#1181 Michael Shaulov | The Man Protecting Bitcoin Self-Custody

Michael Shaulov is the CEO of Fireblocks. In this conversation, we talk about counterparty risk, current banking crisis, self-custody wallets, and what Fireblocks has built to help people in the bitcoin and crypto world keep their assets safe. ======================= Pomp writes a daily letter to over 200,000+ 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/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. We have no advertisers on this podcast, so it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Michael Shalhoub is the CEO of Fireblocks. They are the leader in digital assets and cryptocurrency, custody, transfer, and issuance technology. In this conversation, we talk about counterparty

• 0:43Anthony Pompliano?

  risk, the current banking crisis, self custody wallets, and what Fireblocks has built to help people in the Bitcoin and crypto world keep their assets safe. I really enjoyed this conversation with Michael, and I hope you guys enjoy it as well. Here is my conversation with Michael Shalhoub.

• 0:58Speaker 01

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• 1:28Speaker 02

  UKG is the workforce operating platform with unified HR, payroll, and workforce management. Built to solve the unique challenges of frontline work. Powered by People First AI and decades of labor data, UKG turns workforce intelligence into real-time decisions around staffing, pay, compliance, and productivity, enabling every worker to confidently take action as work happens. Because when work works, everything works. Learn more at ukg.com/work. UKG, HR, Pay, and Workforce Management.

• 1:58Speaker 03

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 2:21Anthony Pompliano?

  What's going on, guys? Bang, bang. Got Michael here with me. I thought a great place to start is the current banking crisis. And obviously, there is this kind of fiat world. There is a Bitcoin and crypto world. But in the fiat world, most people don't think about crisis where they store their deposits. They don't think about counterparty risk. They don't think about, you know, what is the bank doing with my money once I give it to them? But now, all of that has kind of risen up to, you know, the surface, and now that is a topic of conversation. How do you evaluate what's happening with all of those banks and some of the problems they're running into?

• 2:51Speaker 04

  Yeah, so, I mean, I think we are definitely in a very uncharted territory with, you know, some of those banks. And, you know, honestly, I'm not an expert in, kind of, in traditional finance, but I think, you know, even ourselves, we had this exposure to SVB that luckily we managed as a, as a company. We moved actually the assets from SVB the beginning of February. So we sort of like, you know, dodged that entire fiasco. But when you think about what actually happened over there and how it plays into the narrative of crypto, the first thing is really, what is the counterparty risk?

• 3:33Speaker 04

  And what is the transparency that you have in the traditional financial system? And I think that what you said is sort of on point, that when you put your money in the bank, right, and you're seeing it in the checking account, I think most of the people, most of the population thinks that the money is over there, right? That you basically log in into your bank account, and if you deposited $1,000, they show you that you have $1,000. And people actually think that there is $1,000 in that account. They don't actually know that in order for the bank to have his Business model, he's a lender and as long as it is both in checking and saving account, right?

• 4:13Speaker 04

  They're they're basically taking this money and they lending it or they putting it to work, right? And then you are essentially exposed to their investment philosophy. You're exposed to their investment risk. And as we've seen, you know, with S V B and a few of those other folks that um you, you know, now it's basically depends on their competence. You know, the first thing and the second is actually also depends on some some, you know, what the what the federal regulators and what are the central banks are actually doing with the economy.

• 4:50Anthony Pompliano?

  When we look at that kind of traditional financial system, it is a custodial system, right? You're giving your funds to that bank. They're obviously doing everything that that has kind of now been unpacked and and explained to the average consumer. Is there a world where in a fiat system, we could have a non custodial uh type engagement? Where, yes, you could have physical cash and put it under your mattress. But like, are there ways that you could actually interact with uh some sort of financial service and have it be done in a non custodial way?

• 5:19Speaker 04

  It it it can exist, but it will it will require us to move into a system where the cash is represented on a blockchain, right? That we will actually have a natively issued uh central bank digital currency. And whether it's a wholesale or retail and potentially by virtue of wrapping, even if it's a wholesale. So for the the folks that are not familiar with the terminology, central bank digital currency is effectively a situation that in which the central banks, instead of issuing um kind of those, you know, dollar dollar accounts that are either in the form of cash or in the form of uh um, you know, digital deposits that they would uh that they provide to the different banks.

• 6:03Speaker 04

  It's it's basically issued on a on a blockchain, uh whether it's public or permission. But it's actually issued already on the blockchain. And this is the only place in which it is being represented. And the wholesale central uh uh C B D C. Is a situation that basically only the banks have access to that rail. So very similar to what is happening right now in in the traditional fiat eh economy that, you know, you have Bank of America and JP Morgan and, you know, all those banks. They are the only one that have access to the Fed and they are the only one that will have access to CBDC. And retail CBDC is actually something which is more similar to what we are seeing in in China where

• 6:45Speaker 04

  it looks a bit like what we are familiar with, USDC and with the stable coins, that you can actually have the currency in your wallet, right? So it basically propagates to the end consumer. And there is a debate, you know, in, um, it's actually like, you know, a very philosophical debate eh on whether western, western eh countries like the United States and Europe eh, which model is the the right model? Because, you know, you have, you are exposed to privacy and other eh questions that eh probably people didn't care that much when they are interacting eh in in a country like China with this. And then if it's actually just basically stops at the bank level,

• 7:26Speaker 04

  then the banks can use a natively issued stablecoin like USDC or Paxos or or and so on to basically propagate that eh mechanism to the end customer. This is broadly stating that the the model. And clearly, if we are moving into that kind of system, then you can have non-custodial exposure to fiat, right? In a way that doesn't require you to basically take, you know, go to the ATM, withdraw the cash and put it under the mattress, right? You can effectively have that cash truly represented on a digital ledger, on a blockchain in the account.

• 8:08Speaker 04

  And then if you own the key, you own the key and no one else can basically manipulate the assets eh and the fiat that is in your account.

• 8:18Anthony Pompliano?

  As we look at this kind of custodial risk or this counterparty risk, obviously, this has been a topic of discussion also in the crypto world as well. We've seen a number of custodial centralized services that have succumbed to bad trading, potential fraud, and a whole host of other issues. How do you look at the potential superiority of kind of this new financial system over the old financial system? Or is it actually something where there are parallel systems and the same risks actually exist in each of them? And so a user, whether you're in the traditional financial world or this new one, needs to underwrite the risk in either scenario. How do you think about that?

• 8:56Speaker 04

  So in the traditional world, especially when you talk about real like big money or you're talking about assets that are not specifically fiat, that can be represented in the form of a dollar bill, you don't have an option to go non-custodial. Okay, you have to be custodial, right? Whether you are, you know, if you want to have, no one will, I think, you know, unless you're, you know, running some kind of illicit activity, you're not going to have millions of dollars sitting in cash in your garage, right? So the custodial option is probably the only option. And specifically, if you now want to interact with securities, right?

• 9:40Speaker 04

  So for example, you want to have access to bonds or you want to have access to equity, then it also has to be custodial because eventually the certificate that this government bond belongs to you sits in DTCC, which is the Depository Trust Company. It points into the custodial bank, say JP Morgan Bank of New York, well, State Street points to, and eventually it points to some brokerage account that belongs to you, right? So it has to be that custodial relationship. You're not going to go to DTCC and basically pick a, you know, a paper certificate and, you know, take it home. When we, when we think about crypto, in crypto, you sort of see both models, right?

• 10:24Speaker 04

  So when we talk about mostly decentralized exchanges or decentralized lenders, whether it's, you know, Coinbase, FTX, I'm not putting them like in the same bucket, of course, you know, one of them is a very legitimate and well-run business and the other one, we know what happened, right? And we're talking about BlockFi or Celsius and some of those players, they're clearly riding, were riding out of the custodial, out of a custodial framework. But you also see quite a lot of activity that is non-custodial, right? So we have the YDX, we have a compound, we have AVE, right? And those are completely non-custodial offering, right?

• 11:06Speaker 04

  So I think that what is actually proven is that in the cryptos, in the crypto rails, you can choose between those two models, right? And, you know, one of them, like the DeFi protocols and the fully non-custodial, it has still some technology risks that some people, and some friction, right? In terms of on-ramping and interaction that some people are trying to avoid. Vis a vis, the custodial, the custodial relationship with, with folks like Coinbase or, you know, the ones that I mentioned earlier. And then you're effectively taking a very similar risk to the risk that you were taking

• 11:50Speaker 04

  with, in traditional finance. So maybe the example that I always like to, to show recently is that if you look at like, you know, the, the inception, right, of actually what triggered the bank run on Celsius, it is a very similar situation to what happened with SVB, right? Because basically, the way that the bank run on Celsius started was that someone figured out that they have if locked in, as the, in stake if deposits on, on one of the DeFi protocols, on one of the DeFi pools.

• 12:28Speaker 04

  And they figure out that they have a mismatch between their obligations to their retail clients, that they promised them that they can withdraw that if instantaneously, whenever they want. Eh, vis a vis the fact that actually that is was already locked into STF and there was not enough liquidity to basically convert it back to it to to issue the withdrawals. Very similar to, by the way, SVB, taking those deposits and putting them in a 10-year treasury bonds, right, that if you actually wanted to withdraw that cash, then, you know, they didn't have uh, they had maybe like enough liquidity, but they had to to sell it in a really

• 13:10Speaker 04

  eh, aggressive eh, market, right? So it's kind of similar.

• 13:15Anthony Pompliano?

  Got it. And so when you think about what you all are building, right? Fireblocks is a custodian kind of at the core. And then you guys have all this software built around it. And then you've got a number of different services that people can leverage and use eh, on the platform. Talk a little bit as to how you've thought about building this for this new financial system, right? How do you eliminate counterparty risk? Or how do you mitigate some of the risks that people have seen on other platforms?

• 13:39Speaker 04

  Yeah. So the first thing that I would say is that Fireblocks is actually built eh, we we specifically call ourselves we don't call ourselves a custodian, we call ourselves a cust- custody technology provider, right? And there is a reason for that nuance. The the main nuance, the the reason for that nuance is that we are not keeping 100% of the keys, right? At no situation, Fireblocks is basically has full control or full eh, or you actually take or or our clients, right? Eh, specifically taking full counterparty risk to us. So let's assume that you're a hedge fund or you're an asset manager. Um, for for for for eh, sake of eh, convenience, that you

• 14:24Speaker 04

  when you put your assets with, let's say eh, you know, a fully custodial service out there, that custodial service has 100% of your of of of the keys. They basically have full control over your assets. When you are using Fireblocks, Fireblocks basically is built with technology called MPC, multi-party computation. We've been um, one of the eh, leading research organizations behind that technology. And honestly, I think we are now probably eh, the the most eh, kind of the biggest player that is providing that technology. But the idea around MPC, similar to multi-sig, is that

• 15:10Speaker 04

  At least one of the key shares that control the wallet are with the client, right? So we can't move the funds without the client actually initiating their key. And there's one, one or many keys with the client. And then we keep a few keeps, keys on our end to basically put safeguards or actually run the security policies to un, to make sure that the client is not being defrauded or hacked or manipulated by either, you know, the North Korean hackers or an insider who is in their organization because they can preconfigure the policies on our end. So essentially you would say, you know, if I'm not sending it to those wide listed

• 15:54Speaker 04

  addresses, I want to make sure that there are five people in my organization that needs to approve it, right? And then we essentially both mitigating collusion. We are mitigating a situation in which, you know, you have people that are hacked and then the hackers are trying to basically activating, activate withdrawals in their behalf. So this is what we provide kind of in a very high level from a technology standpoint.

• 16:19Anthony Pompliano?

  Can you talk a little bit about kind of the state of security around this stuff? And MPC and some of the like more nuanced components? Because I think what's really important is I personally, when I talk to people about this, I separate out like what is almost like the marketing message from the actual underlying technical capabilities. And the reason why I think that's important is a lot of people, when they first are like, hey, what is this asset? How do I hold it? They need the marketing message, right? They need to understand things like not your keys, not your coin. They need to understand, hey, there's self custody. It's like being your own bank, whatever all those kind of memorable lines are. But you all are very, very technically savvy in terms of like what's actually going on with things like MPC. Can you explain that a little bit more?

• 17:01Speaker 04

  Yeah, sure. So I'll maybe I can give a bit of the history, right? So initially, the concept of, well, at the very beginning, we had the private key, right? So there are only two options. One of the most familiar options is basically I will store the private key on my computer or I will have a ledger nano, right? And that will store the entire private key, right? That had a bunch of issues. You know, one issue is that if you stored on your computer and your computer is hacked and you have a malware, it will steal your private key and the hackers will run away with all your money. And if you had a ledger nano, which is like a very secure device, the problem was that it was offline. The problem with that was that it's a single device.

• 17:46Speaker 04

  So how do you work in an institutional environment where you need multiple people to approve? All those things were basically unsolved. Then in 2012 or so, we came out with multi-sig, which was a specific protocol for Bitcoin that allowed us to kind of have multiple keys that can control an address, right? And that actually solved the issue of a single point of failure, right? The main challenge with multi-sig was, there were actually two challenges with multi-sig. The first one is that it was protocol specific. So multi-sig worked one way on Bitcoin. It worked a different way on Ethereum. It worked a completely different way on Solana, right?

• 18:26Speaker 04

  So it was very difficult to create a unified structure or unified environment that will, that you have basically like one protocol to rule all the different blockchain. That was issue number one. And the second issue was related to the fact that it was expensive, right? Expensive from fees standpoint, because all this logic is essentially deployed on chain. And you need to pay the, you know, in order for you to operate a single key address on Bitcoin, it will be cheap. But if you wanted to operate an address that has 10 key holders, the transaction was actually expensive because of the fees.

• 19:07Speaker 04

  MPC solves those two problems. And the way that it works, it basically kind of... Takes this problem one step below and focuses on actually the encryption algorithm. And across the entire blockchain that we currently have, you know, whether it's Bitcoin, Ethereum, Solana, Stellar, whatever it is, we have only two encryption algorithms. One is called ECDSA, the other one is called EDDSA. But you know, for the sake of simplicity, they are basically just two algorithms. And MPC is working on those algorithms, which means that as long as you have only two implementations, you can cover all the different blockchains.

• 19:49Speaker 04

  And what it does, it basically creates this distributed key, right? That every one of the participants, and the participants can be humans, those can be servers, can be mobile devices. But I can essentially create a distributed key that never comes together. It never comes into one single location. But through this distributed keys and a distributed computation that is built on zero knowledge proofs, you can basically compute the transaction. So as long as a quorum of, let's say, three out of five of those devices agree, they can compute that transaction, but they never put a private key together.

• 20:29Speaker 04

  So you eliminate the issue of a hacker coming in and stealing all those funds from a single location. And you eliminate collusion because there is not a single employee, there is not a single person that has access to the entire private key without requiring the participation of others.

• 20:47Anthony Pompliano?

  What types of organizations use this? Is this like for family offices? Are there corporations doing this? And part of the reason I ask this is many people will look at security measures, whether it's physical security, cybersecurity, whatever. And as an individual, they're like, eh, I don't need that, right? I'm just an individual who would really want to take my stuff. In the crypto world, they're bearer assets. And so the kind of risk reward calculation changes a little bit. But are there very, very large, you know, corporations? Or is this for like more investors? Who's kind of the user base that you guys are seeing success with?

• 21:20Speaker 04

  So honestly, we see success across the board. Let's start from actually even the retail. On the retail side, Fireblocks is not yet over there. We're working on some solution to help there as well. But you have great companies like Zengo. You have the Coinbase Wallet. They're actually using this technology for consumers. So you know, pure, you know, any consumer can use this technology right now. It will provide them protection. Then when we basically move to the institutional or enterprise or the business side, I would say it's actually like, you know, the full spectrum of users are currently using MPC and not multi sig. Whether it's two guys and a dog in a garage that are running,

• 22:04Speaker 04

  two ladies and a dog in a garage that are basically running a small prop hedge fund that is trading crypto. If we're looking at big fintech companies and exchanges like Revolut and others, if we're looking at the bigger banks, Bank of New York Mellon, ANZ Bank, NAB, all those banks are also using this solution. So asset managers, big and small, are using those solutions. So it became, I would say, the standard. When we started in 2018, people were kind of skeptical about it because it was a very advanced technology

• 22:47Speaker 04

  that not many people fully understood how it was working. And multi sig was quite an understood technology back in the days. But what happened over the last five years is that this technology almost propagated to everywhere. And almost every custodian and every provider is currently using this underlying technology.

• 23:12Anthony Pompliano?

  Got it. When you see this technology that you've built, one of the other things that you guys are doing is you're basically wrapping it with developer tools. So I know that you guys just launched a whole suite of developer tools. Talk a little bit as to how you can, you know, focus on the security, but then also add in kind of these developer tools that basically are trying to democratize access to the security.

• 23:34Speaker 04

  Yeah, so I think that what was happening over the last couple of years that we started to see a shift from people using crypto mainly for speculation, right, or for for trading purposes and the client base was mostly gravitating through, you know, around hedge funds, the over the counter desk proprietary trading firms and so on. And in the last, you know, eighteen months or so, we are seeing many more developers that are trying to build almost like real world applications, right, whether those are NFT marketplaces, whether those

• 24:14Speaker 04

  and we have actually like, you know, a pretty cool company that is using us that what they do, they replace, they are replacing airline tickets with NFT based tickets, right? So if you, if you don't want, they call travel, so if you, if you don't want to take the flight, you can basically transfer the NFT to someone else and they can board the flight. And so you're starting to see, and I think like there are a lot of applications in the marketing domain that we are seeing with, you know, Starbucks and Nike and so on and museums and other use cases. So all those, in all those use cases, we basically see developers, large and small, right? Some of those developers, they're already working for established brands or established companies.

• 24:56Speaker 04

  And some of those developers are just basically startups or people that are trying to work on a certain P O C or M V P. And what I think is like, is quite critical over there is that in a very early stage, they will be developing on a secure environment, right? Because if there is something that we should learn from what happened from, I guess, like all the hacks that we've seen in crypto in two thousand eighteen, two thousand nineteen was that a lot of those hacks happened to the exchanges. And the reason why those hacks happen is that those exchanges are very small as an idea. They didn't really put a lot of emphasis on how they're developing or building things securely.

• 25:39Speaker 04

  And then overnight they became big, but still their underlying infrastructure for key management and custody. Was something that, you know, they they built in-house without any controls. And then it failed, right? And I think that now we are slightly in a similar space, but or a similar situation. But with developers that are building applications for for for a really real world use cases. And what we created for them and people can find it at firebox.com forward slash developers. It's basically a set of tools and a sandbox that the developers can open an account. They can start building their application on test net.

• 26:20Speaker 04

  And there is also like a very attractive package for them that they can go and start working and deploying it on mainnet. And from the beginning, they can use a very secure infrastructure for the key management, right? So basically, whether they need to generate hundreds of thousands or millions of wallets for their users, or whether they need to deploy smart contracts and mint NFTs and and and distribute those NFTs. They have secure interfaces. They have policies. They have all the control stack that they need from day one.

• 26:59Speaker 04

  And hopefully, if they are successful and their application is successful and, you know, it becomes basically something that has a very large user base, they need they don't need to go and replatform, right? They don't need to go and rebuild, refactor, reengineer the entire base of their application. They can start very small and very secure without too much uplift. And then, you know, as it grows, the base is secure and is future proof.

• 27:28Anthony Pompliano?

  What do you think the evolution of security is going to be? Is this going to be something where people will be able to use this in a very user friendly way? Like literally on their phones and their desktop, it'll just kind of be second nature? I think a lot about, you know, when I use the internet, I can have a secure connection. And there's a lot of protection that's provided to me and it's almost happening in the background. Versus right now, when I want to secure, whether it is Bitcoin or other assets, then there's a little bit of like, I'm opting in mentally, right? I'm making sure that I'm doing it. And so it doesn't kind of just happen in the background. Do we eventually get there?

• 28:01Speaker 04

  Yes, and I think that to a certain degree, we are almost there. That was actually the philosophy of how we developed Fireblocks in our solution. And I'll give you just like, you know, my philosophy. I've, so, you know, I spent about like two decades in cybersecurity.

• 28:20Speaker 04

  So the vast majority of my career was actually in cybersecurity rather than in crypto or fintech. And I definitely agree that most people associate cybersecurity and cybersecurity control with the, you know, McAfee or Symantec antivirus that you have on your laptop and that it basically starts running in the worst time possible. And basically, your computer is stuck, right? So we sort of view convenience and security as two, kind of like, you know, two extremes on the spectrum, and they don't view it as something that can actually live together in a very convenient way. One of the only examples of a company that was really able to do it well is Apple with iOS and the iPhone, right?

• 29:05Speaker 04

  So if you look at what Apple did, and they done a pretty amazing job, is that when they came up with an iPhone, they actually came up with an amazing user experience. But iPhone, one would argue, is also one of the most secure devices on the planet without asking the user to, like, how many people you know that they have an antivirus on their iPhone, right? There are basically very few, there are actually no proper, today, like, you know, there aren't like, you know, very sophisticated antivirus software for iPhones, right? It's sort of, it's, it has zero vulnerabilities, but they took a lot of very interesting steps,

• 29:46Speaker 04

  both on how they build the entire hardware, how they build the entire software, and how they build the entire ecosystem through the App Store to find the sweet spot between exceptional user experience and high level of security. I think that there is a huge opportunity. To mimic the same approach with crypto and blockchain. And the main reason is that the underlying signal or the underlying technology for blockchain is already built on security, right? Basically, it's all cryptographically secure. There are, if you look at Bitcoin, Ethereum as a blockchain network, right?

• 30:28Speaker 04

  It was never hacked, although it is the biggest, it is the biggest honeypot on the internet. So the solutions that are built on top of it, whether those are the custody solutions, the wallets, the way that we interact in peer-to-peer transactions. There is a huge opportunity to make it very seamless and that people won't need to think about, hey, like, did I back up the key? I didn't back up the key, so on. And I think it's the job of all the people that are working on those solutions, including ourselves.

• 30:58Anthony Pompliano?

  Talk to me about the bear market. As you've gone through this bear market over the last, let's call it 18-ish months, maybe 15 months, whatever it's been now. Are you seeing more of a drive to the custody products? And what we have seen is people pulling assets off exchanges. I'm assuming that they're going more into kind of self custody and not custodial products. But are you guys actually seeing that in the kind of customer flows?

• 31:25Speaker 04

  Yeah, so the week after FTX collapse, we've seen something like $10 billion inflows, right? From people pulling assets from exchanges into the direct custody infrastructure. And we're also working very hard right now to create solutions where, at least for institutions, they don't need to, they can still basically allocate and trade and take positions on exchanges, but they don't need to take the full counterparty risk and pre-fund on the exchange. So there's definitely a lot of push towards that as well. And I can also say that when you talk with a lot of the consumer-based wallets,

• 32:07Speaker 04

  people like Zango and Ledger and so on, they also, like, the months after FTX has been the best months that they ever had in terms of product adoption and new users. So, yeah, overall, I think that

• 32:22Speaker 04

  There is definitely like, you know, a larger appetite and there is a full recognition of a counterparty risk and, you know, quality systems and, you know, both figuring out that you don't expose yourself to mismanagement of your assets by a third party and also that the technology under the hood is safe and secure. People are asking way more in terms of what are the certificates, what were the certifications that you have, what are the governance and controls that you have in terms of developing the solution. You know, for example, we worked really hard to achieve something that is called CCSS Level 3, which is, we are currently the only one that are holding that certification,

• 33:07Speaker 04

  which is a dedicated certification for cryptocurrency wallets. So people sort of like, you know, looking into, into all those aspects. I would also say that people talk a lot about the fact that it's a bear market right now and probably it's true, given the activity, volatility and price point, but as a company, we went through the 2018 bear market and I think it's very different now.

• 33:33Anthony Pompliano?

  As we watch this all continue to play out, regulation is a big piece of it. Do you think that self-hosted wallets, you know, non-custodial wallets, whatever you want to kind of use the nomenclature, do you think that those could potentially come under even more scrutiny or possibly in the extreme example be banned in the United States?

• 33:52Speaker 04

  It's, it's an amazing question. And I think that the pendulum is sort of like, you know, continuously swinging between both sides of that spectrum. I think it's, so I actually got appointed a few weeks ago to be on the Technology Advisory Committee of the CFTC. And we had a session over there earlier this week. And then at the

• 34:19Speaker 04

  The self-hosted wallets was one of the topics. I think that the sensible parts or the sensible regulators and also the sensible legislators, congresspeople and so on, they view self-hosted wallets as a mandatory part of the ecosystem. So it's hard to see how those can be absolutely banned. And it's hard to basically underwrite the narrative of why they should be banned.

• 34:56Speaker 04

  There is a confusion on the regulatory side that somehow assumes that if you introduce self-hosted wallets or unhosted wallets, you undermine specifically anti-money laundering and the ability to basically trace down illicit activity. That's actually was proven to be not true, right? You can, because the blockchain is somewhat transparent and transactions are trackable. It's true that it's harder to freeze those assets in some cases, especially when we talk about kind of native assets like Bitcoin, Ethereum.

• 35:40Speaker 04

  But it's probably more interesting if the regulators will kind of switch the view on this and will say, okay, you know, most of, we believe that the future activity is actually going to be in, let's go and tokenize assets broadly, but you know, whether those are NFTs or stablecoin or you know, tokenized securities or whatever, right? And then you can actually build a very interesting compliance logic into the asset itself, into the smart contract. And then it's actually agnostic to whatever it was in hosted wallets and or unhosted wallets. But I think it will be very, very difficult for the regulators to ban unhosted wallets,

• 36:20Speaker 04

  especially given the narrative that we have right now, that counterparty risk is important, fully custodial services, they have their own vulnerabilities and people should have the option.

• 36:32Anthony Pompliano?

  What are you most excited about internally?

• 36:36Speaker 04

  So I'm super excited about us kind of seeing a lot of the newer use case coming to fruition that we've been working on with, you know, partners. I think that our investment in working with payment service providers, banks, merchants, and so on, on the utilization of stablecoin for transforming the core financial rails and probably, you know, the simplest property of payments between people is starting to pan out. And I think in the next 12 to 18 months, we'll see a pretty significant explosion on that as being one of the killer use cases, especially as it comes to cross-border transfers,

• 37:21Speaker 04

  micro-payments, creator economies, and so on. So I'm very excited about that. I'm excited about the use cases around, broadly speaking, Web3 that are sort of when you go into the non-financial markets, like, you know, gaming companies, brands that are using it for loyalty points, and we're putting a lot of investments over there. And last but not least, this is a bit of a longer, I think, horizon, but some of the works that we have around really the core capital markets, it's lower in the US, but especially in Europe and more so in APAC and Africa, where you see governments really

• 38:03Speaker 04

  thinking about crypto, you know, crypto rails as the rails for the future of capital markets. I'll give you a quick example over there. We're working on a project with the Tel Aviv Stock Exchange. So the Israeli government is currently working on issuing their treasury bonds on a blockchain, right? So those are kind of very futuristic projects, but we're starting to see those things panning out.

• 38:31Anthony Pompliano?

  As we look kind of moving forward, if people want to find out more about the business, if they want to come potentially work with you guys, if they want to become users, where can we send them to find more about Fireblocks?

• 38:41Speaker 04

  Our website, so fireblocks.com. That's probably the place where they can start in terms of exploring what we do and getting in touch with us.

• 38:49Anthony Pompliano?

  And then are there any types of roles that you guys are actively trying to fill right now, or any types of people that you're looking for?

• 38:54Speaker 04

  Yeah, we're mostly currently focusing on the, say, both customer services roles, and we are also focusing on in some of the basically R and D areas where we are hiring.

• 39:10Anthony Pompliano?

  And then where can we find you on the internet?

• 39:13Speaker 04

  So on my LinkedIn, Michael Schaller, and you can email me at [email protected].

• 39:21Anthony Pompliano?

  Awesome. Michael, listen, thank you so much for taking the time to do this. Obviously, self custody has become a huge, huge topic of discussion, counterparty risk, both in the legacy fiat system, but also in the crypto system, still remains top of mind for many people. You guys have done a great job building a technology that obviously a lot of people find valuable and continue to use today. So congrats on all the success, and we'll definitely do this again in the future as you continue to build out further.

• 39:45Speaker 04

  Thank you so much, Anthony.