Money Talks: The future of crypto, part two

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It feels like crypto is on trial. The fraud trial against disgraced cryptocurrency guru Sam Bankman-Fried is underway in New York City. The 31-year-old ran FTX, one of the world's largest exchanges, before the entire enterprise came tumbling down late last year. Prosecutors say he knowingly lied to customers and took the money for himself. He denies any wrongdoing. Lawyers for SBF, as he is known, have yet to present his legal defense. But in his tweets, in testimony he prepared for Congress, and on his Substack, Sam has laid the blame for the collapse of FTX on a few people, including Changpeng Zhao, or CZ, the boss of rival crypto exchange Binance.

In a way, he created Sam.

That is Michael Lewis, the author of Going Infinite, a book about the rise and fall of Sam Bankman-Fried, who we interviewed on last week's show.

CZ blessed him. CZ not only invested in him but had him do his conference, had him on stage. CZ sort of conferred a credibility on Sam. So he was important in creating him.

But over time, relations soured between the two men. SBF ultimately bought CZ out of FTX. According to testimony by Caroline Ellison, who ran Alameda, the hedge fund SBF controlled, SBF spent much of his time in 2022 trying to get regulators to crack down on Binance.

You know, it's hard to know how mistrust happens, but everybody's on pins and needles by November about crypto. Sam has been playing this role of the last man standing. The balance sheet of Alameda gets published, creating some doubt, but it really isn't until CZ starts tweeting about it that there's this big run.

With FTX out of the picture, it is CZ who now looks like crypto's last man standing.

This is where our story begins. Join me on Binance.

To the moon. Binance is where around half of all crypto trading takes place. But unlike SBF, who was a regular on television and who gave Michael Lewis an all-access pass to his life, CZ tends to spend less time in the spotlight. What we do know about Binance is not all positive. America's Justice Department has long been investigating Binance for possible money laundering and criminal sanctions violations. For a long time, the firm had no official headquarters. But in the wake of the collapse of FTX, new rules are being written for the industry. And the picture CZ paints is of a firm enthusiastic to comply.

We actually have the most largest number of licenses or registrations.

On this week's show, what does crypto's last man standing have to say about where it is headed next? You are listening to Money Talks from The Economist. Our weekly podcast on the markets, the economy and the world of business. In Washington, D.C., I'm Alice Fullwood.

In Riyadh, I'm Tom Lee-Deblin.

In Singapore, I'm Mike Bird.

And today, the second of two shows asking what the future is for crypto. This week, an interview with CZ.

First, we hear what he would do differently given how the FTX saga has played out.

I would get much less involved. Knowing what we know now, I don't think we would have invested at all or even went anywhere near it.

Then CZ tells us how he sees his role at Binance.

I'm on Twitter a lot. I'm doing all the useless stuff.

Finally, does crypto really have a purpose?

Just because this year or this past little while is a little bit boring, relatively speaking, doesn't mean the technology is not useful.

Mike, Tom, hello.

Hey, Alice.

Hey, Alice.

Tom, what are you doing in Saudi?

I'm here for an event called the Future Investment Initiative, or Davos in the Desert, as it's colloquially called. It's this big get-together of finance and business types from all across the world, really. It's kind of a slightly more commercial version of its counterpart event in the lovely ski resort of Davos in January.

You're not going dune buggy-ing with Jamie Dimon then?

He is here, but sadly I will not be riding a quad bike with Jamie. No, not this time.

Well, jetting off to the Middle East to talk to important executives seems to be something of a theme in the lives of Money Talks hosts at the moment. A couple of weeks ago, I flew off to Bahrain to interview CZ for this week's episode. Tom, last week we heard your interview with Michael Lewis. Who ended up becoming one of SBF's closest confidants as his crypto exchange FTX collapsed. Yeah.

And there's a kind of interesting dynamic here actually, because as we heard from Michael Lewis last week, SBF seems to credit CZ with creating him in some ways, but CZ also arguably played a significant role in SBF's downfall.

Yeah, I'm looking forward to the soap opera version of this story eventually coming out.

Yes, I can definitely see the Prime Video or Netflix series that will emerge from this one in the coming years. I think it's safe to say that after a pretty friendly start to the relationship, by November of last year, CZ and SBF were not exactly the best of friends anymore.

Right. And after the collapse of FTX, a lot of customers of crypto exchanges might be worried that their money is not really safe inside any exchange. That's not exactly great for CZ as the boss of by far the largest crypto exchange.

So what is he doing to try and change that impression?

Well, for one thing, he spoke to me. He's not someone who does a huge number of interviews, although he does tweet quite a lot.

So how did it come about?

Well, The Economist recently hosted an event on the future of fintech in Bahrain, and we invited all kinds of traditional finance, fintech, and crypto types to speak at this event. And CZ, we wanted to do a fireside chat on the future of crypto.

And what did you think the main message was that he was trying to get across in that interview, Alice?

Well, depending on how you look at it, this does feel like it could be a crackdown on it and make it go away moment for crypto. The SEC, which is America's chief markets regulator, has brought suits against Coinbase and Binance saying that they're operating unlicensed crypto exchanges. SBF is on trial for fraud. And although all of them deny doing anything improper, I think for a lot of haters of crypto, of which there are many, it feels like time to start dancing in the graveyard.

So I presume that is not the way CZ hopes things are going.

Yep, exactly. Because you also could think of this moment as the coming of age time for crypto. Europe has used the FTX scandal to push through some sweeping new legislation to write the rules for the industry. And if crypto was this kind of lawless Wild West before, that's partly because there were not that many rules that had been written for them to comply with. But as regulators take it more seriously, it is now possible for crypto firms to be transparent with authorities, to get licenses to do what they're doing, and all of that should help their customers have more faith in the exchanges that they're parking their money with as well.

So basically crypto firms are being told grow up or get crushed.

Yeah, perhaps not in so many words, but it certainly feels like they're facing this choice and Binance seems to be choosing to grow up. It was once thought of as this shadowy giant with no headquarters and CZ now boasts that Binance is the most licensed crypto firm in the world.

And what does that actually mean? Because I read your piece about your interview with CZ, and it says that Binance's American arm is licensed to operate in 44 US states. Now, obviously, what they're licensed to do in the US is, well, I presume, different to the other licenses that they hold.

Yeah, that's right. It's pretty complicated, partly because Binance US is a separate legal entity to the rest of Binance, and partly because at a federal level, the SEC FCC has said that Binance is operating an unlicensed exchange. Still, as you mentioned, at a state level, it does have a lot of money transmissions licenses in most states. That means Americans in those states can deposit money and buy and sell crypto on this US subsidiary. Elsewhere, licenses can be far more expensive. So people can do things like buy and sell cryptocurrencies, but also trade things like crypto derivatives, which are these contracts that allow people to bet on future performance of digital assets.

But by the sounds of it, they probably shouldn't expect to be able to do anything like that in the US anytime soon, right?

Yeah, it does seem unlikely, although there is an election in a year's time, so who knows what will happen with regulators after that. But the real test, I think, for the firm is going to be in Europe, which is where legislators have written this Markets in Crypto Assets, or MiCA framework, which came into force in June. There is a transition period, so exchanges will be able to keep operating under any existing licenses until 2026 unless they are refused under MiCA. And in general, that act will require robust structures in place to protect customer money and for firms to have policies against money laundering, terrorist financing, all that bad stuff. And if Binance can get licensed under MiCA, it will allow them to operate all over Europe, but it's also a pretty clear vote of confidence from a serious regulator that Binance is operating its business in an appropriate fashion.

Okay, so that's the background to your interview with CZ. Shall we hear what he had to say himself?

I think we should.

Thanks for having me.

Wonderful to see you. What is the most compelling reason or need for crypto that you think is worth fighting for?

It's just a better technology. It's more efficient, it's lower cost, it's easier to use, it's cross-border, has high potential for more adoption. Given all of those, it can facilitate much higher volumes of transactions, much bigger economies, much more global economies. And the fact that we can do micropayments means that we can facilitate new different type of business models. All of those are hugely important for the future of economies. So, um, not looking at this technology is like bookstores don't want to look at internet and say, oh, the bookstores work fine, why do we need internet? So I think it's at that level of impact.

And in terms of it being a better technology, is that payments, for finance, for everything? Where are the boundaries of it being better?

I definitely wouldn't say it's for everything. No technology is for everything. The best technologies are used for their specific purposes. I think for blockchain is really more related to what we call today money or value transfers. So from entrepreneurs looking for investments or fundraising, You can raise money very easily using the blockchain technologies. Transfer of value across borders. Today, most of the use cases are dealing with value transfers. Later on, I think the technology can be expanded into like other areas people are already identifying, like NFTs, gaming, anything that requires proof. So land title deeds, notarizations. So many of those areas will get there. But today it's much more focused on financial applications.

Okay. And just turning back to what you mentioned in your first answer about things that you might have learned from the failures of other firms. I guess if we zoom in on crypto exchanges, obviously, in the history of crypto, there have been a sort of a fair number of ones that have blown up. The most spectacular is, of course, FTX, which failed last November. You had a long history with Sam and FTX. You know, you helped him to get started when he launched the exchange. And later, when it collapsed, you sold off some of the tokens, or you intended to sell off some of the tokens that you'd hold. Knowing what you know now, is there anything you would do differently for your own actions in that saga?

Well, absolutely. I'll get much less involved. So knowing what we know now, I don't think we would have invested at all or even went anywhere near it. Also, even after that, even knowing what we know, actually, we didn't get to sell much of the FTT tokens. We still hold a very large bag of it. I think we sold like, I don't know, 10-20% of it max. So we still have like 80% of FTT tokens, which is zero. Some people accuse us of that may be a trigger out of many triggers that may have triggered it. I obviously did not agree. Looking back, there's many things we can avoid. I think the key lessons are crypto exchanges should have 100% proof of reserves. And this is very easy to do using blockchain technology to do it very transparently. And regulators should demand that for every exchange that's regulated. So this solved the biggest problem that we learned, which is safe holding of customer assets. And also in recent lawsuits we have with SEC in the US, we have proven that they make allegations about commingling of user funds that they have zero evidence for, which actually helps us to prove that we don't do it.

Right.

So with all this criticism, there's also validation. So it actually helps us in many other areas saying, look, we're a different type of crypto exchange. Just because we're both crypto exchanges, it doesn't mean we're the same.

I guess if you're sort of looking at FTX and Binance, You can point to some superficial similarities between the firms other than just being crypto exchanges. So FTX was headquartered offshore, you're headquartered sort of nowhere. In general, there is some opacity in how the exchange works. There's some regulation but unregulated in sort of the big markets like the US and much of Europe. And one of the ways in which FTX blew up is that its sister firm Alameda had made various illiquid venture capital investments, and Binance also has a venture capital investing arm. So On those facts, people couldn't trust Sam. Why should they trust you?

Well, I think there's a few things that people confuse about. Just because Madoff is a VC doesn't mean every other VC is bad, right? And also, we're very much onshore in many places, including Bahrain, right? So we have a license here, we're fully regulated here, we're fully regulated in 18 different other regions as well. So we actually have the most largest number of licenses or registrations, which actually also means we have gone through the most scrutiny and most scrutinized by default already by media, by regulators, etc. So there are some very strong differences. And also even Alameda, right? Just because Alameda lost a lot of money doesn't mean every algo quant trading firm loses money. There's a large number of businesses do lose money because they're not well run. But there are many very well-run hedge funds, quant trading firms, etc. Binance doesn't have our own quant trading firm. We don't trade for profit, etc. We do have some liquidity provision affiliates. but those are not trading for profits. So, but there are other guys who do that as a profitable business that's well run. So again, just because some business is not well run doesn't mean other businesses are bad.

So what are the sort of material ways in which you think Binance is structured differently than FTX?

There's so many differences, right? So I think structurally, we are now the most licensed crypto exchange in the world. So we are embracing crypto regulation by actions. Compared to FTX, talk the good game, but they don't have that many licenses. So we're very transparent with our users, we're very transparent with our regulators. So we are building multiple regional hubs as well as we speak. So there's some very fundamental differences. And also, based on the limited stuff I know about them, they don't even know where their money are, right? So we internally operate a very fairly transparent financial accounting standards. We know where all the funds are. And also, Binance is much larger. Binance is not run by me. Whereas if you look at the Sam Bankman-Fried story, a very small number of people there know where the money is. On a day-to-day basis, I'm not involved in the money part of Binance, right? So the exchange will run fine without me involved. I'm here doing like, you know, interviews like this. I'm on Twitter a lot. I'm doing all the useless stuff. So we're running the company in very different ways. We are much more systematic. I'm not the bottleneck. I don't control much information. In fact, I actually don't have access to our backend system. So the backend system where you see how much money each user has, whenever I need to get information, I need to ask somebody to get information for me. So I try to have as little access to the system as possible. I try to have as little authority as possible.

Okay, one last question on FTX, then we'll move on. Have you been watching any of the trial coverage?

No, I have not. I'm active on Twitter, so I see a few Twitter accounts tweeting bits and pieces of it. I think that's as much as I need to know. People already think I'm too involved, so I'm trying not to get too involved there. And I also try to hold off the urge on commenting on that, because if I read too much of it, there may be an urge to comment, which I will try not to do. Yeah.

So Mike, Tom, we spent a lot of time in that first half of the interview on things like how Binance differs from FTX and how involved CZ was in the whole saga. Obviously, it was sort of fun to ask him what he would do differently and whether he was watching the trial. But I think that the thing that I was most interested to hear him him say was his comment about the SEC, i.e., that they had spent a long time investigating Binance and couldn't provide evidence that Binance was doing what FTX is alleged to have been doing, i.e., misusing or commingling user funds with other money. I guess there are two ways that a firm like Binance can use regulators to prove that it's not misplacing all the money that customers deposit with it. One is to get licenses from regulators who get to look at how the firm works and operates And the other and probably less preferable one is to have regulators investigate you for wrongdoing and not find evidence of that specific kind of wrongdoing. Obviously, it's funny to hear an executive say that a regulatory investigation should give customers confidence, but that seems to be what's happening in crypto.

Yeah, I did find it slightly funny hearing CZ, and I do feel the sort of heavy hand of American cultural hegemony on my shoulder when I say CZ, because I think all of us would naturally say those letters. CZ, but there you go. I did find it slightly funny hearing him say that Binance only ended up selling 10 to 20% of its FTT tokens. They must have found it pretty difficult to sell the rest after the price fell by 90% and the market completely collapsed. I think the fact that he announced his intention to liquidate his position back in November last year, which is the sort of proverbial shouting fire in a crowded theater, I think that's the important bit here. I guess the question of similarities between FTX and Binance depends on whether you think crypto is fundamentally different to the sort of things that he was talking about there. So he's quite right that we don't say quant funds were all unsafe just because LTCM collapsed. So you can't say Binance is specifically dangerous just because FTX went down. But, you know, running an exchange based on assets that basically have zero fundamental value does seem to be a sort of different kettle of fish, at least to some people. People have talked about CZ as this sort of potential savior of the industry, but functioning industries don't need saviors basically, or they shouldn't need them. So it's a question of whether you think this industry as a whole is too spiffy, too hypey to make the running of an exchange, except in the very, very most conservative sense. Basically sort of impossible over the long term.

Yeah. And on that point, I actually want to return to the very first response that he gave you there, Alice, around the purpose that crypto serves. And, you know, like many, I think I'm still firmly in the skeptic camp here. You know, undoubtedly there's still lots of issues in the financial system. So just yesterday here in Riyadh, I tried to pay for a taxi and the driver's card machine wasn't working. And I've now spent a ridiculous amount of time trying to work out how to get this guy money because cross-border transfers are incredibly expensive and difficult to do. So I suppose if crypto could be used to fix issues like that, I think it could be a net positive contribution to the world. But I suppose I just feel like all the energy over the last few years has really gone into the financialization and marketization of crypto rather than really focusing energy and investment around how to make this practically useful and then helpful.

Yeah, I see the merit to both of those points. I actually met someone on the sidelines of this event in Bahrain who said she started in crypto very, very early, but she'd grown frustrated because everyone had just become too excited by making crypto casino instead of coming up with real useful applications for people's lives. As to whether or not those can be come up with, I guess the jury is literally still out, eh, on both that and everything else in crypto. After the break, We will hear what CZ thinks about whether there is a future for crypto trading in the US.

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That's The Week in Intelligence, coming this Saturday from The Economist. Before the break, we heard how CZ thinks his exchange Binance differs from FTX. But next, I wanted to delve into whether he ever expects crypto to be treated like other areas of finance. And we began with that US Securities and Exchange Commission investigation. So you've mentioned a couple of ways that exchanges can prove that they're safe or reassure users that their sort of money is being looked after. One is proof of reserves and the other one is getting licenses with regulators. Obviously you mentioned also that the SEC has filed a complaint against Binance arguing that you are unregistered or unlicensed securities exchange in America because you list many tokens that it thinks are securities. and they essentially think you're just pretending to keep US customers away. I guess before we get into the details of the arguments in that case and ways to make exchanges safe, can I ask, where were you when the SEC's complaint came in? What were you doing? Did you know that it was coming?

We had some indications it might be coming. I was in the UAE at the time, so we had some indications. They, I think both sides have lawyers talking to each other for a bit before that. And so we had some indications, but you were never sure. Right, so I don't want to comment too specifically about that specific case. Yeah, but typically in this type of situations, you have the lawyers talking to each other for a while, and then people try to negotiate a deal or resolution before you have to go to that extreme.

And what was your reaction when it came out?

Well, I think we just got to deal with the issues that's thrown at us. I think, look, we let the lawyers deal with that. I think we're in a strong position that most of the allegations made I think does not have a strong base. I think whether crypto is a security or not, that's debated as an industry-wide issue. The attacks on commingling of funds just does not exist. So I think the truth will eventually come out and we're pretty confident about it.

I guess in the complaint, they sort of paint a different picture of Binance than the one that you've sort of outlined, saying you are registered in many countries and you attempt to sort of comply with a lot of the rules. They had a couple of interesting quotes that were allegedly said by some internal people at Binance, such as, we're operating an expletive unlicensed securities exchange in the US, bro. Was that ever the position that Binance took on these issues, or how do you square those two sort of perceptions of the firm?

So short answer is no, that's not the position Binance had taken. The first time I saw that chat was on Twitter. So this is a private chat about one ex-employee. Well, one employee, it was a private chat between him and one of his guys, I think. I don't know the context. I have not seen the full chat log, so I can't really comment on it. Is not the right thing to say by far.

And the SEC, through its lawsuits against you and also a similar one against Coinbase, it seems to be saying essentially it is not legal to trade crypto here and it maybe never will be. And they think most things are securities. That's obviously sort of an industry discussion and therefore that firms like yourself would need to register. But it's almost impossible to register as a firm doing all the things that you do. Do you think there is a world in which it could become legal to be sort of fully licensed and registered in the US?

Well, without the US part, yes, there's definitely a world where crypto exchanges are fully licensed, fully operating, etc. My understanding on this part is limited. There are much more professional legal opinions about this. But Coinbase is a listed company that has MSB license, Money Services Business license. In the US, you have to go state by state. This license is state-based. I believe there's like 47, 48 states that require them. There's 3 states that doesn't. And that's as close to a licensed operator as you can get today in the US, based on my understanding. Whether that's the most advanced regulatory regime for crypto, definitely not. I think if you look at other countries like here, Bahrain, or other places, the regulatory clarity and framework are far more advanced.

And also in Europe, there are these new micro rules that are coming into place, and they should make it possible for an exchange like Binance to register in one country and then serve the entire market. You've said on Twitter that you're in the process of sort of adapting your business to make it possible to register. So what are the sticking points? What's that process like? What are you having to do to sort of make yourself compliant with what they want?

So MiCA is actually a good process. That means like one process covers 27 countries in Europe, right? And we are working very closely with a number of regulators there, France, Spain, Italy, etc. So we have registrations in all three places. And I think there's also Swiss and a couple of other places. I think we have 5 or 6 registrations in the EU. And then MICA today, I think it's projected to kick in sometime mid to late 2024. You may get delayed, you may not. So once that process kicks in, then one of those licenses should suffice. So we're working very closely. I think the very early draft of MICA, like they did not want to have US stablecoin-based liquidity allowed in Europe. We're like, that's not a very smart idea because the EU-based stablecoins are very small. They don't have enough liquidity. If you block 90% of liquidity from the entire continent, your prices are going to be worse. So you should allow US dollar-based stablecoins liquidity. They actually changed that. So the recent drafts allow that. I don't know all the details, but that's one of the details I came across. So it does show that they are receptive to feedback, which is a very positive sign. So I think it's mostly final drafts now. So, but it's just waiting for the time to kick in. So I think we as a business is quite ready for that. Yeah.

So these licenses that you get in Bahrain or potentially in Europe, I guess they serve two functions. One is that regulators can feel comfortable that bad things aren't happening on the platform, money laundering, terrorist financing, all those kinds of things. And then for users, there's that regulatory stamp of approval that the exchange probably isn't being run the way that some of the ones that have blown up were. Is that the sort of best solution for customers to have faith in exchanges getting these licenses? Or what else is there that you think can encourage trust?

Yeah, so I think to earn trust, it's like an onion, right? There's many layers that you have to build. I think regulatory compliance is a key thing. It is very important. But also like having a track record of being secure, always service your clients, having the reputation in the industry, having other users validating your services and your trustfulness. Is important. So there's many, many different aspects, but I think regulatory compliance is a key one. And also with regulatory compliance also unlocks other partners working with you, especially from traditional financial industries. So then this way we can bridge the two industries together. So that's very important too.

So I guess it is possible for many more crypto exchanges to get these kinds of licenses and be sort of considered safe. I guess we'll see how things play out in the US. Perhaps that won't be the sort of nexus of crypto going forwards if things continue the way they are. Is that what you expect?

Yeah, I think right now US is a little bit distracted because there's an election coming up in the next year. So I think most crypto people are single-issue voters. So, you know, if you like crypto, they're going to vote for you. If you don't like crypto, they're not going to vote because it deals with money. It impacts their finances. And the crypto population is growing. The US does have a very strong base in terms of innovations, talent, VC infrastructure, etc. So once they focus on crypto and put the proper guardrails in, they could actually catch up pretty quickly with the rest of the world. They do have the talent pool, they do have all of that strong base. So it's not to say that, you know, US is never going to catch up on crypto. But today, in this year, given the shutdown of the 3 banks that are crypto-friendly, given all these other issues that happen, they are a little bit behind on the curve on crypto regulations.

We focused a lot on the criticisms that there are bad actors in crypto and that it's unregulated, and not so much on some of the other criticisms that are, oh, it's it's not useful for that much, or there aren't any sort of real use cases. In particular, I've been talking to a lot of people who say, oh, AI has come along and changed the world in a year, and crypto's had sort of 10 or more than that and not done anything sort of real. What would you say to those critics?

Some of those critics are pretty valid. There's always valid points there. But crypto this year especially feels a little bit boring in the sense that there's no new projects coming up with like really fancy use cases, wide adoption, etc. So this year is kind of a recovery year from last year. It felt a little bit boring, so there's people getting into meme coins, people getting into other things which are slightly harder to understand. They're fun, but they don't feel as strong utility-backed. We shouldn't say that that just erases all of crypto. Internet had issues in 1995, right? There's a lot of credit card fraud, shipping doesn't work, so e-commerce doesn't work. The speed wasn't good, so video conferencing doesn't work. People would say, "Hey, internet is a fad, it's useless." It used to be called the World Wide Wait, right? So I think for the guys who are old enough, we remember. But guess what? 20 years later, the technology does improve incrementally over time. So I think we look at crypto just because this year or this past little while is a little bit boring, relatively speaking, doesn't mean the technology is not useful. The technology is still being developed. So there are cycles in the markets. Yeah.

Crypto being boring is maybe a bit of a relief after last year.

But it's better than the excitement we got last year.

Yeah. Well, I think that is roughly all we have time for. Suzy, it was such a pleasure talking to you. Thank you so much for answering my questions. It was wonderful to meet you.

Thank you, Alice. Cheers.

Thank you so much. So, Mike, Tom, how has all of this left you feeling about the future of crypto?

So I'm happy being the pessimist here. I guess not many people go into journalism to look on the bright side of life. I don't think there is much of a future in crypto beyond the sort of the very speculative gamified element that will always be a certain market. You know, we talk about whether it's like a casino, there's a market for casinos. If you're a liberal and you think that people should be able to do most of whatever they like, as long as it doesn't harm other people, then that's fine. But I think the reason it's been a bad year for crypto isn't because there's nothing with an interesting use case coming out. It's because nothing is surging in price, which was most of what was interesting about crypto beforehand. And basically that lack of meaningful use cases and the element of hype means the industry is going to be facing this pretty bleak regulatory environment where I think most regulators have basically permanently made their mind up and it's going to be very tough going for the industry from now on. Just to use CZ's internet analogy, Bitcoin is now coming on for being 15 years old. So the analogy of the internet Let's say that 2009 for crypto is 1991 for the internet when the first web servers were turned on. So Bitcoin right now should be where the internet was in 2006, which is the year that Amazon Web Services was launched. It's the year that the verb to Google was added to the Oxford English Dictionary. And I think our listeners can probably decide for themselves whether they think that crypto has made as much progress as the internet did in roughly the same amount of time.

Yeah, this idea of crypto being the new internet feels a little bit overly generous to me. It's interesting that phrase, the new internet, seems to be applied to all sorts of technologies here at the conference. It's certainly been applied in many panels and discussions to AI, and I think the reality is it's always very hard to tell what kind of economic impact technologies will have. I don't know if people thought the steam engine was ever going to be as as impactful as it was. But I think it's probably fairly safe to say at this stage that crypto is not going to be the next internet. Certainly, I don't think it's ever going to be economically meaningful or transformative technology if it can't shake this reputational taint that frankly it's always had. I mean, going back to the early days, it was kind of associated with all sorts of criminal and nefarious activities. And I don't think the trial of Sam Bankman-Fried and the collapse of FTX is doing many favors for the industry in terms of building its reputation for credibility with the general populace. So no, I'm with you there, Mike. Very skeptical.

Yeah, I guess there are sort of interesting things that I think after this week's episode, just on the sort of specific questions about the future for Binance. With Binance being the sort of biggest and by far the most important crypto exchange, obviously it would be pretty catastrophic for crypto traders if it was shut down or it failed in some way. If you are a customer of Binance, there are a few reasons that might have given you some confidence in the exchange. One is that over the past year or so, the exchange has been able to meet pretty heavy redemptions, even in pretty volatile crypto markets. As CC sort of highlighted, the SEC didn't find that they were making off with customer money. They are trying to get all of these various licenses. There is a question about whether or not they'll be able to put in sufficient structures and protections, both of customer money and sort of against financial crime to satisfy regulators. And I know Binance was headquartered in Singapore for a while, and Singapore was coming up with its own crypto framework. And eventually they withdrew their application to be a licensed crypto provider there. And it was reported by other outlets that that was because they hadn't been able to comply with Singaporean authorities' anti-money laundering efforts. And so I think there is a sort of question over how far Binance will be able to come onto the side of being this trusted regulated entity that can be the exchange that everyone has faith in. And obviously that's just sort of one part of this bigger future of crypto question.

I think it was Joanne Lai who definitely didn't say it's a completely apocryphal quote, but said that it was too early to tell what the consequences of the French Revolution were. Maybe it's like one of those revolutions that you still can't tell. Maybe we'll never know.

With that, shall we pivot to our stats of the week?

Yes, absolutely. My stat of the week is $15.4 million, and that is a dollar figure, and it is an interest payment, or rather a missed interest payment by Chinese property developer Country Garden. That is finally confirmed as a default event by one of the trustees of the bond. Pretty big deal in the Chinese property sector. Country Garden, as I think we've mentioned before, it's never, or it's not always been seen as this sort of very, very risky company. This is a really big deal still happening in the Chinese property sector.

So they're sort of officially bust now. Yeah. What's going to happen? Are they going to be rescued?

Good question. One for another episode, maybe. Probably can't cover it in the last 30 seconds of the programme, but yeah, we're keeping an eye on it.

Well, on a more optimistic note, my stat of the week is 8.7%, which is the real GDP growth in Saudi Arabia last year. And for comparison, global real GDP growth was only 3.3%. Last year. So the kingdom has been growing very rapidly relative to the rest of the world in recent times. Obviously that moves quite a lot with the oil price. I feel like a few years ago, a lot of the reason that people came to Saudi Arabia was really seeking money and investment for projects or businesses outside of the country itself. But actually, I think there's a change that's been underway over the last few years where increasingly there's interest in investing in the country itself. We were talking to someone over dinner the other night about an aquaculture company in Saudi Arabia that started exporting Red Sea fish and seaweed and all sorts of produce to China.

Aquaculture in the desert, eh? Seems like a brilliant idea.

Luckily there's a sea next door though.

So I guess we're long Saudi, short China on purely economic grounds from these two stats alone. There is no elegant way for me to segue into mine, so I'm just going to say it, which is twice as much Jell-O as the national average, which is the rate of consumption of Jell-O in Utah. And I've read this in an article in Bon Appétit about how much Mormons love Jell-O. Apparently, Kraft verified in 2001 that residents of Salt Lake City were the highest per capita consumers of Jell-O. And that same year, the Utah state legislature passed a resolution naming Jell-O the official state snack over the objections of one senator who pressed the case for ice cream instead, which he said was a treat that was neither wiggly, jiggly, nor sexy.

It's very difficult to know what to do with that sort of statement, to know how to respond to it, what to make of it.

If you'd never thought of Jell-O being sexy before, I've now forced you to consider whether or not it is.

Yeah, I've got it. I'm going to think about it every time now. That's it.

Yeah, with that, I really don't think there's any segue out of that either. So all that is left to do is to thank CC.

And thank you for listening to Money Talks. Don't forget to link your account or subscribe to Economist Podcasts Plus. There's more info in the show notes along with the link to sign up for that special offer we mentioned.

You can always write to us about Jell-O or anything else at podcasts@economist.com.

Today's show was produced by Dan Asher.

Our sound engineer is Ting Lee Lim, and the executive producer is Marguerite Howell.

I'm Alice Fullwood.

I'm Tom Lee-Dublin.

I'm Mike Bird.

And this is The Economist.