And imagine being a financier and you don't know how to invest money and your best idea is a 10-year T-bill. Well, first off, if I'm hiring you, I can put into 10-year T-bills myself. So, stable coins are, for a depositor, retail deposit, like better banks than you've ever had. They're very safe, one-to-one backed. You can have an auditor come in. You audit it twice a month. I mean, you don't have any banks that are audited twice a month. It's 100% reserve. It's almost no fees and it moves 24/7. So, it's a better bank than you ever had. And Larry Fink, you know, from BlackRock, he says everything's going to be tokenized. So, every equity, every bond, every fund, it's all going to be tokenized. So, don't take my word for it. Take his.
I'm Scott Melker, host of the Wolf of All Streets podcast. Here with Mike Belshe, the CEO of BitGo. And Mike, you've had a pretty big few days here.
Well, thank you. Look, I think we try to always keep it fun. For me, I enjoy watching the markets. Also, we've got OpenClaw, which has been all over everything. I've been playing with that. Look, I think there's a lot of great stuff that's happening in the world in spite of seeming like instability. There's change. It's exciting times.
So, let's talk about specifically what's happening with BitGo. Obviously, you were the darling IPO of last week, the first crypto-related IPO of 2026. Maybe you can give us some background on that process, why the timing, how it finally happened.
Sure. And then, look, right after you do an IPO, I'm not allowed to talk about certain things. But I can talk about the business and just what are we doing and why do we do this. So, you've known BitGo for a long time. It's been great to know you, Scott, for I think forever. Thank you for your contributions in the industry and with keeping all the news straight and center. But BitGo is an infrastructure company for digital assets. We've been around since 2013. A lot of what we do is prove to our clients that we are worthy of their business. And in the early days it was like how does your technology work? What is this two-out-of-three model that you guys are pioneering? How does it work with multi-sig and MPC and this chain and that? And over time the types of things we do to prove it continues to get more and more in depth. So after the initial technology review, it's like okay well what's the operational controls and the SOC audits and how do you have insurance behind it and how do you do cold storage behind that? What's your regulatory framework? What's your regulatory framework in each of the jurisdictions around the planet? How do you build market structure which BitGo does to make trading capable straight from cold custody? And then of course our latest step is moving into the public markets. And one of the nice things about being in the public markets is that everything is transparent. You know all the faults of the SEC, you can't complain that it isn't providing a really deep look at who is BitGo, how are the finances, what are the risks of the company, etc. So, it's all out there in the S-1 and our clients can see it. And when you start talking with Wall Street, many of whom are public companies themselves, century-old organizations, it's much easier for them to interface to BitGo.
So, how about the timing? I mean, was that a function of when you got approved and you went for it, or was there any plan behind that? Because you did get to be the first in 2026, of course, with a long line of potential IPOs for the crypto industry coming and obviously we had quite a few successful IPOs in 2025.
Well, without throwing too many superlatives out there, I'd like to think BitGo is frankly a bit stronger than most of our competitors and so we were just ready earlier. This is something that we started working on last year. We I think we're pretty close to having it all ready to go back in October when the government decided to take a little shutdown for a little while. So that's to kind of push the timing back but that was the only reason. Other than that we've been anticipating this. We like it because we think it makes our business stronger and it's as simple as that. And one of the things you do as part of this whole process you get introduced to the biggest and best investment and asset managers out there, hundred billion dollar funds, trillion dollar funds. And it's true, they haven't really looked at crypto companies very much in part because they haven't been public. So, look, it's just been part of our strategy for a long time and it's a lot less about some particular timing around the market or whatnot than it is about this is good for us. I think that's unique. Most businesses they're probably like they're raising a bunch of money because they want to go build some data center or they've got some particular thing they need to do. In our case, and you can look at our finances, we're in pretty solid shape. I think and so it was really more about how do we make sure that people can interface with us and understand if you're a fiduciary on the board of a public company, a fiduciary to shareholders, how do you know that the providers that you're using as you get into the digital asset markets are the best ones for you?
It's interesting because we see the articles that say first crypto company by... Did you lose me? I went black there for a second. It's not live so it doesn't matter. We're still recording, guys. We're good. Okay. It's interesting because these articles describe you as the first crypto company of 2026, but I think it's unfortunate that everyone's still lumped together. You look at a Bullish, an eToro, a Circle, Kraken, Gemini, the ones that we've talked about from last year. You're very different. It's almost entirely separate and strange that you're even lumped together.
Well, thanks for pointing that out. That's right. We've seen a bunch of retail exchanges go public already and there hasn't been a lot of differentiation. So BitGo is an infrastructure provider mostly known for storage and custody but actually we've been trying to help build market structure and these days we're a full-fledged financial services company for digital assets. So we look very different. We're also institutionally focused instead of retail focused. But you're right there's a lot of people that just bundle it all together as crypto. I guess it's convenient.
But you're in a very different part of the industry as we said. So maybe talk about... I mean there was a story... You want to talk about market structure? Yeah, that was exactly where I was going because it's become... you might mean something different than the Clarity Act that everybody's looking at, but you know it's going to come from the industry to get sensible views on how that should be structured.
Yeah. Well, first off, let's talk about clarity. We would very much like to see clarity get done. Having spoken to all kinds of participants that have been mostly on the sidelines here to fore, having clarity is really like the government stamp of approval that there's a path forward. Clarity itself it clarifies a couple of things but for the most part it delegates that out to the CFTC to determine over the next couple of years. Nonetheless, we think we as an industry would greatly immensely benefit from having clarity done even if it's got imperfections. And we can talk about the stable coin component in a moment, but let's talk about market structure. Market structure is something most people don't know quite what it is. And it sounds good. Yes, we should have it and we know that there's no market structure in crypto, but what are we really trying to accomplish here? And in my opinion, there's a few basic protections that markets should have and do have in all other asset classes except for crypto. And we're looking for how to bring crypto into that fold without doing something that stifles innovation or prevents us from making things even better. So, if you look at the traditional markets, I believe there's a couple of things that are true. First off, the US has the largest capital markets in the world. They've lasted for over a hundred years. They are not even close and there's nobody else even close in comparison. As the world goes digital those markets will become digital and as such any risks that are inherent to digital will fall into the traditional capital markets. Now I think what we've always done with market structure is we've protected the exchanges. They lead themselves to monopolies, that sounds terrible but it's not really right. A great exchange is the largest collection of buyers, the largest collection of sellers coming together to be able to trade and get the best price. So, it's natural that CME is a monopoly, that New York Stock Exchange plus NASDAQ monopolies. And the same thing will happen with digital. As such, if that monopoly, that center player, that exchange should take a fault and go down, it would kill the capital markets. So, there's two key risks that need to be identified in my opinion. One is custody risk. We have never had the New York Stock Exchange, the CME, etc. take custody of the assets they're trading. It just doesn't happen. Crypto is the first that where this does happen. And the reason it happens is not because people thought it was good, but because in the early days of crypto, there wasn't any choice. It was this brand new asset class. There was nobody to hold it. So, we've evolved to where we are, but it's time to evolve further. And sadly with digital assets, they are the hardest things to custody ever, right? They are bearer instruments and if you lose them, they're gone. Unlike equities or anything else where you can probably rewrite a database and get back up in a couple of days if you had a fault. If the New York Stock Exchange were holding digital assets and had a failure, the exchange would be gone. The capital market would be gone. So you can't have a digital exchange holding custody in my opinion. Now, that might sound self-serving. Let's move to the second risk, counterparty credit risk. We don't see a lot of this in digital assets today, but you're starting to see it as we've got market structure. How do you extend leverage to traders? And counterparty credit risk extending leverage has always been isolated away from the exchange. So, here, think Lehman Brothers 2008, 100 plus year old organization, very fine institution and yet sooner or later humans make mistakes. They overextended. They didn't exactly know who owed them what or how they would recover and of course they ended up dying. Now imagine if Lehman Brothers had been inside of the NASDAQ and NASDAQ had disappeared. It's terrible that Lehman was lost but it would be absolutely devastating if the NASDAQ were lost. So exchanges should not be allowed to extend counterparty credit risk. And in the crypto world exchanges have been a one-stop shop. They take the custody risk. They take the counterparty credit risk. and they want to say, 'Oh, but we can do it better.' Look, you isolate these things out. You build some amount of fault tolerance so the exchange can never die. And of course, this is what you should be doing. So, I'll bring it back though to a more practical example, which is BitGo. One nice thing about that market structure here in the US, when you buy equities, you go to your broker, and you can pick from any brokers, he's got a duty of best execution, best X. He's got to get to the best price. He's got to get to the best price whether it's on the NASDAQ or the Boston exchange or the American exchange or whatever. And it's market structure that allows this to happen. So, you work with your broker and he gets you the best price. When you go to crypto, you pre-fund some exchange. This is the way it works across the entire planet right now. And those exchanges, they don't have a duty of best X. They just get you the best price on their exchange. But we all know that the best prices can be anywhere. As traditional finance comes into crypto right now, they're assuming that they can go to somebody who looks like a pretty good sized exchange, might be a big exchange, might even be a public company. But they're surprised to learn that that exchange is a relatively small set of global market share and then it doesn't get you the best price. All right, so BitGo, what did we do? We were different, right? So we started out building wallets, secure, custody, safety. The bottom foundation of everything that we do in financial services needs to be really, really robust. So we built that. We do 100% cold storage. Our clients love the cold storage. They're storing billions of dollars of assets with us. They don't want it online. They love what we do, the security that we go to, the regulatory we have behind it, the insurance, etc. But when they wanted to trade, they'd have to take it out of that cold storage and go put it on some rickety exchange somewhere. They don't want to do that. Why should they have to trade off between security and liquidity? You should be able to have both. Market structure is what gives you both. It allows you to have the security and safety of where it is that you're banking or storing. It also allows you to have liquidity, get the best price anywhere. So, BitGo's model, of course, we're not an exchange. We're not going to be an exchange, but we get you the best price around the planet, no matter where it might be. We connect all the market makers, all the exchanges, and that's market structure. So we do a duty of best X not because some regulator told us to but because commercially that's what our clients want. Anyway, that's what market structure is in my opinion and very much welcoming changes here in the US to make it stronger.
It's interesting because the narrative that we see in the media and with retail around the Clarity Act and what market structure is from the government's perspective very rarely talks about the duties of an exchange or the roles that they should play that are actually as you pointed out pretty natural in every other market. We're focused on what's a security, what's a commodity and whether you can have yield on stable coins. But what you described is actually the more fundamentally important part of market structure that is being actually discussed in the Clarity Act. Nobody's talking about it.
Yeah. Look, most people don't know how our current markets work. And frankly, once they're set up and running, you really don't need to. They're hard to change. You don't want them to change very often. But we're at this unique moment in time where we have a new asset class coming into play. And people are wondering like, wait, this asset class is so different. Does it need the same type of market structure we've had? Does it need something different? How can we make it more efficient? These are all great questions. But at the end of the day, I think the way you solve it by saying, 'Okay, what risks are we trying to mitigate? Let's identify those and let's figure out how we're going to do that.' And once you start doing it that way, I think things start to break out much more simply. You're right. Clarity Act does answer a couple of basic questions of like who regulates this asset, who regulates, very important. Got to get that done for sure. Stable coin interest. That's a little bit of a curveball, not really related to market structure. Basically this is an infighting between different parties that each want to be able to have the business that gives interest. And there's three different parties, not just two, by the way. But that's an interesting sideshow that's not really related to straight market structure.
Let's talk about the sideshow though because it's a great topic. So, why is stable coin yield such a big question for the Clarity Act, especially when we just passed the Stable Coin Act, Genius Act?
Yeah. Look, so stable coins are, for a deposit, a retail deposit, like better banks than you've ever had. And it's technology that brings them to light. We haven't been able to do this before. It is the combination of the blockchain. It is the combination of the one-to-one backing with a treasury, etc. They're very safe. These are something that Genius was able to wrap its head around very quickly. The idea is you get one token. It's backed one-to-one. There's no algorithmic stable coins. We're not talking about any of that stuff. One-to-one backed. You can have an auditor come in. You audit it twice a month. I mean, you don't have any banks that are audited twice a month. It's 100% reserve. It's almost no fees. And it moves 24/7. So, it's a better bank than you ever had. All of a sudden, the banks are afraid that they're going to lose their deposits. And then they say that's going to cause a systemic problem. Well, look, it won't. And we know it won't because this is not the first time this has happened in history. And for your watchers that haven't heard this before, but this happened in 1970, 1971. Back at the time, there was a piece of regulation called Regulation Q, which prevented banks from offering too much interest to their depositors. So, there was a limit. And then, as inflation started to rear its ugly head, sound familiar? The money market guys said, 'Hey, what if we create a money market backed 100% by T-bills and just give the 8% or whatever the interest rate was at the time.' And the banks cried bloody murder. They said, 'Oh my god, there's going to be a run on the bank. It's going to be the end of the world.' Da da da. Okay, I don't know how many different money markets there are today. Obviously, we got past this. Regulation Q doesn't exist anymore. There was no run on the bank. It's all going to be just fine. So faction number one is the banks are worried about being competitive against stable coins and rather than try to compete their first option is like well if we can just block this regulatory wise we don't have to compete let's keep same old same old it'll be great that's the first player. Now there's crypto generally, the camp I'm in is that in the end of course it's your money if all we're doing is going and putting in T-bills and getting the risk-free rate I believe we have a fiduciary duty to give you back that money. It's not even a choice. The idea that a regulator is going to say like, 'Hey, you're taking no risk on the client's money and yet you should keep it.' seems a little strange to me. Okay. And then there's a third thing which is all right. So Genius is really the bill which already blocked interest on stables. Clarity is coming along and fixing what's now known as the loophole. Now, there's only one company on the planet that I know of that is capable of actually exercising the loophole. I believe there should be no loophole for anybody. There should also be no blocking from Genius. It's really Genius that needs to be changed to allow interest and everybody should be able to do it and compete in the open markets. What we have is option A, which is, I guess keep Genius the same, which would continue to block interest. Option B would be to modify Genius to allow interest. I believe that's the right answer and history will ultimately get us there. And then there's option C, which is what to do about this loophole. Look, there's one company that's fighting for the loophole. They're saying that it's about making sure everyone can get interest, but actually it's about preserving their loophole so that they can continue to private interest. It's like, okay, I kind of understand, but if you're really...
Call it rewards, correct? We're talking about Coinbase. Mike doesn't want to say it, but obviously Coinbase very famously, Brian Armstrong was credited with blocking the Clarity Act. I also don't think that's exactly what happened, but they've made a pretty big statement by saying they would rather no bill than a bad bill and that stable coin yield is at the center of one of four or five things that they view as an issue. But to your point, right now, as it stands, they're offering rewards which look a lot like interest and nobody else really can.
That's right. Look, I think if we're going to have a loophole, like everybody should have a loophole, in which case it's not a loophole. Or we should have a loophole that nobody has access to. It should be one or the other. It shouldn't be a case where there's really just one guy that's capable of doing it. And they might argue no, anyone can do it. But really, if you look practically, there's not an ability for anyone else to replicate that model. It happens to be historic. It comes out of how we got here over the last seven, eight years. And there's a bunch of folks. Tether deserves a ton of credit for pioneering the space in a zero interest environment. Circle deserves a ton of credit as well. Totally agree with all those points. So, I'm not trying to slight anyone in that regard. But as we talk about what should the policy be on a go forward basis of course we want every company to be able to offer interest reasonably back to their clients. And I guess if you want to go a little deeper, I have one more thought about how this should be thought of kind of in the broader context, but should I go there, please?
All right. So, ETFs and stable coins, I think, are pretty similar. BlackRock offers a Bitcoin ETF, the most successful ETF, I think, of all time in terms of speed and growth. And BlackRock takes a 25 basis point fee for administering that ETF. That fee covers their operational costs. It covers their regulatory standing, it covers their audits a little bit more. I think a stable coin is actually a very similar type of activity. You've got again a little bit of operational, you got some regulatory, some audits, and then you're managing a one-to-one reserve. Very similar types of products. So really, we should be thinking about how do we get stable coins to the point where the issuer is keeping somewhere in the neighborhood of 25 maybe 50 basis points. We can argue about that number but it shouldn't be like this 300 400 basis points which is kept today. So I think that's where we ultimately land and once we do that the stable coin market will get better faster. Today since you can't pass interest through, anyone that wants to start participating in stable coins is like, well, I want to be the issuer because I get to keep all the money and the law requires me to keep all the money, right? But once that's not the case anymore, now you can start to have a few stable coins that emerge, provide reasonable administrative fees, and just get ubiquitous. People won't want to create like a thousand different stable coins when there's not like this massive reward created, frankly, by the regulatory capability that we have under Genius today.
Created by the regulatory capability, but also the blueprint laid out by the banks, which is take in the deposits and make all the money and give the depositor nothing.
Yeah. Look, the banks have got another thing, and this is not just here in the US, but also abroad, in the EU. The EMI license requires that if you're an issuer, you're going to keep I think it's 60% of the backing at depository banks. And it's interesting. People think of the just the layman's term bank. It's supposed to be safety and stability and all that, but a depository bank is a fractional reserve bank. We had a bank die just last week. Which one with the silver crash? Which one was it? Do you remember? Something something.
