#399: Fred Pye on Launching A Publicly Traded Bitcoin Fund

Fred Pye is the President and Chief Executive Officer of 3iQ Corp, who manage The Bitcoin Fund is a public bitcoin fund listed on the Toronto Stock Exchange. In this conversation, we discuss the challenges with getting a crypto-related fund listed on a public exchange, how The Bitcoin Fund works, what the value proposition to investors is, and what else Fred is currently working on. ============================== Diginex is the first company with a cryptocurrency exchange to be listed in the US. That exchange, EQUOS, has been built to institutional standards, but is available to everyone. You can trade Bitcoin and Ethereum spot, as well as Bitcoin perpetuals, and get a 5% discount on all fees, by signing up using equos.com/pomp ============================== Pomp writes a daily letter to over 50,000 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://www.pompletter.com

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

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off.

• 0:11Anthony Pompliano?

  Fred Pye is the President and Chief Executive Officer of Three IQ Corp, who managed the Bitcoin Fund, a public Bitcoin Fund listed on the Toronto Stock Exchange. In this conversation, we discuss the challenges with getting a crypto-related fund listed on a public exchange, how the Bitcoin Fund works, what the value proposition to investors is, and what else Fred is currently working on. I really enjoyed this conversation, and I hope you do as well. But before we get into this episode, I want to talk about our sponsors. First up is Digenex. They're the first company with a cryptocurrency exchange to be listed in the United States. That exchange is called EQOS, E-Q-U-O-S, and it's been built to institutional standards, but it's available to everyone.

• 0:56Anthony Pompliano?

  You can trade Bitcoin and Ethereum spot markets, as well as Bitcoin perpetuals, and get a 5% discount on all fees when you go and sign up using equos.com/pomp. E-Q-U-O-S.com/pomp. This is a really big deal, right? Digenex got listed on the NASDAQ, and that includes their crypto exchange. So go check out EQOS, E-Q-U-O-S.com/pomp. You can trade Bitcoin, Ethereum, Bitcoin perpetuals, and you will get 5% off all your fees if you go to equos.com/pomp. Next up is I Write a Daily Letter. Yep, that's right. I'm sponsoring my own podcast. How about that one?

• 1:41Anthony Pompliano?

  I write a daily letter to over 75,000 investors about business, technology, and finance. I break down complex topics into easy-to-understand language, while sharing my personal opinion on various aspects of each industry. You can subscribe at pompletter.com. Again, pompletter.com. All right, let's get into this episode with Fred. I hope you guys enjoy this one.

• 2:01Speaker 01

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 2:27Anthony Pompliano?

  All right, guys. Bang, bang. I have Fred here with me. They have an incredible story as to how they got the Bitcoin Fund approved on the Canadian exchanges, but we're going to get to that in a minute. Thank you so much for doing this, sir.

• 2:40Speaker 02

  Hey, Pomp, it's nice to be here.

• 2:43Anthony Pompliano?

  Absolutely. Let's jump right into your background. Tell us a little bit about yourself. Where'd you grow up and what did you do before you fell down the Bitcoin and crypto rabbit hole?

• 2:52Speaker 02

  Well, you know, first of all, I think I'm, I'm running right up there with some of the older guys in crypto. So, uh, so I've done a lot, but, uh, you know, uh, I definitely got the, you know, shall we say the entrepreneurial bug and it all came from a guy by the name of Howard Kelly. My best friend was Peter Kelly. He was an artist and my mom was an artist and they two, the two of them got along really, really well. And Peter's father was president of company at the time called Guardian Trust Company, which was a big gold trader in the late seventies and eighties and had been around forever. And I was in economics and business and gold trading and foreign Forex trading.

• 3:36Speaker 02

  So by the time I was 23, he made me a manager of the international Forex and precious metal trading operations at this company called Guardian Trust. So here I am, 23 green and whatever he wanted, I got to do. And Howard was always thinking of the next thing. And he said, well, let's set up a discount brokerage firm. Let's do this or do that. And then at one point in time, he goes, Fred, why don't we list gold, silver and platinum certificates on the Montreal Stock Exchange? Because investment advisors don't have any way to buy gold for their client. They're not going to stand out in line on the street with a million dollars in cash and get a gold bar and then walk out, you know? And that's what it was like in the heydays of the seventies and eighties with inflation going through the roof.

• 4:21Speaker 02

  So I said, sure, let's do this. And so I, we applied to list gold, silver and platinum on the Montreal Stock Exchange to be Montreal Quebec Securities Commission at the time.

• 4:34Speaker 02

  And their first response was, hang on a second, it's volatile, it's non-traditional custodians, and it's used for criminal purposes. Why would we ever list this on the Montreal Stock Exchange? So fast forward 40 years later, here I am going, I want to list Bitcoin on the Toronto Stock Exchange. They go, hang on a second, it's volatile, speculative, and used for criminal purposes. Like, what's up with that? Anyways, by 1986, I think Tom sent you a picture of me on the Montreal Gazette as a 26-year-old little rookie, you know, with a newspaper saying, we finally got gold, silver, and platinum certificates listed on the Montreal Stock Exchange, which was really the beginning

• 5:14Speaker 02

  of investment advisors using gold as a, you know, an asset diversifier. And that's really where we went. Following that, my real claim to fame was I was joined a group of amazing guys. Fidelity Investments had come to Canada and after spending three years and millions, tens of millions of dollars, they were about to close the operation. It was after the 87 crash. They said, we're dead here. We're going to close it. And a great guy by the name of John Simpson had, or me and a guy named Joe Cav and we took the company from 80 million to 7.5 billion in the next four years. So by the time I was like 31 years old, we were running this amazing organization for easily

• 5:56Speaker 02

  one of the best financial institutions in the world, Fidelity. And it's fun to see Abigail Johnson running Fidelity right now. And, you know, you know, I remember slow dancing with her at the Christmas party in the late 80s and early 90s. And she is absolutely an amazing, brilliant, wonderful woman. So I have all the utmost respect for her. And so then we went from Fidelity and then, now this is where I'm going to blow your mind. I left Fidelity, I did a

• 6:29Speaker 02

  I went to do a reengineering of a brokerage firm to try and get people to invest in what was called the information superhighway because the information superhighway had just been invented. And I would take out, I'd rent out IMAX theaters and I'd stand on stage in this IMAX theater and we would take a dial-up phone and put it on a, you know, on a modem and it would go eee, ding ding ding ding ding ding. And on the IMAX theater, all of a sudden, the internet would pop up on the big screen. And it was originally the internet, you know, information superhighway and then the world wide web. And I think there were maybe 10 websites in Canada, we surfed the 10 websites and showed people what surfing was about.

• 7:14Speaker 02

  I'd come out on stage with a Hawaiian shirt and sunglasses to Surfing USA. So we did that and then I left there because I thought I had come up with the best investment idea in the history of the world. And the reason was is I had gone through a divorce and I had a beautiful daughter who had like eight sets of grandparents now that I've been remarried. And I had my new son and the problem was is for, you know, holidays and birthdays and everything, she would get a hundred dollars or two hundred dollars or three hundred dollars. And I said, I said, geez, imagine if there was one company in the world that whenever a child is born, that parents would send a hundred dollars to that account at that company, but anywhere in the world.

• 8:00Speaker 02

  And it wasn't going to be a financial institution. So I came up with the idea for this thing called the Disney Fund. And actually wrote a business plan that was called Imagine, which is a children's storybook about children being born. And every aunt, uncle and grandparent would do this. So I sent these business plans to the entire board of directors of Disney and their strategic planning committee. I got half of them back saying, we don't, Disney doesn't entertain non-solicited business opportunities. Said, yeah, well, fine. So I decided I could try and get a meeting with Michael Eisner and everything.

• 8:39Speaker 02

  Everybody who says they know him can get him, you know, can't do it. So I called Michael Eisner every morning for about three months and got to speak to, got to know all his assistants and secretaries and everybody, which now is politically incorrect. But finally, the VP of Finance said, Freddie, I love the idea. He says, fly to LA, we're doing a strategic planning meeting next week. We're going to get you to come in and present to us. And I'm just going, mind blown. This is Facebook before Facebook, like every family, every child in the world, hooking up together on the internet. Anyways,

• 9:13Speaker 02

  my wife and myself and my three-month-old son flew to LA, sat in a Days Inn next to the parking lot and nothing after three days. So we went to Kinko's, printed up more business plans, put them in every Mercedes-Benz or better in the parking lot. Anyways, finally got the call and said, yeah, it's not going to happen. So I made a nice Jaguar convertible and drove with my wife and my kid up to Napa Valley. So here we are in Napa Valley, enjoying a little bit of a vacation and I'm reading old Disney

• 9:46Speaker 02

  annual reports. And I find out that Michael Eisner has a cottage about two mountain ranges from me in Vermont. So I had a home in Vermont and 40 acres and Eisner was just around the corner. So that summer I sent a couple of business plans to Michael Eisner's house and that's when they threatened me with restraining orders.

• 10:07Speaker 02

  So I'm your only, I'm your only guest that has almost got a restraining order from Michael Eisner for an investment idea.

• 10:14Anthony Pompliano?

  That is amazing. And so take us from there to, at what point do you discover Bitcoin?

• 10:22Speaker 02

  So I was running a multi-asset momentum portfolio invented by Jean-Luc Landry and Max Lemieux, who are partners of mine and and I was down at the ETF conference in Florida in 2014, 15. And I met up with Chris Bernisky, who I'm sure you know very well, and Kathy Wood from ARC. And I'm telling, and they had just launched ARC, and I've just launched, I'm running this multi asset momentum. And going, geez, you know, like every other hedge fund manager, we're looking for that perfect non-correlated asset class. And Chris goes, well, I've got to tell you about Bitcoin. So I've heard about it. I've read about it. He says, well, yeah, he says, I said that there's no way to buy it in a public fund.

• 11:07Speaker 02

  He said, okay, he says, well, let's put on a quest. And I said, you know what? I could probably get this done in Canada because I did it for gold 40 years earlier. So I did the standard thing. I maxed out my credit card every month, bought a lot of Bitcoin in 2014, 15. And if you read our original prospectus, it's very similar to Chris's book Crypto Assets. Him and Jack Tater wrote a great book called Crypto Assets, Bitcoin and Beyond. And a lot of that was the base of the original Bitcoin prospectus. So, but my real life Bitcoin story is my son had got a scholarship and went off to Andover outside of Boston, a prep school.

• 11:50Speaker 02

  And his allowance was 200 US a month. So the first month I sent him 200 US and I get a phone call and I go, what's up? He goes, says, Dad, I thought my allowance was 200. I said, yeah, he says, well, I only got 160. I look at it, I said, oh yeah, CIBC took 25 bucks and Bank of America took 15. So you only get 160. He goes, no, Dad, that's not how it works. And he goes, I go, yes, son, that's exactly how it works. So he says, well, what are we going to do about this? And I said, well, what we'll do is open up an account at Coinbase and I'm going to send you one Bitcoin, which was 200 at the time. So I sent him one Bitcoin the next month and goes Bing. And he goes, wow, that was fast. That's cool.

• 12:33Speaker 02

  We kept the Bitcoin. So next month I sent him 0.9 Bitcoins. And he goes, Dad, you were supposed to send me one Bitcoin. I said, no, Bitcoin went up. So, so I only send you point nine, which is the $200. He goes, no, Dad, that's not how it works. I go, yes, son, that's exactly how it works. So he comes back from school a year later. He's got all this Bitcoin in this wallet. And I'm going, what are you living off of? He says, all that fiat currency in my bank accounts that are devaluing as we speak. And I go, there's my boy. So it's a, it's our, you know, that's how we really got in, into Bitcoin. So then we went on the quest to launch the first Bitcoin fund in the world on a major exchange.

• 13:16Speaker 02

  And really, uh, we looked at a bunch of different things. A lot of people were doing reverse takeovers of mining companies, reverse takeovers of, you know, different types of funds. And we just said, you know what? Let's visit with the OSC and say, we want to go on the front door. So we had a, the head of the investment funds branch at the Ontario Securities Commission, was a guy by the name of John Mountain. We had known for years, bright, visionary, kind of really cool guy. He goes, we said, do you want to be the first regulator to approve a Bitcoin fund?

• 13:49Speaker 02

  And listed on a major exchange in the world. It goes, absolutely. Let's go. So, uh, we, we filed preliminary prospectus, Chris Bernuski and Jack, and everybody wrote it. We filed it. We went through two different editions and it was about to get approved. Then the regulators create this thing called a launchpad to help digital asset companies, you know, make it through the regulatory burden faster. Well, it did the exact opposite. It made us stop the approval of the, of the Bitcoin fund. And we said, well, how come? They said, well, we want, we don't know if Bitcoin's a currency, a security or a commodity. And I said, well, that's pretty irrelevant because I'm licensed

• 14:34Speaker 02

  to manage currencies, securities and commodities. I don't care what you call it. You know, we have legally constituted this fund. They said, well, you have, but we're regulating you and we want to put terms and conditions to make you as a portfolio manager have the expertise and right to manage a digital asset fund. So that took them about a year, and this was 2017. So Bitcoin went from $600 or $1,200 to 20,000 and then collapsed. And in January, they go, now you're digital asset managers. And we're going, whoopee, like, we just missed the biggest bull market on anything ever, right?

• 15:13Speaker 02

  For a while. So anyways, we, we refiled the prospectus and said, we're going to go again. And we were about to get approved, kind of, we believe, you know, in mid 2018. And all of a sudden, John Mountain, who's about to sign off and approve it, he gets a radical prostate cancer, or sorry, radical cancer. And he dies within like three months of us being, or three weeks within us being approved, which was pancreatic cancer, sorry. And that was absolutely horrible. It was, and I had just come off

• 15:53Speaker 02

  a prostate cancer scare and had a radical prostatectomy. And so remember your Movembers and get your PSA checked. So, so John passed away, the new group came in, they just said, yeah, we don't get this Bitcoin thing. There's no way we're going to accept it. So what happens is when a regulator rejects a prospectus, what they have to do is they actually have to articulate the reasons why they were rejecting it. And in Canada, they said, look, here's, it took them six months and they said, we're rejecting it because we have questions about custody, about auditability, about pricing, about market manipulation. And finally, they always have this

• 16:36Speaker 02

  magic card called, it's not in the public interest to launch a Bitcoin fund. Well, in Canada, most of you know that we had a couple of disasters with Quadriga CX, an exchange where the guy died in India and, you know, he took, what was it? 240 million of 110,000 Canadians, and it's not in the public interest to have a regulated fund? Like, it made no sense at all. But when, so when they reject it, we looked at their reasons for rejection and we said, we can win this. And we filed, uh, basically a petition to go to a public hearing in front of a judge or commissioner to win the right to launch the first Bitcoin fund in the world.

• 17:21Speaker 02

  And, uh, in October, so we did that in the summer of 2019. In October, uh, on Halloween day, we got the, uh, the results that said we had won on all accounts and we have the right to launch the first Bitcoin fund in the world, which was amazing. We're now like four and a half years and five and a half million dollars into this. And, uh, the judge's landmark decision was not a simple decision. It was a very complex decision. It said, "The application that we filed engages the foundational concepts of securities legislation in Canada." Meaning, a regulator, it's not their job to immunize people against volatility risk

• 18:06Speaker 02

  taking or technology or anything along those lines. Their job is to make sure that it is legally constituted and safe and secure in the eyes of the law. And we won on, on, on all accounts.

• 18:23Speaker 02

  The, the biggest one was custody. And this is when the early custody companies were coming out and they just done with, they've gone with the Bit license now. So we ended up, there were really three people, you know, where I'd hold a hundred million or a billion dollars of Bitcoin right now. It's either Coinbase, Fidelity, or Bitcoin, or, you know, but we selected Gemini. Um, and, uh, there's another one of the greatest books ever written, Bitcoin Billionaire. Uh, billionaires, I think it's an amazing story. It was, you read that in one sitting. So anybody who hasn't read one, you know, you've got to read that. So we teamed up with Gemini and, um,

• 19:01Speaker 02

  uh, and they had, were, became SOC 2, Type 2 compliant, everything proper financial institution that works. So we dealt with custody. Then there was auditability. So Grant Thornton Worldwide in Montreal has a group called Cadillac C. For the last five years, Francis Pouliot worked there at one point in time and Jonathan and everybody else. And they created something called Cadillac C, which was designed to audit blockchain transactions, specifically Bitcoin transaction and Bitcoin wallets. So when we went to the, we already were running a multi crypto asset fund and it had already been audited by Grant Thornton.

• 19:44Speaker 02

  And they said, yeah, they stood up in front of the, the OSC says you can't get it audited. And Grant Thornton's sitting there saying, well, we've audited one and we think we can audit it. So, you know, you know, who's the authority here? Is it Grant Thornton? It is the OSC. So we went on auditability. Pricing was a little more complicated because you couldn't use a single index or a single benchmark or a single exchange. So, um, one of our partners, Van Eckel, owns 10% of 3IQ, uh, plus or minus. And, and Van Eckel's a company called Envis. So Geborg Grubax and the group at Van Eck created with us, with Sean Cumby, our, our CIO, created the, uh, Envis Institutional Bitcoin Index.

• 20:29Speaker 02

  So we ended up selecting the indexes and watching it of all the noise that shows up in a Bitcoin index. And we believe it's the cleanest Bitcoin index, uh, around. So, uh, we proved to them that yes, you could price it properly and it wasn't subject to manipulation. Market manipulation was really kind of funny and I'll just tell you this one story. There was over 10,000 pages of, uh, testimony. And the guy for the OSC says, well, you know, there's market manipulation in, on an exchange in China. And he goes, yeah, fine. That exchange isn't in our index. So, but he says, here you're quoting Mr. Bit from XT. He says, do you know Mr. Bit from XT? The guy goes, no.

• 21:14Speaker 02

  He says, do you think that's his real name? He goes, no. He says, well, did you verify his data? Did you, he scrubbed? Down into it like, I mean, you're the Ontario Securities Commission. You have access to all the data in the world. And he goes, he says, okay, he says, no, I didn't do that. He goes, okay, well, your next one is Betty B. What's Betty B's last name? What does Betty B know about market manipulation? So our lawyer proceeded to on the stand, the whole crowd is sitting there just going, they're listening to this and going, you know, holy smokes. So market manipulation really had nothing to do with us. We're all very familiar with the Bart Simpson chart patterns that you get out of China where it goes straight up and it goes across.

• 21:58Speaker 02

  I come straight down or the reverse parts upside down Bart Simpson just goes down and come back up. None of that ever ends up in the midst of a publicly traded company that's priced at 4pm every, every single day. And then again, the final one was not in the public interest. The Ontario Securities Commission always has the right to say it's not in the public interest. So if we're trying to run a uranium, you know, enriched uranium fund, cold storage in North, North Korea, they may say it's not in the public interest to do so. So, um, the judge literally said, even though

• 22:39Speaker 02

  that not in the public interest carries an awful lot of weight and an awful lot of opportunity, it's not endless. And he says, it's not, uh, can't be used all the time or any time. So we ended up winning on all accounts and the problem is, so we went on October 30th in Ontario. Canada has 12 jurisdictions. So now we had to get approved in 12 other jurisdictions and then we had to syndicate. We did the 12 other jurisdictions. We got syndicated with none of the big Canadian banks, which is a disappointment. They'll come on, which tells me we're early, right? We're early if Goldman Sachs, Morgan Stanley, JP, where nobody's embracing it.

• 23:22Speaker 02

  We're early because when they embrace it, we're already there. You, you, you get that. You under, understand that. So we're still early. And so we're about to syndicate the beginning of March and we go, what could possibly go wrong? Well, apparently there's a global pandemic that we haven't checked the box of. You know, we had a pre-market book of $100 million. It went to zero because every investment advisor in this country was more concerned with protection of wealth of their clients and they were not looking for a new asset class. And we were already running a Bitcoin fund of 15 million. We rolled out 15 million and went public at 15 million.

• 24:02Speaker 02

  Came out, did another offering right after, just before the halving, did 50 million US, then did another 15 million US. We're doing about two, one to $2 million a day of private placements right now. And in the next few weeks, the Bitcoin fund in Canada, qbtc.u will be a virtual ETF, will be able to do what are called at the market offerings. So you can subscribe to the fund every single day, 4pm, get units of the fund, and you can redeem them once a month. So it's virtually an ETF with monthly redemptions and daily subscription. So, you know, we're pretty excited about what we're doing in Canada with that.

• 24:44Anthony Pompliano?

  So talk to me about right now, the types of people. So you mentioned kind of the capital that you guys have gotten into the fund. Where is that coming from? Is that coming from individuals? Is that coming from kind of wealth managers? Is that coming from family offices, institutions? Like where are you seeing the demand from?

• 25:01Speaker 02

  Yeah, so funny enough, it's tiny, right? It's $100 million or, you know, $100 million in three months. We have maybe a handful of family offices in Canada, which you know who all the Bitcoin interested family offices are. We do have, and this is really the, the real crux of it, Paul, is we have a regulated manager running a regulated fund on a major regulated exchange. So now every mutual fund in the world. Should be coming to Canada and buying, buying into, you know, a part of our Bitcoin fund to have that 1% in their global tech fund. So there are three really, you can probably guess who

• 25:45Speaker 02

  they are in Canada, tech funds that are global go anywhere asset management funds that understand Bitcoin. They get it. And these are mutual funds that all show up as top performing. I mean, I have to do is look at ARC and the performance of ARC Web because they bought Bitcoin, you know, four years ago, GBTC, four years ago. And, you know, they're one of the best performing ETFs in the United States. So we have a lot of Canadian mutual funds that are looking at putting our Bitcoin fund into their funds. And we hope that that spreads to the US and the rest of the world.

• 26:19Anthony Pompliano?

  Got it. And then you guys also have an Ether fund that is coming down the pipe. Talk a little bit about that.

• 26:26Speaker 02

  Yeah. First of all, we have filed a preliminary prospectus for the Ether fund. So therefore, when you're in prospectus offering, you're not allowed to promote or talk about it. So the best I can say is, you know, you know, it is filed, it is public record that has been filed. We're in the cresting period of it. We hope that this closes in the next month or so. And any details of that fund can be, you know, you can get the preliminary prospectus from your investment advisor. And that's pretty much all I'm allowed to say about that.

• 27:01Anthony Pompliano?

  That's fair. Talk a little bit about the Bitcoin fund and kind of where you see this going, right? Do we see an ETF coming down the pipeline? Does this eventually have a pathway to become the ETF? Or do you think that the Bitcoin fund will kind of serve as that exposure for, for a good number of people for, for the persistent future?

• 27:22Speaker 02

  Yeah. So first of all,

• 27:26Speaker 02

  The answer is, you know, ETFs will come in and prevail. And yes, we could convert this into an ETF. But we're a virtual ETF today anyways, right? You know, you can subscribe at the end of the day, you know, at NAV plus a little bit or at the market offerings. They're called ATM offerings. Not a lot of people understand what an ATM offering is at the market offering. But Tesla just did a $5 billion ATM offering in the United States. Everybody went, oh, hang on, what's this? So the laws in Canada changed on August 31st. Normally, in ATM offering, you couldn't offer more than 10% of your capitalization. You couldn't offer it more than four or five times a year, whatever the number was.

• 28:08Speaker 02

  Now you can offer it daily and you can offer it to the maximum. So it's the new type of what we call an ETF. So it's virtually an ETF. People will learn what it is. It's kind of like, and Canada was the inventor, by the way, of ETFs. My chairman, Howard Atkinson, literally wrote the book on ETFs. He was, he was out, well, before Horizons and BlackRock and everybody else. So, you know, Howard has literally written version one, two, and three of what is an ETF. So we're a virtual ETF right now and people will have to figure that out and understand it. Having said that, my vision is very different because of the judges' ruling that we have

• 28:52Speaker 02

  and that we're regulated in Canada's a very safe and understood jurisdiction. We'll be listed, we believe, in Gibraltar offshore jurisdiction in the next three days or five days. If they come back to us quickly, we're looking, we've been approached by people to list in Europe and places such as Austria. We've got a letter of intent to launch in Dubai.

• 29:21Speaker 02

  We're obviously looking at Singapore. So we're looking at the friendly jurisdictions. But then we pass work to London, Hong Kong, and the New York Stock Exchange or NASDAQ. So we have every intention. There are a lot of restrictions. We can't go into the US until we are a certain size, have a certain track record and everything else. But we'll have the size, we'll have the track record, we'll have everything else. So I wouldn't be surprised to see through IQ applying for an NYSE listing or another listing at some point in time. And just think, you know, some of the biggest closed-end funds on the New York Stock Exchange, there's spot physical gold, spot physical silver that are, you know,

• 30:04Speaker 02

  seven, eight billion dollar funds, you know, on the New York Stock Exchange. So Canada, we have access to be able to do those kind of listings. So we're always up for good fight, so you know that.

• 30:16Anthony Pompliano?

  I love it. Talk a little bit about Bitcoin just in general, right? So outside of the fund, kind of, how do you see the asset today? Like, kind of, where do you think we're going over the next eighteen, twenty-four months?

• 30:27Speaker 02

  Yeah, so when I was a floor trader in Montreal, I remember seeing the price of something going up. And when the old time traders said, more buyers than sellers. So as long as Bitcoin has more buyers than sellers, and, you know, I'm a I'm an honors degree student in economics and an MBA. And if supplies like this and demands like this, the price is the only outlet, right? And, you know, with all respect to, you know, Warren Buffett, one of my longtime heroes, the Bitcoin blockchain is the most powerful, secure computer network in the world. And I have no idea how he thinks it's worth zero. If Warren Buffett owned email or live streaming, or, you know,

• 31:10Speaker 02

  or voice over internet protocol, Warren Buffett would be even richer than he is today. So why he doesn't own Bitcoin, I don't know, because you can actually own part of the most secure, powerful computer network in the world. And I think a lot of people miss out on the simplicity of the beauty of the technology of what we have here. So you buy Bitcoin for one of three reasons, because it's the most powerful, secure computer network in the world, and you want to own it, which I do. Or you think it's a store of wealth. Now, the store of wealth, a lot of people have a lot of funny questions about the store of wealth. And when I wrote that article and got gold, silver and platinum list on Montreal Stock Exchange, I mentioned in that article that I thought that platinum would overtake gold as the

• 31:54Speaker 02

  Store of wealth over gold because it was more scarce, it was more geographically diversified. You could mine it in more places and it had greater industrial uses. So I said platinum should be a better store of wealth than gold. What I forgot was there was already five trillion dollars of gold embedded in central banks. And there's no way you could ever amass five trillion dollars worth of platinum. By the time we've got five trillion dollars of Bitcoin in central banks of the world. And somebody says, well, I believe in blockchain, but I don't like Bitcoin. I'm going, you have no idea what you're talking about.

• 32:36Speaker 02

  And when you talk about store of wealth, I have four thousand dollar T-shirts and two thousand dollar tubes. I bought dinner for people in Venice for ten Bitcoin. Well, no, I wouldn't do that anymore. I won't spend any Bitcoin. So when people tell me, you know, if you get Bitcoin, we'll never get a bid till you can buy something with it. And I said, that's why I wrote a white paper with Custom Frank and it's on Medium. About for Bitcoin to really hit hypergrowth. Four trillion dollars a day of Forex fiat is traded every day. Until you get those traders taking their phone and going.

• 33:19Speaker 02

  I'm trading US dollars for Canadian dollars, instantaneous settlement, ding bang zoom. For Japanese yen, for, you know, euros, for British pounds. Until they start doing that and going, holy crap, I don't want to own any of these fiat currencies. And now you're selling your US dollars and buying Bitcoin, or you're selling your Canadian dollars and buying Bitcoin. Or your yen and buying Bitcoin. Until we can, as a whole group, get Forex traders to understand that stable coins will be used as a means of currency. But stable coins are either going to be on the Bitcoin blockchain through Liquid, or they're going to be on, you know, or regular.

• 33:59Speaker 02

  Uh, you know, or they're going to be on, you know, Ether or any one of the others, other blockchains. So until the world starts trading digital currencies. We own a company called, have a company with Maven Net Systems out of Canada called Canada Stable Corp. And I'm going to pitch that to your private equity company at some point in time because I love the new fund that you just created. But coming to stable corp, you know, we sat down with a bank, famous bank and a famous asset manager. We did a $4 million bond trade that settled in T plus three, T plus three seconds at a cost of two tenths of a cent. So if anybody

• 34:42Speaker 02

  who denies that all securities trading, all bond trading and everything is going blockchain based and Bitcoin is not the US dollar standard of the blockchain, well, they're just not getting it yet. Right? So, and I'm preaching to the converted. So

• 34:58Anthony Pompliano?

  Well, they just haven't paid, they haven't paid attention, right? They haven't done the work. They haven't spent the time to actually understand how much more superior this is, I think, right?

• 35:06Speaker 02

  Yeah. And again, getting involved in stable coins, it's going to take, you know, what are we, we're year, you know, 12 in Bitcoin. Email was invented in 1982. Most people didn't get their first email to in Canada till BlackBerry went from being a little pager system into an email system in 1994, really. So it took 12 years for people to adopt email. For them to adopt digital currencies and everything else is going to maybe take another, you know, another while. So we are so early in this growth pattern and same with voiceover and in their protocol. When that was invented, you know, we didn't start using Zoom and Skype and everything for

• 35:46Speaker 02

  another 14, 15 years. Now we're 20 years. So people's time horizons are way too short. And that's why I say, you know, when Bitcoin goes from 1,000 to 20,000 in 2017, yep, it was easily the biggest short I've ever seen in my entire life. For people to be buying into the futures, I could see all those futures traders going, this is going to be the biggest short or easiest short apart from, you know, mortgages and during the mortgage crisis, you know, in 2008. So it was easily the big short for me as far as I was concerned, not because I didn't like it, but Bitcoin's price has followed its growth pattern, its adoption rate.

• 36:28Speaker 02

  You know, there's no brain surgery here, stock to flow, anything safety now and safety Dean talks about all of this, the more power it gets, the more people want it, the more people want it, the more powerful it gets, the more secure it gets and goes round and around. These are all brilliant people and these hedge fund guys, you know, are amazing. I was really, I watched your podcast, the guy from MicroStrategy and how he ended up with his, his investment in it. You know, yeah, there's a bit of a rolling of the dice there, but the reality is, you know, it's not going the way, right?

• 37:06Anthony Pompliano?

  It's probably more right than wrong, right? Michael Saylor from MicroStrategy, who put 85% of his balance sheet, $500 million, put 425 million bucks of it into Bitcoin.

• 37:16Speaker 02

  Yeah. But my early shareholders and a guy named Greg Foss, who loves to talk about fiat and, and currencies, you know, the guy is brilliant. He knows everything about trading, about money, about governments, about bond trading, and he knows all the weaknesses. You should follow him, Eric Foss. He's, he's absolutely amazing and point on. But again, he's a maximalist and you have to adopt his enthusiasm. I'm enthusiastic, but I'm looking at the entire infrastructure together. But when people say it's blockchain I like and not Bitcoin, that's when I shake my head and I'm going, you haven't even, you haven't even started to understand it yet.

• 38:01Anthony Pompliano?

  That's the signal that they're starting, right? It is, there's this like continuum you have to go on and then eventually you get back to, hey, this Bitcoin thing is probably going to be pretty valuable in the future.

• 38:12Speaker 02

  Exactly, yeah.

• 38:15Anthony Pompliano?

  What, what, um, what, what else are you excited about in terms of just the build out of infrastructure, right? So you guys have done a ton, obviously, in getting the three IQ, the Bitcoin Fund approved and kind of on to, on to the exchange. What else do you see as important milestones here to help a lot of these investments or investors and asset allocators come into, come into Bitcoin?

• 38:36Speaker 02

  Yeah, I mean, we're going to be Really early. So if you think of a couple of things, you know, let's just talk about like, what would free IQ have on a product line in basis? Everything that's going on with DeFi is amazing, right? Like BlockFi, you know, I think, you know, Morgan Creek might be in there, but you know, Zach Prince and what they built there is is is beautiful. It's a whole new lending management, infrastructure, you know, there's no reason I can't start creating literally money market funds, paying eight percent in Canadian dollars using my, you know, stable coins and or my bitcoins and hedging the positions out. So

• 39:19Speaker 02

  how well accepted would a, you know, as far as we're concerned, a, you know, a DeFi digital asset, um, money market fund look, I think it'd be amazing. And you know, you're going to get income, seven, eight percent of income. Well, versus what? 1.6 on a 10 year? Like, forget it. So, so, um, I think there's an awful lot of opportunities in there and you know that we're obviously looking at those. Um, I do think the, uh, you know, when you start to see, uh, the traditional banking methods, um, and and let's talk about central banks for a second.

• 40:00Speaker 02

  The government, Central Bank of Canada could not create a stablecoin. Yes, they could. They already have it. You know, they, you know, they can program one.

• 40:09Speaker 02

  But if all Canadians are going to hold their money at the Central Bank of Canada, what do we do with the most amazing banking sector in the world? You know, we've got seven to 10 banks, mostly five and that are very powerful. It's not broken, well capitalized. Canadians don't have any banking issues or banking problems. So why would the Central Bank of Canada want to F that up? Right? Well, they wouldn't. So basically what will happen is

• 40:37Speaker 02

  Essential currency is going to be held by deposits because it'll be backed one to one. So all the Canadian banks will start competing for the deposits of my stablecoin. And they won't let that happen very long. They'll just take it out and say, okay, Qcat is now owned by all the Canadian banks. And you know, in my vision, vision, but then every credit card loyalty program. And in Canada, we've got Canadian Tire, Hudson Bay Company, Tim Hortons. These are brand names like, you know, it'd be like your Starbucks or your, you know, Krogers or any of these kind of people. So, so any of those programs start, companies start adopting stablecoins.

• 41:17Speaker 02

  I think that's when you see the entire infrastructure go up and that's when Bitcoin really skyrockets.

• 41:25Anthony Pompliano?

  I tend to think that what Zach has built is just the start for, for BlockFi. But also we're going to see many, many more entrepreneurs follow in terms of building out this, what really ends up being just a mirror image of the legacy financial world in terms of providing all the financial infrastructure that allows Bitcoin to thrive, right? And if you kind of think about over the last 11 years, Bitcoin has grown from, you know, essentially on nobody's radar, you know, you know, basically worth zero or three tenths of a penny to today being worth kind of $10, $11,000. And now kind of the talk of finance, that's all without a lot of infrastructure along the way, right? Yes, you had the coinbases and exchanges and things like that, but all the things that you're used to in the financial services industry

• 42:08Anthony Pompliano?

  really haven't been around and they're coming online now. But fast forward 10 more years, right? I always joke with people, you think more people are going to hold Bitcoin or less, right? In 10 years from now, you think it's going to be easier to use or less useful, right? And so it tends to be, you know, pretty much a no brainer in my opinion as to kind of the world that we're, we're headed towards. But not everyone sees it that way.

• 42:31Speaker 02

  Well, we'll take a piece on the Disney Fund and create the Bitcoin Children's Education Fund. How's that sound? So everybody can start saving for their kids' education in Bitcoin. See how, see where they're at in 20 years, you know, I have no idea how you finance your kids to go to university in the United States.

• 42:48Anthony Pompliano?

  It's crazy.

• 42:49Speaker 02

  At the University of Toronto.

• 42:51Anthony Pompliano?

  It's crazy. It is literally insane, right? And the, the secret is that most of them aren't doing it. Their kids are just taking on, you know, $200,000, $100,000 worth of debt to, to go to college. It's pretty, uh, pretty bad. You know, a foot to start on, if you will, right? Given the, the, the problems. So.

• 43:12Speaker 02

  We hope to help solve a lot of those problems. And, and again, Pop, a lot comes from, you know, for us, it's not Bitcoin or gold. An investment advisor should own both. Um, it's not, it's not radical. It's not this, you know? When we filed our Ethereum fund, I can't say, but we have certain opinions that they're not novel investments anymore. They're 12 years old. And yes, it did take, while we were doing all of this, Gemini was working with us step by step to get their SOC one, SOC two, type one, type two audit things. They were getting their regulatory licenses. None of this happened fast and none of it was there two years ago or a year and a half ago. Right?

• 43:53Speaker 02

  And that's why, you know, gray scales on a non-regulated exchange, we think a regulated exchange has advantages. So now pension funds, they can't overweight their OTC holdings or now, you know, family offices that say, we need certain, you know, uh, regulatory prospectuses around investments that we'll invest in. We think we've now broken that. And the way I look at it is, yes, the OSC rejected us. And the new group that came in, they challenged us to take it to the highest possible level to get the proper approval. So we can easily say there's 10,000 pages of testimony approved by a regulator,

• 44:38Speaker 02

  approved by a regulator who did four years of due diligence and rang us, run us through the biggest wringer to make sure due diligence was properly done. So we easily believe QBTC.U is the cleanest, most powerful product in, you know, in the market today.

• 44:59Anthony Pompliano?

  I love it. Before we get into the rapid fire questions, what is the place where people can find you on the internet or find out more about the Bitcoin Fund?

• 45:09Speaker 02

  Yeah, www.3iq.ca, not dot com dot ca. And that's for Canada, the great white north. And on there you'll have everything, how many Bitcoin per unit, you know, what's our, our challenge is, is we're trading at a 19% premium and our competitors are trading at a 9% premium today. And I'm going, I need to get my premium down. I need people to sell my Bitcoin fund, not buy it. They're all buying it. I need them to sell it to get it down. So we hope to manage the premium a little better when we have at the market, our ETF comes out in the next couple of weeks. But yeah, visit us there. And as I said, for Canadians, again, you get to put it

• 45:50Speaker 02

  in retirement accounts and then tax free savings account, something that we have here. And you know, it can change your life. If you're 23 years old, you can place a $10,000 investment. But if it goes up 10x or 100x, you've missed out on an amazing opportunity. So.

• 46:07Anthony Pompliano?

  I love that. I asked the same two questions to everybody to wrap up, and then you're gonna get to ask me one. First is, what's the most important book you've ever read?

• 46:15Speaker 02

  Um, the most, not the most important book I've ever read, but recently, the one that I read that was the most fun was literally Bitcoin billionaires. And the way he writes and his TV show and everything he does is amazing. I was absolutely, you know, fascinated by it. And, and I like a good, a feel good story, you know, other than that, I read for escapism, but I'm also a big sailor. So most of the important things I read are about weather patterns, wave patterns. And, you know, what do you do when your hurricane's coming and you're sitting in

• 46:57Speaker 02

  the middle of the ocean in your sailboat? These are, so I'll read educational stuff mostly. And then anything industry oriented. So, but, and I'd be remiss to say if I didn't mention Jack Tater and Chris Bernuski's, but, but we're getting a little dated. We need, we need version two, Jack, if you're listening.

• 47:17Anthony Pompliano?

  Those are great suggestions. Second question is more fun. Aliens believer or non believer?

• 47:23Speaker 02

  Oh, I'm gonna have to quote and sing, you know, the late David Bowie. There's a star man waiting in the sky. He'd like to come and see you, but he thinks he'll blow your mind. There's so, there's a star man waiting, but he'll blow our mind. Absolutely. That one of the best writers and one of the greatest songs ever written.

• 47:47Anthony Pompliano?

  That is a fantastic way to answer that question. No one has ever said that. You could ask me one question to finish up. What you got for me Fred?

• 47:55Speaker 02

  Well, how big are you gonna make your, why did you get into venture capital? And how big are you gonna make your venture capital? And how exciting is it? I want to really know how you've gone, because that's obviously, you know, you're half my age, but you know, at some point in time, that's what I'd like to do. Tell me about what, why you did that, because I'm really fascinated.

• 48:17Anthony Pompliano?

  Yeah, I think, um, yeah, I've been doing it now for four years or so. Uh, and there was no grand plan, but if you kind of look with hindsight bias, there's definitely this belief that companies have been staying private longer. Most of the gains have been occurring in the private market. There are still great opportunities in the public market. It's just that, you know, kind of the public market companies, all of the private market value was already sucked out of them, right? By the, the private market investors. And so that game ends up having a attractiveness to a specific type of investor. If you like to be the less kind of, what are the, you know, financials and what's the cash burn and the OpEx and kind of actually looking at financial statements?

• 49:00Anthony Pompliano?

  You're probably more of a public market type investor, uh, but in the earliest stages of building these companies, uh, there really isn't any of that, right? And so what you're doing is, uh, you're basically optimistically believing in a person, uh, and in a vision they have for something that they want to create. Uh, but that's why there's such great returns available to investors is, uh, these entrepreneurs are literally dedicating years of their life, uh, to not only recruit other. They're smart, intelligent, hardworking, ambitious people to work on hard problems, but also of their own, you know, personal sacrifices with themselves, their families, et cetera, to go build these businesses. And literally, they are creating this stuff out of thin air and kind of building value. And the hope is that those companies will capture that value.

• 49:45Anthony Pompliano?

  And so I just really enjoy that, right? I mean, there's now, I've been doing it long enough to have multiple founders who pitched me an idea and a problem that they were going to go solve to the point where they've grown big enough to see they're doing hundreds of millions of dollars in revenue, right? And it's just really cool to see somebody who set out to do something and kind of through all the obstacles, all the challenges, get there. And so for me, it's, you know, yeah, sure, we can make some money doing this, but at the same time, it's much more just about watching these founders kind of build this stuff. And I personally just get enjoyment out of this whole idea of, you know,

• 50:25Anthony Pompliano?

  betting on somebody early on their journey to go do something. And if they're successful, it's a pretty cool ride to be along for.

• 50:33Speaker 02

  Yeah, moving from a user of capital to a provider of capital, it's got to be the day that you put a big smile on your face. And congratulations on everything you've accomplished. I'm a big fan, as you know.

• 50:45Anthony Pompliano?

  Absolutely, friend. Well, listen, I'm a big fan of what you guys are doing as well. And I think that you guys are just getting started. So we will, we will have to do this again, my friend, at some point when you guys have more news. But just keep going, because I knew that what you guys have done so far is not easy. And kind of where the ambitions lie are even harder. So just, just keep going for all of us.

• 51:07Speaker 02

  Great. Thanks. Great to see you.