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Each and every week we provide in depth research and data on some of the two thousand companies and one hundred and thirty industries.
Our analysts cover worldwide.
Today, we'll look at how one e commerce company is being impacted by a US China trade war, Plus what's guess why the retail giant Walmart forecasts a lower than expected profit for the full year. But first we begin with the auto sector. This week, shares a Rivian Automotive tumbled after the company warning it's poised for a first ever decline in electric vehicle deliveries in twenty twenty five.
For more on this and the EV sector, guest host Emily Griffey when I were joined by Steven men Bloomberg Intelligence Global Autos and Industrials research journalist. We first asked Steve how the company is doing.
I think they execute it very well in the fourth quarter and for the most part in twenty twenty four, they actually had a gross profit in the fourth quarter, first ever if you take out some of the non cash items and if you take out credit, they still broke even as they promised. But the only thing is they've you know, they have huge operating leverage and improved costs, but you know, they just can't get enough volume through the plants to really benefit from the cost cutting initiatives.
And what do you attribute to that not being able to to.
Do so, Yeah, you know, their guidance were were lower than expected. Uh, there's some concerns about you know, Trump Trump administration cutting the seventy five hundred EV tax credit denting sales, so you know, and then the other thing that you know they're planning to do is shut down the plant for part of the fourth quarter to really uh you know, bring to bring on the R two, a smaller a smaller.
Mid sized vehicle next year.
So there's some kind of top line headwind that's impacting. But then again, look, you know they've done a really good job you step back, They've gonna done a really good job in rationalizing their capacity, their costs. I think it's just a matter of time that we're going to see huge profit windfall for them when they get the volume up.
So, Steve, what's the feeling in the in the EV marketplace these days about where demand is is on a global scale.
Here for EV's.
It's still strong.
Now we're actually predicting that EV sales will be up single digits similar to last year. And then in twenty twenty six, twenty twenty seven, I think that's when things will improve. Like if the seventy five hundred dollars EV tax credit goes away, there are a lot of new affordable vehicles coming into the market, so I don't think
the consumer will need the seventy five hundred dollars. So I think the man will improve, and I think we'll have to wait until twenty twenty six and specifically Rivian.
We're very positive.
I think they are going to launch a new mid sized vehicle that's gonna resonate well with the consumers.
What did you learn in Rivian's report about just how the company is reacting to the prospect of terras.
It's something they can't control, obviously, but you know, I think they were anticipating the seventy five hundred dollars going away. They they don't expect that to continue forever, and that's why they took that cost cutting initiative at the the middle of last year and really reduce costs by more than thirty percent, and that that will allow them to
actually have more flexibility on pricing. And the second thing they're doing is they're you know, they understand what the what the consumer wants, you know, they want a more affordable vehicle, and that's why they're going to launch the R two in early twenty twenty six or late twenty twenty five.
So they've anticipated that.
Steve, we can't talk to you without talking about Tesla. You know, it's off about the fifteen percent year to date, but it's you know, almost seventy five percent, little more than seventy five percent or the trilliing twelve months. It's kind of the typical volatility that we're I guess used to with Tesla.
Here, what's the feeling out there today?
Is Elon Musk a net positive or or maybe even a little bit of a net negative for this stock right now?
I think I think the concern is really some of the sales that's been pretty weak in the US and as well as in Europe, and I think the rhetoric and there's you know, there's news out there, there's surveys out there saying that you know, Elon Musk is having
an impact, you know, his involvements with with Doge. But at the end of the day, you know, if I step back and look at you know, the product rollout, the product rollouts that they're coming up with this year with a new model why, I think that you know, the model why rollout is having some impact on current sales because customers are actually waiting for.
The new vehicle.
And also there's an affordable model also from Tesla coming out later this year. I think, you know, it's gonna be a you know, a slower year for Tesla in terms of sales. But I think in the second half and in the fourth quarter it will definitely pick back up. There's already signs of, you know, strong demand for the Model Y. If you look at China, they start delivering the new Model Y and and you know, and consumers are really liking that vehicle.
Right now, I have to ask about the cyber truck. Anecdotally, I've seen this vehicle everywhere on the streets of New York City. But I'm not sure if like I'm just noticing it more, but what are the sales looking like for the cyber truck.
The cyber truck is It's not going to be like a high volume vehicle like the Model Wi or three. It's still a niche market. I think it helps Tesla build the brand as a high tech company. It doesn't resonate with everyone, but it does resonate with a large group of consumer that I do believe that Tesla has the technology, the manufacturing technology and the vehicle technology. Autonomy of technology are thanks to Steve Man, Bloomberg Intelligence, Global
autos and Industrials research analyst. We move next to the enterprise security software company sale Point Technologies. Toma Bravo backed sale Point recently completed its initial public offering on the NASDAQ sale Point Race one point three eight billion dollars in its debut, and this marked the first major tech IPO.
Of the year.
For More, co host Alex Steele and guest host Norma Linda were joined by Mark McLain, CEO of sale Point Technologies. Mark's first asked whether sale Points IPO meshes well with the company's long term vision.
Well, I think in general, we've tried to stay focused as a business on building great business with our customers and winning in the market. In some ways, what happens in the financial ownership of the business matters a lot, but it doesn't actually affect our day to day lives, if you will. In finding and securing customers and making them successful, that's certainly always our focus. We do think though, that the IPO gets us back out in the public.
Eye a little more.
The importance of what we do and what's called identity security is raising an awareness and important to the large companies all around the world that we typically serve, and this will help with our visibility, it'll give us future fuel to grow the business. We've had a great run as a private company with Tomo Bravo.
Some folks know this.
We were public before and before that we were runed by Toma Bravo. It's a little bit of an interesting story of a PE backed IPO, same PE backed IPO again. But all the while, our focus continues to be on doing great things for our customers and helping them secure their enterprises with identity Well.
Cyber threats have continued to increase. How does sale Points stay ahead in identity security?
Yeah, what's happened in the world of cybersecurity. There's a lot of shifting things in the landscape. A simple metaphor that sometimes helps folks is that the.
Bad actors are the attackers.
Not so long ago, their metaphor was to break the glass and grab the jewels and run. Quite often now, and we've seen this in breach reports, they'll try to sneak in the back of the jewelry store, poses an employee and eventually try to quote clean out the jewelry store. And that's because they've been able to impersonate, so to speak,
an employee, and that's a comp reized identity. What we do is help businesses, typically mid to large enterprises around the world, focus on understanding all the identities they have, both human and non human, all the data they care about protecting and making sure that at any point in time, all of those connections are secure. It's a pretty complex problem at scale.
Who are your competitors right now and how can you help differentiate?
Yeah, the truth is we've got more I like to call them PowerPoint competitors than real competitors.
I mean, there's folks that are.
Talking about this space quite a bit, but if you look at what happens day to day when we're out in the market, there's very few companies that are capable of delivering the success at scale that we have. We're fortunate to be in almost half of the Fortune five hundred, about a quarter of the Fortune two thousand, and they're generally throwing out older legacy products like from Oracle and IBM.
There really hasn't been a strong challenger to us in this key space, and that's part of what I think has gotten investors excited about our potential for long term, durable growth.
So another thing that's been in conversation, I'm curious, how are you all planning to address your debt load?
Well, you know, one of the key use of proceeds will be to pay down a lot of the debt. We actually had a little more debt about six months ago. Our backers Home of Bravo chose to take some of that debt out with equity before the IPO, and we'll use the bulk of the proceeds from the IPO to pay that debt down significantly, putting ourselves in what they call it debt zero, meaning we'll have as as much more cash as we have debt, which from a financial profile standpoint makes investors really happy.
Why do you guys decide to do the IPO?
Now?
We were just talking about IPOs in general, and I was talking about an LNG export that went public at seemingly a great time and it didn't go so well. So I wonder why strategically you guys chose right now.
Well, we've been watching markets as everyone has, and I think we were really pleased with the progress of the business.
We went private about two and a half years ago.
As part of our S one finaling, we talked about the fact that as of our third quarter last year, we'd grown the business at thirty percent. We've been able to deliver non gap margins of about fourteen percent, and had a strong sense that durable growth we can, and that was at scale. We're over an eight hundred million dollars revenue business now and investors don't see a lot
of profiles of growth at scale with profit. And I think our sense was that the markets were kind of hungry, so to speak, for new issuances, particularly I think in technology security has been considered a.
Really good market for a long time.
I think we looked like a company that would fit many of their requests, so to speak, for a durable growth company in the security space.
How are regulatory shifts driving demand for identity security solutions as enterprises continue shifting to the cloud? How a sale point evolving its offerings?
Well, it's interesting you mentioned that regulatory is indeed part of the landscape we're addressing. Sometimes, you know, audits or the threat of failed audits or not being able to comply with regulations is a driver. But increasingly our space is less about that. Not it hasn't moved away from that,
but it's less about that than truly securing their data. Again, what's happened is this concern that data can be compromised through this lens of identity, if a bad actor can somehow, you know, get in, break in, steal an identity, or in some way get access to data through those identities, they can do a lot of damage. So that focus on truly protecting the data is really more of an issue today than just regulatory compliance.
What's it like attracting talent right now in the market, Well, i'd.
Attracting talent is never easy in a very competitive technology market. I think we're very fortunate at sale Point. One of the things that we pay a lot of attention to is our culture and our values and how that shows up. And as you probably are familiar, a glass Door runs around and surveys the world and tries to understand how companies are doing. We're super pleased they released those results recently.
We were number seventeen in the world, and if you want to cut it by an interesting factor, we were the highest ranked tech company with under five thousand employees on glass Door. I think that speaks a lot about the kind of culture and the values we live out in our company. It attracts and retains very good talent, and we're very fortunate.
Our thanks to Mark McClain, CEO of sale Point Technologies. Coming up, we'll look at how banks are nancing for the energy transition.
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This week we focused on a Bloomberg Big Takes story entitled tem News Rise was aided by Trump? Now he poses a major threat. You can find it on Bloomberg dot Com and The Terminal. The story looks at the online marketplace Temu, operated by the Chinese e commerce company p d D Holdings, and it talks about the obstacles TU faces from US China trade war.
For more, guest hosts Matt Miller and I.
Were joined by Spencer Soper, Bloomberg News Technology and e Commerce reporter First ass Spencer to tell us about Timu and how it may be impacted by a China US trade war.
Basically, this is an online marketplace full of discounts. It's kind of like a dollar tree in your phone. You can find all kinds of products. And the big differentiator here is that they're just really really cheap in terms of prices, oftentimes like half as much as say like
Amazon or Walmart, or even even less than that. It's, you know, kind of sprang onto the scene in twenty twenty two, and it really capitalized on this deminimous loophole, which is basically a tariff loophole that originated in the nineteen thirties, and it's it's mainly for like travelers coming back with gifts and their suitcases and that sort of thing, so they don't have to get bogged down and paying
tariffs and duties. But as e commerce emerged and cross border e commerce emerged, it became a way to ship products directly from like factories in China to shpe in the US without paying tariffs and duties, which has helped them beat some prices from US retailers.
I love the way your story starts out, which is in a town that I'm not going to try and pronounce, but a Chinese town that's twice the size of Chicago with a lot of blade manufacturers. I actually looked on the Timu dot com website and the first thing I see is a sharp sword, a stainless steel sword for four dollars and seventy five cents and a nail cliper.
Probably says that probably says more about you because of their algorithm than it does about FEMO.
Well, I'm looking to be fair, I'm using the Bloomberg Radio Studio computer.
I haven't logged on myself.
But if they also have a nail clipper manicure set for a dollar eighty six which has twenty three different tools in it, so what a price. But you talk to a guy in China who has a clipper company, right, and he said he saw an opportunity during COVID. He used to manufacture and probably still does products for other brands, but now he's selling direct to consumer with this.
Yeah, and that's the big thing is that the Chinese factories are really looking to diversify on you know where they sell, uh, and so this this factory in particular, Yeah, they made a lot of these components that were used
in name brand raizors like Wall or Remington. Those sorts of things, and then they realized, you know what, we could actually sell direct to consumer, especially during the pandemic when people were giving themselves haircuts at home and getting pets and they need to give it, you know, groom the pets. So it basically gave life to this uh uh,
you know, direct to consumer push for this company. And they had tried Amazon and they found that team who was just a lot a lot simpler for them in the sense that they weren't, you know, fighting for every sale on Amazon and paying for all the advertising and you know, you you really have to run a sophisticated business to sell on Amazon. And they found it a lot easier on Temu and Sense where they could just send the blades to Timu and tim who took care of everything.
So what's the fate or the expected fate of this international tax exemption, this loophole, this eight hundred dollars loophole, because that seems a central strategy for TEAMU in terms of undercutting Amazon and pretty much everybody else.
That's the million dollar question right now. I mean, it's not the only Evantage team who has it's certainly one of them, and it certainly helped them be a differentiator, and we're still not exactly sure what's going to happen. You know, Trump made this mandate to eliminate the loophole, but then backpedaled on it. You know, they have to
figure out exactly how this is going to work. And once we know exactly how it's going to work, then businesses are going to look for potentially other loopholes or that sort of thing. So all of this stuff is still shaking out. The bottom line is you could see consumers take some price increases, you could see factories taking a little bit less to try to share in the pain, retailers cutting their profit margin. So generally, when these kind of things hit, it's not like a one size fits
all solution. We'll see this. We'll see the pain of any of these tariffs supply differently, you know, throughout throughout all the players, depending on the position of strength that they're in.
I mean, in reporting on this story, Spencer, did you note that many of Amazon's products are made in China as well. In fact, when I look through Amazon for any specific goods, I tend to notice a lot of brand names that I've never heard of or can't pronounce. A lot of times they are just a bunch of consonants thrown together.
And those products are all made in China.
So Jeff Bezos or you know, the other shareholders he only owns nine percent now, are also going to fall victim to this tax if if it's enacted.
Yeah. What the difference here is Misson wants to offer you quick delivery. So oftentimes what you buy on Amazon is already in a warehouse in the US, meaning it was you know, put on a big cargo container shipped into to a US port, and the value of that cargo container was above this demnimous loophole, so they paid
the tariff on those goods. The difference here is it's being you know, packed in China to be shipped directly to you, in which case, uh, you know, that individual item is coming in under this eight hundred dollars de minimous threshold, in which case no tariff supply. So that's the big that's the big differentiator. I mean, so much stuff is made in China, whether you buy it in a store, on Amazon or whatever. The the you know, source of a lot of these goods is still the same.
It's just a matter of the of the you know how how it navigates into the US, all right?
Thanks to Spenser Sober, Bloomberg News Technology and e Commerce Reporter.
Each week we look at research from Bloomberg n EF. They're the team at.
Bloomberg that tracks and analyzes the energy transition from commodities to power, transport, industries, buildings, and agricultural sectors. This week we look at how banks are currently financing the energy transition for more. We were joined by Trina White, Bloomberg b n e F Sustainable finance analyst. First ask Trina how she looks at banks and how they finance energy projects.
So I focus on what's called our energy supplied banking ratios, and that's where we put bank financing for traditional energy supplies, so for fossil fuels things like yeah, coal, oil and gas into the context of what they're doing on sort of the newer energy and the cleaner energy side, so low carbon technologies like wind, solar, batteries, hydro, et cetera.
So we take and nuclear, Yes, nuclear, we would consider it to be low carbon as well, and so that would be in the numerator and then we put that into the context of their continued support for fossil fuels and the denominator. And we're looking at this across both you know, a global average and then also for individual institutions, and of course that differs significantly by individol bank and the market that they're operating.
So tell me about the change in sentiment that we've seen. Because last uh, in the last administration a few years ago, when we were watching Senate hearings of any kind with bank CEOs, the Democrats especially would gang up on these bankers and say, how can you finance fossil fuels? You know, almost as if it was somehow illegal to finance the operations of oil and gas companies. Now, it seems with this new administration like you're gonna see the exact opposite happen.
Right as we see banks pull back from for example, DEI. There's a great story in the Bloemberg terminal about that. I wonder if we're gonna see banks also pull back on funding of solar and wind and other renewables.
So when Wynn was boring, you know, in the opposite direction, and it was you know, very favorable both here in the US and internationally for banks to make these you know, really strong commitments to climate. We saw these climate alliances for financial institutions take off. So in twenty twenty one, we saw all the major banks sign up to the Net Zero Banking Alliance and sign on to reduce their emissions in line with one point five degrees their financed emissions.
We've actually now seen all of the major US banks, Canadian banks, and a couple of other international banks pull out of the Net Zero Banking Alliance in just the past few months, and that's in direct response to the sort of switch in political pressure. None of these banks have actually you know, pulled back their internal commitments and
particularly their sustainable financing commitments. So while they may see it very very difficult to decrease their financed emissions and their support for fossil fuels when you know the administration is pushing a drill baby, drill agenda, none of these banks want to, you know, stop supporting what they still of you as the future, which is these low carbon technologies. And so if it is profitable, if the returns are there, they're still going to be financing when they're still going
to be financing solar. But that key question remains here in the US is you know, will the tax incentives that made some of these projects profitable, Will they remain in an administration that's not prioritizing it.
What banks are doing well, maybe which banks are kind of lagging.
Yeah, So a lot of the banks in Europe have really high ratios for all the reasons we might expect a favorable policy environment for renewables. They're not oil and gas exporting countries. So BNP Pariba had a ratio of more than three times as much low carbon financing as fossil fuels. That's actually up from one point four in twenty twenty two, and so they've more than doubled their ratio, and they did that primarily by shrinking their support for
fossil fuels. So they said, we're not underwriting bonds for oil and gas expanders anymore. That is a pretty European specific strategy. That's not going to work for a Canadian bank. It's not going to work for a US bank. Among the US players, the highest ratio is about one point
zero four. So Bank of America financed about equal parts low carbon solutions and fossil fuels, and that's primarily in part because of their long standing participation in the labeled debt markets, so underwriting green bonds or green loans.
I wonder about specifically the finances to support a nuclear kind of revitalization.
I always think it's an exciting story because of the vast amount of power it could provide, But it seems like a moonshot in terms of how much it would cost to build actually build nuclear plants, and how long it takes, how much regulation red tape.
There is around it.
I mean, we saw I think one plant open in.
Georgia and three Mile Island and three.
Miland is going to come back on, right, But it just takes so much money and time to get these things going.
Yeah, that's absolutely right. I mean it is, you know, great that nuclear is sort of comparable in what it can power to cold right baseload and sort of dispatchable and and and cheap once it you know, once it's actually generating, it's just bids into the market and about zero but very very expensive upfront, very expensive, a lot of political capital, a lot of time actually a lot of the sort of intermittent renewables are much easier to build,
much much easier overall to build solar and wind. But then we run into you know interconnection problems, so and intermittency issues where you need you know, battery storage to make up the gaps. So there's always straight offs to different types of energy. I think nuclear would be fantastic, but you know, wind and solar are probably what BDF projects to be kind of the majority of this low carbon solution.
Our thanks to Trina White, Bloomberg b n e F Sustainable Finance analyst. Coming up on the program, a conversation with the founder and CEO of Token Metrics.
On the crypto space. You're listening to.
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Move next to the retail giant Walmart. This week Walmart forecast a lower than expected profit for the full year. This suggests that the uncertain economic environment is hitting even the world's largest retailer. For more, guest hosts Emily Grafe and I were joined by Emily Cohne, Bloomberg Consumer team Leader. We first asked Emily for her take on the latest at Walmart.
This was a consistent guidance in line with what they laid out last year for the full year as well, but signaled that the you know, the world's largest retailer, Walmart, isn't immune to the risks that are out there for the broader economic environment. Granted, Walmart has historically given conservative outlook to start the year off, but this definitely showed, you know, and they they used the word uncertain. I haven't checked, but a number of times on their analysts call.
That was sort of like the theme of the call.
What else did they say for this, I guess we could call it, yeah, conservative or negative outlook? Did they mention it's because consumers are pulling back, people are looking for bargains. I guess, like, what did we learn about the consumer in this report?
Yeah, it wasn't it wasn't negative. It was it was in line with what they offered last year three to four percent growth. But I think, you know, and I think that's taking into account near term investments. So they mentioned things is like consumer trends and near term investments like the cost of the acquisition of the smart TV maker Visio. We're still seeing those costs take a hit on the bottom line. But yeah, they said they haven't
incorporated yet the risk of tariffs into their guidance. We also saw US retail sales dip in January and core inflation pick up, So I think those are those are all things that are weighing on retailers, and Walmart certainly isn't immune.
How about on the tariff front, I mean they uh am looking at your bloombergers right up here, talk about tariffs. Walmart imports food from Mexico and general merchandise products like microwaves in China. What are they saying about tariffs? Is that incorporated in their guidance.
They said they have not incorporated tariffs into their guidance before. Tariffs aren't new for a company like Walmart. Obviously, we saw import tariffs, you know, during the last Trump administration. But they're doing what we've seen most companies do so far this year, which is say it's uncertain, we're not sure what's going to happen, and we're not incorporating tariffs into our guidance yet. But yeah, I mean, food prices
were up for them. General merchandising prices I think came down a little bit.
I actually learned something new about Walmart, and that's that you can buy a pre owned Chanel bag through their website. So I guess they're getting into online sales. They're beefing up their digital operation to include items like collectibles and pre owned Chanel bags. Wow, you think about that, I mean luxury items at like a discount retailer.
Yeah.
So Walmart is still small compared to Amazon, but in terms of e commerce, but that's an area where they're just continuing to see huge growth and e commerce in their their marketplace. So that's that that is something that you'll continue to hear them talk a lot about and there's a ton of upside there. Pharmacy delivery was another one that they shouted out. That's a new business for them.
So these newer businesses continue to grow a lot for Walmart, and they would say there's still a big runway there when it comes to competing with Amazon.
It's interesting comparable sales excluding fuel rose four point six percent at US Walmart, Star Wars open at least a year for the quarter into January thirty first. That's higher than Wall Street had been anticipating. So it doesn't seem like the consumer per se, at least in this quarter, was a problem.
The consumer was still spending.
So an interesting thing about the growth this quarter and actually last quarter as well, was that growth was mostly coming from higher income households. So households that are earning more than one hundred thousand dollars a year, not the person you typically think of as your average Walmart shopper. These are like wealthier people who are looking for deals, looking for value. Maybe they're coming to Walmart for groceries as oppost to whole foods this quarter because prices on
food are so high. So that's really where the growth is still coming from, our wealthier shoppers.
Does that tell you then that the consumers maybe weaker if these high income people are having to move down the spectrum, It's.
Possible, and I think, you know, we are looking forward to the rest of the big Pox results coming this quarter. We're looking at home depot, we're looking at Target. I think they will tell us a bigger picture view of how the US consumer is doing. But yes, I have the same question, where are those shoppers coming from? Who's losing here?
Our Thanks to Emily Cohen, Bloomberg Consumer Team Leader. We move next to the crypto space, and I was recently joined by crypto expert Ian Balina, founder and CEO of Token Metrics. We discussed the state of crypto at the start of the new Trump administration in the US and how artificial intelligence is transforming the industry. I first asked Ian about how the crypto community views the Trump administration and their current stance on crypto.
The new Trump administration being pro crypto, they've mentioned that they anticipate having procrypto regulation within six months, so long term, this is amazing for crypto. For the first time in his history, cryptos running downhill, not uphill. But in the short term there has been a large correction in crypto from different sectors, from AI to DeFi, but crypto hasn't
really taken off as people had anticipated. Trump entering office has led to essentially buy the room has seldom news, but long term this is bullsh for crypto long term.
Well, how about you.
You mentioned distributed finance AI crypto A lot of stuff wrapped up in that. Where do you see or where are you and your clients and your vests. Where do you see the most opportunity here?
AI? AI still has the most opportunity. If you just take the total crypto mind share in the last one year or so peaked at about seventy percent being fully AI.
What does that mean?
That means the attention, the awareness in the crypto space was solely focused on AI sector AI projects, from products like A sixteen Z to products like ARC and others. People are seeing what's happening in just tech in general with open AI, XAI and know these other competitors, and that's leading into a rising tide loops all both kind of mentality in crypto in the crypto AI space because
people see AI as the future. But why it's beautiful in crypto Crypto and AI are marriage made in heaven because in a digital world with digital AI agents, you have Sam Altman saying that AI agents is the biggest narrative in all of tech for this year.
So define what that is. AI agents basically.
Other AI is working together as a team of AIS. These teams of AI is working together, how do you trust each other? That's what crypto is about, cryptos built on cryptography, having people online transact through different currencies without having to trust each other. Applying that to AI agents to me, is does naturally makes sense.
Well.
One of the areas that I a lot of folks that maybe aren't as involved in AI, in crypto, in some of these new technologies is does there need to be regulation?
If so, how much and by hume, where are we there?
Yes, there's definitely does need to be regulation in the cryptic space, also in the AI space as well, but not to a level what it stops or restricts innovation, right because AI, as mentioned by the administration, is essentially a national security issue. China is basically just flying, but it's by the by their pants, and we can really allow the US to become backwards in terms of technology with AI and the same thing with crypto. So I
don't think restriction that inhibits innovation makes sense. That's why I think David Sachs the AI cryptos are was actually a pointed to that role. Those two are tied together, AI and cryptoi tie together because for America to stay forward as a company, as a country in terms of the economy and just technology and advancement, they have to innovate.
And for the last almost eight years in crypto, with the SEC and other different regulators, they have forced US entrepreneurs offshore, and now by the administration wanting to make crypto or rather make America the crypto capital of the world, they have to basically be open for business and they have to welcome innovation, not try to social offshore.
So one of the uncertainties I guess of the Biden administration was who in fact would regulate some of these technologies, particularly across the crypto space. Was a Gary Gensler at the SEC. Was the CFTC, the Commodities Futures Commission Commission?
Where are we going now?
Where where's where's the.
Wind taking us now? Who's going to regulate this thing? So right now it looks like it's basically a team effort. It's both does CFTC kind of taken the lead and also the SEC as well, But regardless of who's taking the lead, they all have to really understand crypto at a deep level. They can be crypto a sayers, yes, they are risking and crypto. Yes, scripture is not perfect, it's not ideal, it's new to technology is still being polished.
But you have to kind of take a very optimistic approach in terms of seeing the future and the possibilities of crypto.
So, you know, Bloomberg News did a story a couple of quarters ago when every single one of the S and P five hundred companies mentioned AI in their quarterly earnings release and comments that that's up from like, you know, a handful a quarter or two before that. Where do you see the real I guess applications of AI where most of us going to see it day to day?
How are you guys thinking about that?
So, what we're seeing with our customers and even people in the cry crypto space is AI is unlocking a completely new user experience. So, for example, take defined centralized finance and crypto space, whether yield optimization, whether it's trading agents, different complexities that you basically had to be a crypto expert or quant expert to leverage. You can now just use AI to help manage all that for you.
What does that mean?
Let's say you want to do a flash loan which is basically complicated. Where in crypto of borring money and making the trade and paying it back all in real time, all in one transaction, very hard to execute. But now with AI in the same way how Chad GPD has unlocked and given everybody pretty much a PhD on their computer, you can now have that same PhD person doing all kinds of innovations in the quipment space, from trading to
investing to rebouncing your portfolio. For example, I talking abouts we're building trading agents to allow people to trade crypto using AI in a passive way. So we're seeing this completely unlock different elements that the average person didn't really tap into or have access to.
And it's early in the Trump administration.
Hell I guess domestic are folks in the crypto space that President Trump and his team will in fact deliver on being, you know, a very positive force for crypto.
Very very optimistic, because if you just kind of zoom out and see the history of crypto, crypto has grown to become a three trillion dollar asset class. We think it can go to about eight to fourteen trillion by twenty twenty six. But that entire time it's been basically pushed down by an anti procrypto regulation. Right, and now
crypto finally has a seat at the table. From the Crypto Ball to the Crypto Council to the AI Crypto Zar, there's finally a pathway to crypto having a seat at the table and to crypto becoming a much bigger asset class o.
Thanks to Ian Balina, founder and CEO of Token Metrics.
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