#1541 Michael Ellis | CIA Says Bitcoin Is A Tool They Use

Michael Ellis is the Deputy Director of the CIA. In this conversation we talk about the relationship between US and China, Taiwan, how they evaluate technology and AI, bitcoin, cartels, and what Micheal pays attention to on a daily basis. =======================Figure Markets is where crypto meets real-world finance. Trade 24/7 with speed and transparency, borrow against your crypto with no credit checks, and earn—all on-chain. Stocks and real estate trading are coming soon, giving you 24/7 access and instant settlement. It’s the best of TradFi and DeFi in one platform. Get started today at https://www. Figure.com/pomp! Disclosures: https://www.figuremarkets.com/disclosures/=======================Simple Mining makes Bitcoin mining simple and accessible for everyone. We offer a premium white glove hosting service, helping you maximize the profitability of Bitcoin mining. For more information on Simple Mining or to get started mining Bitcoin, visit https://www.simplemining.io/=======================Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/=======================View 10k+ open startup jobs:⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

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• 0:02Anthony Pompliano?

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• 2:56Speaker 03

  How are you guys doing? Today, we're here with Michael Ellis. He's the Deputy Director of the CIA. And I thought a great place to start this conversation is, everyone wants to understand the United States' relationship with China. On one hand, they are an important trading partner. They rely on us, we rely on them. On the other hand, they are a competitor in the global arena, and at times, they're even an adversary. And so, how do you look at that relationship and understanding, maybe there are things that we need from them, but also there's things that we should be worried about?

• 3:23Speaker 04

  Yeah. Well, first of all, thanks for having me on today. It's great to chat a little bit about all of the work that Director Ratcliffe and I have been doing to execute on President Trump's agenda over the first 100 days. On China, I mean, you're absolutely right that this is a different kind of competition that we're in. It's not like the Cold War, the Soviet Union, which was a primarily political and military competition, because this is an economic competition. And as you know, a huge trading partner. But for too long, and I give President Trump huge credit, being the first to really realize this and point it out to people, China has been... Competing in an unfair way, right? That they were breaking the rules on trade, on intellectual property theft, on cybersecurity, right? I mean, you can go down the list of issues where it was not a fair competition with China.

• 4:08Speaker 04

  And President Trump was the first one to recognize that, right? If you look back at the national security strategies of prior presidents, Republicans and Democrats alike, right? George Bush, Obama, they said that their policy, the official US government policy, was to enable the peaceful rise of China, right? That was the government's policy. President Trump was the first one to come and say, no, that's not our policy anymore, right? That's absolutely wrong, right? We have to deal with them as a competitor, and as you know, in many respects, an adversary. And when we look around the world, obviously, there are other threats, you know, North Korea, Iran, Russia, ISIS and Al Qaeda and other terrorist groups, they're all still significant threats that we can't take our eye off the ball on.

• 4:52Speaker 04

  But China is the existential threat to the United States on all of these realms, but particularly on the economic realm where it is a technological competition with them.

• 5:03Speaker 03

  How do you look at the CIA's role in evaluating that risk, maybe participating in some of the potential solutions, or maybe other things that people don't even realize that you guys are involved?

• 5:12Speaker 04

  Yeah. Well, obviously, a lot of the specifics I can't talk about in this format, but, you know, our aim is to give President Trump a decisive intelligence advantage, right? That whenever he is sitting down for a meeting with a foreign leader, whenever he is making a decision about US foreign policy, that he has the best possible intelligence to inform his decision-making. And that's true for China as well, right? That China is obviously a tough target, right? You know, China is not an open society like ours, so it is a place that is...

• 5:48Speaker 04

  You know, it is a hard target for the intelligence community to operate in and to collect on, but it's vitally important. And for Director Ratcliffe and I, it's a top priority that we be able to give the President the best possible intelligence on China and every other country in the world.

• 6:07Speaker 03

  If I was to ask the Internet, what's the number one question on China, I think they would say Taiwan. And I know that many government kind of position on this is the strategic ambiguity and not really saying kind of a specific view. But maybe what you could help us understand is what are some of the considerations, right? You guys come to work every day, you're trying to understand this issue. As you mentioned, it's very difficult to get information sometimes. But again, you have two allies of the United States, but also at times you have one that is an adversary, another that is strategically important based on a number of different organizations. And so just talk through that China-Taiwan situation and kind of how you guys currently are thinking about it.

• 6:45Speaker 04

  Yeah. I mean, you're right that it's obviously at the forefront of everyone's minds about China and Taiwan. It's also an issue where Taiwan is a great partner of the United States. It's economically significant as well, right? If you look at advanced semiconductor manufacturing, right? TSMC, that Taiwanese company, is one of the world leaders of semiconductors and is important to the electronic products that Americans use every day, right? So this is this is a significant challenge and one that we are certainly focusing on in terms of a lot of specifics, again, hard to get into too much in the in the unclassified realm.

• 7:25Speaker 04

  But it's it's it's part of a whole of government effort, you know, alongside of the military, the State Department, other parts of the intelligence community to be ready for possible scenarios around China and Taiwan.

• 7:41Speaker 03

  You mentioned semiconductors, which is kind of another key pillar of, I think, this administration and the CIA in general is on technology.

• 7:47Speaker 04

  Yes.

• 7:48Speaker 03

  Technology feels like a great tool for many use cases, but it can be also a great weapon. And we've seen in recent conflict globally, things like drones that, you know, I was in the military in 2008, 2009 deployed, and there was no worry whatsoever that there was going to be drone swarms coming after you. That seems to have changed very rapidly. And so how do you guys think of technology, both on the battlefield, but also as part of the intelligence gathering effort?

• 8:12Speaker 04

  Yeah, you know, we view technology as both a tool, right? As you say, there are phenomenal advances in how we can collect intelligence now and analyze and synthesize it, especially when you think about like AI tools. And we've been working to integrate those into CIA. It's also the target for us, right? You know, this, like I mentioned, our competition with China is economic and technological in a way that is very different than how we took on the Soviet Union. And our aim is to give America a decisive advantage in the technological competition, right? To, whether it's quantum computing, or AI, or semiconductors, or biotechnology, that

• 8:50Speaker 04

  we want, you know, to secure a decisive American advantage in all of those fields against China. And obviously, that's not just for the CIA. There is, you know, all across the government, a role for different departments, agencies to play. But it is one where I think the intelligence community has for too long ignored that mission, right? The IC is very good at, you know, counting Soviet tanks, you know, to be ready for a possible conflict in Europe in the Cold War. But, you know, when you ask the IC to look at issues of, you know, where Chinese companies are in artificial intelligence research, it's not one that we've been well positioned historically to think about.

• 9:34Speaker 04

  So that's something that we're looking to change, right? To devote more resources, to devote more personnel. And as part of that, we need to recruit some different kinds of people into CIA as well. We need more people with science and technology backgrounds. Which again, a little different than the global war on terrorism mindset of the last 20 years.

• 9:53Speaker 03

  One of the things that's always struck me is the public sector, government, intelligence effort combined with the military has become more and more dependent over the years, whether it was Blackwater back in, you know, a decade or two ago, Palantir today, you know, these things take different shapes and sizes. Sometimes it's a personnel type stuff, maybe it's weaponry, other times it's software. How do you think about that public-private partnership to really get after what these, you know, stated goals are for your organization?

• 10:19Speaker 04

  Well, I think there's a lot more that could be done there, to be candid. You know, certainly, when the government needs to be smarter about our contracts, I mean, this gets, we could also talk about our Doge efforts at CIA. We had Elon Musk over a few weeks ago to...

• 10:32Speaker 03

  What was that like?

• 10:33Speaker 04

  It was great. I mean, he brought Little X with him.

• 10:36Speaker 03

  I saw the photo.

• 10:37Speaker 04

  Yeah, yeah, yeah. Well, I mean, Little X, his middle name is A12, after the A12 Oxcart, a CIA project.

• 10:45Speaker 03

  Amazing.

• 10:45Speaker 04

  So it was great to be able to show him that. Show Little X's plane. Because you have one, obviously decommissioned, out on the CIA campus at Lang.

• 10:57Speaker 03

  But like, when a guy like that comes into CIA, right, and he's there specifically, let's slash cost, let's, you know, find all the waste and abuse, et cetera, you also have a very important mission to go and gather intelligence and inform, you know, our leaders that they have that tactical advantage. How do you think about the balance there between rooting out some of the, you know, the waste, but also still doing your mission?

• 11:16Speaker 04

  Yeah. Well, you know, the reason we asked him to come in was because, you know, we need to, to find that waste. Look, it's a government, it's a government agency, like every, and like every government agency, there's always things that we could be doing better, areas where, you know, we could be more efficient and smarter with our spending. And by doing that, not only is it going to open up resources that we can deploy to higher priority problem sets, right, but also it makes us more agile as an organization, right, that we can respond more quickly and more nimbly to what the president needs of CIA. So, you know, the idea is, yes, we're going to be, you know, looking For waste and and cutting spending at CIA.

• 12:00Speaker 04

  But it's with the goal of having a more efficient and effective CIA. That we can use to help deliver that intelligence advantage to the president.

• 12:09Speaker 03

  And is that where areas like artificial intelligence and you know, these new models that are coming out and all that kind of stuff. As you guys embrace that, we've seen it work in the private sector with the Palantirs of the world. But also you guys think that you can go use those same technologies internally?

• 12:21Speaker 04

  Absolutely. And then again, it's it's critical that we do so because our adversaries are certainly going to be making use of those technologies as well. And you know, you can think of an enormous amount of of applications for these in the intelligence community, whether it's analyzing information, right, to be able to identify patterns that you know, human analysts would take hundreds, if not thousands of hours to identify. Or in the operational tradecraft of CIA officers collecting intelligence, right? There is there is enormous potential in these new technologies. You also mentioned earlier, you know, UAVs, right? On the battlefield in Ukraine, I think you're right that they are revolutionizing warfare.

• 13:02Speaker 04

  And that's an area where by studying what's going on in these other conflicts around the world, you know, we can bring those lessons back, help share them with the military, make sure that the United States is ready for that next conflict.

• 13:14Speaker 03

  I think that I will get tomatoes thrown at me if I don't ask you about Bitcoin. I know that it's kind of this unique, unique asset that is somewhat outside the system, but being pulled more and more in every day with Wall Street embracing it. I think criminals thought they could use it as anonymous payments. Now it seems like law enforcement is very excited when people use Bitcoin because they can trace it. How are you and the CIA thinking about Bitcoin?

• 13:37Speaker 04

  Well, just just like law enforcement, I guess, you know, we are excited as well because

• 13:44Speaker 04

  people may have thought Bitcoin was anonymous, but I'd say it's pseudonymous, right? It's not truly anonymous. And you know, there, there's a lot of work that we do with law enforcement, obviously, to try to track. You know, illicit crypto payments by bad actors. I mean, look.

• 14:02Speaker 04

  Bad actors, whether they're drug cartels or terrorist groups or outlaw regimes, use cryptocurrency, but they use other tools as well, right?

• 14:13Speaker 03

  They use dollars in cars.

• 14:14Speaker 04

  Yeah, right, right. They used toner cartridges for their printers, right? It doesn't mean we say we should ban all of those, right? No, but look, Bitcoin is here to stay. Cryptocurrency is here to stay. As you know, more and more institutions are adopting it. And I think that's a great trend and one that this administration has obviously been leaning forward into. It's another area of technological competition where we need to make sure the United States is well positioned against China and other adversaries. We need to make sure that we are a leader in these fields internationally and not a laggard.

• 14:54Speaker 04

  And there, as you know, tremendous potential for law enforcement and intelligence community to be able to use cryptocurrency to help trap what our adversaries are doing and disrupt it.

• 15:08Speaker 03

  One of the things I always am shocked by is people talk about it as a tool for the bad people.

• 15:13Speaker 04

  Right.

• 15:14Speaker 03

  But also, it could be a tool for the good people as well, right? And so whether it's Bitcoin or stable coins or anything else, CIA has a lot of payments probably that are going all over the world, as do many large organizations. And so is that how you guys kind of use as a framework for all of technology is like it can be a tool or it can be a weapon against us and we want to be good at using it, but also understand how our enemies are using it against us?

• 15:34Speaker 04

  Yeah, I mean, I mentioned, right, we use technology as a tool, right? And Bitcoin and other cryptocurrencies are another tool in the toolbox. It's also a target, right? It's something we can use to, we can disrupt our adversaries' use of it and we can use these technologies to collect more intelligence, to gather more information about them. So, yeah, I think in that respect Bitcoin is actually very similar to other sort of advanced technologies and one that we have to prioritize. And again, it goes back to, there's a little bit of a generational shift, the cultural shift going on that Director Ratcliffe and I are leading the way on at CIA right now. You know, not everyone in the government is, has these attitudes around new technologies, right?

• 16:19Speaker 04

  People are sort of trapped in an older mindset sometimes. We have to break through that and realize, you know, this isn't just this idea that cryptocurrency is for people with something to hide. That's not, that's just not right.

• 16:29Speaker 03

  You sound like the in-house Bitcoiner.

• 16:32Speaker 03

  Let's talk about the cartels before I let you go. Obviously, that has been a huge focus of this administration, both at the southern border, but also fentanyl and illegal drugs. And just talk about kind of that entire effort of a group that obviously has kind of run wild for a very long time and now seems that that's not going to be the case anymore.

• 16:50Speaker 04

  That's right. So, you know, it all starts with the president's agenda, right? And he has promised the total elimination of the cartels, right? That's his priority. That is what we are seeking to achieve and we're going to do it. And it's going to be a whole of government effort, right? There's a role for, for all parts of the government in taking on this threat. Now, obviously, there's a huge law enforcement role. And traditionally, I think the intelligence community took a backseat to law enforcement. We said, oh, well, you know, this is more of a domestic issue. That's not our concern. But when you look at, you know, these deadly drug flows, take fentanyl, right? The precursor chemicals are starting in China. They're being shipped to Mexico and other places in Latin America. They're being synthesized there and smuggled across our borders.

• 17:34Speaker 04

  You know, this is an international problem as well. And in that respect, I think it's actually very similar to the counterterrorism threat that CIA has been very successfully fighting for the past two decades. You know, these are networks, obviously, different motivations, different structures of the networks, right? But they are, you know, networks that are outside the United States, seeking to bring a threat into the United States. And we need to make sure there are no gaps between intelligence and law enforcement entities and disrupting those networks before the threat reaches our borders.

• 18:06Speaker 03

  And what about partnership? And partnership usually is kind of an American idea. We want to partner with people around the world. But one of the things I've heard talked about over and over again is this idea that whether it's the cartels or other organizations, actually partnering up with some of our adversaries. And during the campaign, as one example, there was talk of, you know, a certain weaponry that was actually brought into the US through the porous southern border. And whether that report is correct or not, I don't know. But it does feel like it's not hard to start to connect dots where if you're an adversary of the United States and there's groups that seem to have an in, right, in the United States. You may want to work with them. And so how do you guys think about, you know, how that global alliance?

• 18:44Speaker 04

  And it's one of the reasons that, you know, having a secure border is so critical. I actually went down to the border last month. I went to San Diego and and visited with our immigration and law enforcement counterparts there to, you know, learn about the work that they were doing and also to see the differences in in how the border is now secure compared to just a few months ago. But, um, you know, when we, when we, when we, when we think about, um, these threats, right, to talk about like the precursor chemicals are starting in China, right? There is an avenue here for, you know, maybe an avenue for cooperation with China, right? That they, that they need to stop the flow of these precursor chemicals.

• 19:22Speaker 04

  There's also opportunities to partner with countries in the region, the Western Hemisphere, right? You know, look at Mexico. They, they don't want the cartels in their country. They don't want the violence, the corruption.

• 19:32Speaker 04

  So it's working with them as well to help, to help rid this deadly scourge from, from our hemisphere. And, you know, I think there's a role for CIA and the rest of the intelligence community. For too long, we viewed this as somebody else's problem.

• 19:51Speaker 04

  You know, CIA was, was busy with China and Russia and terrorist groups, right? You know, counter narcotics, that's, that's for FBI or for DHS. All that, that, that attitude is over, right?

• 20:02Speaker 04

  We, Director Ratcliffe recently announced that we have merged our counter narcotics center of CIA into a new America and counter narcotics mission center, really elevating the prioritization, increasing the resources, attracting the best personnel for that mission. Because this isn't going to be an aphath anymore. This is again a top priority for the president. So it's something that CIA is going to deliver on.

• 20:24Speaker 03

  When you come to work every day, what do you pay attention to? Are you reading the headlines or other KPIs and data points? You know, like, what, how do you think of your day and highest prioritization, but also whether you're making progress or not?

• 20:37Speaker 04

  Yeah, it's tough because some of these are longer term efforts where the progress can, you know, it can be one, you know, two steps forward, one step back at times, right? Obviously, you know, that the headlines always get things before, even before the intelligence community does, right? And that's the evolution of new media, right? Like places like X, you know, and other, you know, social media platforms can be fantastic sources for aggregating, you know, open source information. And because back to what we were talking about, about, you know, the agency needs to be better about utilizing some of this technology. But, you know, obviously, I read the intel briefings, too.

• 21:18Speaker 04

  You know, we make sure that we're delivering that best possible intelligence for the president. And, you know, we have a lot of phenomenal men and women in the intelligence community who are working to, to carry out that mission. We obviously need to make sure that we avoid any of the politicization, any of the bias, those things are over. There's no, there's no tolerance for that. But, you know, it's a, it's a, we're talking about information flow, you know, I try to absorb as much as possible and then, you know, use it to help advise the policymakers, help, help advise the president on, on the decisions he has to make.

• 21:52Speaker 03

  Well, I think you guys are doing a fantastic job. We're excited that you guys are taking on so many of these hard challenges and that we'll definitely do it again in the future.

• 21:57Speaker 04

  Oh, thank you. Thanks for having me today.

• 21:59Speaker 03

  Absolutely.

• 22:00Speaker 04

  All right.