Because the largest economy on earth is financial services, I think crypto will be the 12th sector of the economy within 10 years because it adds so much liquidity, so much productivity, so much transparency, and so much auditability. It’s so much better than what we’re doing right now which is so expensive and so slow. If I want to transfer capital over to Zurich to buy Nestle stock and Swiss francs, it takes me days and it costs me a fortune. It’s incredibly inefficient. I could do it in two seconds with a stable coin and I can’t yet because we don’t have a policy on both sides of the ocean that let me do that.
But it’s coming one day. I think crypto and blockchain and the services and financial transactions are micro transactions. All of it is going to lend itself to this blockchain auditability transparency. The ledger system it all makes sense to me and I think regulators are starting to figure that out now as an investor. I don’t know which of these chains is going to win Solana going to be polygons. Should I be in Poland? What about all of the others? Ethereum, of course, the big one right now but too slow for many financial services what’s going on with you know helium and all of these different ideas out there so my strategy is to do the same thing I do with stocks get diversification I own 32 positions 32 chain projects 32 different coins and tokens.
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I have no idea which ones will win over the next five years but I don’t need them all to win. I just need a few to win and that’s what diversification is all about and I’ve made some investments in the infrastructure of the old adage and the gold rush. You were better at owning and selling picks and shovels and jeans than you were trying to find gold because that was very hard to do because the infrastructure of crypto is companies like FTX. I’m in a shareholder circle. I’m a wonderful shareholder. I’m a shareholder in immunoblot holdings. I’ve given money to all of these projects because they make a lot of sense to me and I use them all and they’re centralized and decentralized.
There’s stable coins in there. There’s the FTX platform which is the first compliant institutional platform. I can find that my auditors and my compliance department finally agree to let me use it to store value and these are the kind of things that really matter to me. I have to disclose I’m a shareholder in FTX. I’m also a paid spokesperson, so I’m eating my own cooking but I’m also talking about the merits of their compliance platform. They don’t need to get it right, they just need to get it in other words. We’ve got to move forward on something here and I’ll tell you why for all of the people in the crypto universe. There are many that don’t think we need regulation.
Let me point something out that would get everybody on board. It’s a very simple quantum mathematics and here’s how it works: the majority of invested capital on earth is held by sovereign and pension plans, about 90 plus percent of it. They own zero crypto nothing and so for all the excitement about bitcoin 800 billion that is absolutely a giant nothing-burger is totally irrelevant. It’s not held by any institutions that matter. Now I’m an indexer and I’ve talked about this many many times. There are many indexers in the world. But we service sovereign funds pension plans. Let’s say, you’re an oil-rich country in the middle east you’re making 250 million cash a day US dollars in oil revenues. You don’t want to reinvest in oil. You want to invest in every other sector so they’ll go to an indexer like me and say index the s p 500 less energy fewer airlines that’s the kind of index we do and I.
We see this fund flows trillions of dollars of fund flows every year just going through the system indexers see that every 24 hours. I always ask these institutions and these sovereign funds what allocation would you put into bitcoin, just one bitcoin which is the granddaddy digital asset. Everybody knows what you would allocate if you could and they said. We can’t because our compliance department won’t allow it because the sec hasn’t ruled on it yet. Larry Fink doesn’t like it and he’s our biggest money manager and all those other reasons but they would allocate 50 to 100 basis points now when you’re running a trillion-dollar mandate or 800-billion-dollar mandate which is some of the sizes of these funds that’s a ton of money and that’s a huge amount of demand that would come into the market.
As bitcoin prices went past that one percent allocation let’s say they’d sell it back down to one percent but just more importantly if it dropped below one percent. They’d buy it back up so there’d be an internal bid forever the volatility would drop dramatically. There’d be price appreciation in bitcoin. It would be good for everybody involved in crypto but we can’t do it without policy and so everybody should just get off this. Let’s be rogue, let’s be crypto cowboys – forget all that crap it’s time to get this real and get a tremendous amount of capital going into crypto because it’s policy and it gets regulated.
It’s good for everybody, so I’m an investor, I’m constantly trying to find a way of least resistance to invest my capital and redeploy it. I have to look around the world for opportunities. I have to be diverse and you know crypto to me when it was being frowned up upon by regulators in a very harsh way if you recall 2017 was probably the height of when regulators were cramping their clamping down on tokens and different ways to tokenize assets like hotels and everything else back then. As a result, I’m so involved in the traditional financial services market where I’m highly regulated. I have to report almost monthly to both my internal auditor’s compliance department and external regulators all around the world. That’s the world I’m used to and I saw no relief coming from regulators and then what turned me around. What changed me completely was when the Canadians, the OSC granted the very first crypto exchange license attached to a dealer broker a compliant platform.
It wasn’t rogue anymore, they told Canadian citizens. You can transfer your cash out of your bank into this centralized wallet. You can trade Ethereum bitcoin and slowly more and more coins are added. Then they announced in Canada the very first bitcoin ETF then they announced the very first ETF that was for Ethereum. They were moving forward with a policy that was regulated and I immediately started investing in that because I saw it coming. I saw the writing on the wall and I’ve also made the assumption. This is a personal assumption that the OSC, the regulator that granted that world order for the first time, was a dealer broker. Well, in touch with the SEC and other regulators around the world. They talk to each other every day. Maybe Canada was being used as a petri dish or an experiment to try. It’s been wildly successful and that’s when I got involved in something wonderful. I became a shareholder there. If I bought it by which was the first regulated exchange and now that company has 800 000 registered compliant crypto accounts. It’s the model for the rest of the world, so I got on a plane. I went to the United Arab Emirates, Switzerland, England, South America and I started showing these different regulators. Look, what the Canadians are doing can we do the same thing here that’s exactly how I’m spending my time now trying to open up these new markets with the policies that have been put in place tested and proven to work in Canada. What I’m suggesting and I’m just one voice but I try to say this over and over again to policymakers is. Let’s pick one thing: I mean the crypto universe is so broad.
It’s so huge there’s so many different things going on at the same time. Let’s bring policy on one thing and get that done and what I’d like that to be is stable coins because as a payment system right now. It would be very productive to bring forward some policy on stable coins. Let the market compete now. I personally prefer ones that are backed by hard assets like the US dollar but there are many ideas out there some work, some don’t obviously. What happened with Luna was a bad outcome but that’s an Ineos in industry. We’re trying different ideas but the need for an international payment system is so huge. It’s such a huge opportunity to save costs to provide transparency, auditability, liquidity speed – all of those things that’s what I’m suggesting. Let’s pick one thing and bring a policy on stable coins to let’s nail that. Then we’ll move into bitcoin, we’ll move into a blockchain, we’ll move into other things but NFTS, but let’s nail one thing you
This article is a transcription of a video made by Jamie Tree
Original video: https://youtu.be/4bDVukSP-Cs