Kraken’s 10 Year Plan With Arjun Sethi

Hey, that's crazy. You're either working for free or that I'm crazy enough to believe that like we can hit those milestones over the next 10 years. So I have a 10-year period to be able to hit that. And so as I explain that to folks, they're like, okay, you basically don't get anything if we don't hit these milestones. So we're basically here to try to hit those milestones. And so if you're, if you're here over, you know, 10 years to try to hit like these extreme goals, then you get rewarded for it. And that means I'm trying to put people in place to be able to hit those goals and, and sort of thinking bigger and bigger as we start executing it.

Nothing said on Empire is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only, and the views expressed by anyone on the show are solely their opinions, not financial advice, or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the companies, funds or projects discussed. All right, everyone, welcome back to Empire.

I've been waiting for this episode for a long time. We had Dave Ripley, the co-CEO of Kraken, on the podcast a long time ago. We now have the other co-CEO, Arjun, on the pod. So, Arjun, welcome, man.

Thanks for having me.

Yeah, dude, I know nothing about you, so I wanted to start there. I actually spoke with some of your co-founders at Tribe years ago. Yeah. What I know about you is you were an exec at Yahoo. You started TribeCap. I think you're a partner with Chamath over at Social Capital.

That's right.

And now you are co-CEO of Kraken. But I know other than that, I really know nothing about you. So I'd love to—

tell me about yourself, man. I guess, where do you want me to start?

I would like to understand— maybe we can actually just fast forward through your career into why you decided to take this role at Kraken.

Sure. Let's see. So I think— So actually, I'll tell you the Tribe story is pretty synonymous with Kraken as a whole. And so at Tribe, when we started the firm, we were— when you think about venture capital, it's a very who-you-know versus what-you-know ecosystem. And I'm sure you've been through it as well, where there's just like, there's just a lot of folks that like think venture capital and capital raising information is in a very specific way. And when you work at a company and you work on any product and you're making it better, you're thinking about, you know, testing an iteration, you have a hypothesis and you can just keep, you know, incrementally making it better and better. And so I think there's never been a time to build better companies, but you just never— and all the innovation that continue to happen, we know all the great companies like, you know, Facebook or Airbnb, Square, you know, et cetera, et cetera. But when you think about financial services, there hasn't really been much movement at all. You know, the greatest innovation is like Excel, which pretty much sucks. And so when you take a look at like early stage, seed stage, mid-stage, late stage, it's kind of the same. Everyone goes through the same process. They might be looking at other heuristics, but it's a very manual process. And, uh, and I think that whole process is frankly quite broken. So when we started Tribe, it was literally, can we get access to, um, raw data for us to be able to interpret that? And then through an interpretation of ingesting it, cleansing it, and we can come up with our own heuristics, not just for one company but many companies. Then could we be better partners? Could we deploy more capital in like a more efficient way? And can we get capital to folks that actually needed the capital versus someone who was like in a FOMO category. So the world's still—

Oh, data. I remember the pitch years ago when I was on the call. I think it was, was one of your co-founders Jonathan?

Jonathan's one of our co-founders.

Yeah, I think it was a data science driven or AI driven or data science driven venture firm.

Yeah, so I think those are terms that people use to make it less—

It's nice marketing.

Yeah, it's, It's just like saying like, yeah, we use AI or machine learning. Okay, well, like you can use ChatGPT, does that mean you use AI at your firm? It was more that when we got data from a company, we could ingest it. And then if you had N plus 1,000 companies, could you benchmark it the same way you think about public markets? And so what is the data that you wanted? So you start off with everything, then you figure out how to ingest it, label it, and then think about ways in which you can interpret it. And then you can come up with a criteria for decision making. One of those criteria are helping a company, investing in a company, or just helping to alleviate some of those insights.

Nice.

Um, so that, that core thesis for us hasn't changed, which is like, how do we continue to empower sort of founders and people that are building companies, uh, versus, you know, versus the other way around, where the most vulnerable you'll ever be is when you're pitching to an investor. Which is like, I need money.

Yeah.

That's not, it's not always a fun place to be, right? Because you're, you're trying to get people to understand who you are, what you do, and why the company you're building is important. And the more, and more importantly, a lot of folks will make a decision off of the heuristic of like, do I like the founder? Do I think they have what it takes? I just, I just think that's, it's kind of bullshit in my opinion, because like, who do you know that has the capacity to do something? And the best performance indicators are just how they've continued to perform over the last year, 2, 3, or 4 or 5 years. And so that was the thesis. And it's worked out really well for us in terms of the types of companies that we've invested in, à la Kraken as well. And so if you think— if you take that nugget, which is how do you get to a place where you can empower the customer more than anyone else. Then when you think about crypto, or at least what was really important for me, it was, it was the same thing, which is, um, I kind of— I grew up in the United States thinking about, you know, or when my dad got here, he like, he kept thinking about, um, I get to come to the United States, I get to build whatever I want, I'm free to be able to build whatever I want, and then I can use the tools and services that are out there to be successful. And no one can get in my way. And so there's this whole concept of like a merit-based system, right? And so now when you're growing up, at least for my generation, I guess I'm on the older side of the sort of the millennial range, at least for me it was the same thing, which is that there are, there's like a path that if you work hard enough or if you work harder than the other folks around you, um, work smarter, not just necessarily harder, like all of those things combined, that you should be able to have a path to be able to also build whatever you want. And so that kind of led me to build multiple companies, test and iterate some stuff, experiment. But I think like what led me into crypto more and more as I continued to dive deeper or get more obsessed with it was just the pure nature of putting control back into the hands of the individual.

Yeah.

So forget like Kraken or anything like any of these, you know, centralized exchanges. Just bear with me for a second. Yeah, yeah. Is that why do I need the permission to innovate? Why do I need permission to control what is already mine? And when you think about the financial utilization of your assets or time, or your data, in some cases, I should be able to have full control over it. And so that's, that's why I sort of got onboarded with the, with the mission of like, you know, with Jesse and Tom and created Kraken for a long time. And then when they asked me to kind of step in and help out, it was a, it was the easy yes, over a long period of time.

Yeah, yeah. So, so I— this is— when did, when did you join Kraken as co-CEO? A year ago?

Officially, yeah, last year, this time last year.

Okay, so it must have been early last summer, maybe end of spring. I was talking to one of the venture firms who has a very large stake in Kraken, has been like an early supporter since day one, of the early days. Yeah.

And there's a lot, there's a lot of firms that have always proclaimed that they've got a large stake.

Yeah, of course. Yeah, of course.

And I think that's actually an important thing. Kraken in its history has only raised, you know, between $25 or $27 million, like ever. Really? In their Series A. Yeah.

Wait, in their Series A?

That's right. And so from that moment on, the company never raised any more capital.

There was— you have not raised money since the Series A?

That's correct, yeah.

Interesting.

I didn't know that.

I'm forgetting the exact—

why is that?

Um, well, the company's always been profitable and very disciplined about how—

Coinbase profitable, Binance profitable, but OKX profitable. These guys raise money.

That's right. Um, I think it was more just the ethos of how, uh, Jesse Yanowitz started the company. And so all of the capital allocators that came to the company came in through secondary transactions. They either bought it from ex-employees or early shareholders.

So you guys— Tribe invested in the Series A?

We didn't. We invested—

or you bought secondary?

We bought secondary.

Oh, interesting.

Yeah, interesting. When I got introduced to the company, it was first through, uh, the folks at DCG when they introduced me to, uh, uh, to Jesse. And it was more of an acquaintance, and over time kind of built a relationship. And then Tribe officially invested into the company through a secondary transaction that the company facilitated in 2020 and 2021.

So here's my— okay, so I was talking to this venture firm who now I don't know if they actually did Series A or if they just bought secondary. Well, anyways, someone with a stake in Kraken and say, how's it going? How are things at Kraken? Like IPOs are start— people are starting to talk about IPOs. Are you going to do that? And they said, look, we're, we're, you know, it's been peacetime. We're going wartime.

Yeah.

And I was like, what does that mean? They're like, oh, we're thinking about bringing this guy Arjun. Sure. He— I was like, tell me about— tell me about Arjun. I never met you, never heard of you. And And they said, look, he's a, he's a killer and he's, he's an amazing product leader and he's going to shape Kraken into more of a product-driven organization. Um, tell me about why you think they picked you to be the co-CEO.

Um, well, the only person that, um, made the decision was Jesse and Tom. Those are two folks, um, they own most of the company today. They're on the board and they're the co-founders. And so my relationship has been with them. And obviously I was sitting on the board as an investor and a shareholder— sorry, as an independent board member and investor and shareholder. And so I'm flattered that other folks were a part of the process. But I think the— look, I think— I'm not sure I can say that I'm a product visionary in any capacity, um, or that I'm good at product. It's just that I've been building products my whole life.

Yeah.

And so I have a, a very specific way in which I look at the world, and that has been always determined by, uh, I don't really know anything, so just assume nothing. And who are the customers? Who are the clients? They come first. And so what are the products and services that you can build for them? And so if you look at the mission of Kraken I mean, we have our, literally our culture doc, our mission doc there, which is around how do we get crypto into the hands of more people? How do we empower them to own their own data in some cases, but own their own capital? And so that's, you know, what does it mean to actually build products in that direction? That's all I'm, you know, continuing to build against, which is what that ethos is and was and making sure that's like front and center.

Yeah.

So in terms of You know, do we have a faster product velocity? Yes, because we're just putting, you know, we're going back to basics, which is what is the product? What are we trying to get done? What do we want to be able to provide value versus extract value, which is what typically companies do. And more importantly, the premise of what crypto was in the first place. So kind of give you an example. When you look at a traditional financial services company, that comes in, you know, like a bank or a neobank, they're trying to find out all the ways in which they can acquire as many customers as possible. But there's only a few areas where they can actually make money, right, the margin profile. And that's usually rehypothecating users' customers' funds in some cases, which is fine, you know, it's regulated, you're allowed to do that, you have a partner bank, etc., etc. And so when a customer deposits funds, and a bank, again, first principles, is rehypothecating it. Um, in the past, you used to get a certain amount of yield back, right? Your checking or your savings account had more yield than it has today. And so as rates have gone up and down, they haven't really gone up and down for the customer. It's not like you get a yield. And so if you, if you look at crypto assets and what it allows you to do, and why I think Kraken has been, in my opinion, more at the center of like, what it— what does it mean for the client and the customer is how do you get rewards or yield or the power back in terms of decision-making back to the customer? How do you educate them that this is happening? And I think it's more and more important to think in that way for all of the new traditional assets that are also converging into what's happening into the crypto ecosystem. It's not something that's talked about. Most people just talk about, hey, we're going to bring these real-world assets or these tokenized equities or assets into the crypto ecosystem. But they're still trying to figure out ways in which to make that spread or that money the same way they made it before. And I think what the beauty of crypto is, like, when you think about earn, staking, yield, etc., it's like, again, in the hands of like what you guys want. You should be able to do the same thing with, you know, tokenized equities. Tokenized equities, most of the financial companies, broker-dealers, etc., that make money off of it, they make money off of securities lending, right? There's no— if that's going to happen, then you should be able to pass that back to the customer, not the other way around.

Yeah, yeah, I agree with that. Okay, so I wanted to ask you about culture and how you've kind of impacted change across the organization so quickly. So I use, I use many different products in crypto. I've been a user of Kraken for several years, also been a user of other things like Coinbase and other exchanges for many years. It's extremely clear to me that the product velocity has gone up about 10x since you've joined. And I guess I'm sitting in the founder of Blockworks issues here. This is something that Mike and I talk about all the time. It's like, how do you increase product velocity? How do you structure organizations? And how flat should the org be, or hierarchy, and things like that? How have you actually done this so quickly? Is this— did you fire half the company so it moves quicker? Did you change, like, did you increase the roadmap time? Like, how did you actually do this?

Yeah, so, you know, um, the— there's this term going back to basics, but then The question is like, what does that actually mean? Right. And I've actually written about this. And so like my whole roadmap, how I think, what I execute against, one of the things that I measure is actually just, it's available open source. If you really think about it.

What do you Google?

How do you find it? So if you just type in like my name or Tribe Capital, like all of the essays in the way in which we think, how I've operated, how we've built out organizations.

I do remember reading a post you guys had called, which I'd recommend called, I think it was how to, about how to find product market fit quantitatively or something like that.

That's right, yeah. And then we have something called scale invariance. But before that, I had talked about how to build a people platform. And it actually just comes down to, I know it sounds funny, like how do you just clearly articulate and transparently talk about like what is it that matters to you? And then how do you incentivize people to actually hit those goals? So let's talk about the basics. So the first thing that most people think about is, hey, this organization is bloated, let's just fire 50% of the folks. And now I think for some types of organizations that, that is important. I don't think that's important for, for example, at Kraken. So the first thing was, um, who are the folks that have already been executing certain initiatives for a while? And so you go spend time with them, and what you want to be able to do is continue to build trust more than anything else, which is The first question I got was, Arjun, are you only here to take us public and then you're out?

Right. I think that was the general idea of the public. Like, oh, they're putting this guy in place to get them public.

That's right. Yeah. And the first thing I wanted to be able to show, and that doesn't happen overnight, was that here's my comp, here's how it's structured, here's what I actually get paid for.

You laid this out to the whole company?

That's right. Yeah.

What is it? Is that public? What is your—

I think, well, I mean, obviously we'll disclose it over a period of time, but like— Or will you share share how you're incentivized? Yeah, so the way I'm incentivized is I have a pretty sort of market rate CEO salary, which is like, which is lower than most of my execs that are there. And then my compensation, outside of me already owning a bunch of shares within Kraken, is at certain milestones for enterprise value, then I get a certain amount of unlock, probably not too dissimilar to how like Elon hit it. And so some of these enterprise value unlocks are like way out there. So you can say, hey, that's crazy, you're either working for free or that I'm crazy enough to believe that like we can hit those milestones over the next 10 years. So I have a 10-year period to be able to hit that. And so as I explain that to folks, they're like, okay, you basically don't get anything if we don't hit these milestones. So you're basically here to try to hit those milestones. And so if you're, if you're here over, you know, 10 years to try to hit like these extreme goals, then you get rewarded for it. And that means I'm trying to put people in place to be able to hit those goals and, and sort of thinking bigger and bigger as we start executing it.

So, which by the way, I love that. That is clearly like how I think the future of exec comp should be.

Yeah.

Um, I saw the Revolut founders doing something similar.

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So, okay, so you get into Kraken. What do you do in like the first month? Do you just like— have you, you know, whiteboarded out your whole product roadmap? You laid it out to the team. You're like, this is what we're doing over the next 12 months. Go.

No, I think what was interesting about Kraken was that I was already in love with the product roadmap. I just wanted us to get there faster.

Nice.

That's it. It's not— it's not like accelerate the product.

I wasn't trying to reinvent the wheel.

It's more that, you know, we have, you know, spot, you know, margin, um, we have our futures and our perps, etc., today. But it's more about how do you bring this in cohesively on behalf of who our customers are. So most of our customers— I actually think one of the big, biggest misnomers about Kraken, because we didn't raise, um, which is a good thing too, is that we stayed under the radar. Um, we didn't talk about who our customers were, who do we cater to. So at the highest level is that we're an exchange We've got a, you know, um, we've got a transparent way in which we have built out the exchange so that, um, our professional traders that come day in and day out— so this isn't a prosumer, this isn't a retail customer, this isn't an institutional, you know, large customer. It's like what I call like the meaty middle, is like folks that are day trading and professional trading, um, like that's their livelihood. And, and this phenomenon started you know, basically 25 years ago with, um, you know, the, the folks that sort of think about, you know, TradingView, um, type products. And so people have always thought about these set of folks as fragmented, but they're not. Like, think Interactive Brokers plus more. And so that's the set of products that we build. So we're a, we're a customer of our own exchange, which is— we have our Kraken Pro, now we've got NinjaTrader, and a set of new products that we're creating. But it's all on behalf of our professional traders. Those professional traders continue to bring us liquidity all over the world. So mostly, um, you know, North America, Australia, uh, Western-style countries, Europe— that's where we've been predominantly strong. And, and we're continuing to grow in other areas as well, where a professional trader, wherever they're located in the world, think, act, look, and feel the same. They want to be able to trade. So a commodities trader or equities trader, options trader, whatever it is, they, they want to be able to have a certain amount of, you know, multiple assets to be able to trade off of. And what's great about, like, how we've built our platform and our exchange is that the roadmap is to be able to continue to cater towards what they want. Um, unicolateral, uh, uniform, uh, way in which to think about where it sits, and then you can think about where— how you want to trade. And so then the tools that you provide them— I, I use this insight internally— is that, look, before, we're— we've been regulated, we're secure, um, and we help our traders, you know, trade any asset. And the more assets that we have the more they're going to continue to trade with us. But at the same time, the more products and offerings that we can have on behalf of that and the tools that we have, then they're going to, you know, continue to stay with us. And so some of them are going to stay within what I'd call like the cruise liner, which is like, it's safe, you know, it's not going to tip over. But some folks might want to do deep sea exploration, right, into DeFi, etc. So how do we bridge the gap or hybridize in some cases all the things that we need to do on behalf of that professional trader.

Um, I think it's one of the, one of the toughest roles is running an exchange in a bull market because there are so many ways you can make money and so many things you can do. And, um, I mean, that's actually when you need to be the most disciplined. The most disciplined, exactly. And like, one of the— I think Coinbase has done many great things, but one clear like venture off into a land that didn't make sense and they spent a lot of resources on was, for example, like their NFT platform that turned, you know, I think they had 500 people working working on that. And that was like a pico top type of thing, hire a bunch of people from Instagram, etc. But I'm not trying to pick on Coinbase. Every exchange has done many things like that. How do you think, like, when I, when I look at Kraken's business, you've got Inc, you've, you've got to be thinking about perps, right? Because there's such a dominant amount of the volume. I think it's 70-80% of the volume in crypto. You've got, what's the payment? Kraken that you just rolled out.

That's right.

Yeah. I think you're one of the biggest staking platforms in the industry. How do you think about what how to prioritize what to go build?

Well, so I mean, part of the problem, the opportunity set here is that it's a fast-growing ecosystem, right? If you think about all the chains, all the ways in which you can provide yield, lending capacity, you know, staking rewards, etc., is there's just not a lot of products and services that are out there that cater to the needs of your customer. So like, think of it this way. One, you need to be trusted. So they think about security, the custody of their assets, the borrowing against it and trading against it. That's one. But if you want to do like savings and yield, that's a different type of customer as well. So like, let's use stablecoins, for instance, as an example. Okay, why is stablecoin on top of crypto rails really important? Again, it might seem obvious, but if you're in Nigeria, if you're in any of the Latin American countries, if you're in any of the Southeast Asia corridors, you care about assets that are safe and you care about assets that are hedged against your own currency inflation risk in some cases, right? So, Latin America is a great example. And so, why do people price their own groceries or things within their store in USDT? Well, they do it because they don't trust their local currency. So, this isn't me saying that one country or its economic system is good or bad. It's just like, this is the demand bottoms up. So you have to be able to build products for that too. So the privilege that we have is that we have our professional traders trading on our exchange. We've got, like, pretty large amount of depth and liquidity, and that gives us the ability to be able to build other products on top of it, right? So there's another counterparty that's willing to take the risk of money movement regardless if that's B2B, for the average consumer, or whatever it might be. So the way I think about it is, again, we're in a privileged position to what I had said earlier, where how do we bring customer and user value back to them and reduce the amount of cost that they have for things that they want to do on their everyday life. So if I want to send you a payment across borders, how do you reduce the amount of spread that there is there down to zero if we can? If I want to send it to a friend, if I want to send any asset, if it is a fart coin, if it is Dogecoin, if it is DOG, if it is, you know, BNB, doesn't matter, the list goes on. If I want to send that, I should be able to do that in a way that's fragmented and easy, and I don't have to, you know, charge a spread. You can do that when you are vertically integrated as an exchange, and you have custody, and you have the ability to lend, and you have the ability to let people move money back and forth. And so instead of relying on traditional brick-and-mortar middlemen in between that take a spread along the way. If we already have a centralized exchange of liquidity, we can just move that capital back and forth for whatever the reason may be. It's one of the reasons probably why we already have like, what is it, I think 65 to 70% of all onboarding and offboarding from fiat to stablecoins worldwide.

Yeah, right now the CEX to DEX ratio DEX to CEX ratio is like, let's call roughly 30%. Yeah, 25%, 30%.

Sure.

Um, uh, which is an all-time high. Do you have—

if you're thinking about—

you've got this 10-year roadmap. If you're thinking about the 10-year roadmap, how much of this trading eventually moves on-chain?

Um, I think the way I think about it is that over a 5 to 10 or 20-year horizon, it'd probably be almost all—

almost all trading.

I mean, it's a, it's a It's not a— I don't think it's something to get scared about. It's just something that will happen. So the question you have to sort of ask is, okay, how do you think about building out your exchange to be able to move on-chain and off-chain depending on the products and services that are out there? There's always going to be a certain amount of stuff that stays centralized, but it's how do you bridge the gap and how do you hybridize for what people really want to be able to do. And so there's always a different cohort of customers that go there first, right? Which is like, we call them degens. But you can think of them as like, you know, the first to be able to, you know, jump off the ledge to try something. And then it works. Then there's the next set that say, okay, you know what, I'm willing to do deep sea exploration. And then there's the next set that say like, look, I want it to be safe and you do it on my behalf. And so there's a set of tools that you build. And then there's a set of what I call hybridized, you know, products and services that you're going to build. But I don't see a world where it's only centralized liquidity. I think it's going to be a combination of off-chain and on-chain.

Yeah. I've heard you talk about working with Chamath and how one of the things that you learned there was how to bet on inevitability before it happens. I mean, actually, I thought—

That was the first time I used that sentence, actually, was last week.

That was a good line. It's a good line. And then actually, Tribe, you had a good line as well, which is how do you build systems to find the inevitability faster? What else, going back to the Tribe thing of how do you bet on inevitability before it happens? What else feels— okay, so the world moves on-chain, that's one inevitability. Does anything else seem pretty inevitable to you that maybe you think others haven't fully caught up to yet?

I think the beauty of maybe the way in which I've been trained and the folks that I work with that I've also brought into Kraken is actually not too dissimilar in— we can say a lot of things about Facebook, but the way in which cohort of people that grew up on Facebook or built on top of their platform and leveraged using data science to see— we used to use this term, how do you see the world as clear as possible? And the more you can see that, then you can see what the, what I call gross demand trends are of human behavior. And so the more you see that pick up, then that's what we consider inevitabilities. All right, then you'd be like, okay, what's an example of that? Well, obviously stablecoin has been an inevitability. Um, it's obvious that, um, people are going to use more and more, you know, blockchain. I do think it's obvious that people will want to have control over their own data and over, um, their own assets. Now, the way in which it manifests, that's going to be different. And so you have to separate the behavior and the demand of what people want versus the products and services that are going to cater towards them. And so you already see this in the, you know, you can call it Web 1.0 and Web 2.0 world or Data 1.0 or 2.0 world. But if you think about what's been happening in fintech, that's exactly what customers have been demanding, not just in the United States, but worldwide. And so that, that's a trend that's happening. The question you have to ask is, okay, while that's happening, are they going to care more and more about control of their own assets, control their own destiny? My sense is yes, because of what's happening across the world and to what I call the volatility of global order. And I don't see that trend changing anytime soon yet. However, it's always possible that it could change. But like, I think the early versions of what you'd see, again, gross demand of people's behavior and demand for the products that they want, I think crypto is like a very large subset of that. So, so let's use other examples. People from Russia, that left Russia, that went into Dubai, India, Southeast Asia corridor. They don't have access to bank accounts. So what do they do? They use wallets. And those wallets allow them to be able to proliferate regular everyday payments. And that's why card services are important. So it's kind of like this interesting mix of things that we're used to here in the United States we just don't really think about, or things that just do not exist for folks that are worldwide. And so when you think about— What does that demand look like? Well, that's 1 billion, 2 billion, 3 billion people, maybe 4 to 5 over a period of time. And their demand will create more products. And hopefully those types of products then proliferate back here in the United States.

Yeah, you're basically talking about— so you, uh, you have a global liquidity engine and you just want to build products on the back of that, things that benefit from a global liquidity engine.

Absolutely. And, and the more we can do that on behalf of clients or customers, depending on the products that you're building. I think the more you can just continue to drive down cost, I think everyone kind of forgets about that, which is every friction point that we have for these products, especially in financial services, is a cost to the customer.

Will you guys launch your own stablecoin?

We, um, so we had a lot of debates about should we do it, should we own it, should it be vertically integrated, we've got distribution, etc., etc. I think we went back to what do our clients want. So if the majority of our clients come to us and say, we don't trust anyone but Kraken to have a stablecoin, sure, we'll go in that direction. I think we're very far away from that because there's USDC, there's USDT. We've already gone through waves of different stablecoins. There's a lot of other folks in the ecosystem that are trying to get into it as well. And it may not be a network effect proliferation, it might be just for, you know, B2B interpretation of moving assets back and forth. What we want to be able to do is continue to stay agnostic, and then continue to be able to build a system so that you can move whatever stablecoin there may be for whatever use case through our ecosystem, regardless if that's centralized or on-chain moving forward. So we'll continue to build the tools around that. So we're agnostic to the way in which the clients want to be able to have access to it. There are some regulatory concerns for some areas and constituents, so we'll adhere to that. But I think what's more important is that does it give access to our customers? Do they get liquidity? Are they able to move their collateral the way in which they want to, regardless if that's stablecoin, Bitcoin, tokenized equities, RWAs in the future? If it's a well-oiled machine, then we'll provide it.

Do you think launching Ink, your guys' L2, was a good use of resources?

I think the, the way we look at any organization is where do you drive your profits and how do you spend it, right? And so research and development is like always important, which is what are the types of goals that you have and what are the multiple shots on goal that you want. I think in order for us to make hybridization of what on-chain liquidity is going to look like with our centralized exchange, we have to take multiple shots on goal in that area. And so the answer is yes, because we've learned a lot, we've made it better, we're going to continue to make it better. And then we've got, you know, over the next 45 to 90 days, you know, a set of new 3 or 4 products that we're going to have out there that are, you know, quite integrated to our exchange, which we've made announcements around that already.

Yeah. Um, do you think that— so, so crypto is this unique— for people in traditional capital markets, they're a little shocked by how crypto market structure works in the sense that, um, you have this combination of the broker and the exchange, right? You've combined New York Stock Exchange with TD Ameritrade, essentially, and that's what Kraken is. Do you think that market structure exists forever?

Well, I don't think you can say never say never, um, but to go back and reflect, the— we think of ourselves as, um, an exchange first, right? Which is like, it's secure, it's fast, we'll continue to have uptime, we'll continue to build what our clients want. Um, so that means investing into that infrastructure, similar to how you think about NASDAQ. But if you think about our suite of products and services or the family of products and services that we have, that's more akin to what I call Interactive Brokers and then more akin to like some of the products that you see with CME. So there's a certain set of folks that are professional traders, so CME plus Interactive Brokers, but there's a certain set that we're starting to build that are like, you know, traditional financial services. So you could actually say like a lot of what we're doing is like, you know, on-chain for Vanguard with like what we did with XDOX. Um, and so it's hard for me to tell what's gonna actually happen in terms of, you know, bifurcation between the market. But if you take a look at the Genius Act, um, stablecoin bill, and what's going to happen with market structure, I think people are seeing that the fragmentation that you had in the past is actually more costly to the customer because of the regulations that you have in between. Um, and, and, and I would argue because there's not as much transparency, there's more systemic risk to the ecosystem or the market. Whereas crypto solves a lot of this because of its transparency.

Yeah, I agree with that. I was, I was thinking before we recorded this, just about the competition that you must like if you're sitting down and you're talking with the leadership team about competition or whatever, like there's, there's so many points of competition. You've got the, you've got like the classic competitions, the crypto exchanges like Coinbase and Binance and stuff like that, probably Coinbase because US, etc. Then you've got the like up-and-coming brokerages, which could be anyone from Robinhood to Interactive Brokers. Then you've got the kind of more on-chain players like, uh, DEX Screener and PumpFun and folks like that. And then you've got perps, which dominates the market, and that's like hyper liquid. How do you— maybe going one by one through that list, like if you think about the Coinbases of the world, or let's use Coinbase as an example, what are you impressed by with Coinbase? And what do you think is maybe their weakness, or what do they struggle with?

So I think, so I won't go into each individual competitor. I think it's more about what's the admiration that you have for people moving into crypto and pushing the education of what it means for everyone coming into crypto ecosystem in the first place. So let's take a step back. Financial services, financial services of what we're used to are pretty fragmented, bifurcated. Pretty much closed ecosystems versus what I'd say is in the open source world. And so I, I categorize all of the companies in, are they focused more on building products and services in an open source style fashion, or are they building products and services where they leverage some of that open source and they create closed ecosystems? And I, and I think you can categorize all these companies in that direction. Now, now the reason you have closed ecosystems is that you want to be able to make more money passively on your customers, same way in which, like, you know, again, a bank sort of just milking holds you down. And our goal has been the other direction, which is how do we become more open? How do we become more hybridized? How do we come closer towards the goals of creating a best-in-class products, leveraging all of the open source and open ecosystems that you have in crypto? I think what you're seeing for other folks is that they are just reinventing the— unfortunately, and I don't think it's a bad business model, they're reinventing the wheel of what you've seen in traditional, you know, fintechs or financial services. And I think like, we've just squarely been against that, because it actually, in our opinion, it's a detriment of— it's a detriment to the folks that you want to be able to get equated or educated with like why crypto is so important. So if you want to empower the customer, if you want to be able to move ownership and sovereignty that we talk about to the customer, I think you have to embrace the open ecosystem and open source world or multi-chain, whatever it may be. So the best products can win and the best services can proliferate out there. And so I think like everyone's done a great job of getting into crypto. And I don't think that changes anytime soon. I think what's really important is to make sure that the ethos of why we got into this, you know, space in the first place, like that, you know, foundational cultural set isn't lost when people talk about how much money is being made, or how much, you know, the assets are going into crypto, or here are all the ways in which you can save costs. Like, that's all great. But it should be in service to you know, like the customers, like everyday folks, like, you know, you and me in some cases at a certain point. Then the other aspect I think people are kind of losing is that like, because you've got liquidity, and because crypto is coming, what does that mean for the average everyday entrepreneur? What does it mean for a protocol listing? What does it mean for capital formation? What does it mean for like more and more innovation to happen because like crypto can power it? So I think about a lot of these things, and they may seem crazy. They may seem existential. But just take a look at the private-to-public world. That in itself is fragmented. A lot of people talk about liquidity. A lot of people talk about long duration. But it doesn't mean that you can't add more ways in which what I call forward mobility for whoever that may be. And we talk about the average everyday individual or the pro traders. But like, if you're a company that's at the, you know, early stage or mid-stage, sometimes you get stuck because you don't have access to capital. And this is something that the public markets were supposed to solve. And so when I think about tokenized equities or tokenized assets or real-world assets, I'm also thinking about like the heartbeat of any economy or the heartbeat of any small to medium business or the heartbeat of, you know, entrepreneurship and innovation. The more you can unlock there for in terms of, you know, faster cycle of capital. I think the more you can do and it's like, it's, it's a, it's a better service.

Yeah.

For what they actually need.

Yeah, I agree with that. I want to get into tokenization stuff in a second, but, um, what about Hyperliquid specifically? Do you get concerned about like Hyperliquid eating into global perps market share? Just, yeah, curious your general thoughts on Hyperliquid.

No, I think like one, they have a great product, right? Like, so like you should We should all be again in admiration for what they've done. But every couple years you have a new set of folks that are in DeFi, which is great because it's open and you have a lot of folks that are trying to build best-in-class products. So a year from now or 2 years from now or 3 years from now, we're going to talk about the next one, right? It's going to be Hype3 or Hype4, whatever it may be. It'll be a different name and we may or may not remember Hyperloop. So my hope is that they continue to become successful. And they've done a lot of great things in order to innovate, again, on behalf of the community. It's, it's a great standard for us to be able to look at and say, like, look at what they've done, again, on behalf of the customer. And so the, the onus is going to be on them to figure out how they continue to do that versus do they move in a different direction. And so, um, are they going to eat into the market? Um, yes, but that's only if you assume the market is zero-sum and it's not continuing to grow. Um, and so The question you got to ask is like, how fast is market growing and how much more of the market is going to continue to change over the next 5 or 10 years?

Yeah.

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Let's talk, uh, let's talk on-chain stocks. So you guys, there's maybe two, two interesting things here. There's xDox. So you launch xDox, which is like 60, 70 on-chain stocks, and then you guys also acquired NinjaTrader. Maybe we can start with, uh, just the vision before getting into those two specific things, just like your overall vision for, uh, equities moving on-chain and kind of like, I guess we could broadly call it the convergence here.

Yeah, so the, the way to think about it is if you believe in a world where traditional financial products and assets, structured products, you know, the list goes on, right? We use the word real-world assets, but any of these, you know, tokenized wrappers on top of an asset is going to move on-chain over a period of time. I think that's inevitable, and I think that's like probably the greatest innovation that we're going to have on behalf of anybody, um, in terms of like how you think about, you know, financial assets and collateral. What are—

what are—

what is the fastest way to be able to do that is to be able to own that chain or vertically integrate it, right? So, you know, NinjaTrader is based off of the same concept that you've had, um, for Kraken Professional Traders, is that you've got a large cohort of professional traders, a little bit older, that have been doing, you know, um, commodities and futures trading and that's the way in which they've been trained. And so how do you get them to access crypto? How do you think about getting them access to collateral that is going to be in crypto? And again, educating them on their ability to move assets back and forth from each other. So when we use the word convergence, it's more about how do we bring more of these assets on-chain? How do we bring more of centralized liquidity for these assets? And how are ways in which we can educate the customer that normally hasn't had access to crypto or didn't know that they could get access to crypto? Professional traders, there's not that many of them, if you really think about it worldwide, right? So for us, it was more about getting access again to the education of another 2 million customers that use these products every single day. And that was really important while everyone else was trying to figure out what the world could look like in on-chain, which I think is also great. And you need to be able to have a certain amount of bets in that direction. We wanted to move in the other direction, which is, okay, great, well, how do we get in order for us to be able to move and proliferate traditional assets into a tokenized world or into the crypto ecosystem, we got to go get them. And if you think, you know, first principles Elon Musk style is that like you got to be vertically integrated in certain areas in order to move the puck forward. That's how we thought about the NinjaTrader acquisition.

I think it was the largest crypto TradFi acquisition of all time.

At the time, yeah.

$1.5 billion?

That's right, roughly. Yeah. That's what we announced.

Based on certain—

yeah.

Can you tell me about the acquisition? Like how this came to be? Like, did they, did they go outbound to you? Did you go outbound to them? Did this like, was this like a big investment banker-led process? Like, just from the founder seat, I think curious about the acquisition.

Yeah, I mean, the, I think the great thing about being countercyclical to how people think is that you have tailwinds in the crypto ecosystem. I think of everything in like the supply and demand curve. It's like a great framework to use, which is if there's more money going into crypto, we're talking about it, there's more headlines, that means the price of the assets are going to go up. And, uh, and it— and then so you can think of, um, the world in terms of intrinsic value and options value. Crypto has become a world, um, for a certain set of assets, or in terms of options value, where, um, things continue to get heated up. And my, my focus to the team was, okay, great, here's our roadmap over the next 3, 5, 10 years. And we want to be able to move into tokenization of commodities, equities, etc., what are all of the companies out there that look very similar to us in terms of the way in which Kraken has continued to grow, especially on behalf of professional traders? And they gave me a list. And we had these, you know, funny names out there. And I said, okay, right, well, like, what are the NinjaTrader guys doing? Like, can we go talk to them?

So your team gave you a list of like 20 companies that would accelerate this vision, basically.

Yeah. And then I forced everyone to use the product, and we use the product as well. Kind of gave us nostalgia to what, um, uh, Kraken had built. Um, more importantly, what was really funny is, uh, a lot of the insights and aspirations, um, and admiration, um, uh, um, that, that Jesse and Tom had when they built the company was based off of a lot of stuff that NinjaTrader built. So it was like there was this nice convergence of everyone on the same page, which is like, this is a good product. Let's go, you know, identify and see if they're interested in the first place. Um, now, now that's all well and good. You can say like, hey, that's FOMO, or you've got like the strategy.

So you identified the thesis, the team gave you like 20 companies, you went and played with the products. NinjaTrader was a great product, been around for 20+ years, 2 million users. And then you reached out to the company and said, would you sell?

Um, not— I, I would say like transactional order of operations, yes. Um, but the way it works is that like, here's our vision, here's what we do. By the way, like the NinjaTrader team, their board, and their shareholders, like, had zero clue, um, A, about crypto, um, and B, uh, about Kraken or like our size and scale.

So you have to lay out the whole vision. Here's what we want to do.

So we, we pitched to Marty, who was the CEO. I think he was really excited because he got it right away, which is that like we could bring NinjaTrader and what we want to do moving forward in crypto through his platform worldwide because they're only available in the United States. Vice versa, we could start coming in with our products that we've already innovated in outside the United States into the United States. So there was just a ton of synergies back and forth with each other. When we talked to the private equity owners of NinjaTrader, they just straight up were like, I don't understand crypto. We don't understand it. Doesn't make any sense. And the world's going crazy, most likely. Yeah. So I think for us, it was just this period of just—

so you had to sell them a little bit.

Absolutely. And we had to pitch them the same way you would pitch any investor on the value of our company, the value of our equity longer term, and like what we think we could do over a long period of time. And so, um, you know, a lot of it was just making the case to, you know, the shareholders of that company around why we thought the synergies would make sense.

Longridge Equity Partners— this is the most private equity sounding name I've ever heard.

Um, I mean, I mean, to be clear, I think to give them a lot of credit. And I, you know, I wear the venture capital hat on at the same time, and venture capital and private equity are like, you know, two different worlds at the same time, um, is that you got to be able to talk about, you know, the financial metrics and the substantiation of what you can be able to achieve. And like, you know, with the numbers, I think that's where our, our data science came in as well, which is like we just did a lot of work to show how Kraken works in the first place, and it's very synonymous and very similar to how NinjaTrader work. And because they were in the company so long, you can kind of, you know, take them along with the journey and say, look, if, if at worst we do exactly what NinjaTrader did, you guys are still going to be able to make a lot of money in the long term because we're going to be able to continue to provide value to our customers.

Yeah. Um, let's talk about the vision. So IPO is the big question I think on everyone's mind. Tell me, tell me about the plans there.

Well, I think, uh, you take a step back, um IPO shouldn't be in the vision in any capacity. It's not the end goal. It's a tool or a tactic. So the way I think about the world is just capital markets. And so the way I think about the world in general is that what are the tools that we need for where we are in Kraken's journey today? And what are the tools that we may need in the future in order to be able to execute that? I do think at some point, you know, will we, will we think about going public? It will be when our customers want it to be. And so you would ask, like, you know, are we going to create our own stablecoin? If our clients are asking for that, we're going to be agnostic to it. Once our clients think about counterparty risk and they're asking for that, then we'll think about if it makes sense for us to go public or not.

I don't follow that. Why do customers dictate a future? Isn't it the early investors? Who are saying, hey, Arjun, I've been an investor in this thing for 14 years, like, can we get some liquidity?

I mean, the great thing about Kraken is that the company is majority owned by its employees and its founders. That's one. So we've got a vision around like how we want to be able to achieve our goals. The second is that because of that, and because of our sort of leniency in the way in which the company was structured, is that there's actually a lot of liquidity available for our employees and people to buy the shares that are out there. I'm not saying you should, I'm not advocating you should buy it or not. It's just that when you think about liquidity, the availability for liquidity for early shareholders or investors or other firms that might have invested in the secondary, they have the ability to sell if they want to. It's there. It's pretty transparent. And so we don't need to solve for liquidity of shareholders. What we want to be able to solve for is Do you have, do you need the, do you have the tools in your toolkit to be able to build on behalf of your customers and your clients? And so that, that's the way we think, that's the way I think about it.

Um, why raise a round? I saw you guys are raising a, I think, $500 million value, $500 million round at a $15 billion valuation. Why do that before the IPO?

Well, I think one, um, rumors are rumors because, uh, I think over the last 3 years we've always had IPO rumors and we've always had, um, what I call fundraising rumors in the ecosystem. And if you look online and say, like, when was the last time Kraken raised a round, it said, I don't know, we raised a round like 3 years ago. There's a difference between, you know, having secondary transactions and raising a primary. And so for us, it's more about, again, private markets. What are the tools in your toolkit in order to be able to get stuff done? Et cetera, et cetera. I mean, so like transparently, I mean, we've looked and we've talked to folks, um, you know, for equity plus debt raises, but a lot of what we're doing is like, what are the financial services that we have on behalf of our customers? So nothing confirmed yet. I would say like that's all speculation, rumors for now.

Yeah.

Do you want to—

I don't— I'm sure you actually can't get into— I'll ask it anyways, but do you want to run the company long term?

Well, the way in which my incentives work at the company is I have to run it long term. And so, um, the, uh, this gets back to the incentive. Yeah, which is, I came up with it, right? Which part of it was that, um, if I'm coming in, how do you build trust with, uh, your shareholders, your employees, um, and the folks that are going to be working with you? Like, look, nothing that, um, none of our success, um, over the last 10 years, or even over the last year, any of the velocity that we've had comes without the product people, the engineering people, and the folks are, you know, working on this day to day. And so my incentives should be more in line with the way in which they work as well. And so I think, like, especially for someone coming in from the outside, not like a founder that's already been there, I think you need to make sure that you have skin in the game and make sure that you are incentivized the same way anyone else would be in order to be able to hit those goals. And that's why we structured it that way. So my want was to be able to make sure that I have something to continue to aspire towards or something to go get, which is the, you know, milestones that we want to try to hit.

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There are two product buckets I'm curious to get your take on specifically. So I know you guys have Ink and Krak and stuff like that, but specific to trading, there's perps and prediction markets. Maybe starting with prediction markets, I'm very curious to get your take on just like, hey, do you believe in prediction? There's one, there's one idea that says we don't need prediction markets because all liquid, liquid assets are the prediction in and of themselves. Sure. The other is Hey, this is a great new form of, you know, of a market structure. Polymarket, Kalshi doing great things.

Yeah.

Curious to hear your plans around prediction markets. Do you like them? Do you guys want to build them? Would you build them in-house? Would you white label someone like Kalshi? How do you think about that?

I go back to who are your customers and what's their intent.

You like the customers.

Yeah, I just think it's really important because, you know, people have a tendency to fall into this category of FOMO, which is that AI is hot, so I got to build this. Prediction markets are hot, so I got to go compete. But I think what's more important is that, you know, Kalshi and Polymarkets are great products. They have a certain amount of product-market fit. They're growing at a certain velocity. And I don't think you necessarily want to copy and say, like, we need to do the exact same thing. And the reason why that's the case is that the intent of the customers that are coming into those products is very specific to the types of trends or politics or, you know, sports, etc., that are, that are out there. And I think of that as like a different category and segment. There's going to be some overlap, but the more you try to bring everything together into one platform, my belief is the more you become like nothing.

It's— think of it as a jack of all trades master.

Yeah, it's kind of a, you know, Craigslist back in the day had like everything. And think about the amount of companies that have been built that are multi-billion dollar, you know, products that like specifically focus on one segment.

Are you doing that with the Kraken app though, or is that a separate app?

It's a separate app.

It's a separate app.

It's a separate experience specifically focused for folks that would be able to want to move, send, and store money and get yield. Now, by the way, it may or may not work, but the point is that we will continue to build products or partner with folks that have a specific intent and that are powered or enabled by our exchange, regardless of how the exchange continues to evolve.

Yeah. What about the Perp side of things?

It's the same thing. It's more, there's a certain set of—

But Perp should be more native inside the platform.

It can be. So, like, you know, the, again, I'll go back to the customers, the folks that trade you know, like equities and options aren't necessarily the same folks that think about commodities, are not the same folks that think about the next set of assets, equities, etc., and crypto, and then, you know, crypto futures, and then perps. You'd be surprised that the overlap of the types of customers are actually smaller and smaller. Like, the, the concentric circles are actually not that very concentric for these types of products. And so when you want to build these types of products, you want to make sure that your existing customer set can get educated on it and you can cater to a new set without ruining your customer experience. And I think everyone kind of forgets about that, which is even for the professional traders, there's segments to what that customer wants to be able to do. And the more you kind of just munge everything together, again, the more you become like nothing to your customer.

Yeah.

Which is, by the way, why Hyperliquid is so awesome is that it caters to the customer in a very specific way.

What I'm thinking about tokenization. So, I mean, if you guys went public, you would go public on the New York Stock Exchange or NASDAQ in like 5 to 10 years. Do you think that'll be the case? Like, do you think people will do— what's the right word for this— like IPOs on-chain? Like, would you guys ever just launch a token? I mean, not, not now, obviously, because the capital markets are 10 times bigger, 100, 1,000 times bigger than on-chain markets. But do you think on-chain IPOs will become more of a popular thing.

Yeah, you know what's really interesting is that, um, we're already moving in that direction, right? So, um, you saw how much money Pumped Up Fund raised within 12 minutes, right? I think it was roughly— I think it was like half a billion dollars, right? And, uh, what's different between that structure, getting access to global equity and raising that capital—

capital— that, that was an IPO, um, for all, uh, for all intents and purposes, like an on-chain IPO.

The, the first principles is they raise capital for what they want to do longer term. And then there's a certain amount of floats and circulation of their token. And so in the future, if more and more assets go on-chain, the question you have to ask is, what are the types of capital formation products that you can build, right? When you go public, you're either giving liquidity, or you're raising capital. And the reason you're raising capital is that you want to be able to have more assets on your balance sheet to be able to do something. And then capital markets have debt plus bonds, et cetera, that your company again has access to. So what will that look like for folks that want to be able to move what I'd call to the purity of on-chain? And so there are going to be steps along the way. I do think the capital markets are quite efficient in the United States in the way in which it's been structured. And so it will be inevitable, in my opinion, that you'll have a convergence between what you see here in the US and what will be like global liquidity in crypto. But let's take US out of this for an instant. Where do you have global liquidity for companies that want to have access to capital markets? In London, it's been trending down. Sorry, in England, it's been trending down. In Europe, it's been trending down. Rest of the world doesn't really have access. So if you're in Mexico or Brazil, any of these emerging markets, you don't really have access to the capital markets as much as you used to, because liquidity is either in some cases being sucked out, or you're just not large enough to be able to access that. And then private markets or private credit have been sort of stepping in. The problem with that is that the duration of liquidity, it takes longer and longer for your liquidity to come back. So I actually think that people used to say that, hey, that's a feature, not a bug. I think it's an extreme bug because it just means that people don't have the ability to get access to capital.

Which part's a bug?

Where you have long duration, a longer timeframe to be able to get liquidity. Oh, yeah, if you're investing into these assets. And so that means these companies don't really have any choices. They don't have the ability to grow if they want to. And they don't have the ability for somebody to be able to underwrite it. And so I do think the world of having capital formation issuance through global liquidity and in the crypto ecosystem for traditional private companies that may want to go public outside the United States, I think that'll happen first. And so I mean, we've already have these discussions and people are coming in every day, which is like, can I take my company, you know, public on your exchange?

People do come to you with that.

Yeah, we get inbounds on that every single day, especially after—

Crypto companies?

I know, even regular companies.

They say, I want to go public on Kraken.

Yeah, they're basically like, can I just, you know, can I take my company public on your, you know, global liquidity exchange?

I've thought about this a lot for Blockworks because our audience is crypto natives, right? So would like, if, you know, you— we could go sell a story to Wall Street right, data and analytics and media and all this kind of stuff. And, you know, we could— it's kind of starting a new conversation.

I don't think you need to sell it to Wall Street because now you've got, you know, Global Street, which is like—

no, that's what I'm saying. We could go the traditional way, would be going to Wall Street and trying to sell this, put on the suit and sell the vision or whatever. Or, you know, we've got 15 million people who listen to our podcasts.

That's right.

Yeah, that's the, that's the new— that, yeah, Global Street.

Sure. Yeah. And, and I think what's, um That's a good name.

Yeah.

I think what's more interesting is that people just want, similar to how we thought about customers want access to yielding assets, we call it safe assets, or we call it demand assets. So mostly US assets today. But what does it mean for, you know, a company in Europe that might be in Spain that's got, you know, €50 million revenue, €100 million revenue, to be able to take their, you know, equity on-chain? And to be able to have access to global liquidity and global financial products. Where are they going to go public? There isn't anything that's out there. There's a lot of global liquidity that's just sucked out of the European ecosystem. But if you've got access to global liquidity that wants to be able to trade, then it's not just a Kraken thing. It's a Bybit thing. It's a Binance thing. It's a Kraken thing. It's a Coinbase thing. Like, everyone, like, through these venues and have access to what I call on-chain liquidity.

Arjun, this is great. As we think about wrapping it up, anything that you are— I'm curious, like, what you see in the market today, just from your seat, that feels very obvious to you that maybe isn't obvious to other people?

In the crypto ecosystem or just overall?

Honestly, just in the world in general.

I don't know. I think we've been just talking about it for so long. Maybe like crypto and AI and all these systems of global liquidity and access seem obvious to us because we're in it on a day-to-day basis. But I don't think it's obvious to like the everyday person. I still think when you use the word crypto, for some folks, it's synonymous with like nefarious activities. And the And I still think that traditional fintechs, traditional banks, specific sovereign nations just think of this as evil. And I'm not sure why they think that's the case. Maybe they think it's like a threat to their system. But if I go back to first principles, if you really want to do what's best on behalf of your constituents or your clients, then I just see no reason for you not to adopt crypto. Like, everything you're doing is inhibiting, you know, power and control in the hands of, like, what I call the post-World War II brick-and-mortar ecosystem, rather than in the hands of, like, you know, ourselves. And the more I think about it, it's a, you know, it's a, it's a, it's like a socioeconomic issue. It's a political issue. And, you know, and it's a zero-sum issue for other folks that are out there. And I do think like a lot of people are, you know, a lot of people think like Peter Thiel's got this thing where if everyone's looking in this direction, people are forgetting about this direction. I do think that while we have this tailwinds in the United States and other areas in the world around crypto and the regulation, I still think it's still just that close or the tailwinds become headwinds very quickly if, you know, there's another systemic risk or someone blames crypto again for something that might be more nefarious. And so I think about that, and I'm paranoid about that every day, which is like, how do we continue to educate people around why this is actually better for them versus what they're used to today?

Yeah, maybe double-clicking on that. How much— how worried are you that— I think the consensus idea in crypto right now is that crypto has won in DC.

That's right.

How worried are you that crypto has not actually won? We've made great progress, but like, let's say— so I was looking on actually Polymarket market. I think AOC is the leading candidate for the Democratic Party in 2028. So let's say AOC gets elected in 2028. Yeah, probably not great for the industry. How, how much does that concern you?

It's, it's concerning. So when we don't have a rule of law, or we don't have, um, we don't have this set in terms of, you know, um, like what we call today like the Genius Act and the market structure build, If it's not already, like, commonplace to say, hey, crypto is regulated, and it's safe on behalf of the customers that we can build in that direction, we have our guardrails. If that doesn't happen, I think we're always going to have the risk of, you know, what had happened with the previous administration. And I don't want to say like, one person is good or bad, like the Democrats, or maybe even AOC, they might you know, come to light and say like, this is actually better for the customer. But I think the only way to get there is to continue to educate them on why it's better. Right now, I think we've also moved in this direction where we're not willing to educate the other side, and so that they're going to take a stance that's in the opposite direction. So again, I go back to, if we can't educate them, they're not going to care about it. And this is the same about, you know, capital formation, markets, banking and financial services. The more and more you see folks saying like, we want to regulate and we want to protect, The more and more you're basically saying like, we're just going to put the hands of the capital back into either the government or to, you know, JP Morgan in some cases. And I'd hate to live in a world where we're just putting more of the capital back into the hands of the institutions versus putting the capital back in the hands of the individual.

Yeah. How much, what percentage of your time do you spend in DC right now?

Well, there was a time where I was there like once a week. Wow. And the same thing for, you know, very specific states. And that's same, you know, like, spent a lot of time in Wyoming. You know, Senator Lummis has been like a huge advocate for what we've been doing in crypto. But I think you're seeing the same thing in Florida and Texas. And you're starting to see the same turn in places like California. So I'm, I'm more optimistic that you will hopefully see that same thing here in New York, while they might be sort of last in transit so far. But I think the reason you could say that is, look, while we're in tailwinds, and while we can educate is Hey, look where Europe is. They're already ahead of us. Look where Asia is. Look where China is starting to move in that direction. And so do we want to be behind our competitors and other sovereign nations similar to how we think about AI, or do we want to be ahead of the game? And I think most people so far think of this as a nonpartisan issue, but it's always at the risk of it becoming a partisan issue.

Yeah, I agree with that. Last thing on my mind was just, you've seen— you've, uh, it's a very interesting career, like, in both operating and investing. You've seen a lot of tech cycles. Do you have thoughts on where we're at in the— I guess maybe two-part question— where we're at in the crypto cycle, and does like the historical 4-year cycle still exist?

So the— so I'd say the historical 4-year cycle All of this goes down to supply and demand, but it also goes down to psychology and sentiment. And so what did you have before? You had a, you had a bunch of uneducated people coming into the ecosystem, not just into crypto, but like, just the market. So a record amount of capital into companies, record amount of SPVs, record amount of just like throwing money. And so the valuations were high. The companies didn't have a certain amount of intrinsic value. There weren't, you know, unit economics or metrics behind it.

Right. Government threw the money at the people with stimulus checks and then people threw the money at the companies.

Exactly. And then, and then the folks that had access to capital or were raising funds, right? Like the mega funds to the emerging, you know, fund managers, et cetera, which is where obviously I spent a lot of my time. They were just throwing money left and right, which is like they would make an investment decision in you know, not even 24 to 48 hours, which is fast, but they make an investment decision in like 30 minutes. When you have that type of hubris, or you have that type of money that's being deployed, you're bound to invest in things that are not going to work or they're going to blow up, or I would call it, you know, versions of systemic risk. And so I think the thing that has been sort of fascinating for me is like these cyclicality where they go up and down in these undulations. These, these supply and demand characteristics of things going up and down are actually happening at a more compressed rate. And they're happening per segment. So you can say, you know, crypto has had its cycle of supply and demand, where the valuations of the products have gone up and down, even this year alone, like 3 or 4 times, in terms of like companies that are in that ecosystem. You can also see like the alts, the the alt season has had its own sort of undulations back and forth.

Yeah, there's kind of cycles within these things.

And so these cycles are really interesting. And so if you go back in time, and we actually have graphs for this, I'm happy to provide it after this, like we look at it really closely, is that the amount of times the time period is continuing to compress. I do think when you have more global liquidity, the compression is going to happen at a faster and faster rate. I don't think that's actually a bad thing, which is It means it's more transparent. You can see these curves. And you can see what these inflows and outflows look like in terms of where hubris is. And if you can see it, and it's more transparent, you should be able to pull back from it and be more disciplined. But, you know, humans are humans, you got the 7 deadly sins, and you've got these memetic behaviors where people will end up sort of, you know, forgoing the data that exists out there. And you have all these market ups and downs. But I think crypto— people say we're in the early innings. I think we're like right in the middle. In terms of like how we quantify it. And so we might have another, you know, 2 years of continued growth, and then there's a possibility of more systemic risk. Yeah, cool.

Arjun, thanks, man.

Yeah, thanks for having me. Yeah, appreciate it.