People Should Be Excited About Crypto with Tony Edward

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1:30Hello, I'm Anthony Scaramucci, and this is Open Book, where I talk with some of the brightest minds out there about everything surrounding the written word, from authors and historians to figures in entertainment, neuroscientists, political activists, and of course, Wall Street. Sorry, I can't resist. Before we get into today's episode, if you haven't already, please hit follow or subscribe wherever you get your podcast and leave us a review. We all love a review, even the bad ones. I want to hear the parts you're enjoying or how we can do better. You know, I can roll with the punches, so let me know.

2:04Anyways, let's get to it.

2:13Okay, joining us now on Open Book, author and founder of the Thinking Crypto podcast. He is also the author of the book, Thinking Crypto. It's a great title. It's got a lot in there. Some of it causes me post-traumatic stress. Thinking Crypto, the Crash of FTX, and the Rise of Safer, Stronger Digital Assets. The remarkable Tony Edward, it's great to have you on. Before I get into the book, the podcast, everything you're doing, I want you to tell us a little bit of your origin story. How did we get to where we are now, Tony? Well, Anthony, first and foremost, thank you for having me on. And it's kind of surreal, man, that you're interviewing me.

2:56It's usually vice versa. And, you know, I've loved speaking to you over the years. I'm a big fan of yours. So it's an honor to be interviewed by you. Well, listen, you know, you got a great book that you've written. I like interviewing authors. You're a great interviewer anyway. So it's like a double whammy for me. I get to pick your brain. I get to tease and talk to you about your book. And you get some of the best crypto guests in the country, by the way. So I love listening to your podcast. I want to ask you something that you've asked me, and I haven't had a chance to ask you yet, so I can do it here.

3:31What was the Eureka moment? I can tell you mine. I was working in the White House. The Fed was talking about digitizing the U.S. dollar. I said, okay, I don't understand what's going on in the blockchain. I got to get up to speed. Of course, I got fired immediately thereafter. So it gave me plenty of time to figure it out. What was your eureka moment? So I guess I'll give some context because I think my background is super important in the eureka moment. Growing up in the 90s, I was super into tech, into the Internet. Anthony, I did some things, which thank God I'm still here, where I could have gotten in big trouble.

4:06I was exploiting vulnerabilities in Web 1.0, you know, hacking some websites. I was part of AOL, IRC chat rooms. But it wasn't for nefarious reasons. I was passionate about the internet and technology. And that passion grew. And I started my career in digital marketing and doing a lot of different things with website building and doing things with Google and so forth. And one friend of mine told me on a, I think it was a Friday night, we were at Buffalo Wild Wings, eating some wings, having some beer. And he's like, hey, have you heard about this thing called Bitcoin and Ethereum? And I'm like, dude, what is it?

4:42Don't talk to me about that. It looks like something like nonsense. However, he started making some money off of it and he bought some really cool things. And then it really had my attention. I'm like, okay, tell me about it. You know, everybody says we come for the money, stay for the tech. And once he told me about it, I started doing my own research. And then I realized this was the next layer on top of the internet. And it's going to change the way we do commerce and trust each other. And Bitcoin absolutely made sense as a decentralized form of money on the internet. But I think what really clicked for me was Ethereum, smart contracts, and the world of opportunities that would open up and thinking of it as a baseline software that people can build all types of trustless, decentralized applications on.

5:27So from there, I went down the rabbit hole and started investing in it, started building with it. And I've been successful so far and I decided to start a podcast about it. So Bitcoin only, you got a couple other coins behind you there. So you branched out behind. You're not a Bitcoin maxi though, right? No, I see this as, look, there's different flavors for everybody. There's different blockchains and different currencies that do different things. And I think this goes back to my enthusiasm about the internet and the dot-com boom. There was Google, there was AOL, there was Yahoo, and there was different technologies, different marketplaces on the internet, different web applications.

6:11There wasn't one to rule them all. And even in a social network world, there's not just Facebook, there's Instagram, there's Twitter, and so on and so forth. So I see these things being software to do different things and serve different purposes. And I'm looking to participate in each of them and test them out and see which one functions the best and see what I can build on them. So I'm a holder of Bitcoin, Ethereum, Cardano, XRP, Solana. You know, I'm diversified. I do tend to stay away from meme coins. So, Anthony, I don't know if you love meme coins by any chance. OK, but your point is, is that there's plenty of room in this utility space for lots of different operating platforms.

6:58And of course, Bitcoin being the big kahuna, I don't want to speak for you, but describe Bitcoin. store of value? Are we going to the Bitcoin standard? Where are you in the range of outcomes for Bitcoin? That's a great question because I've thought a lot about this and especially in the shower. That's how much you know I love crypto. And sometimes I talk to my wife and she's like, shut up. But Bitcoin, it's interesting because based on Satoshi's white paper, it's supposed to be this digital currency on the internet, but it does have its limitations as it relates to speed and transaction fees. However, as a digital goal is a store of value, I absolutely believe in it as that.

7:37And I have it in my portfolio and there's some Bitcoin I will never sell. And I have in a hardware wallet for my daughter, like it's going to her, it's in the will. And then as far as currency, I'm very curious to see what folks are going to do with the Lightning Network and these layer two scaling solutions, where I can go to Starbucks and use some Bitcoin to buy some coffee. I don't think we're there yet. I think there are a lot of smart people who are working on that. But right now, my main thesis is that store of value, digital gold. It's better than gold itself. And the demand is there. And in the scarcity aspect, you have this finite supply, which we've never seen in the history of the world.

8:17Okay. I want to go abruptly. I agree with you, by the way, but I want to go abruptly to the Sam Bankman-Fried Jerome Powell meeting. You know, it's funny. And I went to the DC Blockchain Summit a couple of weeks ago. I met a few congressmen and went on the Capitol Hill, went to different people's offices like Chuck Schumer, Senator Kirsten Gillibrand. And I got to see a bit how the sausage is made. And you know very much, you know, having been at the White House. And then I could see how those folks could have been influenced by Sam and from the crypto advocacy groups, folks that I've spoken to over the years.

9:02They said Sam was walking the halls a lot down there in D.C. And then, of course, he was making incredible donations to Democrats and Republicans. And so he's building a lot of favorability and influence. And I think that got him these meetings with the Fed. And I've spoken to Caitlin Long about this. And she's like, how did he get that meeting to buy that small farming state bank, I think it is? And it just shows money in politics, which maybe is the bigger problem. And we need to fix maybe with blockchain. I don't know. But clearly money talks. All right. So he made 50 plus million dollars of campaign donations.

9:47They dropped those charges on him. And it looks like those campaign donations are not getting paid back. Yeah. Yeah, that's a tricky one. Now, the FTX funds, I know that's pretty much getting paid back. But how do you even claw back political contributions? I don't even know. And this goes back to maybe a blockchain model, which maybe it's 20 to 30 years away, would help with things like this. Because bad actors appear in every market, every asset class, right? I like to tell people that Sam Beckmere-Fried is the Bernie Madoff of crypto. And Bernie Madoff scammed people in a regulated market. it wasn't like he was in the Bahamas hiding somewhere.

10:29So bad actors will appear over time, but to help mitigate somebody's fraud activities and catch these things early before they blow up, I think a blockchain model, proper regulations would help. But I don't know, Anthony, how would we call back those funds, especially if they're used already via campaign costs and things like that? I don't know if you can shed some light on that. Yeah, no, look, it's been very perplexing to me. I feel like the incentives are misaligned. The reason why people are so negative on our nation's political leaders is that they just feel that there's so much cynicism.

11:08You know, they can insider trade in the Congress. They take wild campaign donations into their packs. The the obviously Sam had an embarrassing level of influence and you you make so many interesting comments in your book. But I want you to I want you after reading your book, I had a reaction that I want to test on you and then get you to speak to my viewers and listeners about this. I sort of feel like the Gensler, Elizabeth Warren backlash on crypto was a direct result of Sam's donation. I'm wondering out loud if they would have taken a more moderate approach had they not been so embarrassed.

11:50Of course, Elizabeth Warren, Sam's mom, had worked for her. He had met with her, donated to her campaign. Gary Gensler he met with several times. He met with Jerome Powell. Do you think that the explosion of Sam and the exposure of his fraud left these people embarrassed and caused them to be overaggressive on crypto? That's a great question. And I have two main theories or thoughts around these items. To your point, the first thought is that, yes, knee-jerk reaction to you embarrassing us, you making us look like fools. You're in DC walking the halls. We're taking photos with you, Maxine Waters, giving Sandback 3 a hug, blowing a kiss, and things like that.

12:37And then you pull the rug out from under us and make us look like idiots. So I think there is that layer where there's this knee-jerk reaction. However, I think the second layer goes back to that thought of first they ignore you, then they laugh at you, then they fight you, then you win. And I think the then they fight you phase was coming because in parallel to these crypto startups, whether you're a Coinbase or you're a blockchain project, you had JP Morgan, they're tokenizing on a Fidelity's fund on Onyx and they have JPM coin. So they have their own blockchain technology that they've been building and cultivating over the years.

13:15While Jamie Dimon publicly tells you Bitcoin's a scam and a lie. And then of course, in the book, I covered the ETF race. Why all of a sudden did BlackRock say, we're going to throw our hat in the ring. And then the rest of these big firms came and started off the race. So I think it was twofold. One, the embarrassment, but also two, we got to slow these crypto startups so that we can catch up. The fact that banks and these investment firms are getting disrupted, they can't even hold it directly. And that was the SOB one-to-one rule. And there's not proper regulations. And for the first time, I think in history, retail front ran these large institutions, being able to buy the tokens directly, didn't have to go through the gatekeepers, didn't have to be accredited.

14:03I think those are significant items. And then capital started leaving these TradFi investment funds going into crypto. So you just look at the inflows and the things that have happened over the years where these smaller funds started making significant returns, exchanges, making billions of dollars every year. And then how could these two things be happening in parallel where I don't see BlackRock getting a Wells notice. I don't see Fidelity getting a Wells notice, but these startups in the crypto industry are getting attacked. So I think it's twofold. Okay. I think it's well said. Do you think that in the next cycle, meaning the next congressional term, that we will make Bitcoin or Bitcoin blockchain digital assets a bipartisan issue, or will it still be shifted and slanted towards the Republicans in terms of their positive?

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15:40From afternoon coffee runs to stocking office supplies and even team dinners, you can earn miles on all your business expenses. Plus, you can earn 125 ,000 bonus miles for a limited time through October 29th. The Delta SkyMiles Reserve Business card. If you travel, you know. Minimum spending requirements and terms apply. Offer ends October 29th, 2025. activity? I think there's going to be a shift. I think it's going to become more balanced. And here's why I think so. One, I think Democrats overall, based on some data I've seen recently, are losing some of the younger vote. And the numbers, the demographics show that younger folks own crypto.

16:20And crypto is a way for people to create wealth and make themselves or put themselves in a financially better place. Now, if you're against that, you're going to piss those people off. And I don't think if you're already losing that younger vote and you're adding crypto on top of that, you're going to be in a world of hurt come the elections. So that's one. Two, I think the crypto industry finally woke up and said, hey, we got to play the political game. We got to raise capital and we got to support pro-crypto candidates. So we've seen Fairshake and some of these PACs have been raising an incredible amount of money and donating accordingly, right, in addition to other issues.

16:55So that is a good sign, the crypto industry rallying together, donating accordingly. And three, we're seeing the younger voices in Congress, like a Richie Torres on the Democrat side, Ro Khanna and so forth, who understand technology, who are pro innovation, are starting to realize, hey, why am I going to die in this hill when this is just a technology in an asset class, it can create jobs, it can help us to get incredible economic benefits the same way the dot-com boom did. So it's a weird place where I think you have some of the older folks are like, I don't understand this. I'm going to side with Elizabeth Warren because she has the loudest voice right now.

17:39And then you have the younger Democrats who are waking up saying, yeah, that's not the way to do things. So I think those three reasons, we're going to see more of a balance, I think, moving forward. All right. I want you to be my fortune teller. I've got a big crystal ball here. It's 2029. So it's five years from today. What does the landscape look like for digital assets in America? I think by that time, we will have absolute clarity for stable coins, digital assets, tokenized assets, crypto assets, and all different categories, including NFTs and so forth. And then entrepreneurs and innovators will be able to not have to look over their backs and they can focus on building and creating incredible technologies.

18:26And then I think more enterprises and individual investors will be able to invest more confidently that, okay, the SEC is not going to come sue this asset and it's going to lose a billion dollars in value overnight. There's going to be that clarity. And I think within the regulatory body of the SEC and the CFDC, There's going to be balance. I think they're going to find some sort of the middle of the road regulation where, for example, some of these tokens do start off as securities. However, as Hester Peirce, SEC commissioner, has suggested, over time, they become decentralized and maybe then they go under the CFTC's jurisdiction.

19:05And I think there's going to be more standards, more balance as far as liquidity coming into the market from not just retail, but more enterprises. And I think we're starting to see that with the ETFs. And there's going to be more ETFs aside from Bitcoin and the Ethereum ETFs. There's going to be Cardano, Solana, and so forth. So I think the market's going to grow incredibly. Incredibly. Let me not to stop you, but sure. You know, the question people ask me, so I have to ask it of you. Solana has been deemed by the SEC a security. But you still think you get an ETF out of it? I think so, because there hasn't been a formal lawsuit, for example, against the Solana Foundation.

19:52There has been a bunch of tokens thrown in these lawsuits against Coinbase and Kraken and so forth. But I feel that's the SEC throwing things at the wall to see what sticks. Now, the process we've seen so far is the futures markets gets created and then you eventually work your way to a spot ETF. So I think they will approve of futures. We've seen this. They'll approve short ETFs, futures ETFs, because it allows people to short and do all kinds of things. But I think we can see a spot because what's happening, too, is those lawsuits are not really sticking. Coinbase is fighting back. Ripple is fighting back.

20:29Kraken is fighting back. The SEC is getting sued left and right by the industry, which I think is great. There's even startup exchanges, like one out of Texas called Legilex, suing the SEC. Tell us what's a security and what's not. So all of these things don't bode well for the SEC and they're losing in the courts. So I think Elizabeth Warren and Gary Gensler have lost the narrative a bit that all of these things are securities and this and that and all kinds of the narratives that they tried to drum up. Yeah, make sense. I agree with you. I think that you can't approve an Ethereum ETF and then call Solana a security.

21:08It doesn't make any sense. They've got a lot of egg on their face as it relates to their regulation. Let's go through some of the different sections of your book, if you don't mind. I want to get through as much as possible. We touched on this, but start with the Bitcoin ETF race. How has that asset class evolved in the wake of the ETF introduction? Anthony, the day the SEC approved the ETFs, and look, it took a court case to do that, right? The judges to call the SEC arbitrary and capricious. But anyway, that's another story in itself. I got so many calls like, hey, tell me about this Bitcoin thing.

21:44Hey, what's happening here? Right. It legitimized the asset class to the masses who were maybe on the fence looking at this like, I don't know about this. Maybe I should invest. Maybe I shouldn't. I've heard bad stories. I heard Sam Beckman-Fried stole all the Bitcoins. I heard Bitcoin and crypto died from Time magazine. Right. All of those narratives are out there. But it was like the ETF approvals pushed away to dark clouds. And then people couldn't even remember FTX or what happened. They were just like, whoa, BlackRock, Fidelity. They were seeing these big names, which really brought the validation.

22:20And I think is taking this asset class to higher heights. It's incredible. I've seen such a major change from whether it be institutional investors and their thoughts, RIAs and people I've spoken to, and even just the average Joe and Jane. I don't get that negative talk as much anymore. They're like, tell me how I can invest in this. What should I do? It's no longer, hey, is this a scam? Hey, am I going to lose all my money? So it's an interesting point that you're making in the book. I'm going to test something on you. This is another thought I had when I read your book that weirdly Gary Gensler has helped the industry.

22:57And let me explain why. He should have, and the lawsuit that he lost more or less says this. He was arbitrary and capricious and denying, including Skybridge, my own application for a Bitcoin ETF because he had approved the futures ETF. And they're more or less the same thing. So you can't be arbitrary and capricious. But his political decision not to approve it allowed for the tide to go out. And at low tide, you could see everybody that was swimming naked. and you had the implosion of Celsius and Three Arrows and BlockFi, and of course, the very infamous demise of FTX and Sam Bankman-Fried. Had Gary just approved that ETF, one in November and the next one in February, maybe we would still be living in a world that's loaded with that kind of fraud.

23:50And it's like the subtitle of your book, we're in a safer, stronger place today as a result of all of that stuff getting washed away in that period of over leverage and investment uncertainty. So weirdly, did Gary Gensler help the industry? He did. But, you know, scratching and clawing and crying and screaming on the way to doing it. Let me say it differently. Sure. Accidentally helped the industry. You know, from a macro standpoint and in hindsight, yes, you know, maybe his overreach, you know, it forced the, and I think we're seeing a bit about of that now where Democrats are siding with Republicans.

24:34He's like, they're like, wait, this gets Gensler's guys out of control. Like, what is he doing? Why are we being so crazy about this technology? Let's get comprehensive regulations. Let's protect consumers, but also allow innovation. But to your point, by not doing his job with Celsius, FTX and so forth, and then starting to attack good actors like Coinbase and Kraken and so forth, folks who have come into the SEC and tried to register and try to work. I think he's kind of forcing the hand of Congress, if you want to look at the silver lining here, right, that they have to now take action because the SEC is getting embarrassed and the industry is saying, hey, this is crazy.

25:15Crazy. This is insane government overreach. What are we doing here? And we need to update the laws. The 1930s, 40s, how we test does not, it's not up to par to handle digital assets. So in a way, yes. But I still think Gary Gensler is Elizabeth Warren's puppet, and he's just doing her bidding. And I was actually surprised by Jamie Dimon, you know, aligning with in talking points with Elizabeth Warren a couple months ago at a hearing. I mean, the world makes, politics makes strange bedfellows. Okay, I've got five words for you. I'm going to say the word or the abbreviation. You react to it. Okay, ready?

25:55Mm-hmm. FTX. I say FTX, you say what? Disaster. Okay. SEC. Corrupt. Regulation. Needed. You see, when I hear regulation, I think partisan. I think they've really ruined it. They've not made it fair regulation anymore that's based on right or wrong. It's hard left regulation now, and I think it's a disaster. I say the word Bitcoin, you say what?

26:29Can I use two words? Yeah, go ahead. Anything you want. Paradigm shift. Yeah. I think hard money. I hear Bitcoin, I say hard money. But crypto, crypto is different than Bitcoin. I say the word crypto, you say what? The future. Well, it's incredible. It's an incredible book. The title of the book is Rethinking Crypto, The Crash of FTX and the Rise of Safer, Stronger Digital Assets. It's written by Tony Edward. Thank you so much for joining us today. And it's a great day for those of you listening in and not seeing the video. Behind Tony is his BitClock, which is just beaming beautiful, beautiful Bitcoin numbers.