Crypto isn’t just recovering, it’s evolving. Christopher Perkins, President of CoinFund, joins Wealthion’s Maggie Lake to explain why we’re entering a new era of digital finance.
They break down the rise of stablecoins (which could drive $2T in Treasury demand), the tokenization of real-world assets (from stocks to real estate), and why U.S. regulatory clarity is unleashing a wave of institutional adoption. Plus, how meme coins ironically paved the way for capital formation, and why fixed income in crypto could be the next big thing.
Whether you’re holding Bitcoin, exploring Ethereum, or just crypto-curious, this interview offers a rare inside look at what’s coming next and how to position yourself for it.
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Christopher Perkins 0:00
Okay, stable coins are the greatest innovation for the greenback. I couldn’t take a whiteboard in my office here and design a better innovation for the greenback.
Maggie Lake 0:17
Hello and welcome to wealthion. I’m Maggie Lake, and today I’m joined by Chris Perkins, president of coin, fun, Hey, Chris, welcome Maggie. How are you? I’m doing okay. I’m doing okay. Excited for this conversation. I always love digging into this area, because I kind of feel like we’re all still a little bit on a learning curve. We forget. This hasn’t been around for that long. So let’s just start kind of roughly where we are in real time in the market. I feel like we have volatility on the rise. There’s so much global uncertainty. How is that macro backdrop impacting the crypto market? And I’m just going to use that broadly. I know, I know a lot of people have an issue with even calling it that, but how is it impacting the kind of world where you’re living in right now?
Christopher Perkins 0:59
Yeah, it really, it’s a great question. And it really, it really depends on your perspective and your time horizon, right? As you mentioned, these assets are very young. Bitcoin emerged out of the global financial crisis, and I remember sitting on the floor of Lehman Brothers and going through that, you know, Ethereum is about to hit its 10 year anniversary, and that’s going to be a big unlock, because when I was in traditional finance, like, we really needed 10 years of his history before we could risk manage an asset. And so we have these very interesting new assets, entire new asset class, right? And it’s really hard to, like, put them in a in one bucket that said, because they’re so new, they act like these frontier risk assets, so they’re a little bit sensitive to things like when Israel decides to comprehensively attack Iran. But that said, we believe in time, there’s going to be some decoupling where these assets start acting as they’re designed. And so if you look at Bitcoin, right, what the heck is it? Is it digital gold, or is it this frontier risk asset? And you know, we’ve seen issues times when it has decoupled from being that risk asset. I think in the longer term, you’re going to see that. And then you have this thing called like Ethereum, which is now introduced to smart contracts, and Solana, that does something, you know, similar as well. But then you asked me, What about crypto? Well, what about stable coins? Right? You know, and stable coins can be in any currency. Today, it’s 99% of internet money is dollars. But you know, how did the dollar respond? Right? Because stable coins we’re about to like, be in this very historic period. One of the things I’m absolutely most excited about is this thing called the genius Act. The genius act is going to, for the first time, provide a regulatory and legislative framework around these things called stable coins. And for those of you who don’t know what a stable coin is, it’s something that’s really simple. You take $1 and you tokenize it, and you can move it throughout the internet very seamlessly. So it’s a really hard question, I say like as a as a group today, you know, crypto is perceived as a frontier tech risk, risk asset, so it’s sensitive to to those geopolitical moves or whatever. But the thing that you’ll also see is that volatility works in both directions, and so you can have this face ripping melt up or down, but if you step back as an investor, and again, at Coin fund, we have, we have venture and liquid strategies. You put your long term hat on something like Bitcoin is the best performing asset in history, so it really just depends on your time horizon.
Maggie Lake 3:34
I love that answer for so many reasons, and I want to unpack everything. People are going to see me taking notes, and I’m so interested to hear about stable coins, I’ve been kind of obsessing about this myself. But I love your answer, because it’s not one thing, right? We tend to think we’re using the past as as an example or precedent for this, and I think we really have to change the way we think about it. I like that. You said short term, long term, and we’re going to try to sort of dig in a little bit in the time we have to find out what’s going on and how we should be thinking about this, and lean into your background in traditional finance and the way you kind of pivoted and how you’re thinking about this. I imagine there’s going to be a lot of questions. I’m going to encourage everyone listening. If you have them, put them in the comments. We will get back to we will ask if you are wondering, does it? Is it something I should be thinking about, or I should be more exposed to get a free portfolio review, if you’d like, from one of our advisors in the network, you can head to wealthion.com/free, but I really want to encourage you to ask questions, because it’s new, right? And so we all need to understand this, and if we are planning long term, I think need to wrap our head around. How do we begin to approach this? Because, you know, it’s not something any of us had to think about before when we were looking at the you know, do I want bond stocks? What I want exposure to this just didn’t exist. So I absolutely love this, so I’m buckling in. So first of all, frontier 10. Tech asset, sort of innovation. I think that’s really interesting, because we we’re thinking about the more as kind of stocks, I think are in the same way, or currency. What do you mean by that when you say kind of a frontier tech Why are you categorizing it as that? Or should we think about it as a frontier tech company? Is that a better way to kind of think about the risks around it. You
Christopher Perkins 5:22
know, Maggie, I kind of liked what you said earlier in that it’s really hard to put one label on these assets that can be, they’re fully programmable, fully composable. They can behave and act like, like, like, they’re designed. And the great thing about this is that it’s largely open source. So you can actually, you know, read the code. You can read it’s very obvious, and it’s very transparent to see how they behave. And now, in the age of AI, you can actually, literally upload white papers, ask it questions, and really learn about the how the assets defined. And so I really hate putting labels on these things, but this is what I can tell you, what blockchains are the secret there’s a couple of things that they do really, really well. They allow you to put private property into the internet for the very first time. Think about that. Now, Ledger started 7000 years ago in Mesopotamia, and if you study your history, amazing things happened back then. Algebra came out into being, right? And and why? Because ledgers are really not only the heart of the economy, but the heart of civilization. You can say, check who owns what. You can it leads to credit. And so that happened in Mesopotamia, 7000 years ago. The second iteration came within the Renaissance with double entry bookkeeping, which formed the underpinning of modern day accounting. And then along comes the Bitcoin Blockchain, and for the first time, this is the third iteration on a ledger where you can track trustless, permissionless exchange of value onto the internet. Now, like I said, because you have that internet based ledger, you can now put private property into the internet. What do you want that private property to be? Well, you can take something real world and tokenize it. For example, you can take an equity, you lock it up, you issue a token, and then you can move it out throughout the internet, trustless, permissionless throughout the internet. You can do it for $1 like I talked about with stable coins. Or you can create a crypto native product, something like Bitcoin. What does Bitcoin do? Well, there’s social consensus, and if you look at the programming of Bitcoin, there can only ever be 21 million coins. And so it’s this global scarcity that has now turned into a store of value. So Bitcoin is is designed to be a store of value. Maybe the first iteration they thought they could pay, but now it’s really like, No, this is a great store of value. And then you go on to something like an Ethereum or a Solana or an avalanche or a Sui, these are all what we call layer one blockchains. Their token has utility too, because you need to use that token to affect the movement of anything on their ledger. You have to pay for it. It’s called gas. And so to put something on that ledger, you need to pay for it. So it gives you utility. So it’s really hard. And then, of course, we have these, these blockchains, and then we have applications that are built on them, and they’re, sometimes they issue tokens, and that token may be doing something else. For example, this
Maggie Lake 8:27
is where I’m going to jump in, because this is where I think it’s getting confusing for people, okay, because not for not in this conversation, but in generally, as we’re, as we’re sort of educating ourselves. So I’m going to, I’m going to come at it a different way, because, because there are so many possibilities, which is what makes it exciting, but then, so let me ask this, what is if I’m sitting here as somebody who’s newer to the market, or maybe I hold some bitcoin, some eth, I’ve got a little bit of diversification around currencies? What? What am I most likely to be worried about? So it’s probably Bitcoin, right? Or what am I most likely to have exposure to if I am thinking if I hold Bitcoin, or I’m thinking of increasing my exposure to Bitcoin, what’s happening in that part of the market? How are you thinking about that at the fund, and what do we need to understand about where we are with Bitcoin,
Christopher Perkins 9:20
right? Right. So again, what is bitcoin designed to do? It has a finite set. There’s a there’s only going to be 21 million Bitcoin in the world ever. That’s how the program works. And so with Bitcoin, the way you can look at bitcoin is it’s a store of value. Now, if you look at dollars, right over years, governments print money. There’s a lot of debasement. And so what Bitcoin allows you to do is, because there’s what we call social consensus, people have identified that now this is a store of value, like gold, right? Hey, there’s a limited quality. I think I read that, like, you could put all the gold in, like an Olympic swimming pool or something like that in the world. Don’t hold me to that. Maybe it’s from. Other than that, but, but it’s very limited, right? And so now you have this limited digital asset that helps offset what we call currency debasement. So if governments decide to print, you know, traditionally, you can store, you try to hold, hold, perhaps commodities in your portfolio to offset that, that debasement risk. Well, this is maybe a more pure form of digital, digital gold, essentially. And so it’s really looking at dollar dollar weakness, or alternate currency weakness as maybe where you start. What makes the value of something go up? Well, there’s more buyers and sellers, or vice versa, right? And so there is a social element to this, just like gold, just like dollars, just like anything else,
Maggie Lake 10:48
do you do you buy the argument that we are going to see, there’s some really large predictions on the value of Bitcoin, like, you know it, we’re we’ve got over 100k and now it’s going to be parabolic and go and and, you know, we’ve got some really staggering numbers. What do you think? Where do you see that going? If it is like digital gold, a version of digital gold, will it track in the way that gold goes up and down based on uncertainty? And we certainly know there’s a lot of talk about currency devaluation right now, or is it? Is it? Is it something very different that’s going to have this parabolic move and stay up in those levels?
Christopher Perkins 11:29
Yeah, look, I think if you look at history, and I’m not here to give investment advice, that’s not that’s not my job here, but I can just tell you some things that we’ve identified based on our research. It is like the best performing asset year after year after year after year. What I am seeing is that, like any other commodity, its values is a function of supply and demand, buyers and sellers. What are we seeing now? We’re seeing the administration being seeking to be the seeking to make America the crypto capital of the world. In the last four years, we had that appreciation when the government was actually very much against crypto, maybe a little less Bitcoin. They were okay with Bitcoin, but they were against crypto, and we saw that price appreciation. Now you have President Trump saying, I want us to be the crypto capital of the planet. Hey, I also want a Bitcoin strategic reserve. That’s taxpayer neutral, right? This is obvious. This obviously drives demand. And guess what? Based on my career in traditional finance, and you know, running around the world after the global financial crisis, working on derivatives regulations, other countries tend to follow the US, like they they they tee off of us, and they say, Well, if the US is doing it, I have to keep up. And so we are seeing a proliferation of other countries saying, Well, gosh, I need to have a reserve as well. And when you come down to an asset that has limited quantity, that’s good thing for valuations. If you see sovereign demand for an asset, we’ve seen the ETF take off. Now, why is the ETF so interesting and so so important for this industry? Well, it’s really hard if, if you’ve never bought a token before to understand how to do it, maybe you open up a Coinbase account and try to figure it out. But that’s friction, and what the ETFs now allow anyone to do with a brokerage account. They’re very used to buying stocks, so you just go into your brokerage account, you buy the ETF, and off you go. And so that’s also led to an increase in demand. And so like anytime you think evaluation is really a function of supply and demand, I see a lot of demand out there presently, and that should be good for for the price. The other thing that you’re seeing is you’re seeing normalization of the asset class, like regulatory risk is coming down. Like I said, in the last four years, we operated here in New York, we operated in the United States. Not very easy. But now Paul Atkins, who we know, he’s the he’s the chairman of this sec, very pro crypto. Brian Quinten is the nominee for the CFTC, very pro crypto X AC, a 16 Z policy for the crypto team that regulatory risk is coming off the table, and what that allows now is a lot more institutional capital to come into the space. Why? Because, if you are an allocator, an institutional allocator, you had a lot of risk. You know, you’re like, Hey, I see Investment Committee. I want to do the first investment of my company in crypto. And what I’ve known over the years is that investors are very happy taking market risk. They’re not happy taking reputational risk. And you have reputational risk if you know, you invest in something, and then the regulators blow it up. Like, like, shame on you now that regulatory risk is coming off the table. I mean, we have incredible dialog with, with the government, with the White House, like, you know, we talked. Them. And so they’re like, What do you need? How do we make this work that opens the door for more incremental buyers, not just a Bitcoin, but the entire asset class. So that’s a very exciting it’s a very exciting time for
Maggie Lake 15:10
us, amazing. And so from that, and I like thinking about it in terms of a commodity, because it makes a lot of sense based on what you’re talking about. Do you with that institutional with the reduced regulatory hurdles and the institutional adoption? Do you see that spreading from Bitcoin, you did mention eth, but spreading throughout the crypto universe, or because they’re so different in different use cases, and they’re created for different things. Should we not make that jump? So if I’m sitting here thinking investors, institutional picking up for Bitcoin, eth is next, and then it’s going to ripple through all these other what we call coins, or do we need to think about it differently?
Christopher Perkins 15:58
What a great question, and this has been the core issue for the last four years, like one of the biggest issues, what’s a security and what the last administration did is they didn’t tell us, so we’re not going to tell you, and then they would, you know, make an allegation, and then we’d go into the courts. And what it really did that was designed to really slow down implementation of the asset class. This administration is very different. They’re like, look, we need to give you transparency. And the United States is really weird when it comes to our regulation. People don’t know and if they learn anything from anything I say today, remember this, everything in the world, according to us, regulation is a commodity, except for movie receipts, onions and securities, which are a special type of commodity. Don’t ask me why it’s like that. There’s history. You can go study it, but that’s like, literally how the law works. But what they didn’t tell us was, what’s a security in the past. Now, if you look at there’s another bill. So we have a stablecoin bill going through Congress right now called the genius act. We have a market structure bill going through called Clarity act. And the clarity act is supposed to help us understand which is which. And even if that doesn’t go through, I’ve had amazing conversations with the regulators who are now saying, Look, why wouldn’t we give you clarity? And the thing you’ll find about the crypto industry, like, Look, I’ve been around for a long time. I’ve got no desire to break any regulation whatsoever. We’re institutional. Just tell us what the rules are, and we’re going to be awesome at following them. And so that’s going to be another it’s going to be awesome. So to your question, Bitcoin has always had pretty good certainty, like we’ve known it’s a commodity, even Gary Gensler said it was, that’s why we saw the ETFs. Ethereum was a little bit more of a question, because it’s a yield bearing asset. This makes it really exciting. If you think about it, it emits about a 3% real yield. And to date, in the last administration, they said, Nope, can’t pay you yield, or else it becomes a security. If it’s a security, it’s going to die. And so now we’re going to be in a position the SEC just said, Well, wait a second. Staking activities are not securities. And so we can start earning that yield bearing asset, which is has a really beautiful, real yield. And so does Solana. Solana has a real so it’s going to open up a lot of opportunities with, with, with very bitcoin is lovely and it but it sits there and it’s gold. Now you’re going to be able, with a little more research, to start understanding the nuances of some of these other tokens that have really interesting utility use case, and I believe, value, and that’s all going to be possible by just clearly defining what it is. Oh, and by the way, one of the most exciting things that we’re seeing right now is bringing actual securities to the blockchain. Huge unlock. And let me explain why this is such a big deal. In 2024 the IPO market was around $30 billion so I want you to remember that about $30 billion and if you look at the history of our IPO market, it’s actually been down. It’s like the kegger is actually down like 4% if you adjust for 21 and 22 COVID was really weird. But take that out. But our public markets seem to be coming down like 80. 81% of our companies are private the United States, and private equity has been booing it. So like, I think it’s pretty obvious to those who are, like, who are really in the know that IPOs have been really, really hard to date and our public markets have been stopped. If you look at crypto, here’s another weird thing about our regulation. To date, we have this thing called meme coins that people like, roll their eyes and like, oh, this thing is so stupid. Meme coins are tokens that have no value. Just like, Hey, I’m just, like, a thing, I’m a dog or whatever. But the thing about those meme coins is that they were we understood the regulation behind them. We understood Bucha Bitcoin, and we understood meme coins because they didn’t have any value. They were a commodity, if you try to, like, have value that made. Your security, maybe not. But hey, meme coins, they definitely not a, definitely not a security guys, and because of that, they were allowed to, like, use this thing called crypto, unimpeded by any regulation or
Maggie Lake 20:10
anything, which is where you got a lot of the negative headlines. I’d say 100%
Christopher Perkins 20:14
but let’s, like, look at what let’s let’s look at them for a second. And I’m not here to support one, but I’m going to tell you the value that they serve. So remember $30,000,000,000.24 in IPOs. Do you have any idea what the market cap of meme coins at its height was last year?
Maggie Lake 20:29
I can guess. I know it’s a heck of a lot higher than that. 100 and 40 billion,
Christopher Perkins 20:34
right? Almost 5x right? Why? Because what blockchains allow people to do is have instantaneous, 24/7, unimpeded access to financial services, which is a huge unlock, right? So boom. And the way that they’re able to it’s called capital formation, which is one of the fundamental driving forces of the SEC, right? So they’re very good at capital formation. And meme coins could do whatever they want. They weren’t stopped by any kind of regulation. So often, regulation. So if they want the Trump token, people hate the Trump token, right? On a weekend they launched this thing. Know what the market cap of the Trump token was $15 billion while markets were closed over a 36 hour period, right against, you know? And it’s an apples to oranges comparison. But think about 30 billion in IPOs, 15 billion market cap on a weekend token for Trump. Hate it all you want. It shows how amazing this technology is for capital
Maggie Lake 21:28
formation. So let me say, let me, let me ask if I’m, if I’m, let me, let me jump to what I the point. I think that I should take away from this, but you tell me if I’m wrong. So in the meme Coin World, it was all this capital formation around nothing, and all of that money, that profit, went to someone who was the first to make it in the first out. So that’s why people don’t like them, because they feel like they’re they’re just spec completely speculative in in the declining IPO market, you have real companies, businesses, franchises, whatever you know, a business endeavor that could unlock that capital formation, but cannot, because for of whatever market dynamics are keeping them public, so they are missing out on that capital formation, not a speculative attempt to just get rich, but a but a real business that could use all that money to invest in their future project they believe is worthy. And you have individuals who do not have access to that business, because the only, their only means of getting that would be through the publicly traded stock market bingo.
Christopher Perkins 22:38
And so we’re in a point now where we’re going to be able to take those equities and use that infrastructure of blockchain to make them more accessible to folks. Private Markets are private. You know, we deprive ordinary investors from some of the most exciting companies because they’re not accredited. To the extent that we can now leverage blockchain technology to help bring companies public sooner and faster, you can tap into that, that secret power, that super power, which is capital formation. Let me give you another example. You ever hear about something called an ETF Yeah? Yeah, right. ETFs came out in the 1990s they were an exciting new rapper, not like the music, but, you know, yeah, the rapper on top of the and so the SEC was struggling with it. They didn’t get it. And then, like, Richard Breeden shows up. He’s like, You guys figured out, I want this, and they couldn’t say, No, the SEC actually then helped, gave it a little assist on the ETF, and for the first time, people could start investing in things they never had access to. Today, today, the ETF market is a 14, $15 trillion market.
Maggie Lake 23:43
Most people invest through ETFs, exactly as opposed to
Christopher Perkins 23:47
tokens. Are the new ETFs. They’re new wrappers. And so again, what can they do? 24/7, borderless access, and you can settle in real time. This unlocks new opportunities for collateral. I used to run big derivatives businesses at Citigroup, and like, one of the things that would keep me awake at night is like waiting for my collateral to come in. I got to pay it out that goes away. You know, we had banks go bankrupt in 1974 one called her stat it’s called her stat risk because the thing blew up because it paid money out, didn’t get the money back, and it went solvent. So this technology eliminates that. There’s a lot of utility. And so as you start looking at tokens and start seeing the utility, and again, I hate putting them under one, like,
Maggie Lake 24:30
it’s we’re gonna have to because, like, that’s just the way it went. But, but part of why I’m asking some of these questions, because in the learning journey, we all have to start to think about it differently. It is not just this ubiquitous, like one, one market, the way we think of it. Let me ask you a question on that, because I think this is so interesting and maybe one of the better explanations I’ve heard of tokenization. So thank you for this, Chris, if in this process where, where what was trapped in a maybe that’s a too negative A con a word, but what was. In held in private markets. Now moves into this tokenized market with more access. Do you get better price discovery? Because one of the complaints about private markets right now is the excess liquidity. Swashing around the world, through stimulus, through COVID, had to go somewhere. So so much of it funneled into private markets so you could have a company that didn’t have a prayer in hell of getting out of or being profitable. You were getting a ton of VC money because it had to go somewhere. Does this? Does this make that more efficient somehow, and reward the people who have real business models and a real chance? Or unclear?
Christopher Perkins 25:38
What a great question. So when we see a lot of crypto projects that you know, they may have equity, they may not, they may be a protocol, right? A lot of these projects, they actually go public right around series A and not with their equity, like an IPO, but they launch a token, and that is, I mean, we have a lot of issues around the process by which that happens. But gosh, once you’re out in the public markets, the markets tell you every day how they feel about you, and there’s no hiding, right? And one of the cool things about token issuance so early is that they’re public, they’re liquid, in many cases, not all cases. I’m over generalizing, but you can risk manage a Series A exposure in a legacy venture space. If you make a private investment on an early stage company, you’re stuck with it. You’re praying for the best. And seven years go by and, you know, maybe it works out. Maybe it doesn’t. It’s not easy. It’s doable, but it’s not easy to like very proactively risk manage. Now you have a liquid series A exposure in the public markets. You know exactly how the markets feel. You know the exact liquidity, and you can be much more effective at proactively risk managing it, or you
Maggie Lake 26:51
don’t invest for the everything becomes more short term, like everything and no one’s investing for the long term. And I’m asking this because some of the people listening are probably people who have access to private markets,
Christopher Perkins 27:01
and you It depends on your outlook. You can be a trader, you can be an investor. There are opportunities to trade when the market goes up or market goes down, or you can be an investor. You know, look at the fundamentals, and what we do is we always underwrite anything that we’re thinking about to fundamentals. And the cool thing about crypto is that fundamentals are everywhere, like data is everywhere, and you can go on chain and you can see the number of users and number of wallets. Now, it’s not easy to decipher and distill, but you know, it is possible to apply fundamental research, deep fundamental research, to a various project and like, it’s, it’s, yeah, it works.
Maggie Lake 27:38
So I’m going to skip on to this next session, even though there’s a ton more to talk about, and then we’ll come back so stable coins love it. Yeah, so different than what we’re talking about right now. I think a different aspect, one that seems to also be at a tipping point where there might be a lot more traction. Explain to me why it what’s happening there and why that’s so important.
Christopher Perkins 28:02
Okay, stable coins are the greatest innovation for the greenback. I couldn’t take a whiteboard in my office here and design a better innovation for the greenback, US dollar, the US dollar, right? Which is our greatest export. Why? Let’s talk about what a stable coin is. When you create a stable coin, and by the way, tether is the most prolific stable coin provider. They made $13 billion last year with a handful of people, one of the most profitable companies per capita in the history. You take a person’s dollar, you take that dollar, you invest in treasuries, and you give them back a token that’s a tokenized dollar. They keep the float, and then you have this tokenized dollar. What can you do with it? Well, you can pay someone anywhere, anyplace, anytime in the world. You can move it into what we call defi and try to generate yield. They’re different yield strategies that you can use. I mean, right now we even have AI bots that are helping people to optimize that yield is fascinating. It’s an exciting space, but that’s another conversation. But anyway, you take $1 in Fiat, dollar in and you give back a tokenized dollar. Now there’s a there’s a law that’s being passed, and it has broad bipartisan support. And dare I say, knock on wood, this is going to happen. It’s going to happen this summer, and for the first time, we’re going to have a a regulate, regulation and law around stable coins. What does this mean? It means that there will be a lot more transparency than disclosures and licensing around how to make sure that the dollar that they give you is reserved and risk managed. The Europeans are doing their own thing as well. They have something called Mica. But why is this so important for the US? Well, number one, if you’re in the developing world, would you rather have and you’re sitting there in Zimbabwe or Venezuela or whatever? Would you have the would you prefer to have the local currency, or would you rather have dollars? Well, you’d rather have dollars, probably because local currency is very volatile, as is a lot of crypto assets, and so now, for the first time, you can have access to
Maggie Lake 30:11
them, because you don’t have to get it through a bank.
Christopher Perkins 30:14
Just get it, get it through your phone, right? All you need to do is set up a wallet, and, yeah, there’s on ramps and things like that. But, but you’re able to access to receive these, accept them, sit on them, whatever huge issue. Oh, and by the way, the United States Treasury, which it tends to be, a conservative organization, in my experience, they’ve already stated that in the next couple years they expect for this to drive $2 trillion in demand for US Treasury
Maggie Lake 30:39
bills, which is which? I just want to stop and pause here, because all we keep talking about is the fact that there’s a capital flight out of the US and that there’ll be no buyers for US Treasuries. But folks who are in the crypto world have been pointing out to me repeatedly that there is this built in demand. If this all should happen of a constant purchase of treasuries, because of it. It is the backing of stable coin.
Christopher Perkins 31:04
This is already about a $250 billion asset class, growing very fast, once you have regulation around those reserves, so that you can help prevent what we call a D peg, where it doesn’t equal $1 anymore. Um, the demand is going to be insatiable. I mean, we’ve recently heard the banks are seeking to get into this space. Why it can be very profitable. Like I said, tether made $13 billion with a handful of people by capturing that spread. Circle just went public. Look at circle as a really interesting example they offer USDC. It’s really it has been very hard to get market exposure to stable coins. Yeah, you can’t invest in them. Like, hey, I’m investing a stable coin. It’s $1 it’s not going up, right? So how do you invest in these companies? Well, they’ve been private to date. Now, for the first time you had an ability to invest in a public offering. Circle, we saw what happened. So it shows that the market understands the pent up demand for for for how powerful these things called stable coins are going to be. So it’s going to drive demand for treasuries. It’s going to perpetuate the dollar as a global reserve currency for decades to come, and and it also, frankly, enhances our national security very materially, very materially. And that’s my background. I was a US Marine for many years. Studied national security in graduate school, and here’s why, because if that dollar, that tokenized dollar, makes its way to North Korea, guess what? The Treasuries are still sitting in a custody account, and through due process, we can go and we can do something called freeze and seize and deprive the North Koreans of that asset. So that’s how it works today. Again, if you’re the US government, you couldn’t imagine a better thing for your dollar, your greatest export, and I think it’s going
Maggie Lake 32:50
to be big if we if all that is true, that’s also huge incentive for the rest of the world to have their own stable coins. Are we looking at a multi polar world where everyone has a stable coin. And I’ll further complicate that by saying, I think the thing that people are worried about is that it’s not circle and tether. It’s a US central bank digital currency and a tiny central bank digital currency because of that reason that you just said,
Christopher Perkins 33:19
man, what great questions. So the first thing, there’s a couple issues with stable coins in my mind. The first is that they prevent the end user from receiving interest. And so the question is, is okay, maybe that’s really good for tokenized money market funds, and we’re seeing a lot of them come on the scene. There are some reasons why. Why? Certain maybe lobbyists don’t want to see that that interest being paid out. But we’ll park that to the side for a second. Now, really interesting thing is that today, 99% of internet money stable coins are dollars, but in the real world it’s like 57% or something like that. Oh, and by the way, FX markets are $7.5 trillion a day. Market massive. The entirety of the crypto industry is like three something. That’s 7.5 a day. So the market’s insane. Now the Europeans try to get in front of this that they their their currency has been struggling a little bit. I would argue that’s because of the way that the regular they over regulated it to a degree. I would like to see them to be a little bit more thoughtful around some of the ways they characterize the regulatory capital, but I think they’ll figure it out. So they’ll they have a stable coin. Circle has one. There’s a couple of other folks that are launching stable coins. It just takes a while. But, but And will there be, like, g7 currencies? Probably. But there’s a scenario where the dollar becomes more dominant. I know, you know, I said 99 versus 57 I think it’s going to settle much higher than that because, again, of demand. If you’re in the developing world, you probably would rather have dollars than maybe your local currency, or at least have a lot more dollars because of a hedge. So those are, those are
Maggie Lake 34:54
very, very so you, you must be having conversations in Washington. Do you think that the, I mean, the. There are a lot of folks who are frustrated, not just in your industry, but generally of the I’ll put the whole of Washington, that the political class in general, regardless of who’s in the White House, regardless of who’s in Congress, are slow to move on this and slow to recognize the advantage that this could give the US. Do you feel that this is fast track now, based on the you’re talking with,
Christopher Perkins 35:23
yeah, we’ve hit a tipping point. It’s moving. It’s happening. There was a lot of political there’s always the sausage making. Is the sausage making? People aren’t used to it. This is how it goes. And we’re going to get legislation here in the next couple of months, like I’m I’m seeing momentum. It’s happening, and it’s going to be awesome. You asked a question around CBDCs, which are government issued securities, or, sorry, stable coins, central bank digital currencies. In the US, we’ve seen backlash against this, and you can see the fear of Gosh, what if I have this digital currency from my government. It sits in a government controlled wallet, right? And then, like, gosh, if they look at my social score, they can actually run smart contracts on it and just start burning my my money. That’s no good. And so, like, we’ve seen broad, like, backlash against that in the United States. I don’t think that’s happening anytime soon. Interest. That’s not the case in other
Maggie Lake 36:27
countries. I was gonna say, presumably, no friction at all in China, where they essentially already do that.
Christopher Perkins 36:33
Yeah, and so, like, I think that’s an opportunity for the United States, because, you know, we’re pushing out a product. And what you’re trying to do with any stable coin, right? You’re trying. It’s a it’s a competition for demand. Yeah, right. So which one would I rather have? I think that’s going to be very beneficial for the for private stable coins, because you know, what’s the utility? Which? Which is a better
Maggie Lake 36:58
product? And so and there and there’s, there’s, they’re so ubiquitous and out there already that it’s like the cat’s out, like the government’s can’t stop the private stable coins if they wanted to at this point. Or could they? They can’t.
Christopher Perkins 37:12
The thing is, is that the BIS, which is a bank organization, they just published a paper a month ago or something, they said we need to contain this crypto thing. And I was like, Guys, this is not like George Kennan and communism. You can’t contain it, right? This is the internet. Like it’s out there and anyone can access it. You can’t put the toothpaste back in the tube. How about we do something a little bit different, and instead of trying to contain crypto, why don’t you take make sure all your banks embrace it so they can fix their tech, so they can settle in real time, like we can over here, and I’ve known both worlds, and I’m telling you, the next real threat to our financial system is going to come from that basis. You know, I’ve been through a million stresses. I was on the floor of Lehman Brothers when a bank went bankrupt. I’ve been through it all, always because of liquidity. Risk always happens on a weekend. And guess what? If your markets are open and you can rebalance in real time, you adjust to market conditions. If you have another side of the market that’s frozen, bad things are
Maggie Lake 38:13
going to happen. Yeah, this is when collateral, scarcity, counterparty risk, that’s what blew everything up. Can’t see. But people, well, there’s I almost went down another rabbit hole, Chris, but we’ll save it for next time. I also reported through the financial crisis and was there so but I, because I want to keep on this is, again, I think you’re making so so so much understandable to folks who are trying to wrap their head and look for opportunity. So let’s go back to tokenization. So you talking about being able to tokenize and the change in private markets. Talk to me a little bit about the real world aspect of this, because I think again, we’re at a juncture where people are looking, looking at their portfolios and saying, Am I really diversified? Should I have more real world assets? What does a real world asset look like? Is there things in land or real estate or other tangibles that would have been collectibles before, but now somehow have value in this new, interesting world? What’s happening there?
Christopher Perkins 39:14
I think it’s early. We have meme coins that really showed us the power of capital formation. They also did great job in really stressing blockchains and really creating operational throughput. We also have this thing called nfts that people roll their eyes now and they’re like, Oh, nfts, but they served a very vital purpose. And they showed how you could have discrete tokenized assets, art or whatever. And it really proved the use case. You know, when it comes to tokenization today, we started with the simplest thing of all, dollars, right? Stable coins, product market fit, two 50 billion. Gonna go to 2 trillion, according to our own government. After that, what are we seeing? Well, we’re seeing money, market funds, the next iterative. Ration of tokenization. You know, again, look at, you know, super status company of ours. They have quite a quite a few. There’s middle on BlackRock. You got Benji. That’s the next one. Now we’re starting to talk about, for the first time, stocks and equities that’s going to tokenize. Ultimately, where are we going? We’re going to a place where you can pretty much tokenize anything, right? You can tokenize real estate. I can tokenize my iPhone. I can tokenize everything, and effectively create securities out of them, because you’re creating shares in something that’s potentially illiquid. You can bring remember, capital formation and really liquidity is what you can do. Those are some of the superpowers of blockchains. That that’s the promise. I don’t think we’re there yet. You know, we’re seeing some projects coming out right now that are saying, hey, I can give you know, I’m gonna start with real estate, but very, very hard. You know, we’ve looked at hundreds of these projects. Eventually we’re gonna get there. I think it’s early. I think it’s, I think it’s early right now to just jump into a tokenized liquid. There’s reasons why certain assets are illiquid, and tokens can help, but not necessarily. And I think this new regulatory so we had this thing called fractionalization where, hey, I’ve got this, like, really expensive NFT, a crypto punk, whatever, we can fractionalize it up. Like Hester Peirce herself said, that’s a security guys, if you do that. And in the last regime, if anything became a security. It was, it was a death sentence. Now I think we’re going to have the ability to understand how we can deal with securities who have clarity, and maybe that re galvanizes and breathes life back into this concept of making the illiquid liquid. I think it’s a little early from my perspective.
Maggie Lake 41:38
Yeah, that’s, that’s a great distinction. I think I always, I always say that when I don’t know if anyone’s visited Italy and looked at all the glass blowing, I’m like, just because you can blow glass doesn’t mean you should always end up with what the result. And I’m a big fan of some of the works of art, but it’s kind of that thing. Just because it does exist doesn’t mean it needs to. So for people, in terms of, like, next steps, if I’m thinking about this, a lot of this still seems, for all the excitement and the growth and the change in the regulatory regime, it still seems like it’s not easy to execute, right? Like it’s not easy for an individual person to figure out how to add this stuff to their portfolio, save a Bitcoin ETF. Do you agree with that? And is that changing?
Christopher Perkins 42:28
Yeah, look, you’re going to see a proliferation of ETFs. There are the Bitcoin ETF is out there. It’s doing pretty well, very well. Actually, the Ethereum ETF is an imperfect instrument, because it deprives investors of the most exciting part, one of the most exciting parts, which is that yield, right? But you’re going to see products that are focusing on bringing that yield back into the asset to so they can avail themselves of like the full value and quality of that asset. But now with that certainty that I’m talking about, you’re going to see a proliferation of ETFs coming out, you’re going to see a proliferation of other related products as it all comes down to that taxonomy. So I do expect for like, Robin Hood just did a major deal with Bitstamp, you know, they’re good, you know, we just saw eToro. So, so you’re going to see a lot more just easy user experience access to crypto. I was at the Coinbase crypto summit yesterday, and, man, they put out a number of releases that just make it easier for people to access the asset class, and that regulatory overlay now and that clarity is going to really make it easy, and then this user experience follows. So I think there’ll be incremental opportunities to buy, like those native assets themselves, or the security wrapper and form, like we’re even looking at some things on the you know, we’re seeing, I don’t know if you have you seen these Treasury acquisition companies, where companies will go out and buy crypto, yeah, this is a big deal right now. In the last couple of weeks, it actually exploded. So Michael Saylor is very famous for this with strategy, where he went out, he just bought Bitcoin and he had a public company. A public company, so you could buy his stock, right for buying Exactly. Well, we’re seeing that now across numerous different asset classes, there was an Ethereum product that just launched that did this very similar thing. Joe Lubin was involved, one of the co founders of Ethereum. So that will be another way for investors to access the asset class is by underwriting and buying into those public companies that are effectively like they’re they sit on treasuries of their underlying asset. That’s super interesting on the equity side, again,
Maggie Lake 44:34
I’m just going to interject like, as with all of this, is why it’s really important to either really do your homework or talk to an advisor to find out about this, because I know a lot of people who are very concerned about micro strategies with Not, not because of the action itself, but because of some of the other exposure and knock on. If this happens in a market and there’s a cascade, or something happens with interest rates, you know, these things are a little bit complicated. Because they’re because they’re new. So do your homework on that 100%
Unknown Speaker 45:03
non investment advice. I’m just simply talking
Maggie Lake 45:05
about what’s the questions we want you to ask advisors, whether it’s one that you get from wealthy on by going to that website I said before for a free portfolio review, or it’s one you have already, these are the smart questions you want to be asking your advisors, or the homework if you feel you’re capable of doing yourself,
Christopher Perkins 45:22
yeah, 100% but you are seeing a new class. Essentially. It’s called a reverse merger. And what a company will do is they’ll buy a shell public company, and then they’re replicating the seller strategy with new asset, with new tokens. And so it’s another it’s a way to abstract some of the operational complexity of buying that token by just buying that equity right out of and the thinking is, is that that company may be able to do have a little more flexibility in generating yield or etc,
Maggie Lake 45:52
and they just, they’re more knowledgeable about some of the interest, because there’s that those easy bridges you know that we have in these existing asset classes don’t always exist yet in this, in this world, and that’s what I’m excited about. I’m waiting this person who likes an easy bridge. I’m waiting for that. Are you? So let’s end with a little bit about you. Keep saying we, we looked at that. We’re in that. What do you what is your role? What is coin fund doing in here? Where are you concentrating your efforts? What do we we need to understand about that?
Christopher Perkins 46:21
Yeah, so we’re we’re investors. We have three strategies. We have a pre seed, seed venture strategy, where we invest in early stage founders. We have what we call a venture strategy, which is a Series A and B fund. So we look across the gamut. We look at various projects, and we invest in those founders, the series A and B strategy. Generally, there’s a little bit of product market fit, you know, etc. We have a liquid strategy where we look at liquid tokens. We actually invented the risk free rate of Ethereum. It’s been called Caesar. We we’re in the process of doing something really special with that. And by the way, I talked about all the equity exposure that you that we’re talking about, whether it’s the proxies or the or the ETFs. I also think there’s going to be an entire array of fixed income products that are only now coming out, and this is going to be awesome, if you think about it, you have these blockchains that provide yield, right? You can create fixed income around that. And there’s the opportunity for so much financial engineering. It’s so exciting structured products, and each of them is different. Each of them has a different value chain. Mark my words, fixed income is going to be like one of the biggest horizons in crypto that’s completely undiscovered today. And that’s that’s just a very exciting part of
Maggie Lake 47:42
the market, Spoken like a true derivatives person, that’s where, that’s the great thing about your your background, and I’m sure how it lends to you seeing these opportunities ahead of the rest of us. Because that’s a that’s a world that not all of us fully understand. How did you make the jump from you mentioned that you’re you have a background in institutional. You did all the derivatives work. You were at Liam on the floor of Lehman. How did you make the jump to crypto? Why? What was the bell that went off for you that you said, this is where I want to be spending this part of my career.
Christopher Perkins 48:17
Do you know Sandy call by chance? Sandy call is, she’s head of innovation at Franklin Templeton,
Maggie Lake 48:23
and, oh, wait, I’ve been, I’ve been at events with her. Yeah, yeah. So we sat
Christopher Perkins 48:27
next to each other for like, 10 years, and we kind of, she’s a futurist. She’s a, you know, she’s always out there, like, thinking about, like, innovate. She’s amazing, like, one of the most incredible people in the space. So we kind of got into it together, I think around 2014, or so sitting on the desk there at Citigroup, trying to get it going, try to get it going. And for me, it was that settlement, like I was dealing with these billion dollar margin calls that I’d be waiting on. Well, where’s my money from? Where the yen, when the incoming guys, like, we’re taking a lot of risk here. And I was like, Wow, this could completely help me. I thought about making the jump, but had plenty of stuff going on. And then ultimately, I just couldn’t stand it anymore. And I was just like, wow. I talked a little bit about my thesis around Mesopotamia and how big this could be, private property, internet. And I was just like, I gotta be a part of this thing, like it. And I’ve been full time for years. I will tell you that the highs are high, the lows are low, but I’ve never been around smarter people that are building big things than crypto and like, yes, AI is very exciting and sexy and changing the world. But and we look very closely at that intersection, which is also largely undiscovered. But gosh, these technologies, when they come together, it’s, it’s insane. And so, you know, I don’t think people have really realized how, you know, crypto has had its ups and downs, and there’s been, it’s a new technology and the rep, it’s almost a benefit to us as investors, that it has a little bit of a, you know, not a great reputation, because the under. That perception has nothing to do with the value that I see every day and the founders that I see that are like the most intelligent, driven people I’ve ever come across in my life.
Maggie Lake 50:10
Yeah, I could, I couldn’t agree more. And I feel like, you know, it’s like every frontier, and it involves money, which matters enormously, right? And so there, there, there’s all this unlock, but it’s bumpy. Frontiers are bumpy, right? And there’s a lot of risk, but seeing through that, and I love the innovation part, and your description of this entire thing has been kind of wrapped in innovation, and that’s what this is, right? It’s another sort of innovative move forward. And so rather than, I feel like the media likes to jump on the everybody loves the scandal, right? And so it’s been sort of like anchored in that the narrative. But I think all of this, all of this going on, is hugely exciting, and you explained it so well, Chris, so we’re really benefiting from your understanding and your background in the traditional markets to be able to sort of make the connection of why the growth is real and why the opportunities are real. So it’s been mind blowing. Thank you so much.
Christopher Perkins 51:09
I really appreciate this. It’s been wonderful. Thank you.
Maggie Lake 51:12
I can’t wait to hear about it and keep up with you. Keep us posted. We’re going to come
Christopher Perkins 51:16
back. Yes, ma’am. Looking forward to it before,
Maggie Lake 51:19
before we completely wrap. Just want to punch in and get your thoughts, because you mentioned your background in national security. Thoughts on, on what’s happening right now in the Middle East. The news flow is going to change all the time, so who knows when we’re going to be able to air this? But is, yeah, just, just generally. Do you think this is a major development? How do you see this playing out? What should we be focused on, especially as investors?
Christopher Perkins 51:45
Yeah, you know, it’s the Middle East has been such a challenge for the United States since the Obama era, we’ve really wanted to shift our focus, our national security and everything, to the Pacific. That’s where the real challenge, you know, the strategic challenge seems to be coming from, and I know that President Trump and Xi Jinping came together with an agreement recently, and I think we welcome that, but that strategic competition that is much more strategic and but we keep getting pulled back into the Middle East, and it’s been very difficult for us to because the stakes are very, Very high. And look from a market’s perspective, typically, geopolitical issues come and go. And, you know, the strike happens, markets come down, things settle, they go back up, and we’re able to navigate what we’re on the what we’re watching out for, something much bigger escalation, protracted. And, you know, I think again, Long Term versus short term, we feel very good about the positioning of the crypto asset class that tends to carry on and execute as it was designed despite geopolitical macro pressures. Dollar goes up. Dollars goes down. It does what it’s designed to do. And if you can understand it and you can underwrite it, I think it can be a very valuable part. So look, we are very hopeful that that that escalation, there’s no escalation, things return to some kind of stability. But gosh, it was, it was quite an event the other night, and to see where the ducks land, see where the pieces land, and hopefully we end up with some kind of stability. Yeah, that’s our that’s our
Maggie Lake 53:20
hope. It’s been it’s been elusive, but I think that’s all of our hope. Chris, wonderful to spend some time with you today. Thank you so
Christopher Perkins 53:25
much likewise. Have a wonderful day.
Maggie Lake 53:29
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