Welcome back to another episode of our podcast, In Points Capture. Today we have with us Yat Siu, co-founder and managing director of Animoca Brands. We'll talk about a lot of things, especially the latest happenings in the crypto world, the disruptions, the speculations, the shifting narratives with government sides, and what's new with AI coming into crypto. We'll talk about all these things in a short while. No other person can answer all these questions other than Yat, because he sits at the front row of top crypto voices and has for a very long time. Getting insights from him is the best you as a viewer could ever get. So we'll start straight forward because we're tight on schedule. I have a few questions regarding the latest things happening. So the first one is: we are clearly in another phase of market disruption, volatility, capital rotation, and a lot of noise. From your perspective, is this disruption actually healthy, or is it going to affect Web3 in the long term?
Well, I mean, I think capital rotation is normal. But first of all, I don't have the crystal ball, just to be clear here. It's not like we've had some good bets and we've done well, but broadly speaking, the markets are the markets, and predicting markets is predicting human behavior, which even the best people in the world have difficulties predicting. But maybe let's comment about the market a little bit. I think it's worthwhile going back in time. When you think about what's happening in the space right now, it's very clear that there is capital rotation going out of crypto. When you think also where has most of the rotation into our sector been, it's been institutions really since you could say '24, starting with the ETFs, and of course '25 with Trump and everything. There's been a large wave of institutional capital adoption, starting with ETFs, then of course the DATs which have had mixed results, and then of course with RWAs which is a very big topic, and of course stablecoins and so on. All of these have really hit the narrative. But who are the buyers of these assets? Typically institutions. When you think of the previous period, most of the buyers of these assets were retail.
Basically, they're people from all over the world, many of them who hadn't really looked at even investing. And that's why I think it's useful to go back to the era of '21-'22, which was actually the NFT boom. And by the way, NFTs today still trade $300 million a month. So, it's not a dead market, but it's obviously not as hyped as it was before. But what was interesting is that in '21-'22, because of NFTs, because of the metaverse and gaming, we had millions and millions of new users into crypto for the very first time. These millions of users have stayed with the crypto period of '23 and '24. And these users, many of them have started to rotate out in '25. Now, why did they rotate out? Part of it is because of different asset classes. And so this is a theory, but our theory is that what happens when you enter into crypto and you're not financially literate, you learn about money. I mean, how did you get into crypto?
I mean, I loved Bitcoin in the very beginning, so I was a developer.
A developer, you don't have a finance background.
Yeah, I didn't have a finance background.
So your friends who went to Wall Street or the bankers, and you're a developer, you were actually living two separate worlds, correct? And you probably weren't thinking about a stock portfolio.
Exactly. You're 99% of the world, by the way. Most of the people in the world do not think, 'Oh, I'm coming out of college, what's my stock portfolio? What assets should I buy?' You're thinking about your job. You're thinking, I should be a developer, I should be a doctor, I should be whatever. Only the people who go to Wall Street initially or like a bank think how should I invest, because that's their training, which is very normal. But when you start buying crypto, you start learning about money because it's volatile, because there's trading. And think also about how our children learn about money. You know, Pokemon cards or things that they trade. So the exchange of value of some sort teaches you about that. Okay? So now what's happened is that group of people were exclusively trading crypto for a while because they entered the world of crypto. And then however, they started learning about investing because they started to become more financially literate. They go, 'Oh, okay. Can I buy crypto? What does memecoin? I don't know its value.' But then they have an idea. Oh, Bitcoin store of value. What does it mean? Oh, inflation. What does this mean? Oh, basically QE, what does this mean? So, today the group of people that have entered crypto in '22 with the NFT boom, which really brought in I would say the largest amount of new users from retail that have stayed on, they're now saying, 'Okay, how can I diversify my portfolio?' They've matured. They've grown up. And so in a way that audience has now started buying gold and started buying other assets. And I'm not saying it's a bad thing, because I think part of the mission in crypto in terms of growing financial literacy is to become more financially aware and more savvy. So it makes sense to diversify your portfolio. However, the issue is that while institutions have gone in, retail has actually gone out a little bit. And so we haven't had a big new influx of new users entering the space. Now, how have new users entered the crypto behind the scenes? So, what was the biggest story last year? It was prediction markets. Polymarket is a market. So, how many people who use Polymarket actually know that it's running crypto?
I think nobody knows or very few people really care that the Polygon blockchain is running on the back, right?
Correct. And which is also interesting because the Polygon blockchain is worth maybe a billion or two, but Polymarket is worth 8 billion, which is by the way how we think value capture will hold generally between L1s, L2s, and applications on top. But the issue is that because the capital is invested in a manner where they don't understand or care about the on-chain dynamics, they're just investing, they're only spending it in Polymarket. They're not taking the money from Polymarket and saying, 'Oh, maybe I can put it on DeFi, oh maybe there's a yield product I can invest in' and extending from there. They're only using it in that particular area for the time being for the new users, because they don't know. They're treating it like your typical closed prediction market. They're not knowing that the asset once it's on-chain can travel around. And I'm not sure that Polymarket wants them to know that either, because it's not necessarily good for them. But remember, when you have an NFT, yes, most of the trading happened on OpenSea back then. However, the asset was now sitting somewhere where you would get an airdrop that you would then receive in your wallet that you could then maybe trade in Jupiter or in Uniswap or some other kind of DEX and then eventually maybe in a centralized exchange. So I think the market currently is going through this rotation. The people who are in crypto haven't left crypto, but they've just basically diversified their assets. And of course unfortunately '25 has been a bad year for crypto despite Trump, which means also the net asset value of token holders is also poorer, so they're not spending as much as before. So you have a mixture of these things. So I think the way to solve this is one, we need of course the institutions to keep buying, that's what's happening right now. But the second thing is you need more retail to enter the space. And so we need to give them the use cases, we need to tell them why you should be using crypto. Like my mom's not buying crypto. She's not in the space because it's hard for her, she doesn't understand it. So we need to keep building the solutions that can help do that.
Okay, that's a good insight. But I always had this one thing in my mind about the institutions entering into the crypto space on a larger scale. I mean, we've seen institutions enter but not at the scale which we are seeing right now in the past 2 to 3 years. So what do you think that will affect the retail investor in the long term, or will that help the retail investor in the long term?
So my general message I have for crypto is don't expect the institutions to save you. Okay. I mean if you think about the history of how crypto started, it was very much, and I wouldn't say anti-institution is the right way. We need institutional support, but you don't want the institutions to own it either. You need to have that balance where you have the institutions and the retail. That's the whole promise about democratized finance. I mean if institutions own, theoretically, again I don't think it's going to happen, but owns like 90% of the crypto market and the assets, then it no longer is the asset class of the mass, it's the asset class of the institution, which is basically Wall Street. So in many ways I would say that's not really what we're trying to do here. And so the thing is also though that institutions look at crypto as an asset class. It doesn't have an attachment to its values necessarily, some do but most don't. It's like, okay, there's value. I'm gonna invest. I have a return. My shareholders want return. That's what I'll do. So, if crypto is volatile, maybe they'll trade the volatility. Maybe they'll hedge it. Maybe they go long short. All that kind of stuff. They don't really do it because they think that Bitcoin is going to go to a million dollars. They're doing it because they need to make 10%, 20%, 5%, whatever kind of yield they're generating. And that's different from people who are saying, 'Hey, this is my belief in decentralization. My belief in a world where we should all have ownership in what we're doing. My belief in a better internet where value can be better shared.' That's why you hold that asset. And so you need both. You need the institution to enter, but you need the retail to understand and to appreciate that owning this asset class is a way in which you basically can have a stake in the future. And I think when the asset is very, very volatile it's difficult for some people, especially when they're leverage trading. And I think this is one of the big differences from again '21-'22 versus now, is that perp markets are the dominant instrument of trading and price discovery. At least last year was often led by perp, not by spot. You know when you have a market crash, and especially what happened in October 10, at the end of the day with a crash like this you have nothing because you've basically lost the up and the down. However, if you have spot, then if the market price drops, at least you own the tokens. And if the token at least recovers or sits somewhere, you still have something to build your base off of. But on perps, where you got liquidated both on the long and the short, you have lost everything.
Yeah. You lost everything.
And so that's kind of where the market is recovering from. And the size of that damage is greater than FTX and Terra Luna. So that is the positive and the negative. The negative is of course it's bigger. So the damage is large. The positive is Bitcoin's still 70,000 after all of this. Whereas back when FTX happened, Bitcoin sank all the way down to I think like 15 or 16 or something, it really went down. So again I would say the institutions and certain holders are keeping it there. However, it remains volatile until there's more strength in the market. And again I go back to this point which is that when the memecoin cycle happened, basically before Trump got elected, really it was the same people in crypto retail trading with each other. We didn't really have new audiences enter the space to understand it better. And this is the problem that we need to continue to solve.
Perfect. I think that was a well-described solution for what I was thinking about. Okay, let's move on to the next question. So, regulations are usually framed as a threat in crypto. But lately it feels like regulatory clarity may actually unlock adoption. So, do you see regulation today as a brake or a growth?
It's growth, absolutely. But there's compromises on the growth in the same way that when institutions are entering the space then you have to compromise with the expectation of what the institution has and the expectation of the people who entered crypto in the first place. What I mean by that is we go back to mass adoption. So all of us here and probably much of the audience, you guys are all early adopters or innovators, correct? You're in the first five or 10 percentile of the world. You probably try new software. You tinker around. There's a new crazy thing. You'll do it. You probably install open claw. You're willing to do the crazy new stuff that 90% of the world will not do. And that's the audience of crypto. So how do you expand that beyond that? It's basically going for the people who want the stuff that is more common, more safe, and so you need regulation. So I go back to the example of my mom. My mom's not going to be entering crypto unless the government says it's safe or at least there's a regulation around it. And her friends say, 'Oh, I bought crypto, too. I think it's safe or it's a good investment class or let's put one or 2% or something like that.' At least from their perspective, they go, 'Okay, this is now legit. This is validated.' But remember, it's only been a year and a half where crypto people in America were treated like criminals. So, it's only a short period of time. So, even as regulation improves, there is this element where people still have to be adjusted to the fact that it's okay. Unfortunately, also the media and the politics make this part hard because there's all this controversy around Trump and Trump family. And with the whole CLARITY Act where they're trying to push basically the ethics clause, even though it probably shouldn't be there just because it's not really a place that should be there for legislation per se. The fact that it's being debated continues to highlight this issue where people say, 'Oh, crypto and ethics, yes, it's a problem' even though they're not the same thing in this conversation, it just mars the whole picture. And so still people are sort of sitting back and going, 'Okay, but if a government says this is regulated, this exchange is good, this company is fine or they have a license or whatever it is,' then you can build confidence that at least there is a safety net that the government has reviewed it, that there's appropriate measures taken in place. And this is all necessary in order to enable mass adoption, especially because these assets have financial value.
Perfect, that makes sense as well. All right, so for founders who are building globally, how should they think about designing a product that can survive across market regulatory changes which come across?
Well, I mean, I think the most important thing is that if you build a product that people want, that's essentially the mechanism in which you ensure that whether it's regulation, whether it's government, whether it's whatever, will basically want to find a solution because it's something that solves it in a good way. I mean Uber is a good example. Uber did not have regulatory approval to go and basically launch a service that essentially disrupted the taxi medallion business. Everyone who basically was a taxi medallion owner was like, 'This is bad. We don't like it.' Some governments were obviously also upset because of taxis, because of jobs, all that kind of stuff. However, Uber provided a valuable service to the users, for most parts of the world where they were getting bad service or no service. Okay, there was a service available and because the consumer loved it and needed it, in the end the government had to find a way to solve it because it improved transportation. It solved tourism issues as well in terms of point A to point B. Like the benefits of having Uber or Grab or whatever are very, very clear. But of course it was disruptive but it was a necessary disruption because the ones who had this monopoly on the transport side basically didn't have a need to make that change. And crypto is the same. I mean stablecoins is a good example of an innovation that solves a lot of problems in terms of remittance. Who wants to pay high remittance fees? Who wants to basically wait till 5 or 10 days for the wire transfer to be approved because some bank person says, 'Oh, can you fill out 50 forms' and the money is stuck in the ether when in reality you should be receiving it instantly and basically get the benefits of that right away. And so again that push created the necessary innovation that basically forced everyone to accept it. And the same is for Bitcoin for instance. I mean you look at Bitcoin, now it's considered something that has value, volatility aside. I think there's almost nobody out there except the ones who hate it since the beginning who basically look at Bitcoin and say this asset will not be around. I think a lot of people now acknowledge that this is an asset that has staying power and is important. But again, did they seek permission? No. But they did solve a problem that was very important to them at the time. And that by the way is the reason why we're also very focused on AI. So when we launched just a week ago, it's called Animoca Minds. What was the problem that we're trying to solve there? It's an example of that where basically instead of having a user open a MetaMask, which is a good service but again my mom's not going to use MetaMask. It's just 12 or 24 seed phrase to remember that I have to write it down somewhere. And again it's not because it's hard it's because it's unfamiliar. It's just something you're not used to. Remember how hard it was for some people to move from Blackberry to smartphone? It wasn't hard, it's just unfamiliar, like where's my keyboard? But then the apps were just so much better and the interface was so much more obvious because you're using your finger that you adjusted to and you had a bigger screen and next thing you know basically you were able to move very quickly. And I think AI has a little bit of that moment as well where when you're using ChatGPT you get just better results in search. But now with agentic AI you have the ability for the AI to speak to you in your language and do actions. So I can now use my AI agent in the case of Animoca Minds to basically open a wallet. I can give it a little bit of cash. It can buy my NFTs. It can trade them if it wants to. It can also handle my schedule. It can do everything. And if you think about the interface, I think 99% of the world is going to be happy to talk to someone or something that will then do the action for you rather than click approve, confirm, all these strings, basically is it safe? I don't know if I'm clicking on the scam side. Whereas the AI should be able to do that going forward. And again, this is not to say that you shouldn't move your assets eventually to a cold wallet or keep it somewhere safe, but just entering the space, what should be the interface? And the interface should really be a chat dialogue because you can talk to it over email, over WhatsApp, over Telegram, for example. So it's kind of part of that as well, which is again you're building a product and if people love the product then you basically get that adoption. Clearly there's going to be regulation around AI and money.
