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00:00I want to start just with the price action. I mentioned a new record for Bitcoin, $125,000
00:05on Sunday. How are you watching this? Too far, too fast? Is it warranted? Just weigh in there.
00:11Well, I want to take a step back here and realize something. I don't think this is talked about
00:16enough. And that is that Bitcoin right now is the seventh largest asset by market cap in the
00:22entire world. And for those of us who have been in this space for over a decade, like myself,
00:26that's really extraordinary. And I still think we're so early and just at the tip of the iceberg.
00:31You know, you just had Jamie Dimon interviewed. He's talking about the tip of the iceberg with AI.
00:36I feel the same way with crypto as an asset class. And of course, Bitcoin included chief among that.
00:42Absolutely. October has historically been a big month for Bitcoin, its best performing month
00:48overall. To what extent does the current macro environment, we're talking about stubborn
00:52inflation, long term fiscal concerns, as well as the current political environment, the government
00:58shutdown being the most obvious example of the political dysfunction, create a perfect storm for
01:03those who are bullish on crypto, bullish on Bitcoin? Yeah, sure. Well, we're hearing a lot these
01:09days about in the short term right now, the debasement trade. And it's kind of extraordinary to hear
01:15Bitcoin called a safe haven, because of course, it's it's still a risk asset. And it's it's still,
01:21again, very early. But I think what I'm going to back up and not just talk about the government
01:26shutdown, because obviously, the macro picture always has historically influenced crypto. But I
01:33think that what you're seeing with Bitcoin right now, it's still the institutional adoption story.
01:37And I think we're very early in that institutional adoption. You saw a little bit of that in the last
01:42cycle, kind of in the 2017, 2018, and then also in 2021 and 2022. But I think that institutional
01:49adoption story just continues. And it's it's just getting stronger. I mean, you mentioned ETF record
01:56inflows. You know, I bet BlackRock's crypto ETF, Bitcoin ETF is the most profitable ever ETF. And it's
02:04only around for not that long compared to other ETFs that have been around for 20 years. So I think
02:10you're seeing more and more signals of institutional adoption. You're seeing really a whole crypto
02:16economy and even a Bitcoin economy emerge. One part of the economy that that is seeming to grow
02:21each and every week is digital asset treasuries, DATs. And one thing that I'm wondering from you
02:26is is where we're seeing money flow inside and outside of that space. So because dads are gathering
02:32so much money from investors right now, Katie, how is it affecting venture investment in crypto
02:38outside of that space? Yeah, you know, DATs is not an area of focus for us. Why not?
02:45Well, candidly, we can also hold the tokens directly through our fund structure. And so we
02:50prefer to just bet on the underlying assets themselves. I'm not writing off DATs as a
02:55category. I think they're an important tool, but it's not an area of focus for our fund in particular.
03:00But I still think it's an overall very small part, growing part, but still small of the crypto
03:05ecosystem. I want to ask you about Bitcoin insurers. Your Han Ventures just announced an
03:11investment in Meanwhile, which is a Bitcoin insurer. Can you explain why this investment
03:15makes sense to you? What is it about Bitcoin that makes the cryptocurrency relevant for life
03:21insurance products? Well, I think if you back up and look at life insurance as a category,
03:26it's a really important underpinning of financial services and products and services in this space.
03:32I mean, it's a really also there's a tax advantage to life insurance products and it's a three
03:38trillion dollar market opportunity. So I think the fact now that you're seeing Bitcoin life
03:44insurance being offered is just a reflection of how broad Bitcoin. Sorry, how far Bitcoins come.
03:51We're going to talk more about stable coins next block, but we have time for one more question on
03:55this. And you've been so enthusiastic about stable coins of late. You were an early adopter
04:00in stable coins. But if we were speaking four years ago at this time, I feel like
04:03you'd have that same enthusiasm for NFTs and no question that, you know, NFT trading volume has
04:10declined. It peaked a while back. Convince us right now that and look, it's apples and oranges,
04:17but convince us right now that stable coins have staying power. Yeah, well, look, you're talking
04:23about and you're right that four years ago I would have been talking also about stable coins.
04:27I mean, I've been talking about stable coins on record since 2018 and I was on the board of Libra
04:32Meta's original stable coin project. And we've made a number of bets in the stable coin space to include
04:39Bridge, which was our portfolio company that was acquired by Stripe for over a billion dollars in
04:45cash earlier this year. And then we've also made bets in the space, including in BVNK.
04:50And I think one of the things was to show the staying power of stable coins is the stable coin
04:55supply keeps growing and growing. You know, if we were here two months ago, we would have said
04:59there's two hundred and fifty billion dollars worldwide of stable coin supply. Today, that
05:04number is three hundred billion dollars. And did you know, by the way, that, Tim, we're closing in
05:10on that stable coins will soon be the 10th largest holder of U.S. treasuries in the world.
05:15That's extraordinary. You mentioned that you were an early investor in Bridge. It was purchased
05:19earlier this year for a billion dollars in cash. It does seem like every few weeks we're hearing about
05:26more non-financial firms exploring uses for stable coins. And we're hearing about the growth of stable
05:31coins as an industry. I'm curious, though, about how you look at these in the sense of are they
05:37commodities? Is one stable coin the same as the next stable coin? How do you separate the good stable
05:42coins from ones that perhaps are not so good?
05:44Well, I think you have to take a step back again here and realize why you just mentioned more people
05:51are getting into the stable coin space, even not just crypto firms and not just fintechs. And I think
05:56one of the reasons why that is, is the passage of some regulatory clarity. Namely, you had the
06:02bipartisan passage of the Genius Act, the stable coin bill earlier this year. And I think what that means
06:09is it opens up this space to new entrants. It's no longer used to hear about Tether, for
06:14example, or Circle with USDC and Coinbase, of course, part of USDC, too. But I think now what
06:21you're seeing is you're seeing all kinds of banks start to enter the space. We've we've heard noise
06:26from JP Morgan and stable coins from some of the large payment networks. And you're also seeing
06:31large fintech giants announce their plans to enter the stable coin space.
06:36Katie, can you help explain to me how companies, how people make money on stable coins is if everyone
06:42seems to be getting into it? Tim mentioned that a lot of non-financial firms, I mean, Apple, Amazon,
06:47Walmart, Uber, they're all contemplating launching their own stable coin.
06:51Right. And getting back, Tim, to your question about how do you separate the good from the bad,
06:55I want to be clear when we're talking about stable coins, when I'm talking about stable coins,
07:00what I'm talking about is a fiat backed stable coin. Of course, there are other varieties of
07:04stable coins. We saw this in the last cycle. We saw experimentation with algorithmic stable
07:09coins. That's very frontier. But when I'm speaking about stable coins, I'm talking about
07:13fiat backed. So there is an actual dollar, for example, in the case of USDC backing a dollar in a
07:20bank account backing every USDC in the case of that particular brand of digital currency or
07:26stable coin. In terms of how people make money or entities make money, I think this is a really
07:31important question. There's a debate going on right now in D.C. that I think folks need to start
07:37paying more attention to. And that is the yield. And the question really is who is going to keep
07:41the yield. You ask who who who makes money off stable coins. Well, right now, in the case of
07:47some of the large stable coin issuers, there's a yield back on those deposits. So when there's a
07:52dollar, for example, deposited in a bank account, there's interest paid on that dollar. And so who's
07:57capturing that yield? And I think one of the really interesting things about the Genius Act is that
08:03it bans so-called yield bearing stable coins from giving that yield directly back to consumers.
08:08Now, that's not true everywhere. There are some other regulatory regimes in the world that allow
08:13yield to be given to consumers. And I think if consumers have a choice, why would a consumer
08:19want an institution to keep that yield or would there be sharing of that yield? So right now,
08:24one of the debates going on is will rewards be allowed? And I think these are really important
08:29questions. OK, so that's something that you see a lot of banks, by the way, wanting to argue that
08:36they should be allowed to keep the yield and that consumers should not be allowed to keep the yield.
08:40Yeah, that's something we'll definitely watch for as this debate develops. I want to talk about
08:44tokenization for a moment here because there is a race to tokenize assets. You already have money
08:50market funds, real estate, private credit stocks in the process of being tokenized. Is there any
08:55financial asset, Katie, that does not lend itself to being tokenized? You know, really no is the
09:02answer, Scarlett, especially as we get more rules of the road and more clarity around what will be
09:06allowed. And you see firms like Robinhood. They are offering tokenized stocks in the EU now with their
09:14acquisition of Bitstamp. And you've seen Coinbase file with the SEC to be able to allow tokenized
09:21securities to U.S. consumers. And I think we'll see this trend continue because, of course, if you think
09:26about stable coins, which is what we were just talking about, all a stable coin is is a tokenized
09:31version of the dollar. So if you can tokenize a dollar, it turns out you can tokenize other financial
09:37products and services. And we are starting to see that. You mentioned money market funds. I mean, BlackRock
09:42has tokenized a money market fund. And that's been around for just over a year now, I guess. But you've seen
09:48other firms like Franklin Templeton enter the tokenization space. I think financial services
09:53and products are going to be the first to be tokenized. But eventually, we do think that you'll
09:59see more and more real world assets be tokenized. So that's a space we've been following closely.
10:04We're going to do a little lightning round because we only have a couple of minutes left. So
10:06there's a lot we want to get to. The news today that ICE is making an investment in poly market.
10:12Institutional interest is certainly there when it comes to decentralized prediction markets.
10:16How do you look at an investment such as this? Yeah. You know, we've been following this space
10:21also for a while. We're staying very close to it. I think what you see with poly market is you've
10:27seen, I think this is a reflection with the ICE news out today. It's a reflection of the convergence
10:32of really Main Street and Wall Street. And I think this is a really interesting space. It's a consumer
10:39behavior that's been around for a long time. But now once you have it allowed globally at scale,
10:4424 seven interesting things can happen. So we think this is a very big market opportunity.
10:50And Katie, final question to you. It was reported earlier this year that Han Ventures is was raising
10:55a billion dollars. Did that fundraising close? And what's the latest there? I can tell you that we
11:01are deploying out of our second set of funds now. It is a pair of large funds. And we haven't for
11:06regulatory reasons. We haven't announced anything beyond that. But I can tell you that indeed we did close
11:11on a large pair of funds and we are actively deploying out of that. OK, we do have time for
11:15one more question. You're a former federal prosecutor in your previous life. You investigated
11:20Silk Road. You led the first crypto task force for the government. When you look around the space,
11:27where do you see concern? What keeps you up at night? By the way, just for DOJ's first task force,
11:33not the government's first task force. Thank you for the clarification. Yeah. And also on Silk Road,
11:37it was the agents that were corruptly stealing from the Silk Road founder. Some folks conflate
11:43those cases. But there were a number of other early cases I was involved with in the space.
11:47I was actually asked at one point in time to help shut down Bitcoin. And what I saw as the
11:52prosecutor was when crypto rails are used, it's digital breadcrumbs. And actually investigators
11:57and governments alike should far prefer, with nefarious activity, that is that blockchain-based
12:03systems are used because they are much more traceable and permanent and immutable. And so
12:08I can be the first person to tell you that we never would have caught plenty of people had wires
12:12been used because wires, bank wires, of course, if you've ever tried to subpoena a bank internationally,
12:18the money moves 20 hops before you're even able to get the records. So the thing I do worry about,
12:24though, still continues to be insurance products, safety, security. This is always top of mind.
12:30And it's top of mind for any asset that is this large.
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