But like, what do you mean by that? Is that a general thing for every school, that they should consider adopting some sort of.
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B
They should.
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A
I think they feel it.
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B
No, they don't.
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A
You don't? Really don't.
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B
Absolutely not.
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A
Business schools seem to be very obsessed with showing potential applicants. This is what percentage of our students end up in a career. I feel like they look at that as a point of pride.
- [12:23]
B
They play the same game that mutual funds play with survivor bias. They're not showing you how many dropped out, they're showing you of the graduates. Here's what the percentage of graduates are working in that field. That's a huge distinction. Colleges are. I hate to put it this way, but they're nothing more than car salesmen. Their goal is to maximize sales and revenues. And without regard as to whether this vehicle is in the best interest of that buyer and whether or not they're getting the best price. Colleges are in the business of attracting Students, they're going to do whatever it takes to do so. Such as building lazy rivers. Seven schools in this country now offer one. They're going to have.
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A
I mean, you would like a lazy river if you were at school.
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B
If I were 17, I would go for it. But come on, this is junk food and heroin for a 17 year old. So we need to recognize that they're doing whatever it takes to admit students they frankly shouldn't admit. How else do you acknowledge 24% dropout? At some schools they have food banks on campus because the students are food insecure. They can't even afford food. If you can't afford food, what on earth are you doing there? So they've got to do a better job of evaluating. Are you right for this campus, why are so many schools offering remedial classes in English and math? Isn't that a way of saying you're not ready to be here? Yeah, and that's kind of the problem. So they're happy to accept you. And then there's the cartel issue where so many schools will say, oh, we're going to charge you an in state student rate if you're a state school and we'll charge you a higher out of state rate. Well, guess what, they're going to go after the out of state student where they get higher tuition revenue. So all we end up having are students going to different states because they can't get admitted into their home state, forcing all these students to spend more than they otherwise should because of the game the schools are playing to maximize their tuition revenue.
- [14:11]
A
Florida seems to be going the other way. The schools have become a luxury item within Florida. They cost a lot, but they are also very focused on taking the top students and not having that brain drain and having those kids necessarily run up to the Ivy League. And we're also turning things.
- [14:29]
B
And I'll give you another example. You're absolutely right. A lot of schools are now offering free tuition. And some of the elites, Brown, Harvard, Yale, MIT and others. If you're earning under $100,000 a year tuition, room and board are free. Under $200,000 a year for the family, tuition is free. This is all wonderful. And it's another illustration that over the next 20 years college will probably be free for everybody everywhere, just like K through 12 is.
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A
You think that's where this is going?
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B
Yes, no question.
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A
Okay, where will we see that first away from Ivy League? We'll see that with state schools.
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B
Yeah, state schools. And we're already seeing this community colleges in Almost every state are free right now. So your kid can associate's degree for the first two years guaranteed transferability into the four year state college or university.
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A
Why will it go that way? In whose interest is that? Taxpayers will decide they want to fund this or.
- [15:22]
B
The taxpayers are already saying this. I'll change the word. The voters are already saying this. Mom and dad know how incredibly expensive college is. They can't afford it and they're demanding that their state legislatures make college more affordable. Translation free and partly because schools have many of them have abundant endowments, others have resources from other methodologies that they are playing the game again, attracting students by offering free or low cost or subsidized expenses.
- [15:50]
A
Okay, tell us about Rowan University and what you're doing there.
- [15:55]
B
We announced a couple of months ago the creation of the School of Financial Planning. I'm going to be.
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A
Where is Rowan? Tell people what the school is.
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B
Rowan University is a state university in New Jersey. It's about 30 minutes outside of Philly, two hours from here in New York. And they're an R2 university. They'll be R1 next year. A leading research institution. They're one of the only schools in the country to have three medical schools. It's an astonishing institution. I went to Rowan and that's where I met my wife Jean. She's on the board of trustees. We've been heavily involved there for a very long time and we just created the School of Financial Planning. As founding head, I'll be involved in creating the curriculum and hiring the faculty. Our goal is to produce 500 CFA a year. Once we get fully up and running, we're going to offer a minor, a major and a master's degree, also an online program. And the fundamental reason that I chose to do this is because we have a big problem in our country. Last year, business schools around the U.S. 1,500 of them graduated over a quarter million business, finance, marketing and accounting majors. Less than 200 schools offer a financial planning degree and they produce less than 4,000 financial planners. Let's face it, what do we really need more of? Marketing guys or financial planning?
- [17:13]
A
What are the biggest schools with financial planning programs that you can think of?
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B
Oh, Texas Tech and Kansas have two of the best programs in the country. There are lots of good ones, but not enough. And we're producing far too few financial advisors relative to the need. We're all familiar with the McKinsey study that says 100,000 going to quit over the next 10 years.
- [17:29]
A
Okay, let's dive in on that. So McKinsey says, we're going to be short 100,000 financial planners. We have 1,500 schools offering business degrees. Fewer than 200 offer financial planning. Why does that imbalance exist?
- [17:47]
B
For the simple reason that most people are unaware of the existence of the financial planning profession. Students have no clue at age 18 that you can go into financial planning. They've certainly heard of Wall Street. They know about brokerage and investment banking. They love to go in that direction. Everybody's familiar with accounting and finance and marketing. Their parents are unfamiliar with this. This is a first gen. It didn't exist when you and I were kids.
- [18:13]
A
I agree with that. So I spoke to somebody at the University of Ohio. They now have a financial planning program. It's under the home economics major. That's exactly the school. It's not in the business school.
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B
That's right.
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A
So I guess they were doing personal finance that then became financial planning and
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B
they treated it like home ec.
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A
It's home ec.
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B
Yeah. Let's balance a checkbook.
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A
So a business school kid at Ohio State, which is a great school, does not have entree to financial planning as a profession unless they switch out of business.
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B
And it's pejorative too, because people think, kids think, oh, you're talking about selling insurance and selling stocks and bonds. I don't want to be a salesman. They don't understand the fiduciary nature of what we do, how we improve people's lives. They have no clue because their parents believe very likely don't have a financial planner. Many parents themselves aren't doing very well with money. They're financially illiterate as adults. Kids are growing up financially illiterate because K through 12 doesn't teach them anything about this. And they have no idea what the rewarding nature of our profession is. And that's a big reason why kids aren't choosing it as a choice. Partly because most schools don't offer it even when they do, as you pointed out, it's not in the business school. So we're doing it in the business school, the business college at Rowan University where kids can not only major in it, they can choose to minor. So go ahead, stick with your sociology or philosophy or history major, minor in financial planning. And now you can do it as an online course. You're a career changer in your 40s and 50s now, anywhere in the country, you can get this program online. And we're also going to be creating a couple of dozen certification programs. You don't want a full blown career in financial Planning. Here's a certificate in tax planning or estate planning or retirement planning or college planning to allow students and people in the workforce to add this as a new career path as their current careers are being threatened by AI.
- [20:04]
A
So one thing that I've noticed recently is kids are saying wealth management when you add. So my daughter's 20, my son is 17. So I'm right in the thick of this. And I know all the parents of the kids. And it's constant, like up until the last year, I think, when I asked people like, kids, what do you want to. I'm studying business. What do you want to do? Private equity. Private equity. Private equity. What is private equity? I have no idea. But everyone I know that works in private equity has a sick car. That's like literally the decision process.
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B
Yes.
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A
Okay. I'm hearing wealth now more and more, and I don't know if that's because private equity stopped hiring, but I am hearing kids talk about going into wealth. They don't say financial planning, right? They say, I'm going into wealth management.
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B
And they still don't know what that is.
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A
And they want to go to Morgan Stanley or Goldman Sachs. They have no idea that the most powerful people in wealth management are financial planners. Because they own the client, right? They own the client's allocation decisions. So they go into wealth. You might become a wholesaler selling to wealth. And I don't know if that's what you would have intended if you understood.
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B
And they don't understand.
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A
They don't understand.
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B
The high school guidance counselors have no clue about this. So they're just less likely to recommend it as a career path. And so our real mission first at Rowan University will begin with New Jersey, since it's a state school of going to the high schools around the state to let these kids know of the career this exists.
- [21:34]
A
And it's a great career.
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B
Right.
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A
And it's in demand.
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B
And our next step will be to take this, put it in a bottle, and make it available to colleges and universities across the country. We're just gonna replicate this on a national scale.
- [21:48]
A
So fast forward four years from now, the first class of School of Financial Planning at Rowan graduate. Where do you envision. Obviously, everyone is different, but where do you envision a lot of them ending up in their first job? Is it answering phones at Schwab, Vanguard Fidelity? Is it finding a local RIA near where they live that's like willing to mentor a 22 year old, which most firms are not. You know this. Or is it some other way of getting. Because it's really hard to understand the career path for a lot of people.
- [22:23]
B
And because of that. You're absolutely right, Josh. And because of that, it is really important that we establish the effective career path for these kids. And this is why Edelman Financial Engines has funded this program with a $10 million gift and is going to be creating internship opportunities and career opportunities for these kids using its national park stature. With 175 offices around the country, there
- [22:47]
A
aren't that many firms that have the size and scale to take a meaningful number of advisor trainees. Morgan Stanley and Merrill lynch, they will still do that. But on the RIA side, what do you have? 10 RIAs of the wherewithal to not just big RIAs but RIAs that actually have something to teach.
- [23:08]
B
And that's why our big focus, Edelman Financial, is very heavily behind this. Going to create these opportunities for these k not just in the Delaware Valley area, but on a national basis and broadening this to other RaaS around the country. Because our ultimate goal is to produce 500 CFP ready graduates a year. And we're going to be trying to infuse this on a national scale and encouraging other schools around the country to replicate this model. We're gonna give it to them in a box so that they can very easily create this without having to reinvent it.
- [23:40]
A
Can you tell the audience why you think financial planning is one of the more impervious professions in the age of AI? Why do you think of it that way?
- [23:51]
B
It's because at the end of the day, as we all know as advisors in this business, it's about the human relationship. Although we do know that AI will eventually be able to provide EQ and some people are already getting therapy from online chatbots. We know that it's the human connection. If you have a personal relationship with someone, you're going to want to maintain and sustain that. And this is something that will be, I will phrase it as last man standing, that by the time AI does that, every other job will have already gone by the wayside. So I don't know when it'll occur, if ever, but it'll be a very long time from now. Creating the job stability and career opportunity in this profession that simply doesn't exist elsewhere. Accounting will be history decades before the financial planning industry is.
- [24:39]
A
So I have this vision that I share with my financial planners here at the firm. Curious what you think about it. I sort of think of them as luxury goods. Luxury items or luxury. To the extent that AI is going to be at the forefront of our interactions, everyone's interactions all day long. The moment that you actually get the attention of a human being will actually be special. And having the attention of a human being that really knows you well and whose guidance you trust, that will feel like your luxury for that day. Whereas every other interaction just boils down to a transaction. I need this. You give me this. Thank you, I'll take it. Goodbye. So I'm trying to sort of like instill in my financial planners, time spent with you is a luxury. Wealthy people will pay for that luxury. And it will stand out in a sea of interactions they have with chatbots and software programs. And it'll be even more meaningful in five years than it is today, if you can imagine that. What do you think of that heuristic?
- [25:46]
B
I completely agree. It's going to be the advisors using AI to augment what it is they do behind the curtain. The client isn't going to care because
- [25:55]
A
you care what happens behind the curtain.
- [25:57]
B
Clients already know you're using tax software. They don't care. What they want is from you is not only the relationship and development, but also the analysis of how does all this noise, how does all this information, all this data apply to me and my life? And let's remember that the overwhelming, the overwhelming majority of people in this country all around the world don't care about money. They don't like the subject of money, they're intimidated by the subject. They're busy doing other things, they have preferences in other areas. They don't want to have to go to a chatbot to get answers. They don't want to go online to ask questions. They want it handed to them. And that's what you as the personal human advisor can do, saying, I got this, don't worry about it.
- [26:33]
A
Twenty years ago, the percentage of the population that considered themselves a self directed investor, it's about 30% and today? 30%.
- [26:42]
B
Exactly.
- [26:42]
A
So the 30% of self directed investors who are ruggedly independent, they want to do everything themselves. They're going to have better tools than ever. That doesn't mean anything about the other two thirds that weren't self directed last year, the year before, the year before that, and probably won't be. It seems like it's in this stasis. I don't think that chatbots are going to be the thing that takes 30% to 50%.
- [27:08]
B
Remember when everybody was fearful that wealthfront and betterment were going to put us all out of business?
- [27:13]
A
Well, you and I laughed at that. In real time.
- [27:15]
B
Exactly. And Today they have CFPs on staff, you know, humans. And so it's the same kind of thing.
- [27:20]
A
They're launching referral networks to human advisors. So that's the robo revolution.
- [27:26]
B
It's that old. It's not becoming a cliche. AI won't put you out of business. It's the advisor using AI who will. And we need to recognize that what you do, how you do it, will shift. But what matters, what cannot be replaced, is that human dynamic, that human connection.
- [27:40]
A
All right, so you and I agree on that. I want to. I can't let you escape here without talking about crypto winter. 3 or 5 or 8. I don't know what number crypto Winter is this that we're in right now?
- [27:53]
B
Depends how you count 50% drawdowns or better. I think this is number six.
- [27:57]
A
Okay, so you wrote an update. How do I describe your involvement in crypto? You're a proponent. You're an advocate. You're involved in Digital Assets Foundation?
- [28:07]
B
Predominantly. I'm an educator. The Digital Assets Council of Financial Professionals. Dacfp. You've keynoted at our annual conference. It is a crypto education company. We don't manage money. We aren't serving clients, we aren't pitching product. We're just teaching advisors and their firms. What is it?
- [28:27]
A
You have to change the size of the venue each year.
- [28:29]
B
Year.
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A
For that event based on the price of bitcoin?
- [28:32]
B
No. Shockingly, this year we just held our event annually. Two weeks ago, we had a 60% increase, even though Bitcoin is down 50%.
- [28:41]
A
That is surprising.
- [28:43]
B
I think it's because advisors are now realizing it ain't going away. More and more clients own it, more and more are asking about it, and advisors are behind. They're racing to catch up in their knowledge.
- [28:54]
A
Okay, so you did a mid year update, you said, and first half of 2026 has been brutal for digital assets. Yeah, we know. Not only is bitcoin down, we saw a 10 day period where $4 billion was drained from the popular crypto ETFs. You cited the fear gauge being up 20%. Michael Saylor sold Bitcoin for the first time since 2022, which, there's a qualifier to that. But you just, you list all of these reasons for why we're in this bear market for bitcoin. If you could just give people a sense of like, what's the big picture here? Why the drawdown? And whether or not you have any sort of sense of how far through this particular crypto Winter, we might be
- [29:40]
B
the reason for the drawdown. It's the death of a thousand cuts. No single reason but a couple of dozen minor ones that all add up to breaking the camel's back. And so we are still in the mess of this right now. And it's reflected in bitcoin prices being down 50%.
- [29:58]
A
Gold held up, Bitcoin fell. But those two things were highly correlated. Last year.
- [30:03]
B
They were moving up together for a while they were. But if you look over 16 years, they did not correlate. And for most of bitcoin's history, it has not correlated to anything else. It's been truly an independent.
- [30:15]
A
So here's the other one I wanted to ask you about. There was a period of time where Bitcoin and the NASDAQ were very highly correlated because bitcoin was seen as sort of like it's not a company in a traditional sense, but it was seen as a technology play.
- [30:27]
B
Correct.
- [30:28]
A
That linkage has also broken. Bitcoin is down with software, which I'm not sure if there's any linkage there, but semiconductors have obviously doubled in price over the last year and bitcoin's been cut in half. So that linkage seems to not be a thing that people are talking about.
- [30:45]
B
And that's the challenge for everybody looking at this sector is trying to figure out what is it like. And it isn't like anything. It's like everything at any given given moment in time.
- [30:54]
A
It's a chameleon.
- [30:55]
B
It is. And we have SpaceX, OpenAI, Anthropic, all the shiny new toys that are capturing everybody's attention. A trillion dollars is flowing into that stuff that used to go into bitcoin. So there's a lot of pricing pressure. There's also weakness on Capitol Hill regarding the Clarity Act. It was supposed to have been passed by now, it still isn't. And debate about whether or not it will. If the Clarity act doesn't pass, then people will consider that a negative.
- [31:22]
A
What is holding up the Clarity Act? There are some crypto players who think it doesn't give them enough ability to do things like, for example, pay a yield on, on a stablecoin, et cetera, so that it doesn't have full buy in from the biggest players in crypto. And of course the banks don't want crypto to become neo banks. So it seems like everyone hates it for different reasons.
- [31:49]
B
You're correct. Brian Armstrong of Coinbase has opposed the bill. He's now changed his mind. But he opposed it originally because the Bill wouldn't let stablecoins earn yield. Brian wants it to.
- [32:00]
A
Stablecoin holders earn yield.
- [32:02]
B
Yeah, they want stablecoins to be able to pay yield the way a money market. Exactly. And the bill doesn't allow that. Banks don't want it to because they see that as competition. So the crypto community and the banking community started fighting over it, forcing the bill into no man's land. The question now becomes, will they get past their argument and allow the bill to pass? Tbd. Polymarket says no. So we'll.
- [32:28]
A
Polymarket says no by the end of this year or no. Period.
- [32:31]
B
They'll never get there by the end of this year. They say no.
- [32:33]
A
Okay.
- [32:34]
B
If Trump loses control of Congress in the midterms, then the answer will probably be never. So there's a lot of negativity.
- [32:41]
A
Might've missed their window.
- [32:43]
B
Exactly.
- [32:43]
A
Had the most crypto friendly president ever.
- [32:46]
B
And Congress yet. Correct.
- [32:48]
A
And Congress.
- [32:49]
B
And so they're blowing their opportunity, which is why there's such a push by the administration to pass the bill now. And there's skepticism in the marketplace as to whether that will occur.
- [32:59]
A
All right, so you have new things people can invest in that are more exciting, like rockets and data centers. Right. Okay, then. Now you have this political sort of. There was a lot of political certainty, like now all the dominoes are gonna fall in our direction. And then we ran into this banking thing and it's not happening.
- [33:17]
B
Correct. And so all of that contributes to why bitcoin prices are down.
- [33:21]
A
Explain the Saylor thing.
- [33:24]
B
Well, Michael Saylor, the biggest proponent of Bitcoin, has always said he would never sell. And then a couple of weeks ago he did.
- [33:29]
A
He sold 32 for microstrategy. Not personally.
- [33:32]
B
Correct. And strategy sold 32 bitcoin after swearing they never would. But of course, a week later, he bought over 1500 Bitcoin.
- [33:40]
A
So why did he do that?
- [33:41]
B
I'm trying to get him on the phone.
- [33:44]
A
What are the stated reasons? Surely the company put something in a filing.
- [33:48]
B
They needed to create cash to pay the preferred dividend, but it had nothing to do with their continuing acquisition of Bitcoin as part of their long term strategy. So two very separate issues unrelated to each other, that simply occurred within a period of 10 days.
- [34:06]
A
So he wasn't trading it based on the price of it.
- [34:09]
B
Correct.
- [34:09]
A
Wasn't calling a top and selling 30%?
- [34:12]
C
No.
- [34:12]
A
Because it was quote, unquote high.
- [34:13]
B
Correct.
- [34:14]
A
Because he still thinks they're going to a million dollars a coin or whatever he thinks.
- [34:17]
B
Correct.
- [34:18]
A
Okay. But people did react to this they did.
- [34:20]
B
Because they were all going under the assumption Michael will never sell. He did. And that questioned their own. If they're questioning his conviction, that question their own. Okay, so these are some of the headwinds that are going on at the moment. And as a result, crypto prices generally are down significantly.
- [34:34]
A
So.
- [34:34]
B
Right, but there's a flip side.
- [34:36]
A
Well, before we get to the flip side, it's not just Bitcoin. To your point.
- [34:39]
B
Correct.
- [34:40]
A
Ethereum looks terrible price price wise.
- [34:43]
C
Correct.
- [34:43]
B
Solana.
- [34:44]
A
Solana worse.
- [34:45]
B
Yes.
- [34:45]
A
These are in 75% drawdowns. Ish.
- [34:48]
B
Yes.
- [34:48]
A
Okay, so they, I guess in a bull market there's more divergence. In a bear market they all go down.
- [34:56]
B
Yes.
- [34:56]
A
Is that accurate?
- [34:57]
B
That's fair.
- [34:57]
A
Sort of reminds me of the stock market.
- [34:59]
B
Yeah, they very much so. Their ownership assets, their risk assets.
- [35:01]
A
So what's the flip side?
- [35:03]
B
So the flip side is what's going on and in the technological development and the institutional engagement is a story that people are not paying attention to. Tokenization, Huge tokenization of securities is coming. BlackRock securitized, Franklin Templeton and others. Securitization, tokenization of cash with the stablecoins. Tokenization of ETFs by BlackRock and State Street, Franklin Templeton and others. We're seeing astonishing levels of development and engagement by institutional investors. 95% of endowments and pension funds that currently don't own Bitcoin say they're going to allocate by the end of the year. And three out of four, 76% that already allocate say they're going to increase their allocations. So there is a huge groundswelling being built right now. They're all going through their due diligence process, their investment committee and board approval process which takes, as you know, so years. As they complete that exercise, we're going to see astonishing levels of product. People have no idea that when the Bitcoin ETFs were established in 2024, there were nine of them. Today there are nearly 200 crypto ETFs on the market. BlackRock just filed to release an income ETF that will pay a 15% yield. Goldman Sachs has launched its filing. Morgan Stanley, JP Morgan, they're all racing to add product to client portfolios. Morgan Stanley wants their advisors to allocate 4% clients assets to crypto. So we are seeing a massive disconnect between the price of this stuff and what's happening underneath behind the curtain.
- [36:40]
A
I guess the financialization piece of the crypto story has never really been in Doubt, even in a bear market, people have been willing to trade it. We don't have to worry about that part. I think the thing for outside observers, even people that own a little, the skepticism, the hesitancy is, all right, we're in year 17. What is the point? We're still outside of, you can invest in it, you can make money in it. We all understand that people have made fortunes in crypto, but then what? Still waiting for the answer to then what? Tokenization sounds like it could be.
- [37:22]
B
Tokenization is the future of crypto.
- [37:25]
A
Okay, so this will enable things that are illiquid or unable to be traded unless they're in large blocks to all of a sudden be atomized.
- [37:34]
B
I'll give you an example.
- [37:35]
A
The first a building a sports team. Okay, I'm with you on that.
- [37:39]
B
And we're gonna start with the low hanging fruit stocks. New York Stock Exchange and NASDAQ have already partnered with blockchain companies to securitize and tokenize equities. You're gonna be able, before the end of next year, you're gonna be able to trade securities 24 7,365t plus zero settlement at virtually no cost.
- [38:02]
A
Is there a universe in which that happens and it does not mean anything positive for the price of crypto or does, or if that really becomes widespread, the price of some sort of crypto
- [38:14]
B
has to go up, it all skyrockets. Because the tokenization by definition means you're doing this on chain, you're doing it on a blockchain.
- [38:21]
A
So more capital has to come on chain, which means the prices of the coins themselves have to go up.
- [38:26]
B
Because when you engage in the transaction on the Ethereum network or the Solana network or Polygon or Algorand, you're paying processing fees. They might be fractions of a penny like Solana, but when you do trillions of transactions, those fractions of a penny add up.
- [38:42]
A
Robinhood announced the tokenization of some venture backed non public startups and the companies didn't like it. And I think they might have even gotten some cease and desists and they sort of backed away. They made a really big blustery announcement and then I don't wanna say they backpedaled, but immediately it sort of went quiet. Would public companies look at something like this and say, yes, we want our, the securities we issue, we're okay with them being traded in some other format, even though those aren't the securities that we issued.
- [39:18]
B
But that's the key point.
- [39:19]
A
Okay?
- [39:20]
B
In other words, the pushback against Robinhood was that Robinhood was creating a synthetic right. Companies had nothing to do with wasn't the actual stock and the company had nothing to do with it. They didn't approve of it and it was trading as a mirror, as a replica. That's not what the NYSE and nasdaq,
- [39:39]
A
they want to tokenize the actual security ownership itself.
- [39:43]
B
Exactly. So the companies love it because it's literally their security with greater liquidity and access on a global scale.
- [39:51]
A
Yeah.
- [39:51]
B
What's not to love?
- [39:52]
A
Okay. All right, got it. Anything else on crypto or you think we have it covered?
- [39:56]
B
I think you've got.
- [39:57]
A
All right. Rick, it's been such a pleasure hanging with you. I always learn so much. So I want to remind people the name of the book is the Truth
- [40:04]
B
About Crypto and the Truth About Kotlin.
- [40:06]
A
The Truth About Crypto. You like the. Is that your.
- [40:09]
B
Yeah, I've got the Truth about. The Truth About Money, the Truth about retirement plans and IRAs, and now these.
- [40:15]
C
All right.
- [40:15]
A
It's been such a pleasure hanging out with you. Thank you so much for coming by. Rick Adelman, ladies and gentlemen. Thank you for watching. Thank you for listening.
- [40:40]
C
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