Hello everyone. Happy Wednesday. Pretty sure it's Wednesday. I lose track of time out here. I'm excited to sit down with you today, Diogo. You have a lot of titles. You are the GP at Han, the executive chairman of Anchorage, also the founder of Anchorage, and the chairman of the Near Foundation. You wear a lot of hats as many people in crypto do. I would love to start with kind of getting your vantage point on how you see like the biggest gaps or disconnects between Web3 today and how you kind of see that flywheel connecting through all of your different entities. I think we were talking about this off stage, but I think the crowd deserves to hear it as well.
Yeah, absolutely. So, hi everyone. One of the coolest things about having multiple hats is that they actually all feed each other. People come to Anchorage to have their token be supported because it's one of the biggest, if not the biggest, institutional custodian in the United States. And then I have a checkbook that I can invest into. And so these things kind of feed off of each other. From a reputational perspective, being the chairman of a foundation means that you have a lot of credibility with founders. And then obviously they take your checks because that's what a venture investor is supposed to do, write checks. One of the things that is interesting still in crypto is that we have this constant narrative of like we want new product market fits that are not trading related. And I think this is one of the things that we keep trying to find. Think we found multiple of them. We keep not getting credit for them. Every time something works, people carve it out and they call it not crypto, like stablecoins. It works and now it's not crypto. That's just fintech, which I think is unfair, but it is the current reality. And I think more things like that are happening. And so this is still the narrative of crypto and what's continuing to happen is this constant search for new product market fit outside of trading.
Would you say stablecoins is the hottest narrative and topic right now as an investor?
I would say yes, but it's quickly shifting for the next hop after stablecoins. One way to look at a stablecoin is it is a tokenized dollar. And these tokenized dollars actually have made all of these crypto companies create tokenization infrastructure. Ultimately, it's what's underneath the hood to move stablecoin around. And if you're tokenizing dollars, now it's actually extremely easy for you to tokenize the next thing. So, what I would say is right now the ascendancy of tokenization, stock tokenization, on-chain IPOs, on-chain capital markets, which is a Solana tagline. That one is the one that's kind of rising the fastest from a smaller baseline. Stablecoins still dominates because that's where the large acquisitions are. And just today, as you saw the rumors of Tether raising a 15 to 20 billion dollars on a 500 billion dollar valuation, which is absolutely AI level type valuation, obviously reignites these conversations in the traditional finance because there's not many private companies in the world that are worth 500 billion dollars. In fact, they may be the largest one.
I am not an investor in Tether. That is a business that I've missed. I was not an investor when they were around as a seed round. So, I would have loved to do that.
Yeah. You also wrote an article with the American Banker and I want to talk to you more about that on the front of stablecoins. You talked about the adoption today. You also just brought up IPOs, which we could go into as well. But how do you kind of see where it stands in the broader market cuz I think it's still in the early innings on that front. Obviously, the infrastructure is being made or is made depending on who you ask. But then when it comes to actual adoption from like mainstream audiences, I don't think we're actually there yet.
So, I think I would take the other side of that argument saying that the second largest reason why stablecoins are popular is actually holding dollars. Primarily, the global south wanting to escape their local hyper inflating currencies. And so if you think about that, the numbers of people are definitely in the millions. So, we can debate whether it's low single digit millions or where it's closely approaching double digit millions, but it's already in the millions. So, that's a clear product market fit for stablecoins outside of trading. And I would say that that means that we have global adoption. I think from the United States point of view, it's extremely hard to understand why it's hard for somebody to hold a dollar because obviously we have these things called bank accounts and ours are denominated in dollars. So, it's very hard for us to relate and empathize. But if you go to an Argentina, you immediately see just a different fervor altogether. And in some countries, they don't even call it stablecoins, they call it Tether. And there's massive adoption in a lot of these countries. So, I think it is fair to say that at this point it is a global technology. But what is happening in stables and what's working? So, obviously like as a trading pair for crypto, that's always been number one. It's why stablecoins were created, why Tether was created in the first place so that you didn't have to go back to fiat and it was fast for you to trade between stables obviously and their counterparts like Bitcoin. Then the second use case has been holding dollars. But now we have a massive growth in terms of enterprise adoption. Particularly, anything that touches a border. If your money needs to cross a border, turns out there's lots of people in between the origin and the destination of the money. All of them want to charge money for it. There's lots of counterparties. That's an outdated system and stablecoins just insert themselves as an actual better rail. And so if it touches a border, it's likely that there is some stablecoin way for you to actually have a better transaction, cheaper transaction, faster transaction, or just some other types of guarantees that are successful. So, remittances, pay-ins, pay-outs, treasury management, these would be the types of use cases that are extremely popular right now for enterprises on stablecoins.
We got the Genius Act approved in the US, which has obviously accelerated the adoption timeline for stablecoins. And I think it has also opened up kind of the floodgates on a global perspective. But what would you say are still some of like the key friction points that are kind of preventing mass adoption from really happening?
So, I would say that in the United States, of course, one of the largest and a country where people look up to the regulation of the United States, having Genius Act is clearly huge for our industry. But it actually comes in a reverse order than what should have happened. We should have had Infrastructure and Clarity Act, which is something that's going through the regulatory apparatus or the lawmaking apparatus in the United States to be more precise, which defines whether something is a crypto security or a crypto commodity and who the regulator is. That should have come first. That actually never came. And so as a contrarian take actually, I still believe that Clarity Act gets passed this year, which is not a popular opinion amongst my peers.
Yeah, well, I will take a bet that it passes this year. I don't know. It depends on the odds that you give me. And I see a Seba over there shaking his head. So, he'll take the other side of the bet.
Yeah. Okay, I also want to talk to you about tokenization and the whole on-chain IPO situation that we kind of see a rise in a narrative right now. How do you think about that? Beyond, you know, we talked about stablecoins, payments, etc. But then the idea of tokenization, bringing things on-chain, tokenizing assets. I'm of the camp that not everything needs to be tokenized. People can go ahead and do it if they want to. But I'm curious your perspective given kind of that you have your hand in like three different entities and you have different point of view from probably a lot of people. So, how do you think about that?
So, one of the coolest things about crypto is that there's the meme of Bitcoin fixes this. Whatever that this is, Bitcoin fixes it. Doesn't matter what it is. Could be a social problem, could be an economic problem. Just Bitcoin fixes it. I love that meme. In this particular case, I actually think the meme is real. Not Bitcoin itself. But let me actually say something. For a long time, we've had Bitcoin not blockchain narrative. Then it inverted for a while where it was blockchain not Bitcoin. Then it inverted again, which was Bitcoin not blockchain. And I think we're finally at the stage where it's actually Bitcoin and blockchain. And what I mean by this is that there are companies right now, Figure being the best example of this, a publicly traded company that was very successful IPO, showing you that you can actually use blockchain for efficiencies such that you actually have a much better business in credit, which is what they do, that you could have had before. So, if you're looking from the outside, I incentivize you to go look at their business and realize that blockchain is the thing that is actually being used there successfully for their business to actually have major advantages, be cheaper, operational efficiencies. All of these components we've been talking for a long time, but we haven't seen and we haven't had. I think now is the moment of Bitcoin and blockchain. And I think this is the answer to your question around IPOs. I do think that blockchain may be able to fix it or at least maybe able to improve it. What's the it that it will improve? Well, private companies are getting larger and larger. They're staying private for longer. Companies like Tether, 500 billion dollars. Companies like OpenAI. The public markets don't have access to these companies on their earliest years where you have the largest possibility of them actually being outlier companies and generating money for all of you instead of generating money only for the private investors. And I think it is extremely obvious to see that we can actually reduce the bar for the operational complexity, automate a lot of the processes, not reduce the bar for quality of companies, but reduce the bar for revenue that a company needs to actually go public. And I think blockchain specifically and on-chain IPOs are one of the ways that we can do it. And that would mean that instead of you only seeing companies that IPO in the United States market at 500 million dollars run rate plus, you may be seeing companies that are going on-chain IPO first at 50 million dollars plus and then have a path to then go public later on after a few years of actually being on the on-chain markets. So, the way that I see this is the on-chain markets might be IPO entry points onto the largest markets later on. And I do think blockchain fixes this.
Are you seeing that with founders that you've invested in?
That's right. So, I backed Superstate's Robert Leshner, which was the co-founder of Compound, in his company. They're some of the people doing this. They've also just tokenized the first real equity, the first real stock from Galaxy on chain with all of the rights that an on-chain stock should have in governance rights. So, they have their own ATS. So, they actually track this. This is not a wrapped token. It's not an SPV that has some tokens of Galaxy. No, this is actual Galaxy stock that is publicly listed and traded, also trading on chain with a direct equivalent from the point of view of the regulators. So, that's actually pretty exciting because that was the first one that has happened and that happened just a few weeks ago. So, we're at the early innings, but I think this is one of the most exciting narratives here.
