About a decade ago. Back in the early days of crypto, the industry was kind of like a wild West.
You had a lot of the sort of quirky characters, very techy people involved.
That's oga Karif.
I ended up being the first person here at Bloomberg to cover bitcoin and crypto, and I got sucked in.
It was an easy beat to get sucked into. This was an industry full of big personalities, basically passionate nerds who believed in the power of cryptocurrency as a way to manage their money beyond government oversight, but who didn't know a ton about business.
For instance, there was Charlie Shrem who started bit Instant in his early twenties. It was a way to use bitcoin for payments at merchant locations, and eventually he ended up going to prison because he didn't register it as a money transmission business. That was also Raja Or, one of the first investors into the bitcoin ecosystem. He was called Bitcoin Jesus because he kept carrying on about bitcoin at various barbecues and parties everywhere he went, prosplytizing exactly right.
And so this were people who wore T shirts and baseball hats with bitcoin logos on them. This was a very sort of tight knit community that really really believed in bitcoin and crypto.
In twenty nineteen, one of those T shirt wearing guys named Sam Bankman Freed launched an exchange platform dedicated to crypto. It was called FTX, and it took off. The media gushed over SBF like a kind of celebrity.
One of the most successful entrepreneurs in the world of cryptocurrency is Sam Bankman Free.
The Michael Jordan of crypto if you will.
Twenty nine years old, SBF is the youngest billionaire in the US and the quickest to reach the fortune four hundred less.
And then in late twenty twenty two, it all changed and those commentators changed their tones. Bateman Fried and his co conspirator still billions of dollars from FTX customers. Authorities arrested him last night after US prosecutors filed eight criminal charges. Lots of FTX has sent shockwaves across the cryptocurrency industry. A lot of people watched FTX crumble and saw it as the beginning of the end of crypto. Plenty of retail investors said, I don't want to touch a digital
coin with a ten foot poll. But interestingly Wall Street is taking a different approach. Today on the show, I sit down with Bloomberg's Olga Karif, a senior reporter on crypto. We talk about the banks that are embracing the tech that underpins cryptocurrency and what it means for the rest of the industry. This is big take from Bloomberg News. I'm your host, Sarah Holder.
It's a big change of guard I think is happening in crypto. Where in the early days you saw all these people in T shirts and baseball caps, you know, true believers in bitcoins potential to change the world. Whereas now you see people in business suits, people who used to work at Goldman, people who used to work at JP Morgan, and they're either leading this efforts at those same firms or they went into some crypto companies in their leading charge there.
Did their entrances come after the collapse of FDx or have they been in the game the whole time.
A lot of these companies have been dabbling in blockchain or crypto for years, like Franklin Templeton, for instance, has been working on this for over seven years. By now we have JP Morgan is exploring deposit tokens that would represent customer deposits on blockchain. We have Goldman involved in a variety of ways. We have a bunch of companies involved stable coins which basically represent FIAD, So for instance, Kanter, Fitzgerald, BNY, Melon,
and Blackrock. So a lot of these companies. You know, I don't think FTX changed things for them that much. But I think what FTX did change for a lot of retail investors is their belief that a crypto native new company is maybe less trustworthy or less stable than somebody like you know, Blackrock or Goldman, or somebody with experience in the traditional financial world, somebody who adheres to regulation, somebody who's been around for many, many years.
Are all the big banks getting into this or have some of them remained more cautious when it comes to crypto.
You know, it is not all I think it's fair to say that a lot of them are dabbling and experimenting with this, but they're waiting for more clarity from US regulators as to, you know, what they're allowed and not allowed to do. Like for instance, JP Morgan is exploring these deposit tokens, but it will need an okay, from baying regulators to launch something like this. We are still waiting for legislation clarifying stable coins and what they
are and how they are to be regulated. So there's still a lot of regulatory uncertainty in the US market.
And what happened last month in January that accelerated this trend.
Oh my gosh, it was a huge month in crypto. This is when exchange traded funds that invest directly into bitcoin finally launched. This has been tried for over ten years. You know, many companies filed applications with the Securities and Exchange Commission trying to get this approved, and they all
got rejected. And then black Rock submitted its application last summer, and then Fidelity followed suit and a lot of other traditional financial firms, and so finally the SEC approved the spot bitcoin ETFs in January, and they've already attracted several billion of inflows. So it's basically considered to be a pivotal moment that signaling mainstream adoption of bitcoin and possibly crypto.
After the break, we dig into exactly what this ETF means and how it might reshape the way we all think about crypto. We're back with Oga Karif, a Bloomberg senior reporter on crypto Olga, what did it mean that the SEC approved the first bitcoin ETF in January?
So what it meant was that anybody with a brokerage account can go in there and the same way they can buy stocks or bonds, you could also invest into a spot bitcoin ATF. So basically this removed a lot of the hustles off investing into bitcoin. So previously you had to open an account on a crypto exchange, get verified, It took a while, and then you had to figure out how to buy bitcoin and how to store it so it doesn't get stolen. This is like a big
issue in crypto. You know, you want to keep your coin safe and how do you do it? And it can be complicated. And so now you can invest into this bitcoin ETF through your brokerage and it's as easy as buying shares in a company. And so this essentially opens up crypto to your typical not tech savvy, you know, just normal every day user.
And what does all this mean for the crypto industry of the future.
So I think this means that once this regulatory stuff gets clarified, I think crypto is just going to be your typical part of your financial system. I think we're not gonna view bitcoin as an emerging, quirky technology that only speculators invest in. I think it's going to impact Bitcoin's volatility. Possibly, it's going to be perhaps a more stodgy place versus something that's very volatile, very cutting edge.
Today the baseball caps have turned into suits, as you said exactly, does that undermine any of the early spirit of crypto.
I think that undermines it the great deal because the early adapters of this technology, they wanted to have money that the government cannot touch, that it doesn't have oversight off. And what it turned out to be is that the government does want oversight of this money and very much oversees it. We've seen a lot of enforcement actions from the SEC, from the CFTC, from the Department of Justice. This goes completely against the grain of what the early
adopters believe and wanted. But I think at the same time, this technology and this coins they would have been very niche If that continued to be the case, they wouldn't be the same kind of mass adoption that we are starting to see now.
Olga curieve Thank you so much.
Thank you, it was my pleasure.
Thanks for listening to Big Take from Bloomberg News. I'm Sarah Holder. This episode was produced by Julia Press. It was edited by Mike Reagan. It was mixed by Alex Uhia, fact checked by Tiffany Choi. Our senior producers are Naomi Shavin and Jilda Di Carli. We get editorial direction from Elizabeth Ponso. Nicole Beemster Borr is our executive producer. Sage Bauman is our head of podcasts. Thanks for tuning in. We'll be back tomorrow.