Does Crypto Need Wall Street, or Does Wall Street Need Crypto? | Adam Back & Jenny Johnson

Hi, everybody. How's it going? Well, I'm excited. I got some real legends on stage with me today. So when I spoke my opening remarks a couple hours ago, I talked about the convergence of Wall Street and crypto and how that's really become a defining theme, not just of this conference, but of the space as a whole. And I feel like these two guests really represent that convergence better than almost anybody. We have Adam Back here, who is a key figure in the Cypherpunks movement, and that was a community that believed that cryptography and open networks could reduce reliance on traditional institutions. And then we have Jenny Johnson, who is the CEO of one of those traditional institutions. And Franklin Templeton was one of the earliest companies to bring financial products on chain. So we really are talking about the crossroads here of the Cypherpunks movement, early roots, and the traditional financial getting into crypto. So, Adam, I want to start with you because we had an interesting conversation backstage. A lot of people frame Wall Street's embrace of Bitcoin as being in tension with the original vision of Bitcoin, the original cyberpunk vision. But you have a counterargument, and you say that the Cypherpunks were also strong believers in the free market. So is institutional adoption perhaps more in line with the Cypherpunks vision than we originally thought?

Yeah, I mean, I think that it's a sign of growing adoption. And being able to buy Bitcoin in an ETF is an improved way to get accessibility to a lot of people. So you have to bear in mind that many people are not doing self-directed trading. They're not trading on it. You train or something. So, you know, on the Cypherpunks list, when people were talking about electronic cash in the like 1997 to 2004 era, I was, you know, actually a day trader as a, you know, not as a professional trader, but trading on E-Trade, which is now part of Morgan Stanley. And I'd invested in some IPOs in the UK. And so I think generally the cypherpunks for what they would call anarcho capitalist. So it's a free market advocate, but a strong believer in the function and purpose of capital markets for driving, you know, the wealth in the world, right. The development of products and services.

Would you agree that there is some tension, though, between maybe some of those original visionaries in the space who saw Bitcoin as maybe a way to operate outside the financial system, maybe a method of freedom from sort of those traditional bonds, as it were. And that's sort of now merging with that, you know, system that they wanted to get away from.

Well, I think it's maybe a bit like the internet itself. So in the early era of the internet, it was very freewheeling. And then over time, you know, all companies had a web presence and then smartphone apps and so on. So I think it's just that Bitcoin has some of the value proposition is that it is like it is physical. Even though it's electronic, you can physically own it yourself, which is generally not possible or not easy with shares. There aren't bearer shares. Or if you have shares in a company, you depend on the company management. And if you have cash or a bank account balance, you're depending on the government, you know, to if they how much more they print the monetary policy. And if you depend on a bank, you depend on their solvency and prudent behavior and so on. Whereas with Bitcoin you can hold, you can elect or hold a bearer asset, and it has much lower friction. So you have the sort of benefit of an open financial network. And so the internet is an open network. And open networks innovate faster and ultimately deliver a lot of value. But, you know, as with the internet, you saw a whole range of startups and applications of big companies building things on top of it. So I think you can think about Bitcoin as the Internet of finance. And with Blockstream we build the sort of settlement network technology for that, which is a liquid network.

Jenny, you've been on Wall Street for over 30 years and you know, you've seen it all from the 2008 financial crash. You've seen the really start of Wall Street coming on chain, as it were. And Franklin Templeton has really been leading the charge on that front. You guys were the first to tokenize a money market funds, you know, with your Benji platform, which I believe just turned five years old. So that's exciting. You know, what do you think crypto has really gotten right? You know, as someone who's come in from the traditional side and and seeing, you know, the merits of crypto, but also the shortcomings, what would you say crypto has gotten right? And then also, where does it still fall short?

I'm glad you brought up regulation, because we're talking a lot about the implementation of the SEC's tokenization innovation exemption. When that's going to come, we're not entirely sure. But we also have the Clarity Act, which is supposed to unlock a lot of capital flows, you know, a lot of talent coming back to the US. You know, when we talk about the Clarity Act, I'm always, always curious to know I ask my panelists this a lot. We've seen Wall Street really, you know, launch a lot of initiatives and pilots and the intent to launch tokenization projects XYZ. But there's seems to be sort of a hesitation when it comes to, okay, we're actually going to deploy here. Are you seeing companies and maybe, maybe you can speak to Franklin Templeton specifically, like waiting for the Clarity Act to be passed to kind of, you know, greenlight that? Or would you say Wall Street's not waiting? Wall Street already is deploying and making the most of these products right now.

Adam, you've been in this space for a long time. You've seen that crypto has been asking for clear rules of the road. You've seen what happens when there are not, you know, good policies and good regulations put in place. I mean, what do you think is, you know, still fundamentally misunderstood about smart regulation when it comes to crypto, you know, and what should regulators enable? What should they stay out of in your opinion?

Well, I mean, I think it's important for bitcoin at least, that people continue to be able to hold their own keys as an option. And so that is that should be protected in my view. And there are a few bits of regulations that talk about that interestingly. So I think generally it's been reasonably positive how the regulation has evolved that, you know, the there are different areas in the government, but as the governments are in some cases holding Bitcoin themselves or putting Bitcoin into reserves or sovereign wealth funds, pension funds that you can see that they are thinking in the same way that a Bitcoin investor me, but from the mindset of a government. So the fact that it's bearer and you know you're not relying on a counterparty is good for them in the same way that it's good for a sovereign to hold gold because, you know, somebody can't seize your gold, where if you have foreign, if you have reserves in foreign countries or in foreign assets, and the counterparty turns unfriendly, that becomes a problem. You know? So I think the bearer nature of Bitcoin is good for, for that kind of use case. And then I think, you know, the current US administration has been much more open for business for Bitcoin. And so you know the clarity adds add something about stablecoins. So I think that's generally been positive for the US in bringing, you know more businesses back to the US that were previously offshore. And so I think there's you know there's more of that to happen. And I think also it's generally probably good for market structure to have better run sort of investor protection exchange operations rules, because you do end up trusting the exchange for fair operation of markets in some cases. So some more on shoring of for example, recently some of the derivatives trades around Bitcoin have been brought onshore into the US. I think that's generally good for the for the markets. So you know I think it's a global market. So you know it won't go away. But the regulators do look to each other for example. So you saw that when the US became more up in for business, for example, the UK FCA started approving ETFs that had been on hold. And so I think it is gradually improving, you know, country by country as they look at some of them are had, some of them are behind. But it's progressing forwards and that's good to attract business and you know improve the markets.

And actually, this is something that Franklin has been increasingly talking about is the wallet native financial system. And Bitcoin also is originally built around self-hosted wallets. So it's a theme that both of you guys have been talking about. Do you think and I'll ask both of you this, do you think that wallet native infrastructure becomes sort of the primary mode of how we're going to hold assets in the future? Or do you see sort of traditional intermediaries like banks still sitting between users and their assets? How do you see that relationship between the user and their assets in the future, maybe, say, ten years down the line? And, Jenny, I'll let you take it first.

Yeah. I mean, I think that, you know, there are some people that just want to, you know, talk to an investment advisor and have them handle things. But you can see that the, the internet of finance using like a layer like the coin layer two liquid, which supports tokenization and settlement is, you know, evolving to be the new way to transfer electronic shares between platforms. So if you if you ever tried to move shares between two brokerage accounts, it's a little it takes a while and it's quite manual, complicated instructions where you know, with the the way the bitcoin exchanges have evolved, you can just, you know, paste the bitcoin address from one to the other or a QR code and it's there within, you know, half an hour or something like that. So I think it opens up that kind of capability to move collateral between platforms. So I think that's that's valuable. And as Jenny described, you know, there are now traditional assets in tokenized forms being made available on the Bitcoin exchanges. And so I think the value of that, if you're if you're a trader is that if you have your assets separated into two isolated buckets, you know, it reduces your liquidity and increases your risk. And the, you know, some of the traditional brokerages are adding Bitcoin and some of the Bitcoin exchanges that have securities licenses are adding tokenized shares. So I think every time you see those converge and they're offering different things, you know. So but certainly the ability to use the sort of cross collateral cross margin of our share portfolio combined with a Bitcoin folio is actually beneficial. And locks value for both both viewpoints or both for both investments. It reduces the combined portfolio volatility, increases liquidity, and makes it safer. Because I think what has happened and you've spoken to some Swiss banks who saw, you know, a lot of money leaving the bank. And when they trace where it's going, it's getting wired to bitcoin exchanges. So of course then that becomes a driver to you know, support bitcoin purchases in the in the wealth management banks as well. But for the same reason, you know, the users are just looking for a place where they can have both types of investments on one platform, cross margins. So there's that becomes a competition basically between the bitcoin exchanges and the traditional brokerages and banks.

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So you guys, I guess in a way both operate asset management firms now, right? Because, Adam, you're kind of a native on chain asset manager with Blockstream Asset Management, which you guys launched in 2025. Jenny, obviously, Franklin Templeton is a long time traditional asset manager on Wall Street. Adam Blockstream Asset Management You now build Bitcoin native investment products on chain. So with the spirit of the panel name in mind, you know the future building on chain for the on chain investor. Are you guys competing now for the same type of customer or you solving different problems for, you know, the same portfolio? Like kind of how do you think about, you know, the future customer? Adam. Go ahead.

I mean, I think there are different audiences. So I mean, I've thought for a while there the, you know, the next stage for Bitcoin is sort of financialization. So providing structured products on top of bitcoin with different strategies in them. And you know, we have the STR which is a treasury company awaiting US regulatory approval. And that's, you know, kind of a similar type of company to MicroStrategy but using active management strategies. And so as we think about those asset management strategies, there's a separate activity within the block stream group of companies looking at strategies and making those available. And you know, we're thinking about pension funds and endowments and sovereigns. So it's a particular target audience that you have to, you know, structure and set things up appropriate for. And so, you know, there are different institutions facing, different kinds of investors. You know, retail via E-Trade, that's owned by Morgan Stanley, Franklin Templeton, fidelity, all these kind of entities are interested in Bitcoin two, you know, and obviously Robin Hood now you know, is every few weeks there is an announcement of Bitcoin being onboarded a different brokerage retail or adding to model portfolios. So I think that's quite interesting to see how the model portfolios, you know, as they start to get put into action, because in some cases they have just started on that track. So yeah, I think it's you know, there's some new entrants, but it's all a combined market ultimately.

I want to touch on sort of Bitcoin's evolution. Adam. It started with the premise that it could become a peer to peer form of electronic cash. Today, most of the conversation revolves around Bitcoin ETFs, which I know Franklin has one of, and Bitcoin generally being held as an asset. Would you say the original vision has changed, or is this just kind of what adoption looks like? You mentioned earlier like you're open to adoption and sort of like, you know, capital markets coming in and and taking advantage of Bitcoin and helping it grow. But has that changed fundamentally, the original vision of Bitcoin?

No, I mean I think it's both. And I think it you know you see Bitcoin being used for retail payments and remittances more concentrated in countries in emerging market countries with high inflation or weak currencies. So it makes a lot of sense. But then for the developed world, using bitcoin as an investment is more popular. And of course, in that format for, you know, there are some people that are comfortable using a, you know, a self-service brokerage account where they are trading themselves. And for them, a Bitcoin exchange is fine, or a Robinhood or any trade now. But for a lot of people, they they interact with their savings either for an advisor or they are just the beneficiary of a savings plan from their employment, from a mutual fund, something like that. And so the way they would get the benefit of Bitcoin, the financial benefit is through the investment decisions of an investment professional. And so, you know, I think that's an inevitable part of the picture. Because, you know, as bitcoiners, we just want to see, you know, everybody who's interested gain benefit and use bitcoin. So I think it's just part of the, you know, the next wave of adoption and exposure to Bitcoin for people. But I think, you know, the a lot of the fundamental value comes from the bearer properties and the scarcity which, which remains. And you know, quite often people get interested in Bitcoin, are exposed to it through different avenues. And then, you know, go on to try out the stuff, you know, setting up a wallet on a smartphone or wallet, so on a late stage and perhaps elect to keep some in there. Or perhaps they just rely on a ETF and their phone solution. And I think ultimately that's all fine. And of course now you have the evolution of public treasury companies and pension funds. Some US states, some countries like Swiss National Bank and there's quite a bit of MicroStrategy. The Abu Dhabi sovereign wealth funds have Bitcoin direct Bitcoin investments. And so, you know, sometimes those organizations will use ETFs as well because they're relatively low cost of operation as well.

Jenny when did you become interested in Bitcoin. Is there a story.

I love it. That wasn't too controversial. Something that has become much more accepted, I think, under this administration that we have now in the US is, you know, and these these financial regulators like the CFTC and the SEC is the notion of notion of being able to, you know, settle and, you know, have crypto as collateral. Bitcoin has been used as collateral in the crypto market for a long time. This is a new notion for stablecoins, Jenny. And I think, you know, when you launched Benji and your tokenized money market fund, the focus was to give investors, you know, a way to invest. Today, it's increasingly being used as collateral. So, you know, do you think your view of where the biggest opportunity in tokenization really is, is shifting? Is it is it going towards, you know, collateral and like settling in cryptocurrency these days or is it still in, you know, the investment side, would you say.

Adam, what are you most excited about? Just while we're on the subject of exciting things, what are you most looking forward to in the next, I don't know, 6 to 18 months?

Yeah. So I mean, I think there's always a lot going on in the bitcoin and bitcoin layer two. So I think the kind of crossover assets if you like are bitcoin in the traditional finance asset management, wealth management and so on. And then tokenize shares in the in the bitcoin exchanges and derivatives exchanges. So now Jenny was talking about the money market funds are quite interesting because the stablecoins typically don't pay interest. And so that's you know that's profitable for the stablecoin companies. But as a user you are if you're using collateral, you're often paying a funding rate of interest rate. So it's interesting to receive an interest from a money market fund to use that as collateral and therefore reduce your your funding cost or have the unused capital earning interest. So I think that's a, you know, innovation for the derivatives exchanges particularly is they will be using quite often stablecoins as collateral. And I think the other kind of crossover asset that the Bitcoin traders are interested in sometimes is the tokenized MicroStrategy and other strategy companies, because the types of derivatives functionality available on traditional brokerages is much more limited on the traditional brokerages than it is on a bitcoin derivatives exchange. So I think there's interest to, you know, trade that as a as something you can trade that is, you know, maybe even priced in Bitcoin because it's a Bitcoin derivative that starts to make sense. So I'm interested in seeing that market developers, it's quite a new market. If you have traded that trade in the past, you had to do it manually. You know, you'd have to use a combination of Bitcoin ETFs, sell them to dollars or euros and then use that to do another trade. So it's just more efficient to have it in combination. And there is, you know, tokenized treasury shares on liquid. There are some securities and exchanges, some bitcoin exchanges, bitcoin derivatives exchanges that have securities licensing who are adding those very shortly. So I'm interested to see those markets develop in a kind of market evolution sense. Right. Because you need liquidity to support the leverage. And then that will deliver liquidity to the market as well for those markets. So we'll see if, you know, maybe for some of the mid-sized treasury companies, the price formation, maybe even move from the smaller stock exchanges to the Bitcoin derivatives exchanges internationally. It's been interesting phenomena, and I think generally more liquid markets, more efficient markets are good. And then, you know, there's a lot of opportunity ultimately to improve market efficiency. And I think there are a lot of opportunities to incorporate bitcoin, the asset class, into portfolios, into structure products. So there's a lot more ahead of us. And you know Bitcoin as as a collateral is quite interesting as well because it's highly liquid and tradable 24 by seven. So I think that's been underused to date as well. So quite excited about this kind of financialization in a way that benefits from the properties of Bitcoin. I think Franklin's talked about tokenization of ETFs as well. So that's quite.

So exciting innovations all around I just want to pull on a quick set that you pull on a quick thread that you mentioned Adam, which was the notion of this whole stablecoin yield debate. You know, exchanges, issuers not being able to pay yield on stablecoins. That reminds me of, you know, a notion that money market funds were in the 70s and 80s any you referenced, you know, not being you know, I guess they were an innovation that was not exactly welcomed by the banking industry. You know, they were kind of viewed as competitors to bank deposits. But 50 years later in money market funds are still here and the banks are still here as well. So would you say there are parallels to be drawn with stablecoins and the current debate between banks and crypto offering yield.

I guess stablecoin issuers would argue that because stablecoins are backed 1 to 1 and 100% fully reserves, they don't need the FDIC insurance.

Yeah. Yeah. Actually I agree that the simple way for the stablecoins to pay yield is to just, you know, file for the securities regulations. Right. It's it's the tension is the they want to not not have to deal with that and pay the interest anyway. So now of course there is a difference in risk with the Treasury backed stablecoins. Of course the maturity mismatch risk you mentioned. But also there are narrow banks like the Wyoming Speedy Bank or narrow banks in general, which are fully reserved as well. So, you know, of course the maturity mismatch is a potential risk. And, you know, even if it's not paying an interest, it can have a demand withdrawal risk potentially as well, which now I think, you know, to be fair, the stablecoins did pay out a massive drawdown in a very, very short period of time at levels that no bank, no fractional reserve bank has ever survived, at least not without government intervention. So but, you know, there are risks everywhere and people just need to understand them. And and the way to recognize the risk is the securities approach. And I think some of these issues are covered under the genius act. But I feel like we could have a whole different panel just on this discussion. So we're going to have to do a rain check on that.

But I do want to ask you guys the last closing question before we wrap, because we are over time. But for years crypto is prided itself on not really needing Wall Street very much. But today, as we've talked about, some of the biggest products on Wall Street are crypto backed, right. You've got ETFs, treasury companies and so like those have come through traditional financial means. So does crypto need Wall Street or does Wall Street need crypto? Adam.

I mean, a bit of both. The way I look at it is the, you know, some of the fundamental value is the open network nature, the bearer nature of Bitcoin, the underlying asset. But then to have the most impact in the world it has to solve address ability. So accessibility. And so for a lot of people ETFs, public company stocks, pension funds, savings plans are the way they're going to interact with their savings and benefit from a model portfolio with a big Bitcoin component. So I think it's ultimately all about, you know, adoption and delivering value to to individuals.

Adam Jenny, thank you so much. Please everybody give them a huge round of applause.