Bloomberg Audio Studios, podcasts, radio news from the heart of where innovation, money and power collide in Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Live from New York.
I'm Caroline Hyde, and this is Bloomberg Technology.
Coming up.
Tariff winners and losers in the EV industry as President Trump signs a twenty five percent.
Tariff on auto imports plus core.
We've tests the ibo and AI appetite for brands to cut the size of its US listening sources tell Bloomberg, while Open Ai shows continued AI optimism, finalizing a fourteen billion dollar funding round led by softbankargest of all time. But first we check in on markets, which are being whiswored.
At the moment.
We started in the red. We're now managing to push it into the green. On the Nasdaq one hundred, we're led higher by names that I will reveal in a moment. But on the downside is AMD, for example, once again being called out for its lack of competitive edge versus an nvidio. You've got PDD on the downside from a points perspective, But Moon Music trying to digest the ongoing tariff narrative coming from the White House when it means
for the auto sect. And we dive into that now because on a points perspective, the biggest drag higher Tesla.
We're up by six call it seven percent.
Now, this is of course, it makes an awful lot of the components and its cars right here in the United States. Yes, it has exposure to Mexico, but less than competitors we saw. We also see Rivian up by
six point three percent. Again focused on how perhaps evs can manage to be owning their own supply chain in this moment, unlike the likes of Ford of by two and a half percent, unlike the likes of gm are by six point eight percent, where they are significantly exposed to supply chains coming from Mexico and indeed from Canada. Let's tie us all together with a tech perspective. Mike Shephard joins us for more. And it is so interesting
in the haves and the have nots. Right now, Mike, just tell us the update on what is going to be coming from the White House come April.
Well, Donald Trump previewed some of that yesterday as he unfurled those auto tariffs that we were just talking about and their various impacts, and what we can expect on April second, what the President is calling Liberation Day is what he calls a round of reciprocal tariffs, and this is to try to even out the trading relationships in
his view, with partners around the world. And these include countries that in the US position, put American exporters and products at a disadvantage when they are exported abroad, and he is trying to level the playing field in his view by imposing tariffs against those trading partners.
It's some of the biggest.
Targets that we're going to see or going to be the European Union and then other countries where there is some sort of imbalance. And for tech, one area of concern could of course be Taiwan. It's a key trading partner, but it also has a huge trade surplus with respect to the US. It also happens to be a major source of the semiconductors that Nvidia and AMD design but have produced by TSMC there So this is something the tech industry is going to be watching very closely. And
I will add on semiconductors. Trump has also promised possibly, but he hasn't guaranteed levees on the imports of chips as well, possibly coming April second, but again we are uncertain about that. The autos tariffs were supposed to come April second, he moved them up by several days, so really we're in a wait and see mode there, Mike.
I love how you broaden us out across all the industries that we look to potentially be impacted in the future. For right here, right now, let's go back to Auto's It's interesting that Tesla is being seen by the market as someone that has a protection from this sort of a tariff Levey, but Elon Musk himself posting that they are exposed.
Just not to the tune of a GM or a Ford.
Well, that's right, and they do have some insulation from it,
mainly for two reasons. When you indicated at the top and talking about the market impact, they make all of their US sold vehicles in California and in Texas, they really have no exposure when it comes to finished cars and vehicles being brought into the United States, and even on the component side, in most of their vehicles they have at least sixty percent or up to seventy five percent depending on the model of components that are made
here in the US. So they do have some insulation there and that offers them some protection from the worst of it compared to say rivals like Hyundai or GM.
Even Mike, great, roundup, Thank you so much, bloom Meg's Mike Shephard.
Let's continue the conversation with.
Andrew Rodgers, Senior vice president at Boundary Stone Partners. It's a government affairs consulting firm focused on clean energy. Andrew, you've got well over twenty years of expertise and transportation in the structure and implementation of policy here. How much of an upending is this to the business models of evs and indeed auto makers boom broadly.
Yeah, I mean, I don't think the effect can be understated here. The auto industry, much like the road in bridge building industry, relies on predictability, certainty, reliability. There's a reason that we fund roads and bridges on five year cycles because these are large projects that take a lot
of predictability and investment over time. With the tariffs that were announced yesterday, you can just look across the automotive sector and already see the ripple effect that it is having with sales stock prices plunging across from multiple sectors, including hitting the Tier one suppliers.
Now, I'll say that the underlying goal of.
These tariffs is quite laudable to reshore domestic supply chains to build up manufacturing the United States, and there's a lot of policies that President Trump put in place in his first term that continued through the Biden administration. Now that having been said, the practical reality somewhat different. Automakers every led on global supply chains for decades, and the days of you know, a model T soup to nuts rolling off an assembly line in Highland Park, Michigan, are
long gone and they're not coming back. And so, really automakers are faced with three tough choices right now. Either absorb these costs, pass them on to the consumers, or begin a years long, heavily investment reliant process of reshoring these automaker supply chains.
Do they have the confidence to take the third option, to recommit and to spend that sort of money when terms about four years, I think the.
Word of the day is uncertainty.
And the fact is is that there was a reason that the ev sector saw nearly three hundred million dollars give me three hundred million dollars of investment in just the last couple of years. They were getting clear signals from Washington through the Biparson Infrastructure Law, through the investment, through the Inflation Reduction Act, through the Chips Act, and seventy percent of that three hundred billion dollar invest is already specifically allocated to facilities that.
Are coming online.
When you have what seems to be somewhat more reactionary and less targeted tariffs and other trade policies coming online, it's much more difficult to have that confidence to begin reshoring supply chains and for fears of a whipsaw in a different direction in a couple of years.
It's interesting that, of course, the market is understanding and trading on the idea that Tesla is more insulated, that Rivian is more insulated.
But many had put.
Research out there that ultimately the price the average price of a car is going to go up five to eight thousand dollars, but for an EV it's going to go up twelve thousand dollars. And I'm interested as to how the supply chains, particularly with electric vehicles, are being an issue here considering it's so dependent for magnets for rare earths and minerals from abroad.
Two points there.
So the first I would just maybe put Tessela in a slightly different category. I think it's stock is long traded on prices, maybe untethered from fundamentals, so we'll put that in a slightly different space. But I think the broader points on the EV industry is it is in many ways different than your traditional internal combustion engine manufacturers, and so the ribbeans and the tuzzles the world do have a leg up on the legacy automakers who are
developing these these supply chains online. And that investment that I just spoke to, the three hundred billion dollars plus in the last couple of years, that was the legacy automakers beginning that work. And so yes, I think that
that investment will continue. But if you're talking about raising costs because of teriffs, which can reduce demand ultimately leave more cars on the lots, that can impact jobs, that can cause contraction in the industry, and that can ultimately diminished demand, which sends the absolute wrong signal at a time when those industries are looking to.
Invest Andrew, You've been the Deputy Federal Highway Administrator, You've worked within government, You've been chief counsel on Federal Highways, You've been You've got such a wealth of experience here. I'm sure you're building plenty of calls when you get off air. What is the number one question that you're being taken right now from the industry?
Is this real?
Is this actually going to happen? Is this the new reality? And I think the answer is is that. Look, if you take the president at face value, and I'm doing that more and more in the second administration, I think we need to look at the long term and short term effects of these policies and plan for what is being stated publicly to take root in some way, shape or form. But I think the book is still being written on exactly what form that looks like.
Andrew Rogers trying to help us navigate this uncertainty boundary Stone Partners, you.
Appreciate it now.
The Trump administration is also just cut twenty million dollars in funding for the agency responsible for chip export controls. That's about ten percent of the Commons Department's Bureau of Industry and Security budget. Democratic senators well, they've criticized the moved, warning it could undermine US efforts to stay ahead at you and the AI race and compromise national security. Coming up, core Weave is said to plan a reduction in its IPO size.
We're on that next.
It's a rumor technology.
Cor Weave it intends to cut the size of its IPO to around one and a half billion dollars raised.
That's according to sources.
Now, the cloud computing provider will instead offer investors about thirty seven and a half million shares at a forty dollars price point. That's down from initial plans of forty nine million shares at forty seven to fifty five dollars each. For more of billiombergs, Ryan Gould joins us for more. Look, it is about a month ago that we were talking about a four billion dollar raise in new money for core Weave, and now we more than half that.
Yeah, I mean, I think I would say at the outset that this is still a very fluid situation. You know, Kreweve is not meant to start trading until tomorrow, so anything can all happen. But certainly the sources that we were talking to this morning are saying that you know, the company was considering looking and cutting the rays down
to one point five billion dollars. That would take the fully diluted valuation back to somewhere similar to its last public round that was reported, So that would be around twenty three billion dollars in a fully diluted basis. That is quite the cut when you think about what we were talking about maybe a month or so ago, and when there was some more exuberance in the market around this kind of trait. This is AI, this was data centers.
These are kinds of all the tailwinds that you'd be thinking about positively coming into an IPO that is meant to be one of the biggest of the year.
It's interesting that.
They sort of can't stop this IPO train and a moment where in Realdio's down twenty five percent from its high, so we've see market valuations wiped out for Microsoft more than ten percent, and ultimately in the NAS that one hundred is in correction territory, No wonder it's going to struggle at this moment. Would they ever think about changing direction because this just seems to be the wrong time.
Yeah, I think, you know, based on what we understand as of right now, and again I just do want to preface nevers that it is still fluid, but as of right now, we're not under the impression that they're going to pull this thing. So I think Corey will trade at some point, and we'll be watching tomorrow obviously
to see where it exactly trades and opens that. But as of right now, I think one of the other big things that they've obviously looked towards this morning is that in Vidia, who is obviously already a big customer relationship of kor we've is going to come in with
quite a significant anchor order. That anchor order is going to be worth around two hundred and fifty million dollars at forty dollars a share, And that's what we're reporting, That's what you know some others have reported, and I think that just gives you some kind of indication as to exactly kind of some of the momentum that is required to get a trade like this over the line in this market.
But it speaks in videos perhaps own anxiety that this just feeds into some of the negative headlines the AI bubble anxiety that's been brewing.
We've had Josi or Ali Baba.
Warn about it.
You've even had TV Cowan continuing to tell us that Microsoft is pulling back on data center demand. Well, they're a key customer of Corwave, right.
Yeah, I mean seventy seven percent of the revenue was of Corey've lost it two customers, one of which you're the main one was Microsoft. So you know, in a week when td cown is coming out and saying stuff like that, I think, you know, if your core weave, that's probably not very helpful to you. But again, you know, investors are going to make a take of you, and there's going to be value. They're going to be constructive
on value at certain points. And I think this indication this morning that we've had that they're potentially considering the downsize at forty a share, I think, you know, there's clearly strength and so I'm sure that they're going to feel like they can come out and get this over the line in some shape or form.
JP Morgan Goldman having to earn their money on this one, it seems wrangled. Thanks so much now sticking with going public look social platform Discord also said to be working with the likes of Goldman, Sacks and JP Morgan on a potential IPO. It's according to sources, the company could seek a listing as soon as this year. Discord's popularity, of course, saw during pandemic times, and the company even rejected a twelve billion dollar takeover from Microsoft back in
twenty twenty one. I mean, while Flexport also saying it's still aiming to go public despite missing its profitability tar getting twenty twenty four, it's all according to The Wall Street Journal, Like Discord, the tech focused freight company saw strong demand during the pandemic said it extended its timeline to reach profitability. Let's get another check on AI optimism right now, because open ai is set to be close to finalizing a whopping forty billion dollar funding round than by soft Bank.
So all.
According to sources, the deal would set potentially the value of the company of three hundred billion, almost double its valuation back in October. For more, Bloomberg's Kate Clarks helps break it down. It's so interesting that an IPO we're all worrying about, well, the private market, SoftBank and others just really committing to open Ai at this time.
Yes, there are still a lot of craziness happening on the private markets when it comes to AI, is still a lot of optimism, and the optimism being inflated in many ways by the latest release coming from open Ai.
We are so fixated about their image generator, proving that they can be accessible for business cases, personal cases, and we've seen that their revenues have been on the up and up.
Right exactly, They're expected to triple revenue this year, and they have some wild and perhaps outline projections for the coming years. But this is exactly why investors are still very, very very optimistic and excited about funding the company, despite the fact that it has massive, massive expenses, including talent, data centers of course, and the very very expensive AI chips.
What's interesting is the crossover of investor base.
Like magnetah is we understand committing more to open Ai, it's also an investoring call weave, but for this one, it's all about soft Bank. Well, they're going to commit basically thirty billion of the forty billion.
Yes, exactly, So soft Bank is the major player here. They are funding a very large portion of this round. But as you said, there are also very many hedge funds that are participating. There are venture capital funds including Altimeter and COO TOW, which are crossover funds, but they are expected to participate. And then you have probably sovereign wealth funds from all over the world that have already funded open AI and that are expected to continue funding open AI and give us.
The ultimate view that this is a company that continues to expand and continues to weather what is public market anxiety. They're not thinking that this company is gonna go public in the nig future.
No, I think there's a lot of questions about that.
But they do expect that this is the next trillion dollar company, This is the next Google, this is the next MATA. That is the bet that these these investors are making, and a soft Bank the bet is also to become one of the most influential players in global artificial general intelligence in the race toward AGI. SoftBank wants to have that front row seat.
And we've seen them make excisions of them here and of course they're also they're making They're making moose Massa is always making moose Cake. Clark, we so appreciate having her on technology provide a. Lumina is expanding its partnerships beyond car makers. The developer of Liedar Hardware and Software has a new deal with construction equipment manufacturer Caterpillar.
Luminar's CEO, Austin Russell, joins us.
Your shares pushing higher on the news, Austin and why make this move into industrial?
Yes, so, no, it's excited to be hearing. Thanks for having me as part of this. I think it makes total sense as the market. You know, we're coming hot off the heels of a couple of major you know, automotive launches with Volvo now getting the product into production, to the technology for these light our systems you know, and AI related systems going into the market, and we can leverage that towards these industrial automation markets, you know.
I mean it's what on the order of industrial automation on the ear of a two hundred billion dollar a year industry today and this is a big foray into it for us, you know. So being able to have Caterpillar as the leading provider of and manufacturer of industrial equipment. More broadly, selecting Luminar to partner with to make this happen as part of their next generation platform is something that just makes total sense as we expand beyond the
auto market. But again leveraging those same capabilities, technology and products as what we've been making for the automotive market, and you know, there's a huge amount of value to.
Be created now they're going to the cap off highway trucks for exils. But this doesn't anyways speak to a lack of commitment in the av space. You still push you ahead as hard as ever there.
Oh absolutely.
I mean just this year alone, we're going to be seeing what two hundred and three hundred percent you know, growth in the automotive space for what it relates to our light, our production and shipments you know, globally to these different automakers. So that's something that we're really excited about and pushing full speed ahead on to get those
economies of scale and get that ramped up. But in parallel, it makes total sense of to be able to capitalize on markets like this as auto continues to be able to ramp up in order to be able to I would say, have that same mission around safety and autonomy in a very high value add way. And of course the ASPS and sales price that we're able to get in the industrial markets is actually a multiple for the same products in capabilities is what it is in the auto market.
So it just makes and is that the average selling price is that because of a lack of competition. We just think at the moment, the anxiety around your company, your stock has been Chinese competition in particular, and when it comes to, for example, reporting the Mercedes is going with a Chinese competitor, are those the narrative is true?
Well, first of all, I think taking a step back a little bit, you can give China certainly a credit for a lot of early adoption when it comes to you know, the Chinese market and light our market where you now have you know what on the order of a million vehicles being shipped, you know, with light Ar and local providers. When it comes to a global standard and the capabilities and technology, Luminar is really second to none.
And I think you pointed out maybe there was some confusion or misreporting earlier on some speculation when it comes to you know, Chinese for some of the rest of the world, Luminar's partnerships with the global automakers is not only strong, but we're in the leading position when it comes to global automakers more broadly, and I think that's something that we're going to continue to capitalize on for the broader Western world, which represents about ninety percent of
the volume and maybe even more of the value of the global automotive market. And I think even with for example, in Mercedes in particular, I mean, things have been continuing to move full speed ahead, you know, since the original partnership that we've had with them, and actually even just signed up officially to be able to use Halo as kind of that next generation product that we kind of alluded to at at earnings. So this is something that
we're in full speed ahead on. And by the way, the Halo is the next generation technology beyond what we're doing today, and that further allows us to standardize the product across these markets and industries.
So you have the Mercedes Benz business. When reporting was that Hesai had it. I'm interested that tariffs. You talked about production. How you're going to be scaling more than two hundred percent in terms of the amount of light Oh you're going to be producing, but you produce over in Mexico as well.
How is the current administration going to be affecting that?
Yeah, So, so I mean there's a lot of different kinds of tariff considerations more broadly, and I would say in terms of all the different dynamics going on, Yeah, Mexico is certainly one of those that's obviously a hot button topic. We have a portion of our content value that that comes from from Mexico currently that ships into the US for the production you know, in particular of the Bulbo vehicles that are being produced in South Carolina.
So what we're we're working through as part of our global supply chain, which Luminar is uniquely set up between Mexico, Thailand, you know, and also with a Taiwanese company t PK. We we actually have the ability to be able to shift around between our different partners at a global scale that whichever way the trade winds blow, we're able to
have a truly global presence there. So so that's something that's that's going to be as part of a evolving you know, production plan over the coming call it next
few weeks to make sure that's such in place. The only other thing I'll say is that when it comes to the terriffs for the vehicles themselves, we know there's obviously new tariffs that are introduced today, but when it comes down to it, you know, the vast majority of all the production that we have going the US vehicles now, so that's not really affected by this.
Austin Russell of lumin oar CEO.
Great to have your time with. Thank you.
This is Blue Meg Technology. Welcome back to Blue Meg Technology. I'm Caroline Hide in New York. A quick check on these pretty volatile markets today. We've whipped between losses then gains. We remain up about a tenth percent on the NASAQ one hundred. So try to digest what the latest tariff news coming from the White House really means the auto sector,
but how it spills into other sectors as well. As we of course anticipate the beginning of April and more of those retaliatory tariffs to come on board, we move on and have a little look at what's happening on the individual names, because from a points perspective, apple to the higher side. On the downside is a lot of the chip names. You're seeing Broadcom on the downside, Video off by a quarter of a percent, AMD off by
three point four percent. Come we're really seeing some anxiety built in about what the auto sector means for the semiconductor sector and what sort of tariffs we can see there, but also AMD getting a note out from Jeffreys saying once again it is not managing to compete against Nvidia, or off by three percent, gainstop off by fourteen percent, having its worst date since September of last year. This is an announced it's going to be selling convertible notes do
by bitcoin. Yesterday, that news that they're looking to put it on their balance sheet was a higher side push, but today it's a drag as we see the likes of web Bush saying this is going to fall flat as an offering and even though potentially you can't always bet against the retail investor, but let's just get more broader perspective on these markets. How on Earth you trade them,
let alone invest for the long term. We're joined by Mike Reynolds, is the vice president of investment strategy over at glen Mead, and boy, you have to be able to take a long term percent effective right now? Are you seeing investors willing to get into this market when there's such noise coming from the administration.
There's just been considerable uncertainty around trade policy, not just the actual details of the policy itself, but just the fact that it could go in any direction at any
point in time. So in a market like this, we're watching sentiment indicators really closely to get a sign of whether we've seen true capitulation moments where we see indiscriminate selling, which we have found are often really great opportunities to step in on a contrarian basis, and we've seen a little bit of this, just not in a grand scale. Some of the investor surveys are telling you that investors are getting really bearish.
Which is a good contraying indicator.
You almost want to get bullish when everyone else is bearish. But other than that, we're not really seeing that wash out moment that really makes a lot of sense to materially leg into this market.
But we are recommending.
To our investors that they actively rebalance an environment like this, especially if you came to the year with a relatively balanced portfolio.
Just look out of whack a little bit.
So it's good opportunity to get back to your policy weights.
Why do those rebalancing flows direct you people likely to go back more.
Into tech or actually cut off more.
Yeah, and it's really been tech that's born the brunt of this down draft. So if you had a diversified portfolio with tech in your portfolio.
That's probably some of the things that are down the most.
Overall, we were looking at valuations on the growth side, which is very tech heavy, was at the ninety fourth percentile to start the year, now at this seventy fifth percentile, which is a huge differential, and we only aren't seeing much of the market beyond the growth side correcting as
much as that. So certainly, you know, I think investors are taking another look at the tech side, where things perhaps were looking again very expensive not too long ago, but perhaps there's opportunities now amid this downdraft.
Are they going to enter in slowly and resolutely, or is there another catalyst from a fundamental basis for US and Company that will suddenly make you willing to make the trade, or is there a certain catalyst or number that you're looking from an economic perspective that will get people back in. It was weird Monday just went so to the higher side, and many trying to wonder why that happened.
Yeah, investors have to be careful to catch a falling knife here.
You know, if you look back in.
The tech bubble, if you got too excited about tech stocks. At a fifteen percent draw down, you really would have gotten your face ripped off, as further declines would have really been painful. We think it's really important to again monitor the sentiment side, but also we think actually trade uncertainty does sort of indirectly have an impact for tech.
You know, in particular, a lot of our tariffs have focused on the cash cow of companies abroad or excuse me, countries abroad like auto so far, and if they retaliate, maybe they go after our.
Cash cow, which is the tech side.
So until we get a little bit more clarity on tariffs, it's hard to get really excited about legging into tech to a material degree. But everyone's penciling in April second in as sort of tea day or tariff day as a time where we make it a little bit more clarity on where things go.
Mike, we get fundamental clarity from companies in the next set of earning season, and I'm hearing from many a cell side note coming out at the moment that as you're going to see CEOs lean into that anxiety, they're just going to downgrade all our expectations. Really try and make sure that people have recalibrated where company growth is going to go, just so they can lock in some of this anxiety is that are we going to have a horrible set of earnings coming.
We're not expecting to see a material effect just yet from tariffs or this uncertainty when it comes to earnings, but you could see a lot of guidance around that. Particularly uncertainty in and of itself can be an economic headwind. If CEOs are perhaps just going to pull back on capex or hiring plans because they just don't know the
rules of the game, that's certainly a headwind. And you may start to see CEOs talk through that a little bit on their earnings calls and how they're seeing that play out.
But it's probably a little too early to see sort of direct.
Impacts on earnings themselves in Q two or Q one earnings in particular, that we'll get over the next call it a month or so, but watching those transfits really closely for how they're guiding the rest of the year, which could be really illuminating.
Mike, I was just bringing up GameStop when it came to convertible notes, but it takes me to basically the waterfall effect of assets that you can own. Around this, we obviously lean into equities. Is there a quicker tell often on a company, But when you're managing forty seven billion dollars, I'm sure you're completely cross asset. How many are you looking to say, get into the corporate debt side of these tech companies rather than say just the equity side.
Yeah, we take a diverse about approach when it comes to bonds, and we try to avoid some of the sort of financial engineering stuff that happens on the bleeding edge of financial markets, and some of this stuff out of Game Stop kind of feels like that. But when you're building a ballast in your portfolio, you typically want a good healthy size of measuries in that portfolio. But you can get to that incremental return by getting corporate credit and being smart about it, not overextending too much
on your risk within your bond portfolio. But sometimes, you know, plain vanilla ends up being sort of the best thing to get that good diversification in your portfolio and take most of your risk on the equity side.
Mike Reynold's it's great to catch up with you.
Thank you.
Len me and vice president of Investment strategy.
We wish you well.
Meanwhile, turning to a breakthrough in quantum computing in a world first, JP Morgan said it it's generated truly random numbers using the technology so called.
Random number generators.
Is could have applications for trading, for security for cryptocurrency.
Now.
JP Morgan, which has been making a push into the field for the last six years, used a quantum computer built by Honeywell's Continuum, according to the paper published in the journal Nature. Coming up more on crypto, the markets there are set to gain regulatory clarity under the new Trump administration. We speak with August CEO Ayakontorovich.
That's next.
This is Blue Meg Technology.
President Trump's sec pick Paul Atkins, you can see him him now, says he hopes to create a rational crypto regulation. He's actually undergoing his nomination hearing as we speak, and you can go to Life go if you want to see all of this. But Democratic Senator Elizabeth Warren of Massachusetts or she warns that his past actions could be an indicator of a looser regulatory environment. She sat down on blooms David Goro to take a listen.
I think this is entirely in keeping with what Donald Trump and Elon Musk want to see us do, and that is loosen regulations. Loosen regulations, loosen regulations. That is what Paul Adkins did. He also said repeatedly that no regulations just get in the way. Everybody needs to do whatever they want. Those big Wall Street giants. We saw the crash in two thousand and eight, and here's what happens next. After the crash, he has the chance to
have a little twenty twenty hindsight. He has twenty zero hindsight. He looks back and says, no problem with having let those giant Wall Street banks run wild, and the fact that the American taxpayer had to bail them out not a problem. That's my concern. If someone has demonstrated such poor judgment, you've got to be really worried about putting them in a job where the failure to have good
judgment could be like it was back then. Remember, ten million families lost their homes, millions more people lost their jobs. We watched Wall Street do a real tank then. And here's the thing about Paul Atkins. We have both his demonstrated experience, but also look at his experience overall. So his time in government is a real problem. But now he's someone who has built a very lucrative business with
Potomac Partners. He charges evidently upwards of twelve hundred dollars an hour to give advice, and he says, well, I'm going to divest this interest, but he doesn't want to tell us who he's divesting to, who's buying, and for what purposes? And what are the long term plans. Because here's the deal. SEC chairmanship doesn't last forever, right, two years,
four years, maybe longer? My concern is, And so what happens on the other end, does he just come right back out and instead of charging twelve hundred dollars an hour, it's now twenty four hundred dollars an hour.
But it's who do you work for?
And why that matters is it has an effect on the time you sit as chairman of the SEC.
Senator Elizabeth Warren speaking with our own David Gura there like, let's just get more contact to the cryptoregulatory environment what it looks like under the new Trump administration. I'm joined
now by August co CEO and co founder Ayakontarovich. August provides a platform to manage and trade digital assets securely and the looser perspective too loose or actually, are you thinking we will get a balance here that helps serve your growth but also serve security and the protection of consumers.
Yeah, I think you know, very commonly people misunderstand where Paul Akins is coming from, assuming that you know, we're going to go from the Gary Gensler regulation by enforcement to all of a sudden, no regulation at all. And Paul Atkins is very very strict about no market manipulation and no frauds. So we're going to see KYC, KYB, We're going to see AML requirements, and that's going to be broadly across the crypto industry.
And then also clear regulation.
And I think if you look at you know what Senator Warren saying, before, we saw all of the American companies get pushed offshore, whereas now we're seeing an opportunity to onshore these companies, make them, you know, founded in the United States, and that's a really big shift and a big difference.
And you can do that somewhere in the middle.
So when she was trying to speak twice pose also the way in which he's managed to make it clear that he has no skin in the game.
He has no exposure. He's selling off his assets.
Are those in a position of power over in the administration and in the various agencies doing enough of that, signaling enough of that that there's transparency when it comes to crypto holdings and that not sort of managing to benefit themselves.
Yeah, it's a great question.
I mean, you know, the same question was asked about David Sachs as well when he divested I think it was roughly two hundred million dollars worth, and he did so at a loss. And you know, I think it's really important to your point. One, he you know, disclosed exactly what the positions are. So Atkins has two equity positions and securitize and anchorage. She has one position, a hedge fund called off Chain Capital, and he said he'd
divested those. So, you know, if he gets approved on Thursday this week, and so I think we are getting the transparency we need. But the bigger question here is do we want you know, professional regulators who haven't been in this space, haven't had that dialogue running the regulation for us, or do we want people who have actually been in the trenches who have had those conversations and dealt with those problems directly to be running and making those decisions on our behalf.
Okay, Therefore, what you want is someone in the job who understands the asset costs and then makes appropriately regulatory changes appropriate all you getting the transparency you need there as well. We're already seeing focus on well stable coins it feels like, and unwinding some of the latest things done by the Biden administration.
Absolutely so to your point, you know, the IRS Broker Dealer Rule was just you know, voted by the Senate that passed, and so it's going to President Trump that's going to unwind. As you mentioned, the need for decentralized exchanges to file you know, a ten ninety nine for every user on the platform. It was very much you know, not applicable to the way permissionless platforms exist today.
So it's great to see that happening.
And from what we've heard with colleagues who are in DC every single day is that every day action is being happened around you know, we have FIT twenty one, which is currently going through Congress, that has a stable coin regulatory oversight and guidelines. We have Wyoming that just announced this week that they're going to launch a stable
coins and bank and Wyoming one hundred percent. So we're seeing a lot more progress in the last you know, call four months than we've seen in the last four years combined, and so it's very exciting for any American company or anyone who's sitting in America building their company as well.
Today, we've actually just got some more steer coming from Paul Atkins as he undergoes his oversight over at the Senate.
Let's just take a listen into what he's just been.
Saying unclear, overly politicized, complicated and burdensome regulations or stifling capital formation. While American investors are flooded with disclosures that do the opposite of helping them understand the true risks of an investment. It is time to reset priorities and return common sense the sec return.
To common sense.
At the Senate nomination hearing, coming from Paul Atkins, what next for the common sense you've already said, what's already underway when it comes to stable quains. What are you lacking in your part of the business to get more institution investors.
Active in the crypto space.
Yeah, So if you think about it, there are a couple buckets. The first is the United States, without a doubt, has been losing in the geographic regulatory space. So we have in Europe, Mica, we have in Singapore, mass and in the US we don't have anything. And so you know, it's not just about onshoring American companies that went offshore, but it's also how do we compete so that we can actually get companies from Europe who are under the micro registration to come to the United States as well
and build here in the United States. The other thing too is, you know, how do we treat clients, how do we structure our ENTI A large part that hasn't been discussed for token companies specifically is all token foundations are typically under BBIS or the kmans, and a big discussion is how do we bring that to the US. How do we create launch foundations token foundations in the United States with clear guidelines.
And why would we want token foundations launching in the United States? Just reitroit the positive nature of this for investors and entrepreneurs.
Who are watching this, We're looking for transparency. We want to see exactly how these companies operate. We want to be able to go through, you know, tax filings if we need to, and audit them as well, so you know, it gives you the transparency everyone's asking for. But to do that you have to onshore the company first, and in order to do that, you need the clear regulation. So I think we're definitely seeing path forward with Atkins.
It's going to be really exciting.
To make you know, New York, the United States the crypto capital. We are for finance, it should be for crypto and it's one step in that direction.
I kind of rich.
I said, great to have you on the show. Thank you, August co CEO. There Jiang Yi Ming, the founder of TikTok's owner Byte Dance. He's become the China's wealthiest person for the first time. He topped the list on Wednesday, surpassing ten Cents co founder among others, with a fifty
seven and a half billion dollar fortune. Jang's wealth jumped by more than ten billion dollars after Bloomberg analyzed the valuations of investors like Blackrock, fidelityt Rope price and the company's plans to buy back employee stock, and evaluation of
three hundred and twelve billion dollars. Now all of this comes, of course, as the fate of TikTok in the United States remains still very unclear, but President Trump said he would consider lowering tariff rates in post on China to secure Beijing support for the sale of TikTok's US operations to an American company. Bloomberg's Stephanie Hi joins us some more so, he's actually using TikTok in the broader tip for tat debate.
When it comes to.
Trade, it is certainly an interesting time. You know, we're looking at next week being a very big week for tariffs and TikTok. April second is the day in which Donald Trump has said that he's going to place most of his reciprocal tariffs, and of course, the deadline to find a deal to sell TikTok is on April fifth, before it faces a shutdown. And so one of the things that Trump has floated, as you noted, is a potential reprieve for China if they are to agree to
a deal. And some of the complications behind this include the fact that the Chinese government and byte Dance are pushing to keep the algorithm within Chinese hands. But that is something that many lawmakers are saying would not comply with the US law. And so it seems like there's sort of at an impasse in what Trump had floated just yesterday seems to be one of the ways in which he's trying to work around that.
And yet the algorithm in Chinese hands does seem to be one of the potential deals being debated by the White House. It looks as though there's this ongoing narrative that Oracle founder Larry Ellison maybe he could be persuaded to take a little piece of TikTok the US entity and remain a security guard on it ultimately, but also allow the algorithm to stay in.
China, certainly, and that is one of the deals that has been floated. We've been told that from sources familiar that there is a deal that has been proposed that would allow Oracles to have a minority stake and to continue storing the US data as it already has. And also the other aspect of that deal is to allow China to keep the algorithm.
And now this is.
Something that has caused some pushback among Republican lawmakers who say that that doesn't comply with the law, and so it's not actually clear where this deal lands and whether or not the administration would be okay taking this deal at its face or going to China and asking to negotiate with what we've been currently shown.
As we know, there other public bid is out there. One of them is Fragment Court Junior and Alexis Ohanian, and we know that their bid doesn't involve the algorithm, and they want to have a whole new focus on social media who are in the United States. But the value in many ways is in the algorithm, but also the value is to be determined in some ways by byte dance itself. But also the Chinese government. Have we got any indication of whether they're willing to go through with some sort of deal.
What sources have told us so far is that you know, they want that China wants to keep the algorithm and stop essentially that it would be a non starter to facilitate a deal that does not include the algorithm if
remaining in their hands. Now, that seems to be a problem given the letter of the law, and so Trump's proposal to lessen the tariffs on China seems to be one of the ways in which he's trying to get everyone to the table and say, hey, you know we have to make a deal, and you know we need to work past the sticking point in the negotiation.
A story that's going to continue to evolve over the next week. Bloomberg, Stephanie Lie, thanks so much breaking it down for us.
Now, that does it for this edition of Bloomberg Technology.
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