Ground Floor Consensus GFC012: The Institutionalist Bitcoin Investor( w/ Anthony Scaramucci )

Episode Summary

Mar 02 2021 . 60 MIN

GFC012: The Institutionalist Bitcoin Investor( w/ Anthony Scaramucci )

Financier and former White House Director of Communications Anthony Scaramucci joins this episode for a lively conversation about the inevitability of Bitcoin. From his position as a longtime institutionalist, Scaramucci shares why he has embraced this disruptive technology, what led him into the Bitcoin space, how he understands the valuation of the asset, and where he sees Bitcoin going in the future.

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Show Notes

Financier and former White House Director of Communications Anthony Scaramucci joins this episode for a lively conversation about the inevitability of Bitcoin. From his position as a longtime institutionalist, Scaramucci shares why he has embraced this disruptive technology, what led him into the Bitcoin space, how he understands the valuation of the asset, and where he sees Bitcoin going in the future.

In this episode:

  1. Scaramucci explains that while he has had success investing in core value and growth stocks and holding them for long periods of time, he is a Bitcoin investor because ultimately he wants to be part of the inevitable transformation that is happening.
  2. He argues that all money is a technology and digital currency is just a new way to improve and stabilize the system.
  3. He talks about Bitcoin volatility and why he sees the digital asset following the pattern of Amazon in the long term.
  4. He shares the three things that had to happen for him as an institutionalist to accept Bitcoin and make a sizable investment in it.
  5. He talks about how he understands the valuation of the asset and why he believes it will reach at least $100,000 by year’s end.
  6. He discusses the network effects of Bitcoin, how psychology effects price action, and why he thinks it can be valued fundamentally and is worth a lot.
  7. He shares why Fidelity’s Bitcoin custody business was a seminal event for him that made him want to own the asset.
  8. He talks about the role of government and regulation in Bitcoin’s future, and how opposing viewpoints like Gensler and Yellen will eventually be reconciled.
  9. He reveals why the behind-the-scenes conversations he’s hearing about Bitcoin have motivated him to get into the space.
  10. Finally, he shares his thoughts on the state of New York City amid the ongoing pandemic, the PPP, the city’s recovery, and why he’s long term bullish on the restaurant industry.


*Note: Following transcript is generated using AI. Minor errors might be present.





Welcome to The Real vision Podcast Network.



Welcome to ground floor consensus. I'm your host Ash Bennington. Welcome to Episode 12, the institutionalist Bitcoin investor with Anthony Scaramucci. On this episode Anthony and I talk about investing network effects the nature of money Fed policy, neuroplasticity, and politics and power. All that and more on this episode of ground floor consensus. Anthony, welcome to ground floor consensus.



Hey, thanks for having me, I appreciate being here Ash.



it's such a pleasure to have you, you know, we were talking a little bit off, off mic off camera, about this idea that you have had this incredible institutionalists life, you've been inside the halls of power from Harvard Law to Goldman Sachs to skybridge and Salta inside the White House, all of these sort of very institutionalist positions, and you've embraced what I think is the ultimate disruptive technology. And I'm really interested to hear your story of that journey into the Bitcoin space, what you found so appealing about it, and what your thoughts are on the space.



So I mean, it's I I'm thinking about how to frame the conversation. So I'm going to I'm going to start out by saying that I am an institutionalist. But I'm also an entrepreneur, I left Goldman Sachs at age 32, to build a business. But interestingly enough, it had a warren buffett institutionalists value framework approach to investing. So I'm 57. There are people that have Fudd, you know what that is fear, uncertainty and doubt. And then I call people Fuddy duddies that are loaded with fear, uncertainty and doubt. And I should be one of those people. definitionally, I'm 57, I've had reasonable to very good success, investing in core value and growth stocks holding them for long periods of time. And I've read everything that Warren Buffett has ever written.

And so I view him as even though we don't know each other Personally, I've met him a few times. I view him as an intellectual mentor of mine. And so Warren Buffett thinks that Bitcoin is rat poison. And he despises Bitcoin, of course, one of his friends, Bill Miller, who's a contemporary of his all those 20 years, you and you're an age 70 would say, Well, yeah, might be rat poison, but the rat might be fiat currency. And so, for me, I am an institutionalist. But I'm narrowly plastic, and I have to accept the world the way it is, Ash, not the way I want it to be. And I'll tell your listeners, the worst words in our language are should and ought. I tell my kids, I'm a profane guy, you want to use curse words, no problem. Just never use the word should and ought with me, like I ought to have gotten a 36 on the ACT, I ought to have gotten into the following school. Well, this should have happened, or life ought to be fair, life is unfair. And my kids, frankly, they've won the lottery as as you and I.


And so the words should an OT are the two worst words in the language. I can't control the world. But I can give you a sense from my perspective of where the world is going. And I want to be part of that transformation. We are moving on a technological arc at an exponential pace, where things that are following Ned Cavs law, are going to do quite well and things that are not are going to get splattered in night in 2006, before he passed away, Steve Jobs was asked, Well, why did you end the life of the iPod? And he said, Well, I had to shoot the iPod and put it in the iPhone because if I didn't do it, somebody else was going to do it. Right Oh, the world around you is happening Ash, I can pretend that it isn't. I can get into my bunker and be rigid and dislike change like the average human being, or I can be neurally plastic, I can accept what is happening and be a part of that change. And so what is changing is the technology for the way we're going to transfer goods and services.


And let me just say this last thing, all money is, is a technology and what is it technology you learn somewhere in the seventh grade? The technology is basically tools. It's a tool. We use money to quote Elan musk to prevent us from bartering. If you're a bartender, I can't I don't walk into the bar with a cab. Say here, here's your real color primer, Sean for tonight, give me a scotch and soda. But I walk in with a piece of paper or a credit card or metallic strip and I hand it to you and we transact. And what do we know axiomatically about money? it's always worth less than the goods and services that we're trading, whether it's a seashell wampum. It's gold with the insignia of a country or the profile of a political leader on the coin. What is it, it's just a value transfer. And so it would make sense after 5500 years of value transferring, that we would use technology to improve upon that and to stabilize it. So despite bitcoins volatility, it's volatile because it's tracing Metcalfe's law. Well, let's talk about other things that have done that Amazon has done that Amazon went public may 15 1997, a $10,000. Purchase of Amazon stock on that day, has yielded $21 million of value to that holder of that stock, if they were smart enough to hold it, or they would have had to have written through seven discrete times where Amazon dropped in value 50%.


And yet, if they held it, they were rewarded by the adoption of Metcalfe's law, and the scalability of that network and the advantages of that scale. And if you read invest in wander by Bezos, he basically writes I wasn't playing for the short termism of the quarterly investment cycle of the Wall Street research analysts. I was playing for scale, and I was using my capital and allocating it in a way irrespective of earnings to create that scale. Right? Very, very good news about Bitcoin, you don't have a CEO, it is a decentralized monetary network that has scaled thus far after 12 years to 146 million users. it's on its way to a billion users by 2025. If you follow the chart, and if you talk to people like Plan B, or you look at the stock, the flow models 21 million coin, 3 million have likely disappeared, two ish million left to be mined, you have a shortage of Bitcoin. And that is a perfect type of asset to become a store of value or potential monetary transfer vehicle. And the very good news for the world is we're early. It says that the inception point, and I would point out to your listeners, if you went to 2009 12 years after the inception of Amazon, a great retail network, you'd look at the stock chart and say, Whoa, that's too expensive. That's overpriced. I shouldn't own it. I missed it. Yet Have you bought at 12 years into its run? You had a 64 times move between 2009 and 2021. So we're early.


 I think Bitcoin is the future. I do see it as a technological gift to mankind. It has all of the features that men and women have liked about their money. But it's compact, it's storable. The blockchain technology is impregnable. And it's scarce. And so for those reasons, what am I going to do? Am I going to pretend that we're going to be in a fiat currency world forever? Remind your listeners in 1944, at the Bretton Woods, treaty agreement in Washington, New Hampshire, the seven or eight powers were setting down the lay of the land post World War, and they were setting up a rubric to trade so that they could create some kind of exchange rate parity or currency parity among each other. And what was the fatal flaw there people? You had this manipulation of governments and the governments What do governments do? They devalue their currency, go back through 5500 years of history.


Why do they do that they produce more of it, so that they can monetize their debt, they produce more of it, so that they can have this short term sugar rush in the economy. They produce more of it so that they can deficit spend, and they produce more of it so that they can lower people's standards of living without them necessarily feeling it. It's like starting a frog in cold water and boiling him slowly until he dies. And so all governments do that. The Bretton Woods treaty was set up to prevent that from happening. It broke down by 1971. The US unclipped itself from the gold standard. What has happened to the US dollar in the 50 years? Well, US dollar you could take $2 of 1971 dollars and they have the purchasing power of $100 of 2021 dollars 50 years later. So we crushed our dollar, we took it down 98%. And you're feeling the aftermath of that you certainly feeling it after 2008 you have the systemic rise of nationalism, the systemic rise of this political uncertainty between the haves and the have nots. And all of this is being done because governments have made the decision that they're going to produce more money. Because they think that's going to solve their problems.


All that's doing is creating a greater divide among the people. So in comes Bitcoin. It's not the first iteration Digi cash and others was first. But it was a refined iteration. And they've got it right. It is a mousetrap that works it sustained itself. Over 8300 competitors have entered the market to try to crush and beat down Bitcoin. Yeah, Bitcoin right now has 80 plus percent of the market capitalization of all digital currencies slash digital tokens slash store of value. So as I'm a little long winded, I apologize for that. But I just want to give you the benefit of my thinking, and why a historical framework to it. And so three things had to happen for me as an institutionalist. Number one, it had to scale pursuant to Metcalfe's law at $400 a coin in 2014. I'm not ready for it. It's not scaled, right? There's not effective storage for institutions. Number two, regulators had to pay attention. By the way they could even hate it. Janet Yellen doesn't seem to like it. I was on the phone with Bill Dudley, the former fed president of the New York Fed, he doesn't like it. Christine Lagarde doesn't like it. central bankers in general don't like it, why it takes power away from them. Also, it's too disruptive for them. They're the old guard. You know, you know, and if you think about the United States, if you read the book, Treasury wars, we've used our dollar as a weapon around the world through sanctions, and you know, the way we freeze assets, etc.


 And the fact that the dollar is the reserve currency for the world, has been a very powerful political mechanism for the United States. So of course, central bankers are not going to like it. But the fact that they're paying attention to it, that was number two, for me, very important. And we are having it regulated, now we are having it at least in the United States tax. Third thing. And this is literally the day that we signed this agreement with fidelity digital assets, that they would be our custodian on our fund, we opened the font, fidelity can store it in cold storage, on clip from the internet, not susceptible to hacking. They've got their balance sheet, they've got the Lloyds of London overlay insurance on it. And you can now store and scale tremendous US dollar amounts or any denomination of dollar amounts of Bitcoin with fidelity, New York digital Investment Group. nyttig is another example of a fidelity's larger, more well known in my community. And so for me, when when those three things hit, I decided that we needed to be part of Bitcoin, we have over $550 million in those coins right now.


And we started our fund opened it, we started it on December 22, with $25 million of our own money. We opened it to investors on January 4, it's scaled now to be over $100 million. And it's growing quickly. And I eventually will convert that private fund into an ETF. So that, you know, I'm trying to tell my clients, you don't have an ETF available in the US yet. It hasn't been approved. There's one up in Canada, you saw the rush to that one over the weekend. There's none here in the United States, but there will be one and we'll be one of the ones. And let's get started. Now let's beat people to the investment before there's a mad rush to Bitcoin.



Well, you know, Anthony, in in the five or 10 minutes of the beginning of this podcast, you've basically laid out the global framework for your case, on Bitcoin and how you think about it, and I know this something that you've thought about very deeply. I've heard you talk about Neil Ferguson's the ascent of money, this idea of how value systems store value changes over decades, centuries and millennia. It's very interesting to hear you talk about the case for Amazon while you were speaking, I was actually looking at the chart for Amazon. I think if you bought Amazon at its high in 1999.


You were underwater for like a decade on that on a split adjusted basis. And so when you think about these, these, you know, there's the value proposition for a particular digital asset in the content text of years and decades. I'm curious, some of the things that you mentioned, you mentioned Plan B, who I've interviewed here on real vision, the stock to flow ratio. What do you think about when you try to understand the valuation of this asset?



Well, let's let's go to plan B for a second. And he would tell you that you you're measuring it, its fundamentals based on the network, the monetary network, and Metcalfe's law, and you could trace users and the number of users and you can tie it back to the price of bitcoin. And so the reason why he was predicting by May of 2021, these coins were traded. $55,000 is just a approximation of the number of users the need for the coin, and its transferability and the shortage of supply, relative to demand. And so he's calling for $288,000. by year end, I suggested a $100,000 number on Squawk Box last week. And they were aghast. You're talking about institutionalists. They're way more institutionalized than me. But then when I looked at my Twitter feed, I was getting lit up for being too bearish. And so I was just really trying to think of something in my zip code where I think is quite achievable. And so what is fundamental about Bitcoin is the network Do not underestimate the network. If you're somebody out there, you're Bitcoin skeptic and you're listening to this.


You're sad, this is Bs, it's worthless, and all it is is a crypto graph on somebody's laptop or the internet worthless. Why would I own that? You've misunderstood Metcalfe's law, you've misunderstood the network effect associated with Bitcoin. And I think you'll miss something. And by the way, I am a Bitcoin investor ash, I am not a Bitcoin evangelist. I started out as a Bitcoin skeptic, okay, so I'm not a Bitcoin denier, like Loreal or Peter Schiff where they call this stuff shit coin or Bitcoin. I'm not that right Bitcoin skeptic, I became a Bitcoin investor, I am a realist about life, I could be wrong, my assessments could be wrong. So I tell my clients 135 percent of your capital, I may be wrong. Maybe Nouriel Roubini will be right, it'll trade to zero, you'll survive that if you have 135 percent of your capital invested. But if I'm right, or if Plan B is right, okay, remember his call sign on Twitter's at 100 trillion. So if I'm right, or plan B is right, you'll be very happy that you put one or 2% of your capital in Bitcoin. Because if it does scale, and you get the saturation effect of even 5% of the world adopting Bitcoin, we're in for a very nice run in Bitcoin, the same way you were in Amazon. Now, you said something about Amazon, it was stagnant. If you top tech did in 1999. That is true. And you could say something about Bitcoin, if you bought it at its peak in 2017. You're making a lot of money today. But you went two or three, four year periods of time where you weren't making anything. Bitcoin is going to be volatile as it's adapting. And as the world is accepting it, the unfortunate thing about life, not necessarily unfortunate, but just something realistic, is our emotions are tied to our money. And that's the reason why Chartists and technical analysis people do quite well. And it's the reason why you can look at a chart and you can have some predictive near term direction, directionality, because a lot of it's based on psychology, and a lot of it's based on emotion. And so people that are selling, you know, they bought the thing at 10, they may have set artificial price target in their head of 40 gets the 40 they blow it out. And all of a sudden, you see it priced it from 40 to 35. And that's the way things have worked through out the history of markets.


But I think it can be valued fundamentally, I think it's worth a lot. And I will say this to you, if you destroyed the network of Coca Cola, and killed all the bottling plants. You destroyed all of their corporate offices, you wiped out all of their trucks that deliver coke. And I walked into a Wall Street firm. And I said I own the rights to the name Coca Cola, and I own the rights to the formula known as Coca Cola and the brands associated with that company, Sprite, Santa, etc. Powerade and I would like to raise money to recreate that brand ash, they're going to give me the money. Yeah. Okay. And so, so stop and think about what Bitcoin has done in 12 years. And think of its network effect and think of its ability to beat its competitors. And to recognize you mentioned Neil's book the ascent of money. To recognize that it's hitting all of the criteria of money and, and will first start out as a store of value and will likely become a, a standardized unit of monetary exchange, which will take that game and that fiat currency nonsense out of the equation. And believe it or not, it will lead to a fairer system because you want to talk about unfairness. I've worked all my life as a labor, I'm an hourly worker, I put my money in a bank.


 And unfortunately, the government has decided now to print 40% more dollars, a result of which the money that I've worked my entire life for is worth less. This is the government decided to make it make it a situation for me where I can't really value my labor or my output anymore. Oh, and by the way, since they did that anybody that owns assets, anybody that's tied to capital, well, they're gonna do freakin great because that stuff's gonna shoot to the moon, but not my labor, not my work effort. I can't think of anything less fair than that. In our society in Bitcoin equalizes that.



You know, you spoke about the network effects, which is an incredibly important part of understanding the Bitcoin value proposition, you know, Plan B had that call for I think you said 55,000. It crossed at 58, I think at the high a few a couple of days ago. I'm curious if you could explain a little bit about your thinking on the network effects of it. It's something that Raoul powers, our CEO and co founder revision has talked a great deal about what is the significance of network effects? How do you measure it? And how do you think about what the trajectory forward looks like?



So, Raoul, who I've interviewed, who's a brilliant guy, probably more cautious than Plan B, and I'm probably more cautious than the two of them, frankly. But I think those guys have better understanding of that. What they would say, is as it's scaling, and people are accepting this trusted ledger, this provable, trusted ledger, the coins themselves, their limitation, their scarcity, will force that price increase. And so, you know, again, I don't want to speak for them. So I'll speak for myself when I analyze that. I think of things that are scarce in our society, and I think of what they trade at. And let me give you a few examples. There's a piece of cardboard, it was cut in the early 1950s. It was it's a one and a half by two and a half inch piece of cardboard. It's got four color processed ink on it. On one side is a picture of Mickey Mantle as a rookie 1952. On the other side, it is a data related to Mickey mantle's career, which is virtually non existent at that moment. It's just as minor league stats. That card sold last month for $5.2 million. Why? Well, he represents something iconic about mid century America and baseball, nostalgia. It's a scarce card, and so it's worth $5.2 million. Now, you could get somebody out there and say, well, it's not worth anything. It's a piece of cardboard with four color process ink on it. I purchased in 2015. Actually, it was April of 2016, the Mike Piazza 9/11. Jersey, it's an acrylic jersey, polyester jersey, it's got the American flag on it Mike's name, the number 31. The Mets on the front. It's a white jersey, it's signed by Mike biasa. And I bought it for $360,000. So what is it worth? Or obviously somebody that's a cynic would say, well, it's worth nothing. I mean, it's just a piece of acrylic and polyester.


Why would it be worth that, but there's something iconic and scarce about it. And it represented the rise of New York, the first sporting event after 9/11 he hit a home run. It's metaphorically significant in almost a weird way, and ethereal way. And a result of which people would want to own that. Okay, I've now been told that I want to sell that jersey, which we won't sell it. It's in the 9/11 Museum, it's worth $2 million, five years later. So what do we know, art, collectibles, things that are scarce that are valued by human beings go up in value exponentially. And Bitcoin represents that. So So when you're talking about a network effect, you get more people believing, okay? Elon Musk buys it. It goes heads towards 60. What happens if Apple Computer buys it? And I'm not saying they are, you know, maybe they won't because they're under a lot of government scrutiny and they don't Want to upset the Federal Reserve or the bureaucrats around it, but let's say they buy it.


And Apple's a big leader with a big balance sheet, and let's say Microsoft buys it, and Google buys it, you get the point where I'm making all of a sudden this thing is scaling in a way that is exponential. And you're in there, and I'm in there early. And that's my message to my clients get in there before the big boys get in there. Their common they have no choice really, they can't sit on dollar assets, earning 0%, forever, knowing that the Fed is going to produce monumental amounts of money 26% increase in the money supply in the last year. That's more than all the money that was in the society 26% more than the prior 244 years. If the stimulus goes through, I predict it will 1.9 trillion, there'll be another 17% more production of money that's either printed at a press or done electronically at a computer server. You tell me you got a 40% increase in money in the last 12 months, you're going to be looking for things to put your money into if you're thinking about saving.



Yeah, It's also interesting to think about just how early we are in the trajectory of adoption of Bitcoin, depending upon the numbers you look at, you hear anywhere between 100 and 125 million users of Bitcoin today. Obviously, compared to the global population, that's a very small fraction.



We agree. Yeah, no, totally.






Yeah. Yeah. You know, the other thing that's really interesting, Anthony, about the way that you have been looking at this is it's this intergenerational thinking shift. That, you know, people who are my age or age just sometimes don't viscerally respond to it don't understand the value proposition for digital assets for things that don't exist in the physical world, like a baseball card or jersey, but that are digital. It's extraordinary to me, as I talk to people who are in their 20s, who think about the digital world very differently than than people of our generation do, and are making this shift to something that they're just incredibly passionate about. They feel a relationship to that, you know, if you think about right, the guys who were running money are in their 50s 60s 70s and 80s. And it's just a shift that takes a bigger leap to come to for people who have spent their lives as institutionalists.



Well, you know, we agree, and that's where the neuroplasticity comes in. You could sit there as a fuddy duddy. I've got 85 year old friends that are billionaires, they don't even read their own emails, they have an assistant, I send an email, the Assistant reads it to the person. And then the guy dictates back to the assistant what the email should say, coming back to me, okay, that's somebody that's resistant to change. And then you've got my kids, they've already accepted Bitcoin as a store of value. They don't care about gold. They've already looked at the world of digitization, they're breaking up with each other, virtually, they ghost each other, they don't care. They'll send a Let's go meet somewhere on the internet. Let's not meet anywhere on the internet. Let's never see each other again on the internet. They do all kinds of things this way. And you've got digital art now.


And so digital art is a huge business is going to be a huge business. It's a fingerprint effectively, but it's in the ether, and people are going to start buying that. You also last point I want to make is what about eSports we got people sitting in front of these virtual reality screens that are well defined. These are fantasy worlds that they enter. And they're using a toggle switch or an Oculus device. And they're competing with each other the way we watch sporting events. years ago, you can go on Twitch and you can watch some of the greatest gamers compete against each other and guess what there are now sports teams and sports franchises associated with that. So if you want to just sit there as an old fuddy duddy and listen to your oldies, music on your maybe put an eight track tape in somewhere eight track cassette somewhere you want to do that, go ahead, you can do that. Or you can see the change that's happening around you and make a decision if you want to adapt to that change. And again, for my clients, I'm recognizing the volatility. I'm not a Bitcoin evangelist, I'm a Bitcoin investor, and I'm telling them 1 3 4 5% I may have 15% of my net worth in Bitcoin my one of my partners has way more than that. But for my clients 1 2 3 4 5% Take it easy, recognize the world's changing be a part of it. If I'm 100% wrong and every day that bitcoins Lives Ash is more evidence that I'm not okay as Paul Tudor Jones every day that it lives and is a living breathing organism and there's demand for it. Yes, there's volatility but there is demand, and that demand will outstrip supply. And so be a part of it. That's my message.




Yeah. Paul Tudor Jones, Stan Druckenmiller, some of the best known and most respected names in the money management space, obviously, having that change of heart as well, during a similar time period. Anthony 15%, you've got some real skin in this game.



Yeah, I got a lot of money in this, you know, listen, I put 25 million of the firm's money in it. I've got over $550 million at current market prices across my clients, portfolios. And yeah, but you know, I think it's appropriately sized. If I'm right, it will be a big development for my family. If I'm wrong, I don't think I'm going to knock my family into poverty. You know, and I've been doing this for 35 years. And I think it's the right intersection of risk and reward.



So tell us about that journey, in terms of the mechanics of the of the structure of the custody of how you put the fund together, and what your thinking was, where you thought, not only is this something that I'm interested in, you know, taking a position in, but this is something that I know how to do, as a money manager to spin this up in a responsible way, in the best interest of my clients.



Meaning what type of product they should use to become invested in it? Or what do you mean exactly?



What were the changes that happened where you thought I'm comfortable with the custody of this I'm comfortable with fidelity's balance sheet.


 [Overlapping voices]



And I think I think that is the central question that was the last leg of the stool for us,






Um, we spent a lot of time with fidelity, I obviously put personal money up there bought coins, and put them in cold storage for my family, my family's trust, etc. I went through the layers of protection that they have and the cold storage that they have, I went through the insurance policies that they have related to it, and how much of their balance sheet they pledged towards protecting it. And yes, that got me comfortable, that got me comfortable that there's enough circuit breakers involved. I'm not in love with these platforms that I buy the coin, the coins on my phone, my phone, I could have a SIM card transfer, somebody hacks into it, boom, they've got my, my Bitcoin, I'm not in love with the story. And on my laptop, I'm not in love with putting it at one of the exchanges. And then I'm getting an email that looks like it's from the support group of the exchange. And they're fishing me for my password. I think it's them, I give them my password, I lose my Bitcoin. Oh, and by the way, there's no recourse.


I mean, that's the element of the Wild Wild rest, right? There's no FDIC for Bitcoin storage. So you've got to go to places like fidelity have a very big balance sheet. And you've got to get comfortable with their systems, which we are, and then you got to get comfortable with their insurance, God forbid if something goes wrong. So I think that was the seminal event for me. It scaled, I was still cautious. Regulators was talking and squawking about it. That's a good sign. But the minute it became clear to me that I could store it safely, is the day that I wanted to own it. I wanted to own it in size. That was my eureka moment. And I'll quote my good friend, Michael sailor, who will tell you that the first Bitcoin is the hardest one to own. But once you own a coin, you're like, Okay, why don't I own more of this?



Yeah, and I imagine that that kind of security is obviously something that high net worth individuals take very seriously. I think that the the expense ratio of the fund is like 75 basis points. And that's the that's the proposition, right, that you don't have a lot of wealth, and they want to get some exposure into this high net worth individuals, particularly people who have, you know, who are closer, you know, at the end of their working career, or retired, can't afford to take that risk with, you know, with those funds, which is a very different proposition from you know, the the guys and gals in their 20s, who we're talking about who are experimenting and coming into it at lower at lower velocity. I'm curious, you've, you've talked about one of the things that I think is really interesting, and this kind of gets back to you being an institutionalist in the way that you think about the space. You've said that you're very excited about more regulation because it provides clarity, it provides stability, you've been, you've been actually a very supportive of more transparency in the taxation process. Tell us a little bit about where you are in that process and how you understand what's happening. particularly here in the US.



So it's a really good question because we have so much that we don't know, what do we know we're taxing it as an intangible. It's showing up on IRS forms now. The tax authorities have accepted it as an asset, it being treated as an intangible has some favourability to it, because you can buy it, and hold it and then sell it and get long term capital gains treatment if you're holding it for at least a year. So we know those things. What we don't know is when a ETF will be acceptable. What we don't know is how the banks are going to view it. The banks got a little bit of help at the end of last year. From a functionality perspective, the Comptroller of currency said yes, you can start having services and banking services related to digital assets at your banks. That's a positive, how far that's gonna go. We don't know what the insurability will need to be at a bank. We don't know. You've got somebody like Gary Gensler, former colleague of mine from Goldman, very smart, very modern guy taught a course on crypto at MIT. I have listened to 12 of the 24 hours of lectures.


So he's got 24, one hour lectures on crypto, he does an excellent job of explaining things. I'm only guessing at this now. So I don't want to I don't know Gary, personally, I've met him a few times. I'm only guessing at this, but based on the course and based on what I know, of the people around him. He's going to be somebody that accepts Bitcoin. There'll be pressure from the central bank from Treasury not to accept it, for the reasons that we discussed earlier in this podcast. But I believe that Gary recognizes that it's inevitable. It's here, whether we like it or not. And so therefore, we should get our arms around it. And why should Why should not the United States be one of the leaders? In the technological innovation known as Bitcoin? We're going to see that to the island of Malta, is that we're going to do Do you understand what I'm saying? We can't do that. So. So I think Gary is going to be a force for regulatory progress related to Bitcoin. But you're asking really good question, as we don't know. And I think that's the reason why this is such an interesting and exciting investment. Because if we're right on the trajectory, we're right on the progress of Bitcoin, then, man, we're so so early, this is such an early part of this journey.



You know, one of the things that's really interesting to me is the degree of regulatory fragmentation in terms of the way that different regulators think about and treat Bitcoin currently, under the law. You have people like Gary Gensler, who obviously have been early adopters and understanding the technology teaching a course on it at MIT. And then conversely, you have, you know, our new Secretary of Treasury, Janet Yellen, who seems to be a little bit more hesitant, I guess, would be the polite way to say it. skeptic.



Oh, yeah. Wait, dude, I'm gonna tell you from Long Island. Um, you know what I said about Steve Bannon? She hates it. You know, I mean, come on, I it's fine. You don't have to be you finished it with me.



Alright, so let's so let's



she hates it, and she has reasons to hate it. And but you know, unfortunately for her, it's happening, whether she hates it or she doesn't hate it. You know, Peter Schiff. Unfortunately, there was an avalanche coming and, you know, what are you gonna do? You're not going to be able to prevent it, you're not gonna be able to stop it.






So how does that play out? You've been in government. You see how these turf wars bureaucratic knife fights happen. You have people who are supportive, you have people who hate it, how does that get sorted out? How does it get hashed through?



It's ugly, you know, it never gets hashed through the way you'd like it to. Again, you can't you should an odd in any part of your life, but certainly not in the government. These people are out for themselves. I don't want to be overly cynical on your podcast, because, you know, real vision represents growth and optimism and idealism. But the people in the government by and large suck. The people in the government are by and large only care about themselves. I mean, look at this, like seditious trader Ted Cruz, or somebody like Kevin McCarthy, that, you know, I mean, he started out of my age were the same, he looks 500 years old, because he's following Donald Trump around, you know, I mean, these guys would sell their souls carve out the eyeballs of their parents for positions of power.


And so we got the incentives in our government, very misaligned. And that's why we're getting some horrific policy and that's why we're getting trillions and trillions of dollars of deficit spending and that's why the bridges roads tunnels that were traveling over suck. Our airports look like Calcutta suck at the Calcutta airport looks better than our airport at this point. Our airports and so, you know, we're here now, this is what the government's about. Um, the good news about the government, though, is that policymakers like Yellen. They by and large, get things right. Longer term, they sort of have adapted what Winston Churchill used to say about America, America always makes the right decision after it exhausts every other possibility. So the policy people by and large, get things right. I think the mistake, though, is that we're, we're too occupied with the short termism. So if I reduce rates, I pile on money and I buy treasuries and I buy reads and I buy stuff, it's going to stabilize the market is going to make things feel better temporarily. But it's also going to create a divergence in wealth between the haves and the have nots. That's quantifiable, and I can scientifically prove that to you.


And so when those things happen, it puts pressure on the system, you would have been better off with people that cared more about right or wrong policy, as opposed to left or right policy and said, Okay, look, we're in a ditch, we suck. Here's a 25 year plan to get us out of this ditch. And if we shut up and follow the plan, and we work together, we will be the nation of the future. Because we deserve to be the nation of the future, given the social progress we've had in our country, given the diversity of the population in the country. We deserve to be with Lincoln said about the country, the last best hope for mankind. But you got to get the policies right. The short termism short termism short termism is not going to work. But listen, they're going to regulate, they're going to tax Bitcoin, they're going to allow for an ETF Canada's already allowed for one, they're going to allow for one here in the United States, we're going to be part of it. Peter Schiff is going to be upset about it, I'm sorry to tell him that, but we're going to be part of it.




You know, it's really such a grim statement that you could imagine a young man or young woman in their 20s, a recent graduate from, say, Harvard Law School, and they come to you and they say, Anthony, you know, I want to have two choices. I can go work at a hedge fund and make a lot of money. Or I can go down to Washington and try and make a difference. And, you know, the the level of dysfunction that we've seen across government, it's hard to be optimistic about the political process, as we see it in this country right now.



Yeah, I mean, you know, I? Well, I mean, you just said the incentives right. So let me give you something provocative to think about that gets me thrown out of Washington in less than 11 days. Again, I obviously had a shitty experience in Washington, but let's just let me just get its incentives. So what if I told you, you got 535 seats? There's 100 100. Congress. Sorry, there's 100 senators, and there's 435, congress men and women. And so now you have 535 people, here's the deal, you're going to balance the budget, and the 535 of you have to agree to that. And you're going to get each 20 million US dollars this year. after taxes, you pay no taxes on it, you're going to get handed a $20 million check. But the 535 of you have to balance that budget. As that budget is balanced in 15 seconds, oh, by the way, you can do the very same thing next year, you got a six year term.


And you can make $120 million for yourself and your family tax free. But all you got to do is balance that budget. And by the way, that 535 times the 20 is $10.7 billion, which is a rounding error on the four and a half $5 trillion budget. And so all of a sudden the entire goddamn thing is balanced. And all those people that you were talking about going to the hedge funds are rushing down to Washington to try to get those jobs. And so it's it's really about incentives. And so of course, that's not going to happen. And and you're going to have weaker players in Washington as a result of that, or like the cliche says that Washington is Hollywood for ugly people. And you're going to end up with this mishmash of people. And then you're going to end up with people, unfortunately, because they're not making enough money doing things that are nefarious, or don't meet the smell test. And so that's why frankly, people were open to Donald Trump. Donald Trump is just the wrong guy.


 And he was the wrong personality. But, you know, the people were yearning for a business person that couldn't be bought and yearning for a deal making pragmatist. We didn't get that we got an ideological trader but we were looking for dealmaking pragmatists that was going to cut deals, stop the rank or nonsense in Washington, break up the establishment. And they break up that power structure and make it more user friendly and make it more service oriented for the American people. But we don't have that we don't have public servants. We have people that hear public ruling, they hear ruling as opposed to serving and they're they're mistreating the job. And they've created a tremendous amount of cynicism and a tremendous amount of anger in the population.




Yeah, well, you know, the country obviously, is, is just so hyper partisan at the moment, there are knife fights within each of the political parties that just seem to get uglier and uglier. I remember when I heard that you were going down to Washington to work in the Trump administration, my first thought was, he's got the best life in the world. Why is he headed down to that snake pit?



Because I'm stupid. And I was I was following my ego, I had this idea that I had grown up in a blue collar family, and I call it a couple of good schools and made some money for myself, and I thought I could work for and help the American president. And that was naive on my part. But it was also my ego speaking. And so I have to be honest about that I, I will say this to your investors out there.


This is real vision. Don't put your pride and ego into the decisions. Once it's there, you make really stupid decisions, your emotions are up, your intelligence is down, you got all of the factors in your personality or on that dashboard, or going in different directions that they shouldn't be going in. And I got to come up and save my life. But by the way, on the flip side of it is, if you're having a bad day ash, I just want you to imagine me getting my ass fired from the White House on July 31 2017. And then lit up by every late night comedian in the United States, and then impersonated on Saturday Night Live.


So if you're having a bad day, I want you to think about that day. Okay. And so what do you do you pick yourself up, you dust yourself off, you go back to work, and you do it without complaint or whining, and or without any victimhood. And lastly, you also remain accountable for the mistakes that you made. I said something really funny about Steve Bannon, which was fake news, because you'd have to be a hot yoga participant. And Steve would have had done hot yoga for probably 25 years to get into position that I was suggesting he was in his office. Okay, so that was fake news. But he's a despicable guy. So at least I got that right about who he is as a person. But I mean, at the end of the day, you know, he got fired for that I deserve to be fired. And you know, General Kelly and I have developed a great relationship. We're good friends now. And you know, Donald Trump and I are not, because he really tried to hurt the country. And so you can't let people hurt the country. If you love the country. You get to speak out about it.



Yeah. Gerald Keller was the chief of staff at the time.



He fired me that was his first official act was to fire my ass at 9:32 in the morning, it was very painful.



You know, but as you said, both you and general Kelly, while you had disagreements about policy or the positioning at the time, you both love the country.



He's an awesome guy got to know him very well. He's been to my soul conference in Vegas. I took him to Abu Dhabi with me most recently, we were in Iowa together speaking, we spoken to the van last year before the pandemic in Arizona. John Kelly is an American hero. He's a four star retired general, but he's also a Gold Star family member. He lost his son in battle in Iraq. And it's a it's a painful story, but it's a it's a story of service, and patriotism. And, you know, and I would take my relationship with him as one of the positives of my political experience. And so when people say, Well, you know, I got burnt up and beaten up pretty badly. But I did meet some people along the way that I'm very glad that I have relationships with today.



Yeah. You know, talking about the people you've met and the relationships you have you talk to everyone. And I'm curious what you hear in private about Bitcoin or their high net worth investors who are coming into the asset, who aren't talking about it publicly yet? What's the sort of behind the scenes conversation that you're hearing?



Well, again, I don't want to exaggerate it, because, you know, I just want to be realistic. One of the big motivators for me to move into bitcoin, were those conversations, because, you know, somebody asked me a question about that. Am I talking to CFOs and things like that? The answer is no, they're publicly traded companies and they can't give me that information. So I'm not even going to put them in a position to ask them but I am talking to my colleagues in the hedge fund industry. I am talking to my colleagues in the investment banks, and in the brokerage community, the crypto brokerage community about where demand is. And you know, that extensive research really gave me a lot of conviction related to the supply demand table for Bitcoin. And, you know, someone would say, Well, why not a theorem or some of these other things, I'm like, I'm at a second. I'm an institutionalist. As I just said, I want to go with the one that I think is going to be the winner. And the one that I believe in, and I'm trying to herd cats or move ducks, or whatever you want to call them. And I'm trying to get people to just think about getting into crypto in general, while plenty of time for those other potential digital assets, but this is to me the winner. And being an incrementalist, I want to stay focused on it.



Yeah, you also speak to a lot of people abroad, what are you hearing internationally outside the United States, from investors and people who are interested in Bitcoin?



Well, that that has been incredible. And so I've been doing these webinars, and zoom casts around the world, I'm getting up in the middle of the night, sometimes to do them in the Middle East or Asia. I've done them in India, even though it's the coins are illegal. They're just a training seminar. explain to people what goes on. And so yeah, the demand and the Curiosity is off the chart. The skepticism is off the chart, you know, and the markets climb a wall of worry.


So it's good to see skepticism. And so for me, I can be a tireless explainer and a tireless advocate for this. At the same time, however, I'm also recognizing that for many investors, this is a very big leap for them. So Warren Buffett just told me, it's rat poison. You're telling me it's not rat poison, it's fully adapting Metcalfe's law, and it's going to exponentially move the way things like Amazon, Google and Facebook moved over the last 10 or 15 years, and I missed all those. So I want to get into this. And I'm saying, Yes, that's exactly what I'm saying. And moreover, it's decentralized. So you don't have a canceled culture. In the C suite. You don't have the political pressure. You don't have a divorce of the CEO or this or that, or another thing, you know, I mean, and, and, and i and i think that that really makes it even more important.



Final question for you, Anthony. We're here in New York City. You're a restaurant owner here in New York City, hunt and fish club, a place I've been to many times I always enjoy. I'm curious what you're seeing in the restaurant industry right now, what you're seeing in the city, as a small business owner, and what you're thinking, looking forward as this pandemic hopefully comes to an end.



So the industry is under a lot of pressure, the PPP, remember, the government is a blunt instrument, obviously trying to help but it being a blunt instrument is sometimes can help perfectly. But believe it or not, the PPP has actually helped to an extent. But what you have in New York City in particular is you have higher crime, more homeless, more trash, you have these homeless hotels that have effectively been converted these boutique hotels that have been converted into shelters. You have the mayor of New York City, who's got at least another nine or 10 months ago, who's the worst mayor in the history of the city is an absolute unmitigated disaster doesn't like wealthy people is literally trying to figure out a way to abuse wealthy people and, you know, see if you can force them out of this city, which doesn't make any sense because it's crippled the city's economy.


And it's hurt the restaurant industry. So the restaurant industry benefits from corporations being there. It benefits from tourism, it benefits from things like Broadway, tourism is shut down, Broadway is shut down. And so it's going to be a difficult climb out of the situation that we're in right now. But betting against New York is never a good thing because it's tremendously resilient place. It's got a great geographic location it is in it is in a zip code, sort of where it's at the center of the universe, for finance and for the media and for advertising. And believe it or not, lots of digitization goes on there. It's unfortunate that we weren't able to get Amazon second headquarters there. We botched that from a public policy perspective, but I wouldn't be betting against the If somebody like Andrew Yang, Ray McGuire can get a hold of the city, they can revitalize and straighten out the city. It'll be interesting to see if that if that can happen. So I'm long term bullish on the restaurant industry. You know, interestingly enough, because I'm a numbers person, the data for the hunt and fish club, the restaurant I own with a few guys, we had tremendous sales results, going into the January February zone of 2020, came to an abrupt halt in mid March, we haven't opened.


 Now we're well capitalized because we have other businesses. So we'll be able to reopen shortly and we'll open at the 25 30% capacity. And I predicted there will be a restaurant Renaissance and a city Renaissance. And I can, you know, I guess you can extrapolate that over the country. But it is a difficult, difficult period of time. But all ended on a positive note, when the pandemic ended, 675 people were 75,000 people were dead, after the 1917 1918 1919 pandemic, you know, pick the date of the pandemic. And we embarked upon the roaring 20s, where there was a high level of consumerism and pent up demand for consumerism. And I think that's going to happen. And I think we want to be a beneficiary of that. And I expect to be



well, I can't wait to get back in a roaring 20s part 2



I need Dirty Martini. By the way, I need a Tito's Dirty Martini, as I'm saying that



You know, I think I have to say the final thought. When you talk about New York City and the challenges that we have here, it seems like it's too It's too broad themes, right? It's the failures of government and the successes of technology. And it brings us back to the where we started this conversation full circle. I'm curious if you have any final thoughts that you'd like to leave our listeners with, on Bitcoin on the space, and on the way you look at the world in that context?



Yeah, I want to start where I began, which is that I can't predict the future. But if you're doing your homework, and you're looking at the fundamentals, you can get a good idea where the future is going to be. And if you really understand technological curves, whether it's telecommunication, the adoption of airplanes, the adoption of motorcars, the adoption of the microwave oven, the internet, the smartphone, you had to make an assumption that your currency, the technology that we use to transfer goods and services between each other, was going to get upgraded from paper, or was going to get upgraded from fiat currency had to make that assumption because there's so much variability and capricious nature to the fiat currencies, a lot of it's being born from a governmental policy, you'd want something more stable than that. And so this invention known as Bitcoin is part of the future.


And so for me, I'm going to start where I finished, which is that I can't control the world. And I can't tell you what is right or wrong, or what should be normative in our society. But I can tell you this is this is our society, you know, if you want me to be the Tsar, I would work on a carbon tax immediately and aggressively, so that we can incentivize people to conform their behavior to stop destroying the environment.

And I say that because I have children, I think we're going to hurt the planet, we are intentionally or unintentionally hurting our children and grandchildren. So so you know, we're in a climate crisis, you don't have to be a genius to see that. But you're also because you're only here visiting the planet, we have a tendency to be expedient about our decision making and be a little bit reckless, but we should join together and, and not do that. So but since we're not doing that, well, guess what, I got to adapt my investment strategy and my personal lifestyle to those challenges as well. So you see the world the way it is. Don't see the world the way you think it should be. That's that's my message to the real vision which is appropriate and be real, you know, his real vision. Be realistic.



Very well said and much food for thought. I hope to see you again out and about in New York City. Soon.



I will have a Dirty Martini in my hand. Trust me.






Thank you, man. It's great. I really enjoyed that.


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Ash Bennington

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