Building Innovative Crypto Trading Infrastructure with John Peurifoy, Co-Founder & Chief Executive Officer, Floating Point Group. Raghu Yarlagadda, Co-Founder & Chief Executive Officer, FalconX. Basil Al Askari, Co-Founder & Chief Executive Officer, MidChains. Kapil Rathi, Co-Founder & Chief Executive Officer, CrossTower.
Moderated by Michael Bodley, Editor-in-Chief, TheStreet Crypto.
SPEAKERS
John Peurifoy
Co-Founder & Chief Executive Officer
Floating Point Group
Raghu Yarlagadda
Co-Founder & Chief Executive Officer
FalconX
Basil Al Askari
Co-Founder & Chief Executive Officer
MidChains
Kapil Rathi
Co-Founder & Chief Executive Officer
CrossTower
MODERATOR
Michael Bodley
Editor-in-Chief
TheStreet Crypto
TIMESTAMPS
EPISODE TRANSCRIPT
Michael Bodley: (00:07)
Awesome. Well, thanks so much for being here. Good to see some familiar faces in the crowd. Just a quick introduction again, we've got John from Floating Point here, Ragu from Falcon X, Bazel from Mitchains, and we've got Kapul from CrossTower. So, bit of background about myself. I'm a former hedge fund journalist who fell down the crypto rabbit hole at some point like everyone else. And I saw more and more portfolio managers at places like Millennium, Point72 had nice cushy jobs leaving to get into crypto, going back to 2017. I'm like, "What are they doing? Why are they doing this?" And eventually I decided to try and play some catch up. So, with that said, I was hoping that all of you could go down the line and kind of give, to use some superhero talk, your crypto origin story. What got you into the space?
John Peurifoy: (00:55)
More than happy to take it first. Although Michael, I can't quite compete with the seeing other people and jumping in, because I think that was the origin of how I got in. So, previously I was a researcher at MIT. I did a lot of work in data analytics and things like that. So, I did a lot of work in taking large sets of data, extracting patterns from them, analyzing trends and things like that. And I solved various problems in physics with that. But numbers are numbers. And if you've ever seen the movie Margin Call, there's a good quote, says the money's a little better in finance than rocket science. And so I joined the crypto space back in 2017, initially working as a fund and then previously transitioned to kind of being more of a services provider, doing execution settlement, things like that.
Raghu Yarlagadda: (01:36)
Great. And I started my career as an engineer, specialized in machine learning. After that I'm a senior entrepreneur. Started two companies. Got very lucky with both of them. Then someone gave me terrible advice. Engineers must go to business school. So, went to Harvard business school. Right after that, I joined Google. At Google I led a product line called Chromebooks. Did that for three years. Got incredibly lucky. It's one of the fastest platforms in Google in terms of revenue growth. Towards the later part of Google, some of the brightest engineers that I know were not shutting up about blockchain. And for me as an engineer, blockchain is probably one of the most inefficient databases that's out there. Say, "What are you talking about?"
Raghu Yarlagadda: (02:19)
But all my life, I chased the brightest engineers on the planet. So, I have nothing to lose and I partnered with them and we started jamming ideas. After a year of working with some of the brightest engineers on the planet, I had no question in my mind that a lot of world's value will be tokenized. Starting with crypto. We are seeing stable coins in the form of Fiat getting tokenized in the form of stable coins. Eventually fortune find the tokens. And CBDCs. So, super excited to basically jump on that mega trend. So, started building Falcon X about three and a half years back.
Basil Al Askari: (02:56)
Thanks everybody for having me here today. It's a real honor to kind of be around these role models in the space here. So Bazel [inaudible 00:03:04]. I think I'm the only guy on the panel here whose business is originally from Abu Dhabi, UAE. And previously I was in private equity. I looked at direct investments in the financial services sector. Bitcoin and crypto investing kind of caught my eye in 2016, 2017 on a personal level. And really just wanted to get involved from the perspective of seeing how we could get this industry to Abu Dhabi and to see how it fits in the space there. And three years later, we've got a licensed trading and custody venue.
Kapil Rathi: (03:40)
Hi guys. My name is [Kapul Rachi 00:03:41] . Thank you for having me here. My journey, I think I'm probably the most different one among this panel coming from a traditional wall street space. I started my journey on the floor of New York Stock Exchange. Had a technology background, but after spending seven, eight months on the floor of New York Stock Exchange in 2003, I realized that this yelling and screaming and trading is not going to last that long. So, I pivoted towards electronic trading. I helped build couple of electronic options. Exchanges, IIC, bats, then ended up at CVOE. And then in 2016 and '17, I got involved into a few projects at CBOE at bats, the first ETF on Bitcoin, the future's on Bitcoin. And this sort of kind of hit me that what electronic trading has done to the traditional trading market, the way we knew floor exchanges. Finance generally has not been disrupted by technology.
Kapil Rathi: (04:46)
We know Apple, Netflix, they have been disrupting many other industries, but I think the banks have done an amazing job in protecting their turf. They know how to play that regulatory angle. I think electronic trading is probably the only space till now that has touched the finance industry and digital asset is probably going to be the next innovation that has the power to disrupt. So, for me, it was almost like a dejavu moment. I got to jump in this. I'm not going to be one of the floor traders sitting on the other side. Here I am in this rabbit hole.
Michael Bodley: (05:24)
So, crypto gets a lot of headlines where we're all talking about the institutionalization of the space. Right? What Wall Street bank is going to be jumping in in next? What kind of traditional hedge fund? But then you stick a step back and you look at the flows and it's still mostly dominated by retail investors. So, just kind of throwing out for the room a two part question here, which is the first, would you agree with that categorization that it's still a retail space? And when you're building your trading platforms, these guys have some of the best trading platforms in the business, how do you cater to both retail and institutional investors? Because they have both very different needs in terms of order flow, in terms of best execution, even in terms of counterparties. Right?
John Peurifoy: (06:04)
So, I'm happy to maybe take the first part and then I'll defer to the experts for the second. So, I agree with you. Retail dominates the space. Right? You can see that in public filings, you can see this in analysis, you can see this in just general discourse. Right? You can look at the Coinbase filings and still the majority of their volume's coming from the retail. And that's not assumed to be kind of dominated by institution until 2024, 2025. But I think the important comment to say about the institutional side is I would kind of split institutions a little bit. I think it's a little bit unfair to generally categorize them. You're definitely seeing a lot of institutions in crypto. Right? You're seeing Renaissance. You're seeing HFT firms. You're seeing a lot of groups. But really I think a lot of that's more prop trading capital, more family office, things like that where their regulatory burdens are lower. Right?
John Peurifoy: (06:47)
Their mandates are more broad. Their regulatory filings are less stringent. More of the actual more say pension funds or insurance, things like that, I think that's definitely still taking time getting into the space. And you're seeing that. Right? And in particular you're almost seeing them choose different ways of allocating that. Right? You saw that with [Andreson's 00:07:05] raise of 2.2. You saw that with [TenT's 00:07:05] raise of 750 million. Right? You're seeing them almost allocate to kind of funds of funds or more crypto native funds. And that's how they're getting that exposure. So, I think it's definitely true. Retail dominates the space. It will for some time. But institutions, I think, it's more interesting to kind of split it up and think about how are they thinking about the allocation side. But maybe the second question in terms of technology, be curious to you guys' thoughts.
Raghu Yarlagadda: (07:28)
Yeah. In terms of the split, I do think institutions are almost at par with retail. Now the measurement systems, if you look at it, the coin market caps and the exchange flows, that is one part of the overall flows. There is a lot of institutional data pool trading that's happening. Over the OTC desk and the rest of the places. So, I think about half the volume in the space is actually institutional. And the second very interesting artifact is institutional is not only half, but it's growing incredibly fast. If you look at the amount of volumes on Binance, the most recent quote that I heard is it's about 60, 70% is institutional market makers that are on there. Now the question is, yeah, it's a small collaboration whether retail or institution is bigger. Institutional is growing incredibly fast. That has proven over the last three years.
Raghu Yarlagadda: (08:19)
And in terms of what type of institutions are coming, there is a sea change in terms of the type of institutions. When we first started the company for two years, it was quote unquote the crypto natives, AKA the hedge funds that are built in crypto, buy crypto, and only crypto. From the last year, especially May 2020 onwards, we went from 80% crypto native on Falcon X, which is the largest institution platform, to about 50% is crypto native and 50% is traditional institutions. So, that's a huge change. Now the last part, before we go to the technology side of things, why are institutions coming? I typically hear three things.
Raghu Yarlagadda: (08:58)
The first and foremost, Bitcoin being an inflationary hedge. That is something that is very important for institutions, especially as the world is printing a lot of money. The second thing is uncolation with the traditional asset classes. The third thing is the yield generation. When your banks are paying zero on 40 basis points, crypto in different form factors is paying about 400 to 600 basis points simply because the volatility is there so the traders are willing to take that money and fund their positions. As a result, the interest rate of the yield generation is very high. As a result, institutional growth is happening, but I completely agree with you guys that it's debatable which is big.
Basil Al Askari: (09:38)
I definitely agree with all the points raised and maybe to add further to that, what at least we're starting to see is kind of a convergence of interest from institutional retail. Having to cater to both types of investors from the same venue to maximize kind of liquidity exposure. And, at least as an international farm, what we're trying to as well build up with our infrastructure is to be able to offer a window for international institutions to get exposure to this very big kind of retail investor base that we know exists. And that at least dominates in my part of the world for now.
Kapil Rathi: (10:14)
So, I'll probably take a little positive view. I think 2017 bull run was all about retail. 2020 bull run, '21 bull run is about institution. What we have seen, and for those who don't know CrossTower, we are an institutional focus, a Wall Street grid infrastructure exchange. When institutions in 2020 started coming, they quickly noticed that there are certain fundamental gap in this infrastructure. The prices to trade are still very high. The market is really fragmented. There is no best execution benchmark. The products that institutions need to come in this market space, trade financing, portfolio margining, these products don't really exist. Investment products are really limited. They're very opaque. The best you can do is gray scale, which trades 20% up and 20% down. So, I think institution demand started happening in 2020. The infrastructure probably was not ready for this institution demand.
Kapil Rathi: (11:22)
In last one and a half year, operators like Falcon X, us, we have started kind of satisfying the demand. And that has helped explode the growth of institution. If I break it into two part institution as market makers, high frequency market makers, they didn't have a place to go with the Coinbases and the Krakens of the world. Now they have platform where they can actually manage risk properly. Same thing on the institution side. The custody has always been a problem. Now we have qualified custodians. So, I think in the last one and a half year, the story is all about institution. Retail honestly has moved on beyond the CFI. They are now in DeFi. And that's one area where I think institution is still kind of lagging behind.
Michael Bodley: (12:12)
Custody is a really important aspect of this. Right? Just convincing institutions that you are a good, safe place to store their assets. Many of which may not understand how to do that themselves. So, I'm wondering when you all are offering custodial solutions or you're talking to counterparties who might offer them, how do you vet that? And then what's the educational piece where you're going after potential business development, potential new clients, and convincing them that this is the right way to go about doing it?
Kapil Rathi: (12:42)
Yeah. I'll take this, John, maybe in the reverse order from here. Last week, two weeks ago, we were in Texas. We were presenting in front of 400 pension funds. And the type of cautions... We actually asked the question, "Anybody here invest in crypto?" Literally five hands went up. So, the fire fighters, policemen, these sort of standard fire pension funds, I think they are still craving for a lot of education. There were some really fundamental questions about how do I know it's not illegal. A big portion of traditional large asset group is still skeptical about this asset class.
Kapil Rathi: (13:39)
We actually just participated in a survey with the asset managers, endowments, pension funds, they highlighted three main issues. Why they are sitting on the sideline. Number one is education. They still are not clear of what this a asset class is able to. So, us as an industry, we have to do a lot of work to educate pension funds and endowments. Number two is regulatory uncertainty. I think until we have a clarity from DC, we will see some of these large asset managers and pension funds sitting on the sideline. And then number three is operational risk. Managing private keys, managing issues related to cyber security. They are front and center of these institutions. They are still looking to kind of find the solutions.
Kapil Rathi: (14:34)
Funds like us try to kind of ease it out for them. We create wrapper for them to get exposure to this asset class, without worrying about these type of risks. We have created products that are very similar to other products they are investing so they're getting market exposure but they're not worried about the regulatory exposure or an operational exposure. So, there's a lot of education that still need to do. There's an opportunity to innovate products, to bring institution in this system.
Basil Al Askari: (15:04)
Definitely I agree with that. I think the goal is to get institutions interested in acquiring spot exposure to the asset. And I think that's been less popular because of all the reasons that that were just raised. Where I kind of see things moving in a different order, from at least a Middle East perspective, is that regulations seem to have come first for us. And having now this very clear framework, the next step is to then educate the general market on how we're doing things within the regulatory framework. That this regulatory framework exists and that we are operating under it and heavily scrutinized by it in order to provide that comfort. And sort of with that comes the technology governance, governance associated with getting these licenses, and also the very institutionalized workflows and processes when it comes to custody in particular.
Raghu Yarlagadda: (16:02)
Yeah. I think if you look at what institutions care about, the first thing is custody. Trading credit. So, these are three things that institutions care about. Custody. I need access to the safest custodian possible, which gives me the ability to diversify my portfolio. It's not just about Bitcoin anymore. That was 2017. It's about Bitcoin, Ethereum, and a lot of people are talking about a lot of layer one solutions similar to Ethereum. So, talking about the custody part of it, 2017, it was a nightmare. Why is it a nightmare? It actually very difficult, fundamental problems solving crypto. You lose your private keys, you lose your money. It's as simple as that. That was 2017. From 2017 to 2020, one of the fundamental shift in the ecosystem is how seamless custody has picked up. Right? The reason why it became seamless is you can not simply go to one custodian and then park all your assets there.
Raghu Yarlagadda: (16:56)
That was 2017, 2016. Now what some of the biggest hedge funds on the planet, what they're doing is whether it's Falcon X or players like anyone on this panel, they come to us and they look for how do we think about my custody strategy. From that standpoint, we understand whether they are thinking about Bitcoin and Ethereum only, or are they going to be much more diversified? So, what we are doing is based on their needs, we help them pass to custody solutions. Sometimes to cater to Bitcoin specifically, sometimes to cater to Ethereum, Solana, and some of these other tokens. So, lot of hedge funds are now taking up multi custodian path through our white glove service providers like Falcon X or any of those brokerages in the market. As a result, it became much, much more seamless. So, in 2021, if you were thinking about [assets 00:17:47] , custody is not the first thing that you think anymore. That was 2017.
Raghu Yarlagadda: (17:51)
And I think that's going to become far more seamless because security in the space took a leap frog in terms of what happened over the last three years. If you look at the number of exchange hacks, they're actually coming down over a period of time. So, that's a good move because all the players are collaborating on the back. We see a sense of security hack anywhere in the industry, all of us are talking in terms of how to improve the industry going forward. So, custody, I think, it's a largely solved problem, number one. Number two, it's the approach to custody these days is multi custodian footprint where you're not just relying on one custodian through whoever your brokerage is.
John Peurifoy: (18:30)
Yeah. I think Ragu's point on this is actually really good. I'm really glad you asked this question. Right? I think it's something that I'm really passionate about. And if you think about it, crypto solves two of the hardest problems in society. Right? It solves data privacy and it solves worker automation. And I think those are really fundamental problems, but the question is why don't you see crypto see larger adoption? Or why do you see crypto being more so used for speculation reasons instead of the others? I think the reality is it's a different framework. Right? Crypto is a bare asset. That is a very foreign concept. Right? That is a reality and a factuality, which both empowers it to be such a disruptive technology, but at the same time contains massive risk. Exactly as you were phrasing, if you lose your private keys, you lose your money.
John Peurifoy: (19:06)
And so I think since crypto's a bare asset, it's something that is very top of mind and people talk about a lot. I actually think the point made about kind of the diversification of people on the custodian side, I think it's very fair. Right? That's something that we kind of saw and it's something that we've observed in the space where when you talk to people about custody, it's really a broader conversation about risk. Right? It's really a broader conversation around what are my exposure points? Where can I be vulnerable from a technology side? Where can I be vulnerable from a counterparty side? Where can I be vulnerable from pricing side? And so I think when you start thinking about it in that way, kind of talking about it as a custodial strategy, I think that's actually really beautiful terminology for it. And I think you're right on the technology.
John Peurifoy: (19:42)
And I think what you guys are mentioning on more of the regulation side, I think is very true. Right? In the US, it was pretty crazy when the Office of the Comptroller came out and said, "Yeah, banks can actually start custody in crypto." Right? And you saw that after July of last year, you really saw proliferation across most of the system. And I think that the reality is that while the technical side of this can be well understood. Right? There's technologies like MPC, hot wallet, cold storage. Right? These are things that are well understood. I don't think it's true that they're well understood in the regulatory frameworks. And I don't think they will be for a while. That's why you saw banks coming in with non-deliverable forwards because they can structure them under is does and it's much more straightforward framework. So, in some, I would say I think custody is something top of mind for people.
John Peurifoy: (20:18)
I think when you think about crypto, that is a paradigm shifting idea that is going to be with us for forever. And I think you're always going to see two classes of people say my keys, your keys. Do I keep them here? Do I not? There's always going to be these ideas. Think about it from a custodial strategy, I think it makes a lot of sense if you're an institution. So talk. These are conversations that we have. I assume similar conversations across the rest of the panel. And I think the other side of it is being mindful of the regulation. Right? And being mindful of how that's changing over time, because it's really funny how you were actually mentioning that different places were being more innovative than the US. Because I agree with you. I think actually the US is far behind a lot of that. So anyways, that's how I think about custody. Right? I think this is something top of mind. I think technology is getting there and it's getting pretty good. I think the regulation will take a little bit of time to get there.
Michael Bodley: (20:59)
Branches mean exactly what I was going to ask next, which is regulation. I'm sure everyone saw lots of headlines about the infrastructure bill. Right? Lots of concerns in the US about regulation. So, just the kind of broach the third rail here, do US regulators at the federal level understand cryptocurrencies? And do they understand your businesses?
John Peurifoy: (21:20)
Someone else want to start with this? The blockchain caucus is really cool.
Kapil Rathi: (21:22)
Yeah, I'll go. Of course, after spending 20 years in that regulator world have helped for SCC regulated exchanges working. It takes two years to work with SCC to bring something new. Those who don't know, if you want to build a regulated entity in US for crypto, it's a totally fragmented structure. If you are trading derivatives, it's regulated by CFTC. If you're trading spot, you have to get license from treasury and then you have to get licenses from 50 different states. And most of these states... Forget about the lawyers in DC don't know how fast this blockchain and crypto technology is moving. Expecting a state regulator to understand what is blockchain? What is crypto? I think it's just not fair.
Kapil Rathi: (22:19)
It is really hard to operate a regulated infrastructure in US at this point. And my past experience has told me that regulation has sometimes benefited an industry. I kind of help grew up in the options industry. Equity industry. When reg NMS came in, it brought cost down for customers back in '04, '05. Retail wasn't even trading options. It was only a professional or an asset class for nerds. And then now everybody's trading options. That has a lot to do with regulation, because now we have put together proper investment protection mechanism in place. Those things don't exist in crypto. Overall, I think we need a proper regulatory infrastructure. The current structure is not healthy especially when we are competing with some other nations. Switzerland and Europe is well ahead of us. Let's see where it goes. Of course there is a lot of tussle between SSE and CFTC, but we need to have some proper regulation in this.
Basil Al Askari: (23:37)
I can't really comment necessarily on the situation here, but what I can say is about fragmentation and we look at regulatory fragmentation globally. I don't think that's a unique problem to the jurisdiction here, but it's a global problem. And we're starting to see certain regulators look at the space and how things should be regulated in very different ways. Even in neighboring countries in the Middle East, for example, or neighboring cities in the Middle East that have different free zones. What the takeaway there is that until there's a good precedent for rules to be set and processes to be followed. It's going to be drastically different depending on where you are and which regulator is looking at it before it gets uniform. And I think the uniformity is kind of where we need to be as far as setting up globalized infrastructure.
Raghu Yarlagadda: (24:33)
Yeah. Completely agree with that. Number one, institutions care about regulation. Period. If you expect crypto to be a mainstream asset class, you cannot have crypto without US institutions participating. US institutions will only come if the regulatory clarity is better than where it is. But the amazing news is over the last three years, there was a sea change in terms of how regulators approach crypto. For three reasons. First and foremost, I think this is not as talked as often, but this drives industries. Right? Whether it's internet or e-commerce. The amount of venture funding or the amount of equity funding with all of us that can help us educate regulators and help navigate regulation is one of the most important metrics for an industry to become mainstream. In the early days of internet, this was exactly the problem. People don't know how to process payments. Regulators didn't know either. E-commerce. E-commerce was banned from the country that I come from. India e-commerce was banned.
Raghu Yarlagadda: (25:34)
So, the largest e-commerce company in India was based out of Singapore. So, what happened is in whether it's internet or e-commerce, venture money, getting confident that crypto is the next big thing is the single most important tipping point. And that happened around 2018. If you look at the number of crypto companies and the amount of money that all of us put together raised is staggering them up. So, the first thing that we are going to do with that money is to make sure that we play really well with regulators. So, we are spending a lot of time educating regulators. So, number one, we are using all the venture money to make sure that regulators understand and come up with the framework. Now, once we have the willingness to pay, willingness to do, is there a willingness to do or come to the table from the regulatory standpoint?
Raghu Yarlagadda: (26:25)
Absolutely. Yes. Infrastructure bill definitely was very noisy because of the collapsed timeline that it came with. But the amount of limelight crypto got in a close to a trillion dollar infrastructure bill where 50 billion dollars, or 35 to 50 billion dollars was related to crypto. The amount of limelight crypto got was just incredible. Those conversations are still going. So, what that means is we are actually seeing collaboration from the other side. Number three, regulators also understand that two pressure points if they don't solve regulation for crypto. First is decentralized finance. For those of you in the room who are not familiar with that, this is like finance without any middlemen. What that means is with or without regulators, decentralized finance is just spiking up significantly. So, it's important for regulators to understand that decentralized finance is spiking up so that we better regulate the crypto markets fast enough. Otherwise, a lot more people will transition to decentralized finance.
Raghu Yarlagadda: (27:21)
The second thing is there is competition between countries. There is a massive competition in terms of the global reserve system. The global currency of the future. So, from that standpoint, whether it's China testing its own CBDC or El Salvador legalizing Bitcoin as the legal tender, there is enormous pressure for regulators to move in. I think for the next two to three years. However, I don't think all of this is going to happen in six months. The next two to three years, regulators are going to provide a lot more clarity, which is going to be super helpful for institutional investors. But the one thing that's different from 2017, 2018 to 2020 is most of the hedge funds who are coming, the five or top ten hedge funds are already in crypto. They see this as the future. They're in crypto, they're working with regulators all by themselves. They're also working with industry to navigate this. So, I'm quite optimistic, but definitely at least here in the US, there is a major bridge to cross. I completely agree with you guys. It's fragmented.
John Peurifoy: (28:24)
Yeah. Coindesk has a really good podcast on this where they actually interviewed some of the senators involved with the infrastructure bill. So, if you guys are interested to learn more, a hundred percent highly recommend it. Shout out to the team there who are kind of crafting it. Regulation is fertilizer. Right? That was a really good quote that the CEO of Wisdom Tree once told me. And I think it's really true. Right? The reality is institutions don't want to touch something unless it's regulated. And as we were talking about earlier with Bazel, the reality is that you took three years kind of getting it right with the regulators in order to make sure the institutions were comfortable touching that. Right? Full stop. That makes a lot of sense. And I think that it's certainly true. In the infrastructure bill, particularly, it's quite interesting.
John Peurifoy: (29:00)
Fred Wilson also has a really good quote that says if you consider it back to say when the Internet was coming out. Right? The two big questions were data encryption. This was a foreign concept to people. Is it valid? Is it a safe way to do it? How is on-prem versus cloud? How do these things work? Right? And then the second question was around actually how you do taxation. Right? How does sales tax work state by state? And it's interesting because you really saw a very focused group, both by the private industry at the time, as well as by various consortiums to really educate people about this.
John Peurifoy: (29:29)
And I think you're right, the limelight that crypto got out of the infrastructure bill was actually pretty compelling. Right? What it's argued to generate about 20 billion dollars more in revenue out of it. But the reality is that we probably got more than... I don't know if we got more than 20 billion. 20 billion can buy you a lot, but crypto got outsized exposure unquestionably, and I think it's certainly fair that the fact that the amendment didn't actually get reworked or an amendment got passed. Right? There were two different amendments proposed. One just striking it entirely from the bill. The second actually reworking it to at least give better definitions over what institutions are. Right? That was the big point of contention in the bill was really what is an institution? Are you going to require everyone in crypto to report? Certain groups? How do you kind of play those angles?
John Peurifoy: (30:08)
So, I think with respect to the infrastructure bill, I think it was very exciting because it definitely gave a lot of attention to a lot of the key issues. I think how this question gets solved is I think it gets solved through very dedicated and focused education. And I think it's going to, honestly, this is kind of an issue that it'll be make or break in the next year. It's actually going to probably be really interesting to watch because I think it has the potential to really shape the future. Right? And I think that's the really exciting part. Yeah. And you're exactly right about DeFi. What DeFi is right now at about 80 billion dollars locked in protocols. It was at 20 billion in March. You're seeing a four X gain. It's unquestionable that if people are going to be serious about this space, you have to tackle these questions. So, anyways, those are kind of some of the thoughts on the infrastructure bill and regulation in general.
Michael Bodley: (30:46)
So, as Ragu put it, there's a competition between countries. Right? Who's going to get this done first? Who's going to get this done right? There's also a growing competition for talent. Right? In the space. And I'm wondering, I was talking to an equity trader, who will remain unnamed because he's happy at his current job, earlier today who was saying he's interested in making the jump to a crypto firm. Right? Doesn't know a lot about it. Doesn't know how to trade it. But wants that kind of a seat. So, you all operating growing companies, when you're looking to make a hire, do you care how much crypto experience someone has? Are we at that point in the cycle? Would you be comfortable hiring a talented derivatives trader to help build out your infrastructure from a Wall Street firm? How much is this crypto native versus not argument matter?
John Peurifoy: (31:29)
Yeah. Okay. So, I'll actually give a controversial answer to this. I'd be actually really curious what you guys say. So, we work very much in technology. Right? So, we're building systems like enabling institutions to be able to trade directly on exchanges, enabling institutions to take advantage of things like staking or things like that. Right? These are things that are near and dear to our heart. So, I think the reality is that now in the space, it depends on the role. Right? I think if you're looking for a back-end engineer to build something or you're looking for a front-end engineer to kind of get it done. Yeah, I think that's reasonable. Right? Or you're looking for someone on the op side of the business. I do think it's reasonable on the sales side. And if you're doing roles, building actually on chains themselves, I think those are actually where blockchain experience is starting to be more critical. So, I'd say unquestionably, everyone can still break in. But I do think you're starting to see some of the sea shift, at least in terms of specific roles. Be curious what you guys are saying.
Raghu Yarlagadda: (32:20)
Agreed. I think the most important nuance is by function. If you are thinking about an engineering role, whether you worked on four X, whether you worked on traditional equities or crypto, for the most part, it doesn't matter. A lot of crypto infrastructure today, about 90% of the volume flows on crypto, flows on centralized systems. And these centralized systems are very similar to how you actually architect traditional equity system. So, if you're thinking about a software engineer, there's no issue at all. You need to jump to crypto ASAP because we are hiring. So, there's lot of interest in terms of bringing people from the traditional space so that we don't reinvent the wheel all the time. But exactly as what John pointed out, there are functions where crypto experience is very, very helpful. Sales on the market making side. When you're selling to the projects that are out there, if you're acting like a Goldman Sachs taking Snowflake public, you better understand everything there is to understand about Snowflake. Those places, the crypto experience counts.
Raghu Yarlagadda: (33:24)
But, in summary, as a much more broader statement, crypto is still in the very early stages. We are in the second or third innings of crypto. So, if you're considering or thinking about crypto, now is a good time to jump in because this is going to be the next 10, 20 years of finance. Because what finance really cares about is three things. Right? Can it be truly 24/7? I still can't believe that most of your banks, most of your trading, doesn't work over the weekend. Would you be okay if Google and Facebook doesn't work over the weekend? So, how are we all okay with traditional infrastructure not working 24/7. So, it's not crypto, it's digital assets. And digital assets provide you 24/7. It's truly elastic and it's truly global. And any kind of talent who's excited to basically make these three things happen need to come to Falcon X. We're all hiring. Falcon X is also hiring.
John Peurifoy: (34:11)
Yeah, I was going to ask we're all hiring, I assume. Right? Like very rapidly.
Kapil Rathi: (34:16)
Yeah. Can't wait.
Basil Al Askari: (34:19)
Yeah. So, definitely agree with you guys. It really depends on the role, but I think in general, in the Middle East for example, talent is scarce. Specifically talent with crypto experience. So, I'd say more often than not, we let people break in. Especially when it comes to ops rules. Ops rules, I think, are the easiest for people coming out of traditional finance to kind of readapt themselves and just learn the products and really what they're operating. And it's just workflows at the end of the day. So, fully agree with the rest guys.
Kapil Rathi: (34:51)
Yeah. So, I have sort of kind of two comments to that. Number one, it depends on the company's mission. For someone like us, our mission is to bridge the gap. Bring digital asset to mainstream. Especially we are institution focus. So, for us, the traditional Wall Street talent actually is working out really well. Of course, there is always a demand for tech talent. For a company who's actually building a DeFi protocol, probably the Wall Street talent is not going to be helpful. I think the two main challenges as the operator of am institution focused business, number one, COVID has changed the whole landscape about hiring and talent. You can't really compete with the exchanges or operators in Ukraine or China or in Asia somewhere, because the talent outside of US is much more economical.
Kapil Rathi: (35:55)
So, bring that has been the sort of biggest challenge for us is of course Wall Street demands a pretty good substantial amount of investment if you want to bring that type of talent. And I think overall we are looking at both outside and inside. We actually in fact just launched CrossTower India and we are hiring Wall Street caliber talent from there, not just necessarily technology compliance, regulation, legal. So, any crypto infrastructure you're building, you have to see it as a global. Get a dip into the global talent pool. Just the staying local talent pool is not going to help because you're competing with some really cheap or at least low expensive operators out there.
Michael Bodley: (36:43)
Yeah. Well I think we're up on time. Thank you all so much. Don't forget to drop your resumes off with these guys in the back and we'll see you at the happy hour.