All right, welcome to a new episode of Power Players with Brian Sozzi. I'm your host Brian Sozzi and I have a special guest here, someone that I've followed his career and background for a while, but I've actually never seen him physically in person. So, this is the first time for me. He always would come remote. Changpeng Zhao, better known as CZ. I know him as CZ. Y'all who know and follow Bitcoin probably know him as CZ, too. It's good to see you in person.
Yes, absolutely. It's great to be here. It's good to meet you in real life.
Likewise, likewise. Let's talk about crypto first because that was the last conversation I had with you in November 2022. Since that time, of course, we've seen the crypto boom. It's become embraced by so many people, even regulators, too, finally, of course. Like, what is your thinking on the current state of play in crypto?
I think there's actually a lot of parallels. Crypto goes in 4-year cycles. So, there's a lot of parallels between November 2022 versus now. November 2022, if I remember correctly, the Bitcoin price was about $16,000. This is post the FTX crash. This is post Luna USD crash. That was in May 2022. It feels like yesterday. And then, I think the early November was the FTX crash. And in December, by the time we talked, it's probably right on the bottom on that cycle. So, right now, we're in what we call a bear market again. Bitcoin dropped to 60,000. So, there's quite a lot of similarities in mood. But, if you look at the prices, it's still three, four x higher than 4 years ago. So, I'm still very optimistic about the industry, but we're going through a winter and the industry will recover. The industry will continue to grow.
What causes these winters?
I actually think it's just mass psychology. Humans, we overreact. Given a large population of people, we either all rush in and create a bubble, and then we panic and we all sell. We overcorrect. So while the industry may be growing like this, the prices fluctuate around the value. I think it's just mass psychology. And then all this other news around it. There's many things that are four-year cycles. Presidential elections are four-year cycles. Stock markets are either four or eight-year cycles.
But stocks always go up though.
Yeah, stocks always go up because there's a lot of inflation. There's always more money supply in circulation. If you look at the pure price of stocks, but also economies grow. There's more companies that do bigger things, etc. So yeah, stock grows. But same thing applies to crypto. I think there's a lot more. We're going to need more and more transactions, and crypto blockchain is a new technology for money. It's not going to disappear. It's a technology.
At this stage in the game, what gets crypto out of a crypto winter?
I think there is always going to be continued innovation. There's cycles. The winter will always come and go. But the industry is growing. This winter now, 60,000, we think is really low. Everyone's panicking. But last winter four years ago was 16,000. So the industry is still growing. I think we just need more applications, more use cases. And I think more and more use cases are coming. People are developing it. And also newer industries actually help the blockchain industry. Like everyone's really hot on AI. But right now today AI doesn't transact for us. AI can search for the cheapest ticket, the best ticket for us. But today it doesn't buy that ticket for us. Very soon it will. And when it can, if the AI companies want this transaction to work globally, supporting crypto is actually the fastest way to enable global adoption.
Is that the next big unlock here you think for crypto? Because for the past 2 years it was becoming more embraced by regulators. That was a catalyst. Well, now we've gotten past that. I think the whole industry is looking for this next big thing, this big moment. I don't know if that big moment happens. You would know better than me, but or is it more incremental? Like, tech companies are using crypto to transact and that suddenly is the next hot thing.
I think it's more incremental. Also, there will be little things that people call the next thing. DeFi was hot for a while, NFTs was hot for a while, meme coins was hot for a while. But all of those things will come and they don't really go, they stay, but they become less hot. And I think AI payments will come. I don't know when, but I would assume it's in months, not years. And also RWAs, real-world assets, tokenization of other assets, either financial or non-financial assets. That's growing much faster than I expected. So, a year and a half ago I thought it would go like, I don't know if it's just hype or not. But now it's growing like multi-billion dollar asset allocations, etc. And it's growing pretty quickly. So, I think RWAs will continue to grow and I was pretty excited about that. With seeing that now, you can trade AI company stocks using crypto globally.
So, which country doesn't want their stock to be traded globally by the global audience? Before, with SpaceX IPO, only Americans traded and a few institutions around the world can, but you don't reach the masses. Now with blockchain, you can reach the masses now. And we've seen fairly significant trading volumes on those instruments. So, I think all of those things are happening. I'm pretty excited about RWAs, stablecoins, AI commerce, AI payments.
I can't help myself. You mentioned the SpaceX IPO. As someone who has led a very large company in Binance, has seen a lot of different market cycles, what do you think about just the excitement around this particular IPO? It's a very unique moment. And look, SpaceX is not alone. It's OpenAI potentially Anthropic coming to market, too.
Well, SpaceX is unique in the sense that it's not just an AI company. It's also an internet service provider company. It's actually the largest internet service provider, right? Globally.
It works great. Like it's a great service.
It's fantastic. It's fast, it's cheap, it's reliable. It's just higher quality than your cable. So, this is 30-40 years after the internet. So, you can still build a very strong internet. Starlink alone is a very valuable company, right? They somehow merged xAI into it. We invested in Twitter, and it became X, became xAI, became SpaceX. So, we kind of indirectly got rolled into there, which we're very happy about. But it shows that you can still build a global ISP 30 years after the industry's matured. ISPs were all the rage 30 years ago, but now Starlink is really an ISP. It just does it very differently and it's from space. And then now with the AI, I think everything Elon does is really crazy out there, but also tremendously respectable.
Can you imagine data centers in space? That is wild stuff.
It's wild, but like he makes a lot of sense. Yeah, so it's cool. Everything he does is really cool. Everything we do is very boring.
Well, you know, this is also an exciting world for the retail investor. And the retail investor has really come to embrace cryptocurrencies. You know, they want to be the early community to embrace this technology. How does this new supply of like these amazing tech companies SpaceX, OpenAI, do you see that competing with the demand to own crypto?
No, no, no, not at all. I think this is great for... crypto is not its own industry. Just as internet should not be its own industry. It's a technology. Crypto should be just a technology that enhances financial tools, financial applications. So there shouldn't be a tradfi versus crypto kind of division. Existing financial players, institutions should use blockchain technologies and should adopt all the things that's happening in crypto. All the crypto guys should be providing all the services that traditional financial guys provide, including trading stocks, loans, all these financial tools. So it's just one technology that should be applied to a service and there's no division between crypto and tradfi. In my opinion there shouldn't be. Right now the industry is relatively new so the new players tend to be lumped into crypto players, crypto platforms, but they shouldn't be. That's a purely labeling division. There's no reason why, for example, if you look at crypto platforms like Binance, they provide loans to people, they provide savings programs, they provide a lot of payments solutions. They provide like 40, 50 different kind of financial products to retail users around the world using blockchain technology. So there's no division. So I think they should all merge together.
Is there another, I guess, catalyst from a regulatory standpoint that the crypto community would like to see?
Absolutely. I think even today the regulatory frameworks are still early days. US is still debating about the Clarity Act. Most other countries are still waiting for US, they're still looking to copy their homework. So we're still early. I think the crypto regulations have a long way to evolve. I think it's going to go on for multiple decades. It's probably going to take 50-70 years for things to mature. I can guarantee you that 70 years from now people are still debating about this little nuance, that little nuance, about this new feature, new product. So it's never going to be perfect. We still debate about even security regulations today, right?
Whether we should report earnings quarterly anymore, yeah.
Yeah, yeah. So that's like a 90-year industry. So I think it will continue. Regulations are usually slow. They need industries to mature and they slowly adjust to it. And they're very event-driven. Like whatever happens, there will be new regulations to cover that so that it doesn't happen again. So I think it will continue to evolve. I think we're still pretty early. But now US is leading, which is great to see. And when US leads, everyone follows. So whereas if a smaller country leads, no problem, but if US leads the rest of the world may or may not follow. But when US leads, it's good. Now we have coherence. Everybody does the same thing. Which is great to see.
How are the regulatory frameworks different overseas? Like how have we pulled ahead of some other countries?
I think US, there's way more discussions. There's also way more debates. There's a lot of news, which is good for something that's really important, right? And US is more focused on, recently more, I think there's almost a bit too much focus on stablecoins. Whereas other countries are much more focused on tokenization. Like say, how do you tokenize national debt? National bonds? How do you tokenize rare earth minerals? So all of these other countries are looking for ways to develop their economies. US is too, but US is really much more focused on the US dollar, interest rates, the banking sector. So US has a more developed financial sector, which is understandable. But I think US leads overall in crypto regulations by far now.
What side are you on? I'm sure you're watching the war words between Jamie Dimon and Brian Armstrong. Which team are you on?
I don't really pick a team. I'm a crypto guy, so I kind of want to be on the crypto side. But I want to be on the consumer side. So I think we should give the maximum benefits to any business who wants to pass on the benefits to the consumers should be allowed to. That's the capitalist way. If a company, if stablecoins, right? You give US dollars to me, I put it in the bank. I issue stablecoin, I give it to you. This money generates interest through the bank or buy US treasuries. The business should be allowed to pass that interest to you. To the extent the business stays afloat. But that's a very simplistic understanding of it. I think there's a lot more nuance to the debates. I know there's a lot more.
Maybe these two just need to get in the ring and fight it out.
Set up a UFC right beside the White House.
You put Brian Armstrong in there with whoever else. I would pay big money to watch it. As a financial media geek, I would pay big money to do that. On the stablecoin front, I'm glad you mentioned stablecoin because every credit card company and payments company that I know is telling me about stablecoin. Is stablecoin going to be that big to support everyone in doing something with stablecoin?
I think so. I think stablecoin is going to be pretty big. Stablecoin is really a new form of fiat money. 10 years ago when stablecoins were starting, I didn't understand it. Again, I thought this thing couldn't work.
Like who would use a stablecoin? But it did find an intermediary between fiat currency and crypto and blockchain. Back then Bitcoin was highly volatile. Many people cannot use Bitcoin because of volatility. Many suppliers, they buy stuff in US dollars and their profit margin may be only 10-20%. So, they cannot use a currency that fluctuates like 20% a day. Whereas stablecoins fills that gap. And also stablecoins solve the problem where in the early days banks did not want to work with crypto exchanges or crypto businesses. Stablecoins solve that problem. And also, to wire money through banks, if you want to send money from a US bank to say a bank in Singapore or bank in China, if you want, it takes days and weeks and a lot of procedure. With stablecoin on one address, doesn't matter where the receiving is in the world, it goes instantly. So you leverage the advantages of blockchain technology. So, stablecoin is that big? If you look at the industry, the two big businesses in the industry are exchanges and stablecoins today, right? So, stablecoins are pretty big. And I think both businesses, stablecoins have not tapped the true potential. They haven't hit the ceiling. Right? So, stablecoin today is what? 200 billion maximum market cap. That's not that big in the grand scheme of things. I think it can still grow like a couple of thousand times, a minimum. So I think there's a lot of potential. And then we're only talking about the US dollar stablecoin. Today that's 99% of the stablecoins in the crypto industry. But every currency should have their own stablecoin. They should have multiple of their own stablecoin to see which one's good. And then they should all be transacting on chain. And when that happens, not if, when that happens, the FX rates will be determined 24/7 on the blockchain.
So the FX markets will shift. So, I think all of that will happen.
