SALT TALKS

[00:00:00] John Darsie: A live edition of Salt Talks here from the iConnections Global AltsConference in beautiful sunny Miami, Florida. We're proud investors in andpartners with iConnections on our series of global events that take place inNew York, Singapore, Abu Dhabi, and then for the first time in Jackson Hole,Wyoming this summer.

But again, welcome to SALT Talks. And SALT Talks is really a digital interview series withleading investors, creators, and thinkers. Where our goal here is the same asour goal at our SALT conferences, which I described earlier. Which is toprovide a window into the mind of subject matter experts. And one of thosesubject matters that we're very enthusiastic about is the digital assetecosystem.

Digital assets is an area at the Skybridge side of the house, as well as through our SALTconferences. We've endeavored to educate and grow that ecosystem. And we'revery excited to have one of our partners on the Skybridge side of the househere today. Steve Kurz, who's the global head of asset management at Galaxy whowill be interviewed primarily by my partner at Skybridge and SALT, AnthonyScaramucci, who's our founder and managing partner.

And I'll turn it over to Anthony but I'll chime in here or there with some follow up questions.. I'm trying. I was just winging

[00:01:16] Anthony Scaramucci: that posture is good too. Thank you. I could still work on the posture. Steve, how the hell are you?

You're good.Great to see you. Yeah. You've been through the wars, my brother, right?

[00:01:24] Steve Kurz: Which one?

[00:01:25] Anthony Scaramucci: You've been through some trade. You've been to trade five wars, some crypto wars. You're like a galaxy fighter, right? You're an interstellar human being. But let's go back to the beginning. Okay. How'd you grow up?Where'd you grow up?

Where'd you goto school?

[00:01:40] Steve Kurz: Yeah, sure. So I grew up in Houston, Texas.

And then moved to Budapest, Hungary when I was eight. My dad's a Hungarian immigrant to theUnited States. And so we spent some time there as the country was coming out of communism. So he was one of the few people that spoke Hungarian and spokefinance. And so he helped the central bank come out of literally decades of communism.

And Then my mom won over and we moved to Western Maryland, more cows than people So what town?Smithsburg, Maryland. Literally just five minutes from West Virginia. And it was, a really interesting difference than living in New York, going to Cornell, spending some time in finance and gave me a good lens that I think, I hope I still hold with me, but it was it was just a very a very different upbringing than a lot of my peers.

[00:02:16] Anthony Scaramucci: Alright, so you're at Cornell. Yeah. You decide you want to come to work in New York City on Wall Street. So your first job is where?

[00:02:22] Steve Kurz: First jobs at Lehman Brothers, I actually was going to drop out ofCornell for a worm poop company called TerraCycle. And this is important because the Lehman guys they loved Cornell.

It was a good, they could prove from there and they actually saw an article about TerraCycle.Just to, for viewers and listeners, Tons of senior people from Lehman were fromCornell. Exactly. So they had a whole, that whole freight train of people coming in and out of Cornell.

And to their credit, so I'm sitting around, selling worm poop at Cornell thinking about dropping out.

We're in theDaily Sun or Cornell Daily Sun or Ithaca Journal. The Lehman guys saw and they wanted to meet up. I said, I'm never going to work in finance. And so they setup an interview. I said, look, I'm dropping out of school. I said, don't do that. Come have an internship in New York. And I loved it. So I, I hard tackedinto finance and then thought I was going to the best the best possible job on wall street.

And that was inMay of 2007. And I was there for, about a year. And then,

[00:03:12] John Darsie: So that's about when you were leaving, right Anthony?.

[00:03:14] Anthony Scaramucci: I left actually in March of 2005. And we have similar stories. So Isold my business to Lehman. They were great guys. I loved the firm, but I always had the entrepreneurial bug. So I went to Dick and said I was startingSkybridge.

Could he help me? And he did. He gave me 10 million of balance sheet capital. And then I did something that I was told to do. We can talk about this. I had all these options, and I had stock in Lehman Brothers. And I petitioned the management committee to please let me keep the options. Not force my sale of the options.

upon departure because I wanted to hold everything. I thought Lehman stock at that time was about 30. I was going to 300. And so the management committee said, no, you're technically going to competitor. We have a fund of funds. And so they flushed me out. They sold me at 40. Now, the rest of the story, the stock went to 89.

So I wanted to stab myself and In the eyeball with a butter knife, okay? But then it went from, then it went from 89 to 0. And so it was one of the luckiest things that ever happened to me, that they flushed me out of it. What does that say about risk management? The things that we think we know, for certain, we actually don't know, right?

[00:04:22] Steve Kurz: I thought Lima's going 300. How about this? The worm shit company did 50million in revenues last year. Lima did 0 last year. Yeah.

[00:04:28] Anthony Scaramucci: Amen. Skybridge is still here. Lehman, we unfortunately don't see anymore. So now you go from

[00:04:33] Steve Kurz: Lehman to where? So I went to work for Mike Novogratz. He ran a macro fund.

Obviously, the Fortress guys are well known in the hedge fund industry. It was a different league for me. I showed up in my Brooks Brothers suit that was too big. I missed, this two, two minutes and I was like, this is not the same as what I walked away from Lehman Brothers. Just a different level, different different approach.

And so I spent five years at Fortress in Singapore and London. Some strategy work, some product specialist work, some sales work. And really got an education in asset management.

[00:04:58] Anthony Scaramucci: And Lehman was part of the IPO

[00:04:59] Steve Kurz: for Fortress, right? Yeah, I worked for Jarrett Waite, who actually yeah,I think he led the IPO.

Jarrett's a great guy. Yeah, absolutely. Taught me a lot. Alright, so Fortress to where?And then I went to work for Bart McDade, who was the president for the last 93days of Lehman Brothers. And, he wanted to create a nice 15 person firm thatwas high integrity, credit focused, and to the entrepreneurial point, I didn't want to work at a big company, and Fortress was becoming a big company, so started that with Bart and with Alex, and we built it to a billion and a half of AUM, and I did that for five years before I got the bug again and quit to go start a virtual reality company.

So I've had this pattern of kind of just, once it gets easy, I start something, new. What does it say about you? Masochist, you like pain. How do you explain saying crypto Ijust think that when the ground's moving, I want to move, with it. And I felt,I remember feeling when I left, McDade in 2017.

Nothing against credit, nothing against those guys. I just felt like the world was changing andI was too young to coast and I wanted to move into tech and that's really what got me here. So how did the virtual reality of your business go? I got my wife toquit Blackstone. I quit my job. We traveled around the world.

She's still your wife. I'm just shagging. So this comes into play in a minute. We moved to theWest Coast five months into building this company. Novo calls me and says, you got to come back to New York and start Galaxy. with me. I just agonizing laying in bed. I'm like, Fiona, we got to go back to New York.

She's What are you talking about? You're crazy. To her credit, she actually joined galaxy. She helped us go public. So she was a partner of mine, a galaxy for a year. We decided probably didn't want to do that for more than a year. A little crazy to have both of you in crypto. I stuck around and she moved back to traditional finance.

So yeah, we're still married. We've got two kids.

[00:06:35] Anthony Scaramucci: So did you join Galaxy because of Mike Novogratz or you had an apparitional light that dawned on you that crypto was going to be part of our future or.

[00:06:45] Steve Kurz: I got a lot of faith in Mike. He's really great at seeing the big picture and synthesizing information and seeing around corners.

He first said, because I said, look, I started my own company, I can't do it. He said, learnabout Bitcoin, and if you actually spend time learning about Bitcoin, intellectually, honestly, and you're not interested, fine. But I want you to go through the process. So I came in, I met some people. Some of the early young crypto guys, you can't unsee it.

You know that once you learn about Bitcoin, you see the problems in the world. So Bitcoin drew me in, but Mike drew me to Bitcoin.

[00:07:13] Anthony Scaramucci: Okay. It may make sense to me, this guy doesn't like crypto, butnow all of a sudden he's starting to like crypto.

[00:07:18] John Darsie: He didn't start

[00:07:19] Anthony Scaramucci: Is that you?

Or did

[00:07:20] Steve Kurz: you have the apparitional light where you're like no, I got it right. I got it right away. To my dad's point, dad's traveled all around the world. He's seen what happens when monetary systems get debased. He believes in math and computer science, which is what Bitcoin is. And you don't really need to know much more than that.

Really, right? I just want to, I just want to

[00:07:37] Anthony Scaramucci: stay for our viewers and listeners. That was like to correct. Thatwas fake news from John Darcy. I've never hyperbolized anything in my life.

[00:07:44] Steve Kurz: All right, go ahead, John. John, do you

[00:07:46] John Darsie: have any questions? to correct the record, okay? Okay. Obviously, I owndigital assets.

I'm still at SkyBridge after our deep foray into digital assets, so it's definitely not forme. How long have you guys been working together? Our several

[00:07:57] Anthony Scaramucci: near death experiences. At nine years. At nine years. We've hadCapital Digitalis perform to the heart of SkyBridge.

[00:08:02] Steve Kurz: As we were trying to survive.

What I would say is, We're

[00:08:06] John Darsie: not going anywhere. He's like a nuclear cockroach. He's fallen down and got stomped on 50

[00:08:11] Steve Kurz: times. We're going to crawl out of the rubble. That's Bitcoin, right? But

[00:08:14] John Darsie: Bitcoin always resonated with me. As the, the cliché digital goldnarrative. It's a finite supply, non sovereign currency in a world ofdysfunction and money printing and excessive spending.

It's something that people around the world can hold and have faith that it will stay the same supply and that the value will be, somewhat stable. I would say some of the other more speculative aspects of the crypto world turned me off a little bit.Not that I haven't dabbled in NFTs and things like that, but I.

I thought at the height of crypto, a couple years ago I thought there was a lot of

[00:08:51] Steve Kurz: excess. Yeah. That's true. But two things can also be true. Like it wasn't just Bitcoin for me. I for maybe it was the reason that we talked aboutthe entrepreneurial thing. My thought was love Bitcoin, love Mike.

This makes sense. This stuff might be wrong, but what if some of it's right? That was my mentality and all of it doesn't have to be right. 5% of it, 2% of it has to beright for this to be a good way for me to spend my time. And at that time you couldn't prove it. You were imagining things.

If Ethereum does this and this happens and then that, you couldn't have a rational conversation with a credit investor and be like, this is how you model it out. So you

[00:09:22] Anthony Scaramucci: have the Genesis period of Bitcoin and digital assets, and then you have the disbelief from the traditional finance people. And then you have allthat skepticism and then you go through a few hyper cycles.

The most painful one for us thus far was the November, 2021 hyper cycle. And then we had all the fraud and all the deleveraging. So where are we now? Are we in a more maturephase? Are we still in the Genesis period? Where would you say we are

[00:09:51] SteveKurz: right now? I'm not, I guess I would say I'm happy that it happened aspainful as it was.

If that hadhappened when we were not a trillion or two trillion dollars, it would havereally hurt people. And it would have really hurt the potential of crypto. Wetook our medicine. You're saying the overall market

[00:10:05] AnthonyScaramucci: cap of crypto

[00:10:06] SteveKurz: being at that high. Yeah, it was not insignificant and people did losemoney.

But I, it showedthat we as an industry hadn't done a good enough job of, Avoiding some of thethings you just mentioned and we needed to take our medicine. There was a lotof hubris There was a lot of ego. There was a lot of nonsense. And so I think2022 was cataclysmic Obviously the the first quarter last year was terriblelast year was about digestion, right?

You had that youhad finance being resolved. You had some of the court cases working out. Wewere chosen thankfully to manage the FTX wind down. We're really grateful forthat opportunity. So cleaning up the mess is how I'd say 2023 was. And what Ithink people miss about the Bitcoin ETF now, everyone says it's so great forBitcoin.

BlackRock andVesco are not going after the Bitcoin ETF just for Bitcoin, right? And it's notjust about tokenization either. If you make the tokenization bet and theBitcoin bet and the Ethereum bet, you're really making a financialinfrastructure bet. And to me In our world, the financial infrastructure is

[00:11:02] AnthonyScaramucci: changing.

And it's And theway we

[00:11:03] SteveKurz: transact with each other is going to change. If you're coming to thisspace with a blank slate, and you ignore All of the bias and the things you'veheard in the headlines and the froth and you just start with where we are fromthat lens. It's almost impossible as a thoughtful investor to say I shouldn'tbe involved.

You're actuallynot being honest with yourself. And so it's hard to lose the brain damage ofthe past but I think that's what crypto people need to do. Because the worldchanged like that. Everyone's business is much more competitive and if youhaven't woken up to that. You're out. And that's a good thing,

[00:11:33] AnthonyScaramucci: actually.

I think that'sthe first time that FTX has been mentioned. I haven't gotten like a skin rashor some type of psoriasis buildup. Oh, God. Where are we, to the extent you'reable to talk about it, where are we in the disposition of FTX's assets? Yeah.And where do you think We go. Is this like Mt. Gox where it goes on for 12, 13

[00:11:53] JohnDarsie: years?

[00:11:54] SteveKurz: Is it, gotta, you gotta give John Ray a lot of credit. He did Enron. He'sa real guy. Obviously, there are things that we can't talk about. But what Ican say is that they have been incredibly thoughtful and methodical aboutsegmenting things out. So you've got the liquid crypto, you've got the venture,you've got the exchange, you've got the trust structures, you've got theventure portfolio.

And they've gota real process going. been able to get a work stream with the U. C. With theadult committee that's been very constructive. And, without going into details,we've been pretty aggressive in the run up at getting through a lot of whatneeded to be got through. And our job was to do it quietly and professionally.

I'm happy to saywe've done it.

[00:12:29] AnthonyScaramucci: But this on the public river, they still own a ton of Solano,right?

[00:12:32] SteveKurz: There's the Solana and the lock Solano. And we we've been You've beenopportunistic, let's say, on the way up with Solana, and yeah, I think we're ina really good spot with the estate on that a lot of locks, Solana.

That's true.Yeah, that's true, but I think Solana at a hundred and Solana having gonethrough what you, this nuclear winter, I think Solana's established itself as ablue chip crypto, right? That's just happening before our eyes. They're now inmiddle school. If a theory is in high school and bitcoins in college, likegetting to middle school is really hard for any crypto assets.

So I just thinkthere's a buyer base in Solana that's going to support. They're going. Peopleare going to want that lock. Solana is my point. Okay, are we allowed

[00:13:06] AnthonyScaramucci: to ask prediction questions here? This is our podcast, right? Sowe're here a year from now. You're drinking out of an eye connections mug.

Nice mug. I havenothing in my eye connections. Mama, That's all right. Yeah, I finished thevodka. Okay, so where is Bitcoin a year from now?

[00:13:24] SteveKurz: There is no way that the ETFs, I think the ETFs are already 3 percent ofthe 21 million Bitcoin supply. We're two weeks into that. You just got to holdthat in your mind.

There's no waybetween the halving and the ETFs. We run an ETF with Invesco called BTCO. Weare focused on LATAM, we're focused on Asia, we're focused on Europe, we'refocused on the wealth channels. That contextualization in a portfolio hasn'thappened. You've never had it in the model portfolios, you've never had thesolutions teams focused on it, you've never had the regulatory check from theSEC, even if they did it grudgingly.

So the, sosupply is not gonna, so demand is not gonna go up overnight, but a year fromnow, it will have gone up, and you'll have a steady cadence of buys from theETFs that are hundreds of millions of dollars. You'll have the halving that hadhappened that reduces the inflation rate to 1 percent of Bitcoin and It'll beless volatile, but still volatile.

And you'reprobably, a little more than double where we are today. Okay, so

[00:14:14] AnthonyScaramucci: nearing 100, 000. What about Solana?

[00:14:18] SteveKurz: I think Solana, the question for Solana, Solana still has to prove itselfa bit on the tech side. They've had zero downtime on their network since lastFebruary, which is a huge achievement for them.

Efficient, fastcost blockchain that just is everywhere, and they're doing a really good job ofexecuting on that road map. What Solana needs to do to be multiples of where itis today, they need to follow the same institutional path that Bitcoin and Ethereumhave followed. So you got futures, CME futures, Bitcoin needs to have that.

Then you haveOSC approved ETH have that. Then you get the futures ETF, Bitcoin and ETH havethat. Now we've got spot ETF in the U. S. That's next for Ethereum. Solanahasn't even taken that first step. So while Solana is a major in crypto, ithasn't taken the path to becoming an institutional investable asset.

That's probablywhat next year is going to be all about. I don't know the timing of that, butif they can achieve that, in addition to hitting their tech milestones, Solanagot a ton of upside. They got to execute on that. Scott but

[00:15:13] AnthonyScaramucci: and just for our viewers and listeners, So in order for an ETF tobe packaged, Bitcoin is deemed a commodity.

Correct.Ethereum is then has to be deemed a commodity. Is that correct? SEC's positionon Solana?

[00:15:26] SteveKurz: The SEC's formal position is vague by design. I think in a year we mayhave a different commissioner. I don't think that anti crypto is actually ademocratic party platform. I'd love your take on it, but I think if you go to.

Hakeem Jeffriesand if you go to Gavin Newsom, if you go to Maxine Waters, it's a verydifferent lens than Elizabeth Warren and Sherrod Brown and I don't know whyyou'd hate crypto You can't hate crypto so much that you're willing to give upThe digital rails that are going to carry the dollar dominance forward and sothere's just a wisdom that's missing and I think that I know you're talkingabout Solana, but it's all tied up in the same thing.

If they can'tunderstand that this is about the future of capital markets, and therefore it'sa national security imperative, then forget it, we've got a whole different bagof issues. I'm not even talking about DeFi. I'm just talking about how in theU. S. are you going to build the rails that are going to allow the dollar andother assets to survive.

seamlessly movewhen everyone else in the world is doing that. And again, you can't hate Solanaso much that you torch that. That makes no sense. And I think most people inWashington get it, but there are a few in this administration that don't. Andwe've been held hostage by that.

[00:16:31] JohnDarsie: I got a question about galaxy.

You guys havethis 5 billion under management. You're one of the most successful crypto assetmanagers. Obviously we're all bullish on digital assets, broadly Bitcoin,various other tokens. When you guys were thinking about how you provide valueto an LP in your funds. What's the approach that you guys are taking that'sdriving your outcome?

There's a

[00:16:51] SteveKurz: couple, there's a couple principles. One principle is, and we've been nonnegotiable on this we haven't traded on exchange at all with our asset. We'vealways gone OTC, direct to cold storage. That'll help us avoid FTX. There arevery few places that we actually go, so we avoided Luna in general.

So avoiding thepitfalls and not doing stupid stuff is actually pretty hard to do when theworld's going crazy. I learned that from Lehman Brothers, I learned that fromBart McDade. So that's been our philosophy. And then underneath of that, wedon't think crypto is one thing, and we don't think that everyone approaches itsame way.

So we're aplatform. We want to have venture funds. We want to have active funds, highball and low ball. We're gonna have passive funds and we want to be able to beopportunistic and help out an FTX estate. And I think if we do that really welland knock on wood, we're doing an okay job that's going to take care of itself.

And the real betthat we're making on the asset management side AB put out a really good report.They said it's a cottage industry, crypto asset manager, 50 billion is whatthey said in the fall. That's supposed to be five hundred to six hundredbillion in five to six years. And the ETF is the catalyst for that to start tohappen.

So that's whatI'm thinking about. How do we take our share of that and be a part of drivingthat forward over, over the next five years? And the way we do it is we deliverreturns. We don't screw things up. We do what we say we're going to do. All thethings that, that every asset manager that has integrity does.

That's a, it's astock answer, but it's really hard to do that in crypto as you guys, I think.

[00:18:08] JohnDarsie: And I think, one of the next challenges, as you said, the SEC hasbegrudgingly approved Bitcoin ETFs and thus blessed the asset. And I thinkinevitably they will lose, I think, what are gonna be inevitable court battlesaround Ethereum etf Yeah.

And potentiallyfuture coins. But do you see as the next wave in terms of. Big developmentsthat take place in the crypto universe.

[00:18:29] SteveKurz: The institutional side, even though it's obvious, we're just gettingstarted, right? With Invesco is our partner. Invesco is the second biggestissuer in the ETF issue in this race.

And those guys,they have so much infrastructure and gown ground game. And it's just get it.That's what people are missing. Crypto so fast. Everyone in a second. Oh, thisis what's happening in a week. This is what happening. This is about a year,two years, three years down there.

Look at GLD. I'msure you guys have done that analysis. That story is going to be a major storynow and in the future. The degree to which those companies like Invesco aretalking about the future of capital markets and leaning into these other thingsare going to be the key drivers of what, how far we can go with that.

And I thinkwe're going to be surprised to the upside that's my view. So we're excitedabout that partnership on the crypto side. I really think that, you've seen AIcapture the attention crypto two years ago. You need both of them, right? AI isthis top down mechanism of control.

Crypto is thisbottom up almost libertarian thing that is protecting our privacy and that kindof thing. If you didn't have crypto driving forward in the last five years, youwouldn't have had all the ZK proof technology work that's been done. You need thatZK proof stuff to keep the models honest. You need it to make sure that it'sactually Anthony Scaramucci who's saying something on TV and not someone else.

That's gonna bea reality of ours in a year. John wishes it

[00:19:45] AnthonyScaramucci: was somebody

[00:19:45] JohnDarsie: else saying something on TV, but We're gonna have fun with that, Ithink. This is actually AI Anthony Scaramucci.

[00:19:52] SteveKurz: I'm

[00:19:52] AnthonyScaramucci: like mostly muted here but my question to you is you're a youngguy. You've seen the old landscape of traditional finance and.

Decentralizedfinance. Why? What's your message to people that are missing this? What's yourmessage to the skeptics? You mentioned Sherrod Brown or Elizabeth Warren, butabout the traditional finance skeptics. There's a guy named Jamie Diamond. Haveyou ever heard

[00:20:19] SteveKurz: of him? A lot of friends who work for him.

We You shouldsee our text arguments about this. I also have friends at Vanguard. It's,

[00:20:26] JohnDarsie: there's a lot of people working on crypto within

[00:20:28] AnthonyScaramucci: J. P. Morgan. What's the message?

[00:20:30] SteveKurz: The message to my friends is I'll answer it in two ways. The peopleworking under those guys are Don't agree. So I think anyone who's I'm 38 yearsold.

Anyone who'sunder 40 almost uniformly has a view that's not right. And that, in and ofitself, in a generational wealth transfer era, is important and worthy of note.So the arrogance of telling the younger generation that's not that younganymore, this is how it's supposed to go, I think is something.

What I wouldtell people is, ignore the noise and focus on one or two things real or thatare at least developed in the crypto space and just start there. When theinternet happened, our job in galaxy isn't to defend crypto. Just to be clear,cryptos, whatever the world wants it to be. The internet was whatever the worldputs into the internet.

You don't defendeverything on the internet. You focus on the few things that matter. So I thinkit's, I think it's a distraction point. People get distracted by a lot of thenonsense of crypto and that's because crypto is noisy and you got a lot of shitheadsand you got a lot of people that make stupid.

But there's alot that's real, and I think the mistake is calling it all one thing.

[00:21:34] AnthonyScaramucci: So it's three years from now. I'm gonna buy stock in Applecomputer. Yeah. Is my Apple stock

[00:21:42] JohnDarsie: tokenized?

[00:21:44] SteveKurz: I think so,

[00:21:45] AnthonyScaramucci: yeah. Is it on my phone? Do I have a smart and secure wallet wheremy apple I think it's, you're not computer stock is right

[00:21:51] SteveKurz: there on my phone.

I think so.Yeah. And you're, there's gonna be so much there's already been so much workon. It's only going to really scale when no one really thinks about it beingcrypto or web three backed or anything. And that integration is much closerthan we expect. What people have been quietly doing in the last two yearsbehind all the financial aspects of crypto and the noisy fraud of crypto isthey've been building tens and tens of billions of dollars and put it was putinto venture in crypto in the last cycle.

And you havepassionate young entrepreneurs, the smartest coders in the world that havewhat's different this time around is they're solving known problems. Six, sevenyears ago, you were saying again, is it going to be, Are we doing modularblockchains? Is it a theory? No one really knew. And now you know you needcompliance, you need MLKYC, you need better UI, UX, you need the integration ofwhat you like.

There's acompany we just invested in called Mesh. It's all about an app that allows youto. Take your Venmo balance and buy crypto through Coinbase in a seamless waythat's protected. That's the start of what you're talking about. And they'realready there with the technology. So it's just a matter of how that all kindof plugs in and where scale really takes hold and who wins that race.

So I think forsure in three years we'll be there. Yeah. You talked

[00:22:56] JohnDarsie: about Invesco, BlackRock. Integrating likely Bitcoin into some of theirmacro models. A lot of these big asset managers, it's going to drive hugedemand for the ETFs just by integrating Bitcoin into an overall assetallocation.

What aboutinstitutional LPs? So we're here at the iConnections Global Alls Conference.There's a lot of, there's sovereign wealth funds here. There's pensions,endowments, foundations. That crowd, from our experience, has been allergic todigital assets to this point. They've done some crypto venture, that some ofit's gone okay, some of it hasn't.

But I think nowwith the SEC blessing Bitcoin through the ETF, you might. see a little bit of achange of their tune. Do you agree with the notion that some of those playersmight start sniffing around coins and digital assets? Or is it still too early?

[00:23:39] SteveKurz: So you're right. It's been venture and basically passive, which is to sayBitcoin and maybe some ETH.

And so that'show we built our asset management business. Only now are we really focused onwhen you have exchange traded products and options on them and then you got theunderlying and then you've got companies, public companies like Galaxy, likeCoinbase that you can go long and short. You got credit instruments.

You're startingto build a toolkit where you can actually have a hedge fund. So I think thebiggest surprise over the next two years is going to be that belly, that liquidactive space is finally going to, come to the forefront. People areuncomfortable in the LP seats becoming portfolio managers, let alone around 80vol assets.

And so some ofthe way it's going to happen is through existing multi strap portfolios, legacyasset managers. And I don't mean that with prejudice, like it's just going tohappen and they're not going to feel like they have to make the call. And thensome of it's gonna happen because you're gonna have much higher.

We screwed itup. Active management in crypto was Liquid VC. That's, don't worry about it.It's liquid. It's gonna be fine. Down 95%. Doesn't work for LPs. Doesn't matterthat it came back. They just, they can't live in that world. We screwed up bysaying market neutral funds. There's no market neutral funds in crypto, right?

That's the samething as Lehman Brothers. You had contagion on the back end, right? And so wehave to be honest about what's possible. And that's the starting point. Youhave to be honest about volatility. And you have to be honest about where youwon't go and where you will go and the trade offs between that.

And a lot ofasset managers haven't done that. So I think the Bitcoin ETF, what's going tohappen is by June, July you're going to have Bitcoin higher. It's going to, whoknows until then. Everyone's going to say, wait a minute, I missed on that one.And then by the fall they're going to start doing work and maybe by Decemberyou get allocations.

So unfortunatelyit's going to take a while still. But I think it's different this year becauseof the ETF and it starts that process.

[00:25:18] JohnDarsie: Yeah, no, we observed the same thing in the context of our conferences,too. It's starting to become, not a non starter, but how do we start doing moreof the

[00:25:26] SteveKurz: homework.

And you needSkybridges, hopefully Galaxy's a part of that. You need people that are talkingin a rational way about crypto. That's really what it's, that's what it's allabout. And contextualizing it for these guys. And in the same way that thewealth the army of Sales people at Invesco are going to go and contextualizeBitcoin in a portfolio with BTCO.

We need oursales teams on the alt side to be contextualizing it in an alts portfolio.

[00:25:48] AnthonyScaramucci: What I like about your messaging though is that let me be thenaysayer for a second. I think a lot of these people don't like it because it'sspeculative. But what I like about what you're saying is it's actually, some ofit is speculative, but there's a rail system being made.

So if it's threeyears from now and I'm buying a meal here, At the fountain blue. What is thecredit card charge? from American Express MasterCard or Visa, or am I doing awallet to wallet transfer

[00:26:13] SteveKurz: with the hotel? I actually think it's going to be, I think it could beall of the above in the same wallet.

And it's yourchoice, right? Do you want the points for Amex or is there a better incentivemechanism around the token? Or has Amex figured that out? I don't think it'sgoing to be either or. I really think you're going to choose your own adventurethrough the same application. But there'll be more options than I have rightnow.

Way moreoptions, yeah. I think it's going to be seamless and I think it'll be, We'vetalked about delta miles and all that's going to just find its way to theserails at the same time. And I think three years is actually the right timeline.I'm glad you're asking it that way because everyone says five years and that'stoo far.

And one year isnot because it's probably somewhere in there.

[00:26:47] JohnDarsie: Yeah, like you said, I think when crypto really arrives is when we stoptalking about crypto and when people just take it for granted, it's embedded in

[00:26:54] SteveKurz: our daily lives. Bitcoin's already getting boring. From a cryptoperspective, not from a traditional perspective, that's boomer coins, a realthing.

That'svolatility

[00:27:01] JohnDarsie: will continue to go down as it becomes a more mature asset with theETFs. As you talked about steady flows as opposed

[00:27:07] SteveKurz: to already has just in anticipation, just

[00:27:09] AnthonyScaramucci: very happy. I kept my hair through this whole cycle. And it wasgood that the hairs hanging in there. But I was. I was really worried that Iwas losing it.

I got some gray.I was also thinking about getting a barrel and suspenders there at the end of2022.

[00:27:20] SteveKurz: Oh, man. It was really the first quarter of 23 that was terrible. So thebest

[00:27:24] AnthonyScaramucci: year in the history of SkyBridge was 2023. But if you had asked meat the iConnections conference at the beginning of 2023, what was the yeargoing to look like, I would say we're going to be at the bottom of the swimming

[00:27:36] JohnDarsie: pool.

Ron Biscardididn't even want to be seen with Anthony because it was in the wake of the FTX

[00:27:41] AnthonyScaramucci: debacle. He was like, Oh my God.

[00:27:44] SteveKurz: The taint of FTX is too much. I'm gonna be diplomatic where we're goodfriends with Ron.

[00:27:48] AnthonyScaramucci: No. I love Ron. I don't have a history. History. We're partnerswith Ron.

It's a littlebit of gun waving on his part. I forgave him for it. But the question I havefor you, are we out of that woods or are we gonna see a 90% drop in crypto of80? 70 80 percent drop in Bitcoin is Ethereum or let's say Solana, is Solanagoing to go from 100 to 10?

[00:28:13] SteveKurz: I don't, what I think is, I think the hard thing for crypto companies isnot going to be that or for crypto investors.

I, I think thatthe competition changing so rapidly as we're not yet in a full bull cycle isgoing to create a very difficult operating environment for a lot of companiesand for some investments. I don't worry. I think the 90 percent is off thetable for the majors because there's just so many people that are looking tobuild a long position over time.

And it's just,you have a use case in a lane. But I think there's a lot of crypto companiesthat are still gonna go out of business. I think a lot of crypto funds aregonna go out of business. And I think a lot of crypto coins and projects aregonna go out of business. And I don't want that to happen.

I just thinkit's, if you haven't woken up to 0 percent fees on ETFs and what that means forretail exchanges or any of it or even In the U. S., look, our policy in D. C.is very difficult for DeFi, and it's going to be for a while. When FinCEN'sfocused, that's really different than CFTC.

So there arehurdles for pockets of crypto in the U. S. that remain, and it's going to bethis really one size doesn't fit all. World for the next year or two, and yougot to really pick your spots where you focus your team and allocate capital.

[00:29:15] AnthonyScaramucci: See there's the legend himself, Ron Biscardi, now.

[00:29:18] SteveKurz: He heard you.

[00:29:19] AnthonyScaramucci: He's okay now with the crypto stuff. Before, he was trying to drownme in the bottom of the swimming pool last year.

[00:29:24] SteveKurz: Listen, Ron, I had your back. You can run the tapes.

[00:29:26] AnthonyScaramucci: Because of my involvement with crypto, but it's okay. I do loveRhombus Gordy, and We've come a long way in a year, though.

It did hurt myfeelings when he was trying to disassociate himself from me, but it's fine.Okay, alright, so he's still there, see that? Yeah. Alright, that makes sense.It's been a long year.

[00:29:41] JohnDarsie: We were talking, we were walking on the boardwalk here on Miami Beachon the way over here to record this podcast episode, and I was talking toAnthony about what you said, is that I do think not just a lot of protocols aregoing to fail, but I think a lot of asset managers are going to fall to thewayside, and I think there's going to be a few dominant players, and I thinkGalaxy is well positioned to be the black rock of crypto.

[00:29:58] SteveKurz: God willing. I like Invesco because we're partnered with Invesco. But Iwill say that what BlackRock did in 2008 with some of the advisory workoutstuff, really helped their brand. I think that's what we're doing with FTXright now. And I, if we do a great job at that and we help clean up the mess, Ithink that's going to say a lot for us in the future.

And we feel ifwe can execute and prioritize, we're in a good spot.

[00:30:18] JohnDarsie: And, we were talking a little bit before we went on, but just theresilience of Crypto, me as someone who came at it from a skeptical angle, it'salmost like a crypto shrink, though, more couch time.

[00:30:27] SteveKurz: When you go through it yourself first, it's easy, yeah, I like it. Novohad me in his house for a three day meditation retreat before all this, andhe's convinced that's why we are where we are, and I'm where I am, just

[00:30:36] JohnDarsie: the resilience of crypto, everything that it's gone through, FTX,Binance, Terra Luna, all these things, and it really absorbed all that in avery healthy way.

[00:30:45] SteveKurz: What a story. Yeah, that's a but that's resilient. Look, it's you sawsupply chain supply chains during the pandemic. We want resilient systems inthe world. And we saw that was laid bare in many ways. When free market China,this is when I really knew that I made the right choice when China shut downBitcoin mining, and 50 percent of the industrial Yeah.

Yeah. capacityof Bitcoin went down overnight, and the next block hit, okay, this, I get it,right? That's a profound thing, right? It's never happened.

[00:31:11] AnthonyScaramucci: But isn't 10 percent of the mining still happening in China?

[00:31:14] SteveKurz: Yeah look, and China's now gone, the other, Hong Kong's opened up forfinancial side, and they've loosened the reins a little bit, but my, yeah, mypoint is that when people say shut it down, mine.

It's antifragile for sure. Yeah, it has value. Just that alone has value in the world.

[00:31:31] JohnDarsie: We'll probably wrap it up there. Steve, thanks for joining us here onSolve Talks. You're a great guest. We

[00:31:37] SteveKurz: appreciate it.

[00:31:39] AnthonyScaramucci: I appreciated the free therapy. I didn't have to pay any Satoshi'sfor it.

[00:31:45] JohnDarsie: You didn't have to go to a meditation retreat.

[00:31:47] AnthonyScaramucci: I can't go to a meditation retreat. My head would explode. Take usout, John.

[00:31:52] JohnDarsie: Thank you, everybody, for joining us here on Solve Talks. Salt Talks,again, from beautiful Miami Beach, Florida, during iConnections Global Alts2024. Again, we're very grateful for the partnership with Galaxy and thepartnership with iConnections.

And this isundoubtedly the biggest and best global cap intro event in the world. So we'revery grateful to be here and be working with iConnections. Reminder, if youwant to watch any of these episodes of Salt Talks, they're all free and ondemand on our YouTube. YouTube channel and on our website at salt.

org. We're onTwitter, or I guess I should say X at Salt Conference is where we're mostactive. And as I said in our previous taping, it's always fun to follow atScaramucci on X where we get a combination of crypto commentary and electioncommentary. As we lead into what will be an interesting election season in thefall.

[00:32:39] AnthonyScaramucci: Just so you know, Darcy writes a lot of those tweets, particularlythe anti Trump ones.

[00:32:42] JohnDarsie: The most inflammatory ones are from me. Yeah, that makes sense.

[00:32:45] AnthonyScaramucci: Exactly. He's blasting away using my address.

[00:32:48] JohnDarsie: But I will say that Anthony labeling Gary Gensler and Elizabeth Warren,the regulatory axis of evil.

That was all ofhis doing. I can't take any credit for that one. Or regulated institution.Yeah, exactly. And as Jeremy Allaire said in Davos, we have a little bit of adifferent PR strategy than in a company like galaxy and circle, which does morebusiness, I would say with the government. But anyways, thank you for joiningus here on salt talks.

We'll see youback here again soon.

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