Cathie Wood Interview - Bitcoin & Crypto Are Part of the Next Industrial Revolution

Cathie Wood is the Founder, CEO and CIO at ARK Invest. In this interview we discuss:

• ARK’s Bitcoin ETF Launch
• Bitcoin ETF impact on Crypto Adoption
• Cathie’s Bitcoin price prediction
• Central Banks will hold Bitcoin
• Will an Ethereum Spot ETF be approved in 2024?
• SEC Ripple XRP Ruling
• Gary Gensler will not be SEC chair after the Presidential election
• CBDCs vs Stablecoins
• The Next Industrial Revolution and tech disruptions
• Outlook on the Fed decisions and markets in 2024

Transcription

• Intro – That central banks will start including Bitcoin in their reserves, and actually it will become some competition for the world’s reserve currency from that point of view, but it will also discipline us, I think, as well. So, I don’t think the dollar disappears, I think maybe Bitcoin and the dollar and maybe another currency start to dominate, we’ll see. That’s sort of been the history.
• Welcome to the “Thinking Crypto” podcast, your home for cryptocurrency news and interviews. With me today is Cathie Wood, who’s the founder, CEO, and CIO of ARK Invest. Cathie, it’s great to have you on.
• Thank you. I’m delighted to be here, first time.
• Yeah, Cathie, I’m a huge fan, so I’m ecstatic today to speak to you.
• Ah, thank you.
• And, you know, last week was historic. We had the Bitcoin ETF launches, the trading seems to be going well, the volumes are in the billions. How are you and the team feeling with your ETF going live?
• Yes, well, we feel great. There have been some surprises. We are definitely punching above our weight, I think that’s clear. I think we’re number three if we’re excluding GBTC, which is seeding market share because of the fee difference primarily, then we are number three in volume. And volume is a good leading indicator for flows, means we have one of the top three liquid ETFs, so it’s BlackRock, Fidelity, and then ARK in terms of volume. So, we’re thrilled about that. We’re not, I think we’re number four assets because I know there were a few institutional flows into other funds, but and whereas ours are all really retail funds.
• Hmm, and what sets ARK’s ETF apart from the others? Certainly, you have a plethora of experience with investing, ARK is well known, but what sets you apart from the others?
• Well, one thing I’ll start out by saying is we’ve been researching Bitcoin since 2014, actually before that, I started in 2011 at another firm. But since we founded ARK, 2014, we wrote our first blog in 2014.
• Wow.
• We did. So, ARK knows Bitcoin. We did our first white paper with Art Laffer in 2015. We were the first public asset manager to gain exposure to Bitcoin when it was only $250 in September of 2015.
• Wow.
• We did the white paper called Bitcoin: Ringing the Bell for a New Asset Class in collaboration with Coinbase. So, I don’t think anyone beats us when it comes to research, knowledge, and understanding of Bitcoin. That’s very comforting for advisors and individuals. There are two other things that we think are very important and will be especially so for the wirehouses, the Morgan Stanley’s, the Bank of America, Merrill Lynch’s, the UBS’s, the Wells Fargo, and that is we have partnered with 21 shares, which over the last five years has evolved the infrastructure and operations through booms and busts, through forks, and airdrops, and halfings, and they have battle tested this infrastructure. I don’t think anyone else can say that. And then the third, the third variable, is, and again, especially for advisors at these wirehouses, they do not have a deep understanding of Bitcoin, understandably. We are gonna be there to support them. We have a sales team that had to start talking about Bitcoin. And I remember a few of them saying, just telling us recently, “We didn’t even know what Bitcoin was when we were interviewing for the job.” And then guess what? They got the job, so they had to learn what Bitcoin was, develop conviction, and hold hands through volatility. And then, of course, the last is we’re treating this and we do believe that Bitcoin is a public good. It is the financial superhighway of the internet, and we have priced it accordingly. We want to make sure that everyone has access because we think it is a very big idea.
• Hmm, and Cathie, what was your first encounter with Bitcoin? I don’t know if you’ve ever shared that. Like who told you about it, and what was your aha moment? When did it click for you?
• Yes, well, those are two different questions. The first time I heard of it was in 2010, I think, 2010 into ’11. So, Brett Winton, who’s our chief futurist now, he and I were working at AllianceBernstein and every Friday, as we do today at ARK, every Friday we did a brainstorm. And analysts could come in with the most interesting, or provocative, or controversial ideas that they’ve learned in the last week in their respective technology space, or the biggest breakthrough in their own research. And so, Brett, who was an analyst at the time, he’s now our chief futurist, he came in and started talking about Bitcoin. Now, Brett at the time was very shy, and so for him to step out and talk about something that seemed like it was from outer space was in and of itself interesting. And then, he and all of us became very focused on it. When we started ARK, we started with five major innovation platforms. I mean, no, sorry, four, four major innovation platforms: robotics, energy storage, DNA sequencing, and there’s one other one, next generation internet. And then, as we were doing more research on Bitcoin and on artificial intelligence, the breakthroughs, deep learning, we said, “Wait a minute, it’s not just next generation internet, there are two platforms here. One is artificial intelligence, the other one is blockchain technology.” And then Chris Burniske, I don’t know if you know?
• Yeah.
• Yes, Chris, he was our first crypto analyst, first next gen internet analyst, fell down the Bitcoin rabbit hole and we’ve haven’t pulled him out since. He has just gone all crypto. And so, he wrote a book, we all became obsessed with, “Wow, this is a new asset class, this is a new monetary system, this is the layer of the internet that developers did not build, did not develop in the early days, in the early ’90s when the internet was evolving because no one knew it would be used for commerce or financial services at all.” And in fact, not too many years before that, in the ’80s, it was illegal for consumers to use the internet, it was just for national intelligence and so forth. So, to help people understand, wait a minute, this is the currency that’s native to the internet, you know, we can get rid of all of these middlemen and toll takers who are there really to minimize risk. This is more peer-to-peer, so just take out those middlemen and minimize the risk, including counterparty risk.
• Hmm, and Cathie, you know, in the early 1900s and the late 1800s, we saw disruptive, incredible technology brought to the table, electricity, light bulb, automobile, and we had the Industrial Revolution. Do you feel we are at the start of the next Industrial Revolution with certainly starting with the internet, now blockchain, crypto, AI, robotics, techs, EV, and so forth, space exploration. Do you think we’re at that start of that next Industrial Revolution?
• Without a doubt. And one of the things we’re saying is we have not seen this many general purpose technology platforms, innovation platforms evolve since that period of time. And you’re right, the three major ones back then, telephone, electricity, internal combustion engine/automobiles, those were three platforms. Today, we have five and 14 different technologies are involved in them.
• Hmm.
• So, there are subsets of technologies. And so, what we believe we’re moving into is a period of super exponential growth. So, if you look at the period from the early 1900s to today, the average growth rate of the global economy, real GDP, including China, has been 3% on average.
• Hmm.
• Now, if you go back and you look at past periods of technological breakthroughs, the steam engine and so forth, each time growth rates in the global economy jumped, I think we got from 0.6% to 3%, that was the jump to get us to that 3% for the last a hundred and some odd years. If we’re right, these five platforms will create a boom in productivity, magnificent wealth generation opportunities, and could take GDP growth up to 6, 7, 8%. Nobody believes that now, nobody, they think we’re crazy when we say it. But we are putting the building blocks together, you know, of these platforms now that they are moving into primetime, each one having their own S-curve. So, AI and Bitcoin, we did a bitcoin brainstorm, it was our second Bitcoin brainstorm with, I don’t know if you know Rod at Bitcoin Park in Nashville, Tennessee. And it was the convergence of Bitcoin and artificial intelligence. Because of convergences like that, we think that these S-curves are feeding each other and will get us to those growth rates.
• Now, do you think there’s gonna be a period of where these technologies are going to affect us negatively in the short term, but long term bring a lot of prosperity, improve life, and so forth? And for an example would be AI and robotics taking jobs where there may be a need for universal basic income, but that’s where maybe stable coins, CBDCs, bitcoin, crypto come into play. I know that’s a loaded question, but what are your thoughts on that?
• Well, the history of technology is it’s a net job creator over time, you just don’t know what the jobs are going to be. For example, in the early ’90s, the early days of the internet, did we have any idea that Uber and Airbnb would exist? It wasn’t even possible to comprehend it, but they could not exist without the internet, right? So, I think the kinds of jobs we’re going to be seeing are very interesting. Already in AI, we’re seeing a new category of engineers, they’re called prompt engineers. Just now that we’re not going to need as much coding and development, AI will do that for us, we just need to become linguistically very precise. And so, I think linguistics is going to become more important as a job as well. So, different kinds of jobs. In the short term, sure, you’re gonna see some displacement. I mean, we think most food deliveries will be done by drones and other robots. Right, ultimately, so those delivery jobs might disappear. That is why it’s so important, and it’s one of our missions and values to educate people. So, instead of universal basic income, what I would encourage is that read up, educate yourselves, figure out if you’re in harm’s way, if your kind of job is going to be displaced.
• Sure.
• And then figure out which of these major platforms you wanna get involved with, and I’ll give you an example of that. We started teaching high schoolers about drones. And at the end of just a six-part seminar, and this was in an economically disadvantaged area of the country in Danbury, Connecticut, during Covid, within just six seminars, we were able to tell those high school students, you now know more about drones than 98% of the people in the world.
• Wow.
• If you are interested, inspired by this new way that the world’s going to work, follow Sam the drone man. Sam does our drone work. Sam, that who is one of the teachers, follows that and follow who he follows, learn as much as you can. They’re not teaching this yet in a lot of schools. You’ll be so far ahead of the game. So, we are encouraging, we’re trying to help sound the alarm that there’s tremendous disruptive innovation out there. The disruptive part means disintermediation or total destruction of industries. We think the traditional auto industry is truly in harm’s way, we think most of those companies will go bankrupt or will be consolidated. So, if you are working in that traditional world then maybe you should think about applying for a job at Tesla, electric and autonomous is where this is going.
• Yes.
• So, and philosophically, UBI, I feel would kill a part of the incentive system that has really made America the innovation engine of the world. Flexibility, agility, opportunity, that’s the most important thing. And what I love about innovation is that it’s the great leveling field. When my father with sixth grade education, he went into the American Air Force after emigrating, he fell into the radar rabbit hole. No one knew more than my father. And guess what? He made a great living for his family. And I think that’s what innovation does if you go for it.
• Yeah, it will open up a lot of new opportunities. And like you said, folks have to really do their homework, look at if are you in the path of disruption? But it presents an opportunity to invest as well-
• Absolutely.
• and create wealth. Yeah.
• Absolutely. And in the financial services industry, watch out. You know, Jamie Dimon is as vociferous in his opposition to Bitcoin as anybody out there. Well, guess what? It’s because these are the financial rails that are going to derail you in many ways, Jamie and JP Morgan.
• Yeah, absolutely. Certainly see JP Morgan getting disrupted and Jamie continues his flood. But you know, there’s other detractors as well, such as Vanguard and Merrill. What do you think is up with that? You know, is it a little bit political that they’re trying to do this?
• I do think our business is highly regulated and being on good terms with the SEC is very important. So, I think there’s an element there because remember, Chairman Gensler sure approved these ETFs, but was very quick to say, “We are not recommending that you buy Bitcoin or even invest in these vehicles. We’ve approved them just because, you know, the courts have challenged us and we have to take a point of view and we can’t be the reason, according to the courts, that this movement is derailed,” which is a great thing. Checks and balances in the American system, so legislative branch, which is basically the SEC judicial, I mean, I’m sorry, executive branch, judicial, and legislative, so excited there. So, I think Vanguard and you mentioned someone else, who was that?
• Merrill Lynch.
• Oh, I think, yes, I think Merrill is beginning to understand that Vanguard has made a mistake. ’cause Merrill has actually said, “No, no, no, we aren’t banning it, we’re evaluating it.” And Merrill’s very conservative and they were, Merrill was the last platform to approve our strategies, our ETF strategies. But once they do approve, you know, they’re a powerhouse, so they’re very careful. So, I think this is a massive mistake, a massive strategic mistake. And I do believe the next leadership, the new leadership of Vanguard, whenever that is, will change its policy. Because what they’re doing is preventing their investors from accessing a new asset class. Their role is to facilitate-
• Right.
• the access of all asset, financial asset classes. So, I think many people are leaving Vanguard, I think Fidelity is the biggest beneficiary there. And Fidelity, I think, as I understand it, is actively courting them because there’s and I don’t think Merrill wants to fall into the same category.
• Yeah, and what we’re seeing this interesting dynamic, and I’ll love to get your thoughts on it, and that is you have crowdsourcing and groups behind certain movements, financial networks like Bitcoin and other tokens. And because of the internet and social media, people can say, “Hey, Vanguard, we don’t like what you’re doing, we’re gonna start a movement.”
• Yeah.
• And we saw that movement start where people are closing their accounts, moving their funds. What do you think about this dynamic and how it plays into crypto where, for example, the token holders are benefiting from the network effect and Metcalfe’s law and the growth of that network, it becomes more powerful. It’s just an interesting dynamic.
• Yeah, and it’s called the Fat Protocol thesis. So, Joel Monegro at PlaceHolder where Chris Burniske went to be his partner and start a venture fund focused exclusively on crypto. He coined when he was at Union Square Ventures, the Fat Protocol. And what he was trying to communicate was, you know, in the internet, the internet, the protocols were very thin, right? Nobody made money on the protocols.
• Right.
• It was only the applications on top of the protocols. With Bitcoin in particular and other crypto assets, but especially with Bitcoin, the Fat Protocol is the Bitcoin itself will enjoy the largest piece of the pie as opposed to the applications on top. They will also get a piece of the pie.
• Right.
• But, you know, this is the global monetary system, a rules-based digital, decentralized monetary system. That’s a very big idea. There aren’t gonna be many ideas that are bigger. And so, we do think that in this case specifically, the Fat Protocol thesis applies.
• Hi, everyone. Pardon the interruption. I’m Tony Edward, the founder and host of the “Thinking Crypto” podcast. I have a huge favor to ask you, if you haven’t subscribed as yet on YouTube or the podcast platforms, hit that Subscribe button, hit the thumbs up button, hit the notification bell on the YouTube platform. And on Spotify or Apple or wherever you get your podcast, please leave a five star rating and review. It supports the podcast. It allows me to bring great quality content to you. Thank you for your support, and I’ll let you get back to the content. Let’s circle back to the Bitcoin ETF. It seems like we’ve hit this tipping point where Bitcoin is and crypto is about to go mainstream. What impact do you feel these ETFs will have? And we’re just in the early innings, the tip of the iceberg on the global adoption of crypto, the mom and I think about my parents, they’ll now be able to access the ETF in their retirement account and much more.
• Yes, yes. I think when people put something in their portfolio, they’re apt to watch it a little more closely than they, and maybe seek out a little bit more education, even if their advisors have put them in. And certainly, the advisors have to educate themselves. So, I think once more and more people educate themselves and understand what this is, it’s a technology, yes, and it’s a monetary system, then I think they’re going to understand why it’s taking off in emerging markets and why everyone should have a little bit of an insurance policy called Bitcoin. And last year, the regional bank crisis was a great case in point. I think many people were shocked as regional banks, the KRE, the regional bank index was imploding, Bitcoin took off, it went up 40 to 50%. And it was the first time that traditional investors, many more took note, “Wait a minute, why did it do that? This is supposed to be a risk-on asset. It’s supposed to be very volatile and highly correlated with risky assets. What just happened?”
• Hmm.
• And what they learned there was that, “Hey, it’s a risk-off asset too, why?” Because there’s no counterparty risk like there is in our banking system. You’re not gonna be held hostage to like you were in ’08/’09, wondering if your bank was going to survive or you’d get any more than 250,000, the guarantee, the FDIC guarantee out of your bank. So, this doesn’t happen with Bitcoin. Education, “Wow, how many risk-off and risk-on assets are there?” So, I think the more people come in, the more they’ll be comparing and contrasting what this is to what we have in the traditional financial world. And guess what? This is better. This is better, and it is why emerging markets talk about needing an insurance policy in hyper inflating economies. It’s an insurance policy against counterparty risk, inflation, and deflation. It’s amazing.
• And as Bitcoin, the factors you mentioned that why you should hold Bitcoin and that thesis. When do you think, you know, what’s your timeline for when it could be I go to the store and I can spend a few Satoshis versus fiat currency, you know, is that like 10 years away? I know that’s a tough question, a lot of speculating there.
• Yeah, no, it’s interesting. The Lightning Network is making some good strides. And on that brainstorm I mentioned, the convergence of AI and Bitcoin, this is really happening in the emerging markets. And I was on that brainstorm and I was saying, “What? Completely redefining division of labor in emerging markets.” So, we can we think of giga jobs here or giga work.
• Hmm.
• Put that on steroids in emerging markets and the Lightning Network is ena enabling it. Now, what you’re asking in terms of Bitcoin serving as a means of exchange, not just a store of value and maybe even becoming a unit of accounts, so serving the three roles of money, I do think that will happen. We’ve done another few podcasts and brainstorms with Art Laffer. Who, do you, I don’t know if you or your listeners are familiar with Art Laffer, he’s a famous economist. You have to be very familiar with economics and different economic theories. Laffer Curve is all about tax policy, but he’s a monetary scholar as well. And he was my professor at USC in the day, in the ’70s, and he is 83 now. And he has, I’ve never seen him more excited because what he’s saying is, “Wait a minute, this, I’ve been waiting for this since Nixon closed the gold window in 1971.” So, a new monetary rules-based system. And then I’ve asked him and these podcasts were around this topic, “Wait a minute, could it become a means of exchange?” Well, when it has proliferated throughout the world, and of course we’re going to enjoy the scarcity value of it as institutions enter. Once that’s fairly ubiquitous, then what he thinks is that it will become more of a stable currency or it’ll act more like gold itself, just much more stable than Bitcoin. And it will in more and more economies, especially emerging markets, it will serve as a means of exchange because it won’t be straight up. And if you bought a pizza you paid in future dollars, you know, $2 million for a piece of pizza, it’s not gonna be like that anymore. It’s going to be, “Okay. I paid up a little bit, but the utility is so great that I was willing to do that.”
• Hmm, tough question for you ’cause this is something I’ve been thinking about, how can Bitcoin be used to solve the fiat currency problem that we have? And that is fiat currency continue printing, and we’ve seen empires fall as a result of this, right? The currency become so devalued. And I’m thinking about my daughter’s future here in the United States. And the United United States, of course, has the world reserve currency, but they’re printing, the debt is incredibly high, are we headed for an Argentina? Is the question that comes to mind. And how can Bitcoin be used? Can the central banks use it? Maybe they tie it into CBDCs where that’s the true gold, right? You have a finance supply. I know I’m rambling a bit here, but what are your thoughts?
• No, no, no, it’s a really good question. We do believe, and El Salvador probably the first, that that central banks will start including Bitcoin in their reserves. And actually, it will become some competition for the world’s reserve currency from that point of view, but it will also discipline us, I think, as well. So, I don’t think the dollar disappears, I think maybe Bitcoin and the dollar and maybe another currency start to dominate, we’ll see. That’s sort of been the history. So, and as far as CBDCs, you know, it’s very interesting in the United States, I definitely don’t think that’s going to happen because this is a state’s rights issue. And I know in the state of Florida where we are, we moved ARK here two years ago. In the state of Florida, Governor Ron DeSantis has said a CBDC would not be welcome. All of that, all that would mean is government surveillance, invasion of personal privacy like in China. And so, if it’s not gonna work in Florida, it’s probably not gonna work, you won’t get all 50 states, that would be a big problem, right? And I don’t think it would work, and I think the politics would basically prevent it becoming ubiquitous in the United States.
• So, question for you, given you mentioned China and their digital yuan, and there’s the digital ruble and all these that are coming, how does the United States remain competitive? Is it not a CBDC, but rather a stable coin like USDC, which exists on multiple blockchains, is interoperability more decentralized and less surveillance?
• Yes, much, absolutely, that’s the way we think, this is the route we think that stable coins are the bridge into effectively into the internet financial system and are playing a very important role and probably will continue to play a very important role from an interoperability point of view and so forth. So, yes, we definitely think that’s going to go on. If when you think about CBDCs, what are they? There’s still got human beings making decisions, there’s no mathematical metering, it’s just a human being making decisions and setting a policy and then changing its mind whereas a policy that everybody understands these are the rules of the game and it’s not gonna change, mathematically metered a block every 10 minutes, having it roughly every four years, 21 million Bitcoin, never more. I think that is moving us away from fiat currency, taking the human being out of the loop, importantly.
• Yeah, absolutely. I know we’re running up on time so I wanted to ask about your outlook for Bitcoin if you have a price prediction for this cycle. If not, it’s okay. And we’ve seen the correlation with global liquidity rising, the money printer, and assets rising, and crypto is a part of that. And the halfing plays a part as well with the supply getting cut in half and the presidential cycles every four year. You know, what is your outlook, you think the Fed is gonna cut rates and money printer turned on and Bitcoin’s price prediction?
• Well, it’s interesting. I think one of the reasons for the regional bank crisis was the Fed raising rates at a faster rate than it ever has, up 24-fold in 17 months. Never seen anything close to that. Chairman Volcker increased interest rates two-fold, not 24-fold.
• Right.
• So, that was part of the regional bank crisis, and notice Bitcoin went up during that. So, and it is true, it probably was anticipating the financing program that the Fed put in place, which was a bit of a jog toward easing and then it went back, a reverse course. So, we think that the Fed is going to cut rates. Now, there are a lot of confusing economic data. We hear something from companies and something very different from the government in terms of economic activity. They’re not matching up, they’re not matching up at all.
• Hmm.
• And so, I find that very interesting. I think the Fed is going to figure out that there is much more stress in the system, that the regional bank crisis was the first sign of it and we’ll get other reminders, and that they will move into a rate cutting. Now, what we really think is going to happen is it’s going to be less about real economic indicators, it’s going to be about price deflation. We think and Walmart has said we’re gonna have to cut prices. That’s deflation, that’s not disinflation even, it’s deflation. And I believe the Fed is gonna be shocked at broad-based price deflation this year. And that that will be, they’re using now inflation as their primary gauge, they’re not as focused on real economic activity because inflation has come down even without a recession. I think we’ve been in a rolling recession, but nonetheless, so inflation is the primary variable they’re watching. We think there’s gonna be deflation, so they’ll get 2%, all right, and it’ll keep falling. So, they’ll lower interest rates, that will be very good for risk assets, and Bitcoin among them. It was interesting, I think it was in late in the fourth quarter earlier in January, Bitcoin led the market. And so, you know, it began to, and so we’re watching Bitcoin now, and of course we’re having a sell on the news moment after the eight, or I mean the 11 Bitcoin ETFs are approved. And I don’t know how far that’s going to go, this is high frequency trading, it’s people getting in just for that short, short boost and now getting out. But institutions and these retail platforms are going to start moving in and then we’ll see the scarcity value. So, what is the price target? We have everything focused on the long term, but it takes short terms to make up a long term. So, by 2030 we are in print for our base case as saying that we believe Bitcoin, which is now closing in on 40,000, will be at 640,000 by 2030. That’s our base case. The Bitcoin ETFs have increased the probability of our bull case, which is $1.5 million. And if you want to see the building blocks of that, you can take a look at Big Ideas 2023, which we published last January, we’re about to publish 2024, and you’ll see in Big Ideas how we get to those two cases.
• Hmm, I wanna ask you about the Ethereum spot EFT because there’s talks about this, some folks have thrown their hat in the ring. Do you think we see an Ethereum spot EFT this year? And is ARK in the race for this as well?
• Yes, and yes.
• Hmm, do you anticipate any hurdles though, because Chairman Gensler, for example, refuses to acknowledge Ethereum a security or not before Congress, and there’s still the SEC trying to throw everything under the securities blanket.
• Yes.
• Do you anticipate any problems there?
• So, that would be the one, I think if after this election, I don’t think Chairman Gensler will remain at the SEC whoever’s elected, I think he has aspirations for political, some kind of political appointment, so he may go for that reason if Joe Biden is reelected or he may go or he will go altogether if a Republican is nominated. So, yeah, the SEC could drag its feet, but I think the court cases have spoken pretty loudly. We have the Coinbase hearings, we’ll get lots of information about what and what is not a security during that trial. So, I do think that raises the odds of an Ethereum spot approval. Gensler could be in the way, but we do think it will be approved.
• Yeah, and to your point, you know, the judicial branch is doing its job and not putting up with any nonsense, they’re holding up the law-
• Right.
• which is great. You mentioned Coinbase and boy, I am hoping Coinbase coming out with a big victory. What were your thoughts on the SEC Ripple ruling? Because that seems to set some great precedents with the case law that the token itself intrinsically is not a security.
• Exactly, I think that was a very important victory. And you’ll know Bitcoin was up five-fold last year, partly for that reason. I mean Coinbase, I mean.
• Okay.
• So, yes, I think that Coinbase is going to do us a great service through the court system, and the court system is going to do us a great system. You know, if you look back in history, we have had an experience like this before, it was when derivatives were launched and the SEC and the CFTC were vying for power over, regulatory power over derivatives. It went all the way to the Supreme Court, which this probably will. And that forced legislation so that both the SEC and the CFTC have a role in derivatives oversight, but those roles are clearly delineated and they don’t cross over. I think the same thing’s going to happen here.
• Do you think congress is gonna act this year? I know it’s a presidential election cycle, it’s gonna be nuts-
• Yeah.
• or is it 2025?
• You know, this could be an election year issue, and I think that’s one reason we are seeing so many congressmen getting so well educated on what this is. I mean, I heard Congressman French Hill a couple of weeks ago and I said, “Wow, he’s come up the learning curve so quickly and knows so much. This is fantastic.” Knowledge and education. Knowledge is power, education, obviously, is the route to knowledge. So, I think, yes, I think the odds, I don’t know how high they are, but in the next two years, I think the odds of legislation are very high. I don’t know how the election year complicates it. I do know that there are voters out there who are one issue voters and they are crypto voters, and I know that Washington is hearing that loudly and clearly.
• Oh, yeah, you’re absolutely right. I mean, I was so surprised by these presidential candidates, whether they’re Republican or Democrat, you know, talking about crypto, whether it be RFK Jr., or Vivek, Ron DeSantis. And I think just this week Donald Trump all of a sudden says, “I don’t like CBDCs,” and he’s also issuing NFTs on the Bitcoin ordinance. I’m like, “Wow.”
• Oh, yeah, yeah, yeah. Yeah, the CBDCs, is that right? CBDCs is more I think a question of privacy and state’s rights.
• Sure.
• I think that’s the angle he’s taking. He has still to fully come around I think on Bitcoin specifically. But, again, as he gets educated and learns just from the NFT experience, what this is, digital property rights, immutable digital property rights, he will come around as well.
• What are your thoughts on tokenization? We see BlackRock CEO Larry Fink talking about this, it seems this is a direction where traditional asset stocks, bonds, whatever it may be, will be on the blockchain 24/7 trading global markets, no opening or closing bell. You know, what is your outlook for tokenization?
• You know, you heard it from Larry Fink, if you’ve got a powerhouse, one of, I think the largest, I think the largest asset manager in the world, might be wrong, maybe there’s someone in China, but saying, “This is the way the world’s going,” there are two things you know, one, there must be a lot in it for BlackRock. And that could go either way, they’re trying to avoid being disrupted and they want to get on the right side of change or they see a way to make a lot of money in it. And I think taking middlemen out again is going to compress the kinds of fees. So, I think it’s a little bit of both that he wants to not be on the defensive, wants to go on the offensive or on the offense. And he probably does see a way to capitalize on it.
• Hmm, okay Cathie, got some wrap up questions here for you. The first is, if you could go back and tell your younger self or give your younger self advice on investing, what would it be?
• Advice on investing, I think in the early days of investing when someone’s thinking about investing in a new asset class, like Bitcoin for example, I think the mindset is, “You know, I’m going to do it,” and they put a lot on it, maybe too much early on. And what I believe everyone should do is leg in, average in. Whether it’s averaging down, that’s psychologically okay, your average price for getting in is going down. And if you’re right on the investment, it will turn around and you’ll pass that average pretty quickly. Or you’re averaging up, and that’s okay too ’cause there’s nothing feels better than appreciating asset. Right, so I think averaging in, and I do think while many people say, “Diversify, diversify, diversify,” there are other people who do say, and Warren Buffet is among them. Yeah.
• You know, if you see a big idea, if you believe, if you’re educating yourself that this is a big, a really big idea, then don’t diversify away from it as much. Now, the rules of the game as we address advisors means we have to take profits, we have to, we can’t let any stock or asset go above a certain percentage of the portfolio. That’s just kind of the rules of the game that they play by and the way you can get onto platforms. But I think for individuals, you know, if you believe you’re onto a very big idea, average in, one way or the other, weigh the evidence as it comes in. Are you feeling higher conviction or lower conviction? Especially if the price is going down. If you’re feeling higher conviction as the price is going down, that is a very good sign, a very good sign.
• Hmm, final item here, rapid fire questions. First is favorite food?
• Salad.
• Favorite musician or band?
• You know, this is a funny one, he passed away not too long ago and I missed him, but Tom Petty I’ll say-
• Oh, yeah.
• just ’cause I really loved him, I really did, and many people are trying to emulate him. He was the real deal.
• Yeah, you know, for years I found myself knowing Tom Petty songs and listening to them and humming them and I’m like, “Oh wait, that’s Tom Petty.”
• Yeah.
• And as I get older, I understood what was happening, but he’s great. Favorite movie?
• I am going to go with, I don’t know if you’ve seen the movie, it’s a Christmas movie and “It’s a Wonderful Life”.
• Oh, great, Jimmy Stewart.
• Yeah, Jimmy Stewart. And there’s so many lessons for people and it’s such a warm story and it is just delightful. It’s wonderful entertainment, I think, especially for families.
• Oh, yeah. Great, great movie. Favorite book?
• Well, II usually say “The Emperor of All Maladies”, which is the biography of cancer and there’s another book out called “The Gene” by the same author. Fascinating, but I’ll be very straightforward, even though we are in a secular setting here, it is the Bible. I’m amazed, amazed as I read, read, and reread it, how much richer it is. At first when I read the first was like, “Oh my gosh,” especially the Old Testament, “this is so dry.” But then as time goes on and I know other people are experiencing it, it’s just fascinating. Especially if you really study the history too and really listen to what the prophets are saying, or you’re like, “What, how could they possibly know?”
• So, yeah.
• Yeah, many great lessons, a lot of wisdom. I personally love Psalms and-
• Yeah, Psalms.
• It’s just a lot of, and sometimes you go, like you say, go back to it and it’s timely and it helps you in maybe a part of your life where you-
• And every time I read it, I’m in a different phase of my life, of course, and it means something different. It definitely relates to, because I sometimes I don’t remember reading it and I’ve read it a number of times, but I don’t even remember reading some of these passages.
• Yeah, absolutely. Final item here, favorite, or your hobby, your past time?
• I was, it’s kind of a joke, ARK is my vocation and avocation, that’s the… Because there’s nothing more fun than trying to put the pieces of the puzzle together. This is like a puzzle, trying to figure out how is the world going to work as all of these technologies transform it, and how quickly is this going to happen? So, it’s really fun, it’s just really fun. And of course, I love nature and walking and being with friends and, you know, so forth. But I’m just so privileged and blessed to be able to say what I just said to you.
• Yeah, that’s amazing, and I feel I’m the same way, that my wife may not like it ’cause sometimes I talk too much about tech and all these things, but and, you know, I’m the same way. I think about human psychology, human behavior, tech, and the change in life and civilization. So, anyway, I will let you go because I took a lot of your time. Thank you so much.
• No, this was fun. Thank you so much, and we’ll do this again.
• Absolutely.
• I’m looking forward to the-
• All right.
• Big Ideas on Monday so that will be good.
• Yay. Yeah, the deadline’s Monday, it’ll be out.
• Okay.
• The debut is sometime next week.
• Oh, okay.
• Deadline for me is Monday.
• Monday, yeah.
• Awesome.
• So.