Ken Nguyen: Tokenizing the World One Startup at a Time

Ken Nguyen is the founder and CEO of Republic. In this conversation, Nguyen and Anthony Pompliano discuss working at AngelList, the variations of securities law, building a startup in a highly regulated market, and why tokenization could eradicate global poverty.

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. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off.

• 0:15Anthony Pompliano?

  Ken Wynn is the founder and CEO of Republic. This conversation covered a lot, including him working at Angelist, the variations of securities law, building a startup in a highly regulated market, and why tokenization could eradicate global poverty according to Ken. This conversation was a lot of fun, and I hope you enjoy it nearly as much as I did.

• 0:37Anthony Pompliano?

  This podcast is presented by Blockworks Group, the only blockchain event and media production company I trust. If you're an investor, lawyer, accountant, or entrepreneur, and want to attend exclusive events and dinners, visit them at blockworksgroup.io. I promise you won't be disappointed.

• 0:55Anthony Pompliano?

  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.

• 1:22Anthony Pompliano?

  All right, guys. I'm super excited. I've got Ken here. We've got a lot to get through, but our goal today is we want to create the single source of truth for all things tokenization. So whenever somebody asks you, what is tokenization? Why is it important? You can send them this one podcast episode. So tall task, no pressure, Ken.

• 1:40Speaker 01

  Thank you so much, Anthony, for having me.

• 1:42Anthony Pompliano?

  Absolutely. All right. So real quick, just so people have perspective, how did you get into crypto? What's your background? Let's go through all that, and then we can jump into the tokenization stuff.

• 1:49Speaker 01

  Definitely started out as a securities lawyer, worked in finance, went back to academia, and then joined Angelist as their general counsel back in 2014. And then so I spun out an affiliated entity called Republic to allow retail investors to invest in stock, common stock, preferred stock, early-stage companies. And then from then on, in 2017, helped Coinlist set up, helped Angelist set up Coinlist. And in the course of that, seeing very well that these tokens, a lot of them are going to be deemed to be securities, meaning you got to find a compliant way for everyday people to participate in own tokens. And that's why we launched Republic Crypto.

• 2:32Anthony Pompliano?

  Got it. And so let's talk about the securities law stuff first, right? So what were you doing there? Kind of what was the things that interested you on the security side, kind of pre crypto, right? Because now a lot of that stuff is super applicable. But what were you doing?

• 2:48Speaker 01

  The way that I view fintech is basically half legal and half business. And then if you deal with Silicon Valley and a component of engineering, when you deal with investment, there's an 80 years, you know, of securities law to deal with. Crypto navigates at the forefront, at the very edges of financial technology, which means the legal component is probably going to be 70% or so. And so it's about navigating the murky landscape, going far enough to be ahead of the game, but not overstepping so that you end up in federal prison. But it's a delicate dance. So I think law is always going to be a key part of fintech.

• 3:30Speaker 01

  But in crypto, it's going to be, you know, it has already been a major, major component.

• 3:34Anthony Pompliano?

  Absolutely. That makes complete sense. And so you go from securities law into the like finance side, right? So maybe talk a little bit about kind of what type of financial organizations there?

• 3:44Speaker 01

  You mean, yeah. So when I left Google and Procter, I joined a massive asset management firm, straight up fund of funds. Our counterparties was like Lehman's and Bearstone and whatnot. And it was just structuring fund products, you know?

• 3:59Anthony Pompliano?

  R I P to those guys.

• 4:00Speaker 01

  Exactly. L P G P, dish out, you know, trashing the billions into, you know, traditional assets. It got boring very quick, right? It wasn't a whole lot of creativity. So I went back into academia and then Angel List itself is a fund manager.

• 4:16Anthony Pompliano?

  Yep.

• 4:16Speaker 01

  The syndication model. And so we applied the same thing. We nudged the boundary a little bit there on broker dealer investment advisory law. And then we left when the law changed to allow retail investors to invest in early stage companies.

• 4:30Anthony Pompliano?

  Very cool. And so when you go to spin out Republic, we'll get to that in a second, right? But let's talk about Angel List, kind of pre you spinning Republic out, right? Because I think a lot of people don't really know. What Angelist is, what the benefits are, but it's changed the way that people look at financing private companies, right? So maybe talk about kind of what Angelist does and why it's important.

• 4:54Speaker 01

  Soonavon Nivvy started Angelist back in 2011 mainly to provide more information to entrepreneurs. Venture financing, which is, you know, this black box. You're either lucky enough to get to someone and get retracted without knowing why. This was, I mean, very little information at the time. So it started out just as a literally a block, a venture hack. And then over time, I think they saw an opportunity that once you build an ecosystem of entrepreneurs and investor, then you can facilitate investment. The moment that you do that, the moment that you monetize on investment activities, then regulations kick in.

• 5:35Speaker 01

  And so they hired me as their first general counsel when they first launched the syndicate product, matching investors to underlying startups.

• 5:44Anthony Pompliano?

  Absolutely. And so what's been the impact of Angelist, right? Because it really did open up information, access, et cetera. But how do you look at that impact in non-crypto or non-tokenized world, but in still private startups?

• 6:00Speaker 01

  I would say before Angelist, you gotta be very lucky to know one of three dozen extremely well-connected individual in Silicon Valley in order to get financing. So even if you're a very high net worth person here in Wall Street or in Alaska, you didn't have access to deals and you didn't really care or know how to vet early-stage startups. So by establishing a platform that a lot more high net worth individuals now can finance projects, it increased the pool of capital and it necessarily led to a much wider field of entrepreneurs who got funded since, you know, 2013, 14.

• 6:45Anthony Pompliano?

  Absolutely. All right. So you end up seeing the change in the law that allows retail investors to participate in this and really unaccredited investors, right, is what we're talking about. And you go to spin Republic out. Let's start with just what is tokenization, right? So in your mind, that term gets thrown around all over the place. What does it mean to you?

• 7:08Speaker 01

  For me, it's basically employing this new technology, blockchain technology, that would bring a level of fractionalization unprecedented because it's so cheap. The simplicity of fractionalizing something and the automated impact of basically remove the administrative costs out of it. So I would say liquidity and fractionalization are two elements that you add on to traditional financing. And those two key elements alone, in my opinion, would generate, I don't even know how many hundreds of billions, if not trillions of value, once you disintermediate the middlemen that are permeating throughout the banking system.

• 7:48Anthony Pompliano?

  Absolutely. And so as you're doing this, what type of regulatory environment is there, right? So the technology is one piece, and we can talk about that in a second, but the regulations make this possible, right? And so let's go through kind of each one of the regulations that exist and then the exemptions themselves, right? So if you don't use an exemption, what are your options as an entrepreneur to fundraise?

• 8:17Speaker 01

  You know, and if you allow me, Anthony, to just backtrack one little bit, because the reason why Congress passed this law that allow everyone to invest, doesn't matter if you're a millionaire or not, they didn't consider crypto, of course, at the time. But the purpose behind that was actually realized by the wave of ICO unbeknownst to Congress. So the reason why they opened up, they changed the law to allow everyone to invest was that the number or the type of entrepreneurs that got funded by venture capitalists fit a very particular mold. They gotta be massive, massive, or companies with massive potential, mostly people, young males from Stanford, Harvard, and the like. And

• 8:59Anthony Pompliano?

  Traditional venture capital mold that we think of.

• 9:02Speaker 01

  Correct. So basically, it's a very narrow lens. And the other side of the coin was that pretty much everyone, it was 99.9% of the population, didn't get to participate in what has been the biggest wealth generation event until crypto. So

• 9:22Speaker 01

  We lobby Congress and then they changed the law to allow for minimal small participation so that even a teacher in Alaska can invest fifty dollars in the next Uber. And that fifty dollars, if Uber does really well, can be more than a million dollars worth in value.

• 9:39Anthony Pompliano?

  And this regulation was called what?

• 9:41Speaker 01

  The Jobs Act.

• 9:43Anthony Pompliano?

  The Jobs Act.

• 9:43Speaker 01

  Yep, or Regulation Crowdfunding. So ICO, of course, at the time, and there were already ICOs being done in 2015, 16 in Asia. You have people anywhere, everywhere, funding, financing businesses, projects, in a way that was much further than what the law even contemplated or hoped it could be. So now it's just basically in the US, it's using an existing legal framework to try to make what has already been an industry practice more compliant and possible.

• 10:18Anthony Pompliano?

  So really what people are doing is they're taking a law that exists on the books and they're interpreting it in a new way based on technology that was not available when the law actually passed.

• 10:27Speaker 01

  Or another way to look at it is that now there's a framework, there's a legal framework that does allow for everyone to participate, does allow for open participation. But you have to operate within this legal framework because otherwise the legal risk, not just from the SEC, you know, cramming down, is from potential investor lawsuits, it's just too high. So the current legal framework does actually work. It does come with a cost, but it does work.

• 10:54Anthony Pompliano?

  No, it makes sense. Let's start a business, a hypothetical business right now, right? So you and I want to start a construction company, kind of just a traditional mainstream company that does not have the multi-billion dollar potential, right? So we're talking about a traditional business. And to get started, we need to go buy some equipment, right? We need to hire some people, kind of get operations off the ground. And so we need to raise some capital.

• 11:19Speaker 01

  Yep.

• 11:20Anthony Pompliano?

  What are our options today?

• 11:22Speaker 01

  So first, you got to form a company.

• 11:25Anthony Pompliano?

  Okay.

• 11:25Speaker 01

  Either a limited liability company or a true corporation. It's essentially just a legal entity.

• 11:31Anthony Pompliano?

  And pretty cheap, pretty fast to do this.

• 11:33Speaker 01

  Pretty cheap, pretty fast. An LOC can be formed in like less than forty hours, a couple hundred bucks. Same thing for a corporation.

• 11:42Speaker 01

  What you do with that entity, how you're gonna fundraise, how you're going to capitalize it? Now that's a range of options.

• 11:50Anthony Pompliano?

  Okay.

• 11:50Speaker 01

  You can go to a bank and say, I have great credit, you know, score. Please lend me a million dollars. That's probably gonna be a hard sale unless you already have a lot of assets.

• 12:01Anthony Pompliano?

  And it's a hard sell because they don't have a lot of collateral at the business, isn't it? There's no history.

• 12:06Speaker 01

  Then they would have to reach back to your personal asset to do it. So for, you know, someone who's under thirty, for most people, that's not a reality.

• 12:13Anthony Pompliano?

  Yep.

• 12:13Speaker 01

  The second one is to convince friends, family that, hey, I'm building this business. It's gonna be really profitable. Why don't you lend me some money and I'll pay you back?

• 12:25Speaker 01

  Another way, lending money and paying you back is just fixed income, right? So over a period of time, you get back ten percent, twelve percent interest every single year. Not super interesting. Or you can tell.

• 12:35Anthony Pompliano?

  And it's, and it's hard to do because most friends and family aren't used to lending to businesses.

• 12:42Speaker 01

  Correct, and they may not have the capital to lend. For example, if you lend someone ten thousand dollars, that means ten percent out of that, every single year, you're gonna get a thousand dollars back. Convincing people to lend you ten thousand dollars so that every single year they get a bit of return, that's, that's a hard sale.

• 12:59Anthony Pompliano?

  Absolutely.

• 13:00Speaker 01

  Or you can go to twenty friends and say, hey, guys, this is gonna be a big business. I'm gonna sell it one day for a lot of money. Why don't you each buy in five hundred bucks? So all together, I get ten thousand dollars. I'm not gonna pay you back anything until the company makes it big. And then your five hundred bucks is now gonna be fifty thousand. That's the equity sales for people to, to participate.

• 13:26Anthony Pompliano?

  Got it.

• 13:26Speaker 01

  VC essentially fits into the latter, you know, the latter framework.

• 13:32Anthony Pompliano?

  And so if I don't get a bank or my friends to lend me capital, right? Non-dilutive capital, then I've got to go and raise equity capital, right? To fund the company. The options there would be, I can go to professional investors, right? Venture capital funds, et cetera. I can go to friends and family, they can buy some of that, like you described. But then there is this new regulation, right? That has come out where these exemptions under the Jobs Act allow me to raise equity capital. If I sell a piece of my business to people I might not know, right? So not friends and family, and they're not professional investors. What's my range of options there on the regulation side?

• 14:11Speaker 01

  Since the Great Depression until about two and a half years ago, the, if you are raising from people who you don't know and don't know well, you can only raise from so-called accredited investors. That means institutions, that means loosely defined people who are millionaires.

• 14:28Anthony Pompliano?

  Okay, so, so pre-Jobs Act, you can only raise money from accredited investors? And this is something that's avail, this is something that is across the United States?

• 14:39Speaker 01

  Correct.

• 14:39Anthony Pompliano?

  Across the world? What, does everyone use as accreditation? Talk, talk me through kind of how this applies on a global scale?

• 14:45Speaker 01

  In much of the developed world, there's a limit or there's a minimum requirement on anyone seeking to invest in an early-stage company. These legal frameworks really to protect investors. You don't want, you know, grandmas and teachers, quote-unquote, loosely defined by the law, unsophisticated, financially unsophisticated, to get duped into investment opportunities. The law assumed that if you're rich enough, that you know enough in order to protect yourself.

• 15:13Anthony Pompliano?

  So wealth is used as a proxy for sophistication or intelligence?

• 15:18Speaker 01

  Unfortunately, in the US, that's the case.

• 15:20Anthony Pompliano?

  Okay.

• 15:21Speaker 01

  And obviously, in practice, that's not the case.

• 15:25Anthony Pompliano?

  Of course, I've said it before, there's a lot of dumb rich people, right?

• 15:28Speaker 01

  In fact, the United States is the only country among the developed world that doesn't have a sophistication standard based on how much you know, rather than how much your net worth is.

• 15:38Anthony Pompliano?

  Oh, so interesting. So.

• 15:41Anthony Pompliano?

  Other countries have both a wealth criteria and a sophistication criteria.

• 15:46Speaker 01

  Correct. So in the UK or Canada, if you have spent a year working for a financial institution in an investment capacity, then you deem to be an accredited investor. Their definition of accredited investor.

• 16:00Anthony Pompliano?

  And so really, it's an either or, right? You can have a million dollars or meet some wealth criteria, or you could have worked for a year at a Goldman Sachs, wherever.

• 16:09Speaker 01

  Correct. And this standard in the US is that you gotta make at least $200,000 in salary the past two years, or have a net worth of a million dollars or more.

• 16:19Anthony Pompliano?

  Got it. Okay. And so today, if you and I have that construction company, we want to go raise capital. We've got Reg D, right? Regulation D, which is an exemption under the Jobs Act.

• 16:29Speaker 01

  Correct.

• 16:30Anthony Pompliano?

  Reg S, Reg A+, and Reg CF. So those are the four?

• 16:34Speaker 01

  Reg A+ and Reg CF, a new legal framework since 2016, of course.

• 16:40Anthony Pompliano?

  Okay.

• 16:40Speaker 01

  But those are the four main ones.

• 16:41Anthony Pompliano?

  And so what a lot of people don't understand is, when we talk about these regulations, these are exemptions to securities law. So this was part of a deregulation of the industry, right? To make it easier for people to raise capital without going through the steps required by legacy securities law. Real quick, just touch on what were those steps? Why was it so hard to leverage securities law to raise capital before the regulation exemptions came in?

• 17:06Speaker 01

  So after the Great Depression, securities law in the US basically draw a red line. In order for, in order for a company to raise money from retail public, not a credit investor, or to raise money at all, you gotta be a registered company, meaning a public company, meaning going IPO.

• 17:25Anthony Pompliano?

  Okay.

• 17:26Speaker 01

  The cost of being a public company just to file the form is a couple million dollars at least, and a few more million dollars per year just to maintain it.

• 17:35Anthony Pompliano?

  And where does that money go, right? So everyone hears that. Registering or becoming public company is very expensive.

• 17:41Speaker 01

  Yep.

• 17:41Anthony Pompliano?

  But what are you paying money for?

• 17:43Speaker 01

  Uh, legal fees, of course. The GAAP accounting that is required by law and just the fleet of accountants and lawyers to comply with all of that is extremely expensive. Internally, you have to have a record-keeping system. Just the operational framework to be a public company is excessively high.

• 18:05Anthony Pompliano?

  Okay.

• 18:05Speaker 01

  So either you have to be a public company or you're exempted by the law from the registration requirement.

• 18:13Anthony Pompliano?

  So you can raise money from a non-accredited investor if you're one public company that is expensive and requires a lot of, um, kind of a higher degree difficulty, uh, things to remain public and comply and et cetera. Or you can leverage an exemption from being public to raise capital. That's what we're talking about with Reg D, Reg S, A+.

• 18:33Speaker 01

  Correct. So it's not just, uh, retail non-accredited. If you want to raise money from the public, either you have to be fully registered or you have to fit one of the exemptions.

• 18:42Anthony Pompliano?

  Okay.

• 18:42Speaker 01

  Reg D, the first exemption, says that if you're just raising from accredited investors only, again, millionaires, then that's one exemption. But if you take in a single non-accredited investor, you lose the exemption.

• 18:56Anthony Pompliano?

  Okay, so, so let's go deep on Reg D for a second. If I and you have the construction company and we want to raise money through Reg D, we can only take accredited investors' money?

• 19:06Speaker 01

  Correct.

• 19:07Anthony Pompliano?

  Can we raise as much as we want?

• 19:09Speaker 01

  You can raise an unlimited amount.

• 19:11Anthony Pompliano?

  Okay. And how can we market to those individuals? So, so we have to know they're accredited, but can I just go on television and say, hey, I'm raising money? Do you, you know, call my cell phone if you want to put money in or how do I actually market to them?

• 19:22Speaker 01

  No, we're getting to a deeper level of, uh, legal nuances.

• 19:26Anthony Pompliano?

  Uh, that's why you're here.

• 19:28Speaker 01

  If you go on TV, yes, you can put on a billboard in the subway, you know, watch your journey, go on TV and publicly announce to the world that you're fundraising, but you have to verify that everyone you are taking in to the realm, taking money, is truly accredited.

• 19:44Anthony Pompliano?

  Okay.

• 19:44Speaker 01

  So you have to look at their tax return or you have to get an attorney to verify. You know, the verification of accreditation is a is a

• 19:53Anthony Pompliano?

  It's pretty high.

• 19:53Speaker 01

  complicated threshold. If you don't publicly announce it and you just go to people that you know and they're friends, then you can rely reasonably rely on people's accreditation representation without having to verify.

• 20:07Anthony Pompliano?

  So thi- this is an important nuance. If I want to do billboards, television commercials, go on the news, kind of publicly solicit funds from people I don't know.

• 20:20Speaker 01

  Yep.

• 20:20Anthony Pompliano?

  I have to verify that they're accredited.

• 20:22Speaker 01

  Yes.

• 20:22Anthony Pompliano?

  But if I actually rely on personal relationships and it's from people that I know, I can simply ask in a kind of predetermined way, are you accredited? And if they tell me yes, that that meets the barrier or that meets the criteria that I can rely on their self accreditation.

• 20:39Speaker 01

  Yes. So and the threshold is pretty easy. And this is a loose threshold, not a legal threshold. If you go online, you Google someone's fundraising round and it doesn't come up. You know, the person is technically not publicly fundraising. But you can still do a billboard ad and somehow doesn't make it on the internet. But nowadays, that's unlikely.

• 21:00Anthony Pompliano?

  Got it. Okay, so that's Reg D. Reg S is what?

• 21:05Speaker 01

  So Reg S is if you fundraise from non-US investors outside of the US, then the SEC Securities Exchange Commission takes the view that it's not our business. You have to take a few steps to make sure that your offering is not accessible by US investors and that you don't in fact have a US resident somehow investing in the round.

• 21:30Anthony Pompliano?

  So our construction company, we say, actually, we don't want US investors. We want to raise money from international investors. We're allowed to go do that without having to comply with US accreditation law.

• 21:44Speaker 01

  Correct.

• 21:44Anthony Pompliano?

  If we ensure that US investors want to invest in the offer.

• 21:48Speaker 01

  But you do have to comply with the local laws that may apply to the round.

• 21:53Anthony Pompliano?

  Okay. See how I asked that question that way? So if we want to raise capital internationally and let's say that we have interest in, I don't know, Singapore, India and the UK, right? We don't have to worry about the US accreditation criteria as long as we're ensuring no US investors are participating. But we do have to make sure that we're compliant in the UK, I would say, India and Singapore, correct?

• 22:20Speaker 01

  Correct.

• 22:20Anthony Pompliano?

  Okay.

• 22:21Speaker 01

  And you have to take that into account.

• 22:22Anthony Pompliano?

  Okay, because you won't be in violation of US securities law, but you would be in violation of the UK, India, Singapore's securities law.

• 22:29Speaker 01

  Absolutely. If you're out in Singapore pitching your, your offering to Singaporean residents, Singapore laws would apply.

• 22:37Anthony Pompliano?

  Okay, so in recap, Reg D accredited investors in the US, pretty cut and dry, well understood.

• 22:44Speaker 01

  Cheap to do.

• 22:45Anthony Pompliano?

  Yeah, cheap to do. And this is a little bit of the rich get richer because you can only raise money from rich people.

• 22:50Speaker 01

  Correct.

• 22:50Anthony Pompliano?

  Right? Reg S says a lot of the same stuff, but you just won't take money from US investors. You'll take money from international investors and you'll, and you'll go through the steps to make sure US investors don't participate. All right. So that's all, you know, fairly well understood. Let's get into the fun stuff now. So we've got Reg A plus and we've got Reg CF. We'll start with Reg A plus because I think more people understand that. What exactly is Reg A plus and what are the, um, the things that I can do with that that maybe I can't do with the other exceptions?

• 23:17Speaker 01

  So Reg CF, Reg A plus going IPO are three ways that you can accept non-accredited money in the US.

• 23:24Anthony Pompliano?

  Okay, so IPO, Reg A plus and Reg CF.

• 23:26Speaker 01

  Correct.

• 23:27Anthony Pompliano?

  Okay.

• 23:27Speaker 01

  And I would, the way that you should look at it is in terms of complexity and cost.

• 23:32Anthony Pompliano?

  Okay.

• 23:33Speaker 01

  So IPO probably a year or more to prepare for it and the cost is a couple million dollars all the way to like 15, 20 million dollars to do, just to do an IPO and then maintenance cost.

• 23:44Anthony Pompliano?

  So an IPO really is time consuming and expensive and likely only done by large companies that are well capitalized, et cetera.

• 23:54Speaker 01

  Correct.

• 23:54Anthony Pompliano?

  Okay.

• 23:54Speaker 01

  And then everyone anywhere can just openly buy. I mean, the Google app or Facebook of the world.

• 23:59Anthony Pompliano?

  Got it.

• 24:01Speaker 01

  Reg A plus is a couple notches below that in terms of cost and timing as well.

• 24:06Anthony Pompliano?

  Okay.

• 24:06Speaker 01

  So law firms now quote about one million dollars or so to two million to do the cost of a reg A filing. That's just the legal fee. In crypto space, the time that would take for the S E C to approve a reg A plus, you know, application can be six months or eight months or more. In fact, today, there hasn't been a single approval by the S E C for a reg A plus campaign.

• 24:30Anthony Pompliano?

  So a reg A plus is a little bit less expensive, a little bit shorter timeframe, but it's still not this, you know, the creation of an LLC, which a hundred bucks, you know, a couple hundred bucks in forty eight hours. We're talking six plus months and still, you know, hundreds of thousands, if not a million plus dollars.

• 24:47Speaker 01

  Correct. And there's a limit on how much you can raise.

• 24:50Anthony Pompliano?

  Okay, so let's talk about that.

• 24:52Speaker 01

  And that limit is currently at fifty million dollars and soon will be semi five millions. If you do an IPO, you can raise whatever money that people are willing to to invest.

• 25:01Anthony Pompliano?

  Okay.

• 25:02Speaker 01

  In the billions.

• 25:02Anthony Pompliano?

  So an IPO, I can raise as much money as I want from unaccredited investors. With A plus, I can only raise up to fifty.

• 25:08Speaker 01

  Correct.

• 25:08Anthony Pompliano?

  But they can be unaccredited.

• 25:10Speaker 01

  Yep, accredited or unaccredited or accredited.

• 25:13Anthony Pompliano?

  Okay, so it can be either. Is there a limit on the number or on the check size they write?

• 25:17Speaker 01

  Yeah, yeah, so generally, no, that is the now in reality, the people, the type of people would invest, you know, millions are generally all accredited.

• 25:28Anthony Pompliano?

  Yep, so you can go raise, I could raise up to fifty million dollars from unaccredited investors using reg A plus and everyone could put in ten dollars.

• 25:35Speaker 01

  Correct.

• 25:36Anthony Pompliano?

  Got it. How can I find these people? Can I go on television and, you know, promote it and billboards and put it all over the internet?

• 25:43Speaker 01

  Absolutely, absolutely. You can launch, you know, your own website. You can then, you know, do Facebook, ask to the extent, to the extent that they accept you, anything, public promotion, advertisement, as long as you disclose it.

• 25:55Anthony Pompliano?

  Got it. So that's Reg A plus. CF, almost nobody knows about. It's probably the most misunderstood or unknown regulation exemption. It's what you guys are focused on.

• 26:08Speaker 01

  Correct. And full disclosure, that's what Republic's been doing since summer of 2016. And it's a big drop off in terms of everything. It takes about two weeks to launch a campaign. It can be as cheap as three, $4,000, but there's a limit. It's a pretty low limit. No company can raise more than a million dollars, 1.07, to be precise, per year.

• 26:31Anthony Pompliano?

  Okay, so if we got our construction company and we need a couple hundred thousand dollars or a million dollars to get started.

• 26:37Speaker 01

  Yep.

• 26:38Anthony Pompliano?

  We can go, takes us a couple of weeks, I'll say, you know, a month or less. We can spend less than $5,000.

• 26:43Speaker 01

  Yep.

• 26:43Anthony Pompliano?

  We can raise money from accredited or unaccredited investors. They can write as little as $10 up to whatever size check they want, but we can't raise more than 1.07 million dollars in a 12-month period.

• 26:55Speaker 01

  Correct. They actually, each investor, there's a cap. No one can put in more than $100,000 in a Reg CF campaign.

• 27:02Anthony Pompliano?

  Oh, interesting, okay.

• 27:02Speaker 01

  That's the maximum. Anyone, even a student, even if you're greatly in debt, the law deems that anyone can invest at least 2,200 bucks, no question asked.

• 27:11Anthony Pompliano?

  Okay.

• 27:12Speaker 01

  Above $2,200 is a fraction of your income or net worth. So if you're a teacher making $100,000 a year at a private school, you cannot invest more than $10,000 in a Reg CF campaign.

• 27:23Anthony Pompliano?

  So you can only do up to 10% of your income into a single investment?

• 27:27Speaker 01

  Correct. And even you or Tim Draper cannot invest more than $100,000 per year in Reg CF opportunities.

• 27:34Anthony Pompliano?

  Oh, so me as an investor, total, even if I like 15 different Reg CFs, I can only put $100,000 into Reg CF offerings.

• 27:44Speaker 01

  Correct.

• 27:44Anthony Pompliano?

  In totality for the year.

• 27:46Speaker 01

  Exactly. And the SEC in their infinite wisdom saying that, hey, if Anthony wants to invest more money in startups, he should go to Reg D or Reg A. But Reg CF is about a small amount of money, lots of people. We want to keep it that way.

• 28:01Anthony Pompliano?

  Got it. That's super interesting.

• 28:03Speaker 01

  Is it rational? I'm not sure, but.

• 28:04Anthony Pompliano?

  Okay. And so. Why are you guys using Reg CF? Is it because it's more of a democratic way? You get more people and smaller check sizes? And you think that there's advantages there? Or explain to me, why are you so focused on that specific exemption?

• 28:20Speaker 01

  Whether it's about what is traditional finance or crypto is about access. Where for crypto is even that much more important? Because you really do need to get these tokens into the hand of, you know, developers in college to start working and building. So if it's gonna cost a project or a company a million dollars just to do the legal filing, that's not providing access. That's why it hasn't been practical at all. And IPOs, that's something only for like the biggest, the most mature type of companies. So there's nothing else in between. It's just either Reg CF or accredited only or outside of the US. So we think that is a key component to bringing open access

• 29:04Speaker 01

  to capital and to blockchain in general.

• 29:08Anthony Pompliano?

  Got it. And so let's walk through what you guys have built today. How big is the company? And then we can talk through, you know, how somebody works with you.

• 29:18Speaker 01

  Right now, we have two offices. The headquarters in New York with a side office in San Francisco. Approximately.

• 29:25Anthony Pompliano?

  Not very many people come here and say side office in San Francisco.

• 29:28Speaker 01

  Approximately 40 of us. And we have a pretty balanced team. You know, we, a lot of people from our team came from Angel List. In fact, we deem Angel List to be an institutional co-founder. We have, we're strong on technical and business. But one unique differentiator is that there are, I think, seven former attorneys turned crypto enthusiasts working in-house at Republic to navigate, you know, that murky area at the forefront of fintech and securities law.

• 29:59Anthony Pompliano?

  Got it. And so when somebody comes to work with you, can they sell just regular, private, illiquid equity? Or do they have to sell tokens?

• 30:10Speaker 01

  We launched in 2016 to deal with just equity. That is, the first 50 companies we launched, which are traditional startups, selling convertible notes, selling preferred shares. Now, since 2017 until now, given that most new tokens are deemed by the SEC to be securities, we opened up the framework to allow people to either do a SaaS, pre-sale, actual token distribution, even airdrops and bounty programs as securities offerings that have to meet one of these exemptions. And so the CF framework at Republic really accommodates all types of securities.

• 30:53Anthony Pompliano?

  Got it. And so if I come and I want to actually raise using a tokenized security, so it's equity in my business, right, in that construction company, but it's tokenized, can it trade on an exchange?

• 31:06Speaker 01

  Absolutely. So today, there hasn't been yet an exchange in the US that has been approved to do tokenized securities trading, but I have no doubt it will come by Q1.

• 31:19Anthony Pompliano?

  What does the regulation say? Is there a 12-month lockup, a one-month lockup, three years? What does that lock look like till you can get to liquidity?

• 31:29Speaker 01

  Let me give, go back to your Reg D and Reg CF distinction, and let's just focus on those two being the most relevant one for projects in the US. If you issue securities, token or equity, through a Reg D campaign, then for one year, they're deemed to be restricted, meaning under very limited circumstances, would you be able to trade and sell publicly?

• 31:54Anthony Pompliano?

  Okay.

• 31:55Speaker 01

  For Reg CF, immediately, anyone can sell a Reg CF securities to accredited investor, and after one year, to non-accredited. So there's still that lockup period for one year.

• 32:08Anthony Pompliano?

  Got it. And let's go deeper on tokenized securities, right? Everyone's talking about this and they're saying, oh, you know, the cryptocurrencies, the Bitcoins of the world, right? There's huge potential. If it replaces, you know, the US dollar as a global reserve currency, right? We've had Murad on and just that there's huge potential there. Then there's the ICOs and utility tokens, which are kind of more access-like tokens, right? So it gets you onto a network, it gets you some sort of, you know, value there. But these tokenized securities, there's hundreds of trillions of dollars of assets in the world. And so if in fact, everything becomes tokenized or digitized, what does that world look like?

• 32:52Speaker 01

  I would say what some deem to be somewhat controversial, but I think that a mature tokenized security world will effectively eradicate poverty around the world once and for all. And there's a reason why I'm saying that. 1.4 billion people have been lifted out of extreme poverty in the past 30 years. It hasn't been due to government policy. It hasn't been due to philanthropy. It's been entrepreneurships, businesses like Uber's and Microsoft creating jobs around the world. Those companies today have been financed predominantly exclusively by investment funds and by ultra, ultra-high net worth bankers.

• 33:32Anthony Pompliano?

  Professional investors.

• 33:34Speaker 01

  So those professional investors for the past 30 years have picked a few that they, that fit their liking. If you open it up for everyone, imagine energy, money is basically energy. If a mom, stay-at-home mom in China or Argentina can invest $50 on a tokenized basis in a project in Canada or the US, if you can imagine everyone participating in early-stage investing in the same way that they buy products, in the same way that they buy lottery tickets, that's that much more capital will be fueled into entrepreneurship. And the outcome of that is within a decade or two, I really think that the world will

• 34:16Speaker 01

  be so prosperous that we won't see extreme poverty anymore.

• 34:21Anthony Pompliano?

  So, highly controversial, right?

• 34:24Anthony Pompliano?

  What has to happen, though, from where we are today to get to what you just described?

• 34:30Speaker 01

  And I'll I'll use the pain points of Republic in the first two years before crypto as a basis as for my projection.

• 34:41Anthony Pompliano?

  Okay.

• 34:41Speaker 01

  So when we launched Republic in 2016, allowing everyone quote unquote to invest based on that same vision, but if you're sitting in China or Korea or Argentina and you want to make a $50 investment in a project on Republic before the tokenized world, well, wire fee is a loan $50, $35 at the very least, possibly $50 or more. That makes it wholly unrealistic for someone to invest $50, right? After you get it, what do you do? How do you transfer if you want to your interest, your investment to your neighbor? You have to go through a very complex, complicated administrative process.

• 35:22Speaker 01

  Those two components are already being solved if things, if the whole process of fundraising is tokenized. If you invest, you know, using ETH, the transaction fee is so low compared to traditional finance making it possible. You can also circumvent jurisdictional cross-border limitations that exist with traditional banking system. And then, so where we are today with crypto, there's a major hurdle for adoption. The reason why you don't see more, you know, stay-at-home moms participate in crypto is that they don't understand what Blockstack means, what Filecoin means, heck, what blockchain means.

• 36:04Speaker 01

  But if you tokenize a traditional business, a real estate portfolio, a construction company, they get it. They don't need to know how it's done. All they need to know is that now I own a piece in this real estate portfolio and my piece is actually only $200, right? It is $200,000 minimum requirement of yesteryear.

• 36:25Anthony Pompliano?

  It's so funny because the everyday consumer actually can know that something will be valuable before professional investors, right? Because it solves their problem. And so they're on the ground in terms of, you know, you talk to these investors, a lot of them are like, "Oh, I saw somebody was using something and therefore I became interested in it," right? Or even, you know, take Tim for example, Tim Draper. Why did he start looking at digital assets and digital currency? Because his son asked him for money to buy something on a video game, right? Like, so there's, you know, that story is told so many times where the actual investor or the capital allocator is not the target market for the company. They learn about it solving a pain point for somebody else and then decide to invest.

• 37:09Anthony Pompliano?

  But if we can empower the person who has the problem solved for themselves to actually be able to invest, all of a sudden you start to really change the dynamics of fundraising.

• 37:17Speaker 01

  Absolutely. And then this one other element, which is professional investors only are only interested in businesses or projects that have extreme potential return, huge market size. They probably wouldn't be investing in a local restaurant that, you know, providing dividends and benefits in a robust company, but never yield a 10x return. On the other hand, a lot of community people would want to do that and they may not be accredited. They want to invest a hundred dollars in that restaurant and be able to go to it and get a discount and call themselves an owner. So by opening up, by making it easier for everyone to invest,

• 38:01Speaker 01

  it necessarily funds a much greater range of businesses and not just the ones that, you know, venture backable.

• 38:09Anthony Pompliano?

  Got it. Let's switch around. I want to play devil's advocate with you, right? So the arguments against tokenization, right? One is that this actually isn't that important. All it is is securitization and we've seen this before. The technology is really not that interesting or that revolutionary. What do you say to that?

• 38:31Speaker 01

  Coming from the fund asset management background, most people aren't aware that, well, most people are aware of credit card companies taking just a transaction fee, being that middleman and building, you know, billion dollar industry or trillion dollar industry, fund administration, the same thing, accounting, pretty much anything that requires someone to validate and be the trusted party in the middle. I think that that trusted party has permeated every single aspect of our life and certainly in business. I think I can't think of more than one or two aspects of businesses that doesn't, that doesn't involve a middleman. If you remove that, if you make, you're gonna make it that much cheaper.

• 39:16Speaker 01

  And if you can help people transact at smaller dollar amounts, you're gonna increase the flow of capital. That combination, an increased pool of liquidity, along with less cost and less inefficiency, naturally will give rise to, will be such a boost to the economy and to the world in a way that no other technology, in my opinion, has been able to deliver.

• 39:46Speaker 01

  Take the internet as an example, what does it do? Communication, right? The ease of communication, of exchange of information. Now you're gonna have that taken to the next level in terms of the ease of asset transfer and the ease of, yeah, in short, one is the, one is communication facilitation. The other one is liquidity facilitation.

• 40:09Anthony Pompliano?

  For sure. So what do you say to the people who argue that tokenization doesn't actually increase liquidity, right? It doesn't change what asset it is. And so...

• 40:23Anthony Pompliano?

  Is it true that it actually changes liquidity?

• 40:25Speaker 01

  It doesn't change the money supply right off the bat. But net-net, when you make it possible for people to participate in small amounts, over time, you're gonna have a lot more engagement. It's kind of like voting. You can't just expect one day that you're like, hey, everyone can vote now that everyone goes to the ballot. But over the years, people now feel encouraged, feel that they have a voice. And then all of a sudden, 10 years out, and you have a highly engaged democracy. So same thing with money. If you now enable everyone to participate, both through regulations and through technology, and then by making it possible and relatable for them, you will have, you know, improved liquidity at a great scale over time.

• 41:10Anthony Pompliano?

  Okay. What about people who say that none of the infrastructure exists, right? So there's no exchange right now. There's none of the things that we actually need in terms of empowering this to happen on a global scale.

• 41:25Speaker 01

  We're six minutes into this new day. So, you know, there are a lot of good people, but there's also a lot of money being deployed in building that foundation.

• 41:36Speaker 01

  As I mentioned before, today they easing an active securities exchange in the US that can facilitate crypto. Three more months, that may very well be different. So, you know, hopefully, an hour in, rather than six minutes in, we can have, you know, a lot of the tools necessary to justify my optimistic projection.

• 41:54Anthony Pompliano?

  Okay. Now, this isn't a knock against it. I think it's just more of your opinion. If this happens, right? And all of these assets do become digital, right? So personally, my perspective is that 100% of assets in the world will become digital. Every currency, stock, bond, commodity, everything will become digital in terms of the way that you interact with it. If that happens, do we get away from the siloed financial world, right? So the stock exchanges today are very Western centric, if you will. Do we actually reach this like one global financial system that is more inclusive? Or do you think that it'll still be fragmented in terms of, you know, there's a certain exchange for real estate, there's another exchange for oil and gas, and there's an exchange

• 42:39Anthony Pompliano?

  for just North America, and that fragmentation persists? Or do we actually get to that global financial system?

• 42:45Speaker 01

  I really hope that we will get to a point where it's a global system in terms of regulations and framework. In terms of market segments, I imagine that there will always be a separate niche exchange for real estate or commodities like, you know, tomatoes and onions and whatnot, and one for, you know, startups, and maybe one for restaurants, one for real estate. So there will be market segmentations, but the hope of a globalized framework, I certainly would like to see that happen, you know, within a decade.

• 43:19Anthony Pompliano?

  Got it. What's your biggest fear when it comes to tokenization? What keeps you up at night?

• 43:28Speaker 01

  Once a ill-informed piece of law is enacted, it's very difficult to undo it. It takes a lot of time. So I would say my, what keeps me up at night would be hasty decisions or actions by regulators. That may be New York regulators, or the SEC, or FinCEN. You know, the bid license set of law is one example. But I do think with respect to the SEC, they've been very pragmatic, very thoughtful in their approach, so it's encouraging. But that concern applies in all major jurisdictions, maybe Japan, which effectively now has such

• 44:09Speaker 01

  a high hurdle for ICO, that's not possible to do ICO in Japan because of a reaction to, obviously, that exchange securities concern over the summer. But yeah, I would say regulatory risk, not risk to the underlying. Projects with risk of ill-informed overly restrictive regulations.

• 44:28Anthony Pompliano?

  I think that's completely fair and I would echo your sentiment that I think US regulators have done a very good job of being patient and measured and really spending the time to learn before acting. Whereas maybe we haven't seen that in other jurisdictions. So I think that's completely fair.

• 44:45Speaker 01

  And their view right now, which is the current legal framework does works. If you apply it to crypto, it's just that each player got to assess for themselves, are they complying? And what the ultimate legal risk would be if they don't. But yeah, I highly doubt there will be any drastic change to US securities law as applied to crypto anytime soon.

• 45:06Anthony Pompliano?

  I mean, look, I've said this before, we wrote up a whole thing around, I actually think the SEC or regulators in general are going to in some form or fashion mandate the tokenization or digitization of assets. And it's for one reason that goes unspoken of in many of these circles. Today, regulators spend a bunch of time, money and resources to identify bad actors, to identify things that they did that actually broke the law or violated regulation. And then they have to build a case, can usually take, you know, a year, two years, it's very expensive. And then they enforce, right? And they actually go after the people who did something wrong.

• 45:45Anthony Pompliano?

  The promise of tokenization, if it actually happens, is that you are able to KYC, AML, investor verify, myself and my digital wallet, right? Also, either issuer or another participant in the market, you can KYC, AML, investor verify. And then the actual token in which the security is held can have all of the information, it can have who issued it, when did they issue it, what regulation, all this kind of stuff. And so now if you write the code into the law, or I'm sorry, the law into the code, the code can actually prevent.

• 46:21Anthony Pompliano?

  Non-compliant trades from occurring. And so you take regulators from being reactive and put them in a proactive position that saves them time, money and resources. So to them, this is like a dream come true.

• 46:33Speaker 01

  Right. Now, it will take some time for our many legislators and regulators to fully understand underlying technical know-how and take a view of combining, you know, law and technology. But yes, our legal system is highly outdated. And I have no doubt that I actually agree completely that blockchain will benefit regulations over time into a great extent.

• 47:02Anthony Pompliano?

  Yeah, look, people fear what they don't understand, right? But in this one case, it actually is technology that will make the regulators better at their job.

• 47:10Speaker 01

  Right.

• 47:11Anthony Pompliano?

  Right? Okay. So before we wrap up, I do a whole bunch of kind of fire round questions. First is, what company do you believe is the most important in cryptocurrency and blockchain today that is not Europe? So can't say Republic, but what's the most important company out there?

• 47:31Speaker 01

  Well, one of our lead investors is Binance. And I love just how long-term of an approach they that they've been, you know, adopting. I would say Binance.

• 47:45Anthony Pompliano?

  Well, why are they important though? Right? So I agree that they've done a bunch of stuff, right? That they've taken this very particular view, but why do you think they're important to the overall ecosystem?

• 47:58Speaker 01

  To have that pool of capital and deploying it not for near-term further wealth generation or near-term return, but instead reinvesting it into incubating companies that are clearly not going to issue token and be 100X so that they can sell tomorrow, but that are addressing problems in the underdeveloped or the developing world. I think the Binance Lab team, the Binance incubation program, I haven't seen anyone else in the industry with this level of influence that are playing that long game, that long of a game.

• 48:40Speaker 01

  And because of that, that I think that over time, the net influence of what they're doing today, we're going to see in years for in years to come.

• 48:50Anthony Pompliano?

  I am, uh, I'm long CZ. I, I think a lot of people don't understand how kind of critical he is and the way he thinks. Um, so, so we'll see what, what happens there. All right. Next question. Uh, if you had a magic wand and you could wave it and change any regulation or improve any regulation, what would it be?

• 49:09Speaker 01

  I would take away the $1 million limit on Reg CF and make it much more, you know, pragmatic and appealing for, for larger projects.

• 49:20Anthony Pompliano?

  What would you put the limit at?

• 49:23Speaker 01

  $20 million, I think would be a reasonable limit.

• 49:25Anthony Pompliano?

  So Reg CF would go from a million, 1.07 million to $20 million limit?

• 49:30Speaker 01

  Correct. And we submitted a letter to the chairman of the SEC and hope that, that, uh, he can use his discretion to, uh, to lift the cap.

• 49:40Anthony Pompliano?

  Could they actually do that?

• 49:41Speaker 01

  You know, in my opinion, uh, he certainly has the authority to do so.

• 49:45Anthony Pompliano?

  And so he could actually just decide this should be a higher limit and we're going to go ahead and change it?

• 49:49Speaker 01

  Correct.

• 49:50Anthony Pompliano?

  Got it. Well, maybe we'll tweet at him a couple of times and get him to, uh, to do that. Uh, all right. What, what's the one thing you believe in crypto that you think a high majority of other people would disagree with you on?

• 50:05Speaker 01

  That the fully tokenized world will probably come sooner than most people think. I would say in less than 10 years and that within a decade, I still think that we're going to get rid of extreme poverty around the world because we're going to see that level of adoption of crypto technology, of, of crypto assets in general.

• 50:26Anthony Pompliano?

  Do you think that more people in that 10 year period will adopt Bitcoin or tokenized securities?

• 50:33Speaker 01

  They will use Bitcoin to invest into tokenized assets. That is, it may be a tokenized Monet and now they're able to acquire a tiny bit of it or, you know, one, one billionth of the Ritz Quartet Dow in, in Tribeca. Um, and so the tokenized, um, traditional assets will bring forth relatability and encourage people who are now standing on the sideline. Interested but haven't, you know, haven't dived in to actually take that step to be engaged.

• 51:05Anthony Pompliano?

  Got it. All right. One more question before I end everyone, let you ask me one question. So you think of a question, but completely not related to crypto. We're just going to admit that aliens exist, right? So aliens are out there somewhere. We always think of aliens as comparative to humans, right? Do you, in movies and the way that it depicted in sci fi, it's always some sort of human-like creature. Do they have pets? Like, do you think that there's alien animals and alien human type creatures? Or do you think that they're just one homogeneous creature?

• 51:46Speaker 01

  My bet would be that they do have pets.

• 51:48Anthony Pompliano?

  Why?

• 51:49Speaker 01

  Pets, you know, just fills a human need for comfort and security, you know, to be more. And so I imagine that a highly evolved species probably would also very have high, highly evolved EQ emotion. And if that species has emotion, then it will have things like pets.

• 52:10Anthony Pompliano?

  Pets, right. Okay. I think nobody's ever answered it with an EQ focused answer, but I think that you're probably more right than wrong.

• 52:18Speaker 01

  What's, what's the most common answer to that question?

• 52:21Anthony Pompliano?

  The funniest one is that we're the pets, right? I think the most common is yes, there are pets and everyone's got kind of a different reason as to, as to why.

• 52:32Speaker 01

  You're one of the most prolific crypto investor out there, out of the world of like STO securities, tokenized assets. What excites you the most in, in the past month that didn't come on your radar until literally the past 30 days? In terms of a sector, a project?

• 52:52Anthony Pompliano?

  Okay.

• 52:56Anthony Pompliano?

  So I'm gonna cheat a little bit. It's probably not the last 30 days, but I think it's something that is not very well understood and.

• 53:04Anthony Pompliano?

  But it's exciting to me. I don't think we're there yet, but people are building it. I've seen a couple of companies pop up. I won't mention who yet because I don't think that they're they're public with it. I'm really interested in this idea of on-chain cash flow or on-chain debt, right? And the idea being that it really doesn't have that much to do with blockchain. It has everything to do with automation, right? And so, you know, I'm on record as saying blockchain is simply the foundational technology that will empower or unlock the true value of automation. Right? So if you think about in an automated world, most assets will not comply with that

• 53:48Anthony Pompliano?

  world because they're not digital. So they're paper-based or they're electronic-based, right? Kind of DCC today, etc. If we can use this technology to actually create digital assets, native digital assets, not, oh, this is a representation of a share in a company, but it is the share in the company. Now, what you've done is you've laid the foundation for every stock, bond, currency, commodity to be digitized, and now automation is unleashed. So the example that I use is if you're an employee at a company and you own a house, normally what happens is you go and you apply for a loan, right? And when you apply for that loan, the lender underwrites you and the asset. They say, okay, what house you buying? How much does it cost? How much money do you have to put down? What's your ability to pay back?

• 54:33Anthony Pompliano?

  Your credit score, all that kind of stuff. You then take out the loan, you put some money down, you get paid every two weeks from your employer. That money goes into your bank account. You then take some of that money and you pay your mortgage payment every month. Well,

• 54:48Anthony Pompliano?

  my bet is that at some point in the future, your employer is going to make two payments. They're going to pay you your salary net of that mortgage payment because the bank or the lender is going to say, I'll underwrite you, right, as the borrower, and I'll underwrite the asset, but I'm more likely to give you the loan and also at a lower interest rate if I can underwrite the corporation rather than the borrower, right? And so now,

• 55:18Anthony Pompliano?

  Today, that might be possible, be pretty complex and inefficient to do and, you know, accountants at companies would hate it, right? But if we can actually get into a truly digital world, these micro payments and the ability to start to automate this stuff unlocks huge value, but also it changes the way that humans interact with money. Because what would that do? It would give you as an individual consumer cheaper capital.

• 55:46Speaker 01

  Yep.

• 55:46Anthony Pompliano?

  And we know that cheaper capital unleashes innovation and we know that innovation actually changes inequality. Right? And so that's a really long threaded thing that's reliant on a lot of ifs. But I think that this digitization of assets is the key to building that future.

• 56:03Speaker 01

  Projects like Damar, the early, the early phase of that evolution, you think?

• 56:10Anthony Pompliano?

  So, so Damar, for those that don't know, is it's a protocol in which anyone can go on and build debt-like instruments, right? Or debt-like services on this protocol. It's based on blockchain, right? I think that they are absolutely one of the fundamental layers or, and if they don't win, somebody will win in terms of a protocol for debt-like instruments. The part that may not be as popular with the crypto community is I actually don't know if blockchain is the, is the right technology. Right? We think a lot about asset management for our business in the digital age, not in the blockchain age, in the digital age. Now, today blockchain is actually the best technology, right? In majority of cases. And so what blockchain is heavily reliant on in many of those cases is that we will

• 56:54Anthony Pompliano?

  move to a decentralized world. But if we just move to a digital centralized world, so not for money, for Bitcoin, et cetera, but just, you know, for debt or whatever, does blockchain have to be the right technology? I don't know yet. And I think that's the work that we're trying to do to figure that out. But if we do move to a truly decentralized blockchain world. The ability to not only get access to this and unleash automation, but then do it without central authorities? We could sit here all day and talk about possibilities, right? I mean, it would be absolutely incredible in terms of the economic benefit for both individuals and society that that would unleash.

• 57:31Speaker 01

  So that's the hope, right? I mean, today, there isn't truly any example of a truly decentralized initiative project network, but hopefully that one day we'll see some manifestation of that.

• 57:45Anthony Pompliano?

  Look, I'll leave you one last thing. I actually wrote about it today. Bitcoin, in my opinion, is going to do more to solve the income inequality gap than anything else in the world. And people, that's an insane statement from somebody who's, you know, just talking their book, right? I went back and in 1998, the IMF issued this paper that describes the impact of inflation on income inequality. And the things that it talks about is things like there's insiders and outsiders. They put people in two camps. The insiders are people who can get inflation-adjusted wage contracts. So every year, my income goes up X percent to accommodate for inflation and prevent impact of inflation. Real asset ownership.

• 58:30Anthony Pompliano?

  So when I get paid my salary, I take my money and I put it in something other than an inflation currency, right? Things like that. Bitcoin completely removes the dynamic inflationary rate or the ability for a central bank to influence that. And so if you believe the IMF's work that shows inflation has driven more income inequality in the last 50 years than most things, if you move to a disinflationary model and a decentralized model where there's no influence on a day-to-day, month-to-month, quarter-to-quarter basis of inflation, interest rates, et cetera, all of a sudden, you start to close that inequality gap, right? And so to your point, like, that's just Bitcoin. You're talking about even bigger, just all assets in general.

• 59:14Anthony Pompliano?

  But I do truly believe that this is the type of stuff that, you know, it's the Gandhi quote, right? First, they ignore you, then they laugh, then they fight, and then you win. We're probably past the laughing stage. Fights are coming, right? So you start to see central banks saying, ah, this is stupid. It's dangerous. It's, we'll see how bad the fight is, right?

• 59:33Speaker 01

  No, apparently Jimmy Diamond doesn't give a shit.

• 59:37Anthony Pompliano?

  The, Jimmy Diamond and I are gonna end up friends at some point. Mark my words. But I think that's the stuff that, you know, I get excited about. And so I think we're just getting started here. And the entrepreneurs who are really kind of understanding the technology, understanding the law, are gonna build things we can't imagine. And that's really where we want to invest. And I think you guys obviously are operating. And so that's stuff that gets exciting.

• 1:00:00Speaker 01

  I'm definitely a fellow believer.

• 1:00:02Anthony Pompliano?

  Absolutely. All right, man. Thank you so much for coming. This is super fun. And we'll have to do it again as you guys keep progressing.

• 1:00:07Speaker 01

  Thank you so much for having me.

• 1:00:11Anthony Pompliano?

  Hey, everyone. Pop here. If you liked this episode of Off the Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off the Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on Off the Chain.