I think the central question is: is the technology better than existing technology? Can we move things more quickly, more efficiently from a cost basis, and can we move things more securely? And I think the answer to those questions is yes. I think throughout history, anytime the technology is better, we typically adopt it even if there's some resistance. The forces are such that these things will happen whether Wall Street is fully embracing it or not.
Well, good morning everyone. John, thank you for kicking us off. I have to say this is absolutely hands down the best event of the year. This is such an amazing location, but I think most importantly a really high-level group of people that are always people I want to talk to and bump into in the hallways. So we have a shortened time it looks like. So why don't we dive right in? I think everyone knows Arjun Sethi. He is the co-CEO of Kraken and also the chair of Tribe Capital, and of course Anthony Scaramucci who needs no introduction. I want to touch on a couple highlights.
That's a good thing maybe. But why don't we start with you, Arjun? I think this is about the state of the digital assets industry. I think the one big catalyst has been the change in regulatory environment. Kraken had a heck of a time under the prior administration. You've settled with the SEC, you were sued by the SEC. How are things looking for you today between the Genius Act and the White House's plan and Chair Atkins' speech? Talk about what that change has meant for Kraken and your company.
Yeah, I don't think it's relegated to just us. There's been headwinds in the industry for a long time. Protocols, exchanges, everyone was trying to build on crypto rails. So I don't think it was specific to us, but I don't think I'm saying anything new that people haven't said before. It's a new administration with a focus on crypto technology, pro-innovation, pro-United States as we've heard. I think we're just looking forward to it, where the US is moving at a speed that can be much more akin to company or protocol level, and we can course correct along the way as opposed to what we've been seeing in other countries. To their credit, outside the United States they were ahead, and I think you're just seeing us catching up and moving ahead of the rest of the ecosystem.
Anthony, you always have stood at the center, at least in my mind, of the institutional world and the crypto world and have been very involved in policy. I remember last year we both attended a meeting in Washington with the Biden administration. They wouldn't let us into the White House, but they were kind enough to walk across the street and meet a group in a hotel. We've come a long way, and I think even you've given credit—I know this isn't your favorite president—but have given credit to him.
He's everyone's favorite president according to the president.
But how do you think Wall Street are perceiving these regulatory changes, and what does this mean for the buy-side world going forward?
I want to go back to that moment that Kristen's talking about. We were in the Willard Hotel, the conference room downstairs. Incidentally, the same conference room was used yesterday by the European leaders with President Zelensky. The Biden people came, they took notes, and they basically said to all of us, 'Listen, we hate you guys, but we would like your campaign donations.' We said, 'Okay, thank you.' Then they left. And then Chris may remember we did a Zoom call with Treasury and we said, 'Listen, this operation choke point 2.0 is wreaking havoc in the industry.' They said, 'Well, there's no such thing.' And then somebody on the call said, 'Okay, raise your hand if you've experienced some level of choke point 2.0.' Everybody raised their hand. So it didn't go super well. This is real plaudits to the Trump administration for getting it. Whatever your opinions are on President Trump, he has phenomenal political instincts. Back in July of 2024, he realized that the future of financial services and the mantle of US financial services leadership is going to include this industry, of course include Kraken. You've got to give him a lot of credit for that. We've had a major sea change, and I'll go as far as saying I think it's a permanent sea change. I don't see the Democrats, at least the ones below the age of 55, wanting to go back to an Elizabeth Warren anti-crypto army. There's just no anti-crypto voters out there. I'm hopeful that this will continue and will somehow become permanent in Washington.
One of the trends that people were talking about last night is obviously this convergence of crypto and traditional finance. Arjun, you at Kraken have been looking outside of the traditional crypto world. You're starting to look at tokenization. Can you talk a little bit about how you're thinking about these two worlds coming together and what the opportunities are?
Yeah, I think if you go back like 10 plus years, the whole promise of crypto was let's get as many people access to capital, access to money, not just trading and speculation. This sentiment has been talked about year after year. For us, when we took a look at the exchange, global liquidity, global demand for assets, we saw that with stablecoins over the last five years. How do you start thinking about actually putting in real-world assets, real estate, tokenized stocks, etc.? How could you do it in a way where it's not a walled garden? One of the things we've seen is that a lot of these exchanges, the value sets they have, they're kind of a wrapper trying to extract value and keep customers within their ecosystem. There's some value in that in the short term, but it goes away from the core of why a lot of us started over the last 10 years, which is that decentralization meant freedom—being able to own your own assets and not have someone come in and rehypothecate them in traditional banking. So we went back to first principles. If you take a look at the Kraken culture doc and what we're striving towards, we build products and then drive profits from them to drive it back into what we cared about in crypto. Tokenized equities were really important so that non-custodial or custodial wallets or exchanges all over the world, DeFi or not, could perpetuate real-world assets and global liquidity. On the convergence of the TradFi world, it's more about how do we bring those folks along to say crypto is not nefarious. Yes, there was some speculation, but the word meme isn't a bad word. It's more about promoting this global liquidity that exists not just in the United States but all over the world.
Anthony, how do you think Wall Street's ready for tokenization? Do they see this as an opportunity? Do they see it as a threat? What are you hearing, and where are they at in the adoption cycle?
Obviously Larry Fink is ready for tokenization. He sees the vision of it. I think the traditional banks are probably going to take regulatory guidance from places like the Fed or the SEC before they move forward. But I think the central question is: is the technology better than existing technology? Can we move things more quickly, more efficiently from a cost basis, and can we move things more securely? I think the answer to those questions is yes. Throughout history, anytime the technology is better, we typically adopt it even if there's some resistance. Remember, everyone in this room has been in an Uber, but there wasn't one government official in any major city that wanted Uber to exist. The forces are such that these things will happen whether Wall Street is fully embracing it or not.
To add to that, what I get worried about is the Wall Street-ization of crypto. You see the DATs, you see all these corporate treasuries, you see SPACs come back into play where they're going to start investing more into the ecosystem. I think that's well-intended in some cases, but it kind of reminds me of what we saw in 2020, 2021, where you just have a lot of fast money and loose discipline around what's happening in the ecosystem because they're just excited about it. You see these similar waves in AI, etc. The best thing to think about is how do we get traditional Wall Street or institutions to adopt and start thinking about building into crypto rails rather than trying to control it in a financial way, because that's when the industry gets better. One thing everyone forgets is the billions of people that are trying to transact with these assets today. Like Xbox for us—I was surprised it's been out for four to five weeks and we're almost at $3 billion in transactional volume. That means there's a huge amount of demand outside the United States, and the United States prospers by just getting these types of products out there.
