Wall Street's crypto FOMO and tokenization, with Christopher Perkins

Transcript

It's hard for me to imagine that those gas tokens don't become strategic commodities because so much value is sitting in those ecosystems. Bitcoin is dipping again, but the biggest names on Wall Street aren't running away. They are building whole new divisions around digital assets. But what do investors need to know about all of this? Hello and welcome to Milk Road Crypto, the show that knows that once markets are trading 24/7, Tradfi is finally going to learn what it's like to be in crypto. I'm your host, John Gillan. Today is Wednesday, October 14th, and today we are joined by Chris Perkins, head of Franklin Crypto at Franklin Templeton.

Chris was on the show last in March. He had a different job then. A lot has changed since we caught up with Chris. I'm excited for this conversation. He's going to share a lot of alpha with us today. If that sounds good to you, make sure you like and subscribe. Share this episode with somebody who's going to enjoy it. And as a reminder, our podcast today is free and that would not be possible without our wonderful partners at Nexo, the digital asset platform that lets you earn, borrow, trade all in one place, all in one account. So keep an eye out for more information on them later in the episode. But for now, welcome back to Milk Road Crypto. Chris Perkins, Franklin Crypto, how are you, sir, >> John, how's it going? Good to see you.

>> It's good to have you, man. I I think this is a really interesting time in the market. We're in one of the strongest institutional bull runs ever. The bull market is starting to pick up. Let's start with Bitcoin here. Um we're we're dipping again. Bitcoin has tested 81k a couple of times. It's still holding support, but the macro headwinds, people are worried about Fred Fed rate hikes and things. What's your outlook on Bitcoin here? What are your what are your thoughts on the market at the moment? >> Yeah, I look generally feel very very positive. I think it's a very constructive setup. The uh obviously macro continues to play a role. I think the good news is is that we've seen a lot of resiliency uh with Bitcoin as an asset. You know, visav other uh assets.

Bitcoin gold has been constructive and really that's picked up since the Iran war picked up. Look, risk assets will always be sensitive to things like rates, things like CPI prints, hot CPI prints. But the if I were to tell you that the biggest change in this cycle, frankly, is that as regulatory clarity comes and crystallizes, we're seeing this and what that does, it opens up for institutional adoption. So, institutions are marching forward. I challenge you to name one major financial institution that doesn't have a digital asset strategy. So, regulatory clarity has opened up institutional adoption. And so, what you're seeing now, and remember, crypto since its

inception was largely a retail driven market. Retail would come, retail would go, four-ear cycle, they would trade that, etc. But for the first time, what I'm really seeing is that fundamentals and utility are displacing memes and momentum. Like does momentum in tech do these things apply? For sure. I mean still like very exciting for certain people. Yeah. But institutions are really focusing on those fundamentals. And I think with this cycle you're going to see is a dispersion between those with fundamentals and those without. U because you can underwrite and they're very comfortable underwriting tokens which are now allowed. Like remember back in the day if your token had fundamentals, if you had value acrruel, it was like a death sentence. You're dead man walking because um off you

would go. Um, and then you know you'd be accused of being a security and that was that because there was no path to being a decentralized or tokenized security. It was difficult. Franklin Templeton pulled it off to be honest with you, but it was very very hard if you were token. Uh, fast forward to today. Um, you can be a security and you can be just fine. Um and and you know thankful for all the efforts that that are coming out of the SEC and CFTC from Chairman Atkins and Chairman Celink they're creating the conditions that allow those fundamentals to shine through. So constructive on Bitcoin it it has it it's it's proved itself as a store of value. There's social consensus. There's still some risks. You know in addition to the the macro headwinds I think there's a lot of

focus newfound focus rightful focus on things like security. That's something that people are paying attention to. I'll be honest with you. I've been speaking to institutional clients all over the world. Uh I've been speaking to sovereign wealth funds all over the world and there's a lot of interest in Bitcoin as an asset. A lot of interest. Some of the challenges that they face like we have a pretty pretty brutal security environment right now. We've got AI coming you know I don't know if you saw what Justin Drake was saying a few days back and saying guys like this Qday thing is really scary. uh when and Q day obviously is when quantum with the quantum capabilities to break public key encryption but we may not even have to wait for that because AI may get us there and so what we're seeing is we're seeing a lot of people coming to people

like us saying you know we need that we need an intermediary we need someone to help me manage this asset why because of all of the things that you know they're focusing on on security risk management you know robust custody of assets That's all those things that like you know used to be like the the the tail uh wagon like no that's that's at the forefront like take care of my reputational risk my regulatory risk take care of my cyber risk taking care my operational risk so that's that's one of the things that's coming to the forefront uh so we're seeing a lot of institutional demand uh for Bitcoin as an asset and for those alts with fundamentals uh so I think it's really really interesting time >> this pullback on Bitcoin is scaring a

lot of people and I am not one of them so if you want to see what I'm not selling and why, what's on my watch list, and when I'm going to be deploying more capital into these markets. You can join Milkro Pro today. It's just a dollar. The link is in the description. I answer questions day and night in Discord. I'll see you there. A really helpful framing there, Chris. I want to unpack a lot of this a lot more, but I want to start with your story. Since the last time we talked, Franklin Templeton bought your firm and placed you in charge of Franklin Crypto. Uh, what's it been like? Just talk us through that story. you went from uh you know a crypto fund to being you know head of crypto at $1.7 trillion asset manager maybe more than that I don't know but uh

walk us through that journey and and what it's like being in this new seat in this new role. Yeah. So, we were acquired by Franklin Templeton in June. One of the coolest things about it was that they acquired us in their native token uh called Benji, which is great. Uh it was uh it had added utility and and it it it acrews interest from the moment it hits your wallet. So, it's like it's very very cool. The thing about Franklin Templeton that people don't understand and I would challenge you to find another firm that has been this forward, you know, when you're running a nearly a$ two trillion dollar asset manager and you've been around for 75 years, almost 80 years, you have a lot of risk, right? Because you want to make sure that that that

that part of your business um is not disrupted. And so most folks in in that position would say, "No, no, no, no. Like I want to stop change. Like things are going great. I was able to raise, you know, $2 trillion. Things are going great. Why would I want to change? Like I want to I just want to keep things the way they are." Jenny Johnson and the Franklin Templeton team, Sandy Call, etc. Uh went 180 degrees in the opposite direction. In 2018, they decided to go all in on this asset class. That was courageous. It was brave. It was thoughtful. And you know what have they done since that time?

They've built an incredible understanding of the asset class. They run their own nodes. Like people don't understand this that the sophistication of these folks. Their tech is is profound. They've built an incredible foundation. They've pioneered products that are composable that can do things that I mean stable coins are awesome. You know, you give me a dollar, I give you a token back, you can move it around. Maybe Brian or Paulo, Jeremy get the interest. That's fine. It works, right? Everyone loves stable coins. Well, they pioneered the next generation. What if you had something that was yielding and could pay you yield to the second? That's pretty cool.

And and so you have that enhanced utility um as we're looking at now and you step back, remember I talked about utility. This is the first time that I've seen in my entire career where tokenized assets um like money market funds can actually lower the risk and also lower the collateral because like you know you can settle in more real time. You know we were designing these things you'd have to like reserve three days of collateral like put your finger in the air dump it in there pray for the best. Most of the times you had too much sometimes you had too little and you're really scared but now because you can settle it's great. So long story short, they innovated and they pioneered these these products uh built an incredible foundation and now my job is to come in and to execute on that foundation. It is

to build an active management business because remember like all these institutions all over the world, they had a lot of risk if they were in the space. Franklin took that risk. They built the foundation. Now the rest of these folks are coming in. are saying, "I've got risk. If I'm not in this space now, because my regulator, my board, everyone knows that there's something going on here. Can you help me?" And so, our job is to work around the world uh with clients, institutional clients to help n navigate them through this very confusing. You know, we we we as cryptonatives get very comfortable like, "Oh, layer one, layer two, we throw all this stuff." It's like most people have no idea what we're talking about. And so we have to really help them understand the value, the utility, fundamentals,

uh, and the risks frankly and navigate them to places where they want to be. What am I seeing? Um, you know, I was in Europe two weeks ago. I was in Asia last week. Multiple sovereign wealth funds focusing on the asset class. Public company CEOs, you name it. Every flavor of institution needs a solution. They want a solution. They don't want to get left behind. And it's everything from how do I operate my business on with 247 markets? How do I you know fix my treasury um you know now that I have these new tools? How do I invest in various products? Like what is the risk?

What is the benefit? Um so like the the demand for education, the demand for learning and the the the demand for getting into the space and help working with someone that that can navigate it for you insatiable. satable globally and across institutional verticals. So, I couldn't be more excited about um just where we are in the market. Obviously, there's risks. There's always risks. Some of those regulatory risks have been taken off the table. I think security remains something that people are focused on, but man um it's been really cool to uh to start here and get building out of the gate.

>> I want to have some more context around these conversations you've been having because I I've been watching a lot of your recent interviews. you did one with Bloomberg at token 2049 in Singapore. Um, and you talked a lot about these conversations with institutional partners, clients, sovereign wealth funds. Those conversations, you know, you you said that they're interested in how they can build products or or use, you know, public blockchains as infrastructure. Um, but they're also interested in investments. talk to me about the different things that are being explored there from like leveraging public blockchain infrastructure as a as a you know support infrastructure for their business versus investments and and what those conversations have been like and give me some more detail on that. I say the first thing for financial uh organizations or or even people that are looking to to acquire assets, the world

the world has entered a period of 247 markets. It's done. We're here markets by their nature are 24/7. We put artificial boundaries around them that kind of constrain liquidity. We put these artificial open and closing hours. We never had the technology otherwise because we had to go to sleep at night. We had to go home and eat dinner with the family. No, like like it's it's on and it's just getting started because the bots are like really don't care, but you know, we're crazy crypto people. We've been doing 247 for years. So that change in paradigm, it changes risk. It changes everything. We haven't even gotten to AI yet. Like the AI conundrum about, wow, everything is now changing, but like right now, where are we? It's like, okay, crud. Like 24-hour markets,

how do I do this? And and so a lot of folks and then what's the what's the benefit of 24hour markets? How should this ch how should this change how I'm managing my treasury? How should this change how I'm you know managing my business? So so that's here and now and like there's so much FOMO right now particularly amongst markets part market participants because like we've seen the story before. We've seen people fail to adapt and like there's this thing called liquidity and nobody knows how it's created or destroyed. You don't know like if I knew like I wouldn't be here like sometimes like a market will show up and say hey I'm gonna be the best at at provide the most liquidity I'm gonna drop my fees to zero and doesn't happen

so it's it's not necessarily fees right you just don't know how it happens but we've seen instances throughout history where liquidity has migrated from one venue to the next never to return I often tell the story of the of the euro bund future was in the life exchange traded on open pits moved over to URX gone forever like that's a A lot of institutions are very nervous that if the market is moving to 24/7, well, like let alone the risk side of things. Like you have two markets now. You got a 24/7 market and one that goes to sleep. Which one's more risky? I mean, it's pretty obvious to me every crisis I've been part of has been liquidity crisis. It's probably the one that hasn't dynamically rebalanced. So, there's a the risk concerns for not being able to keep up

and then there's commercial concerns for not getting keep up. So, like those are two things that are driving a lot of the FOMO that we're seeing. And then of course there's the investment opportunity and like I said um for a long time some of the best performing asset classes best performing assets in history things like Bitcoin right and people don't want to miss out on those opportunities we have very unique differentiators for being in crypto for example we are instantaneously global that opens up a material tab you know it's not like you open up a shop you know on on Main Street and then you franchise it and you solely built it out like how many years did it take for McDonald's to become ubiquitous. Well,

for this we deployed into the internet, it's instantaneous tab and so and and the fact of the matter is is that we also put a lot of artificial boundaries around who you could invest in, what you could invest in. You know, derivatives markets were all offshore. US persons, you can't do it. You can't do it. Well, now US persons can do it. and you're seeing just this flurry of of activity, value creation, products coming on shore. And so our investors want a access to those very exciting products. I mean, if you think about it, most of crypto is like less than 10 years old.

Like the most some of like Ethereum's like 11 or something. You know, these are exciting startups. These are, you know, and by the way, for many years, it's been very difficult for normal people to get access to early stage startups. Now they can and there's a lot of risk right you can lose a lot of money your investment can go to zero but some of the most exciting companies are those early stage companies that are getting a ton of momentum creating value solving problems and by the way as institutions come into this space they have a lot of challenges there there's a lot of problems that are being created a lot of infrastructure requirements and so it's just amazing to see founders and entrepreneurs pouring into solving those challenges I think it's a great landscape to be in private markets too >> Chris I'm curious your thoughts on some

of the winners of this move towards tokenization. I've heard you argue in the past that if stocks and funds and all these assets really do move on chain that the native tokens of these chains are going to matter. They are going to appreciate. Who's winning the horse race right now from your perspective? And and who what names are coming up most in these conversations? Is it avalanche or Yeah, go ahead. >> Of course. you know, I I I hate shilling like one or the other token because, you know, I don't want to give investment advice and of course like if I forget to name one of the projects, which I'll probably do, they'll get mad at me. Um, but but I think the way to think about it just from a like if you want to think about a layer one or layer two, you

know, blockchain through a blockchain infrastructure lens, this is very very basic, but you tell me why I'm wrong. If you know we're going to be putting trillions of dollars on chain, you know, we already have 360 or so. Well, I haven't looked today, but over 300 something billion dollars worth of of stable coins. Many people are saying that's going into the trillions. Okay. Do you believe that? Yes or no? But we're already in the billion, hundreds of billions. You have a $160 trillion equity market. Uh, which I think is going to tokenize because I'd rather buy the token than the regular old equity if there's liquidity because I need it to hedge my book on the weekends. Fixed income $160 trillion. You know, what about tokenized treasuries? So, so as these assets move

onchain, it's hard for me to imagine that those those gas tokens don't become strategic commodities, right? Because so much value is sitting on those on in those ecosystems. So, look, I think the administration's already talked about a strategic arsenal. I think they're they're talking even more now about uh the strategic Bitcoin reserve. I think that you know these other ecosystems the gas tokens anything that powers uh and supports those real world assets they'll obviously be very strategic you know different layer ones have different value cruel mechanisms always important to look at those things um and that's just on the infrastructure side and I think there's plenty of other

investments on the infrastructure side because remember regulatory risking institutional adoption boom everyone's coming together racing when you come into a new techn technology you can build or buy. I'm telling you, these banks, many of these institutions, they just can't build. They would love to. Talent moves too fast. It's just not what they do. So, they're going to buy. And so, you have an entire new generation of startup founders um that are that are solving those infrastructure challenges. I think that's very very interesting place to be. And then finally, the apps. You know, there's old thing called the fat protocol thesis. Everything's going to go to the blockchain. I think many of us don't really agree with that. You're going to see real value acrew to the apps. So there are a number of apps that are doing quite well right now. Um values accuring to the token. Do your

own research. But those are the things to think about. And then I'll be honest with you, other places that I'm interested in um as you think about the investment landscape is the intersection of technologies. So we're crypto people. Crypto's democratization of finance. It's all happening. You have institutions coming in. It's being more and more ubiquitous. It's it's becoming the new internet settlement layer. Then you got AI like you can't ignore AI in our space right now. And AI is a civilization changing technology. It is the great disruptor.

It is the great optimizer. It's the great accelerator. And when you look at the intersection of these two technologies, I believe that crypto and AI are friends. I believe that yeah, AI is finding vulnerabilities in certain cases and that's fine. When we'll find them, we'll eliminate them. Ultimately, AI will be better for security than worse for it. we're going through this interim period. Um, but gosh, there's a lot of value acrruel that can happen as you look at the decentralization of AI, the decentralization of AI infrastructure, agentic economy, which is that application where they're going to start paying in microp payments on crypto rails. There's a lot of value acrewing there. And then the last civilization tech defining technology, I believe, is quantum. And you have these

three things hitting at the same time. Quantum will give us compute like we've never imagined. it's also giving us a lot of challenges, you know, maybe also by AI and security. And so when you look at where these these civilization these brand new technologies intersect, I think there's so much value to uh that that's acrewing and that's where I spend a lot of my focus frankly. >> I've heard you call tokenization electrification 2.0. And you know, you talked a lot about these major trends here. This is a thread we've been following on Milk Road for a long time. the the rise of crypto and digital assets, tokenization as a part of that intersecting with artificial intelligence and kind of colliding with all these things. Do you think that the the people you're talking to at these institutions understand that this is

electrification 2.0 or are they still going up that education curve? Where are we in the process of this like seeping into the understanding of the general market? Uh from your >> we do a lot of education. We just published a whole bunch of thought pieces on on tokenization. There's an in like it's hard to explain the insatiable demand for education that we're constantly asked c I I I need to understand can you translate for me you guys know crypto I don't you know traditional finance I do explain to me what this means make it simple make make it make it make like help me understand and like so we spent a lot of time and we walked them through and we're like hey this is this is what you can do this is what you can't do this is this is the risk this is the opportunity and then um

the light bulb goes and they're like, "Oh my gosh, like I got to get it. I got to get on top of this." And and so then we have to, you know, we can't just come to them with education. We have to come to them with solutions. >> Okay. So, I've also heard you say that you are not a Bitcoin maximalist, you are a utility maximalist. And you think that there are a lot of assets as you you said in your answer that generate value, create value. Um, where are you seeing value acrew from this collision of AI and crypto and tokenization? because there's a lot like you said there's a lot of different places that you know an investor could look and our community is always asking me questions about this where where are some of those places that you think value acrru from

this in in the long term in the short term what's the outlook for you on that >> yeah I guess as a utility maxi and by the way Bitcoin has a lot of utility as well as a store of value I'm not like saying that I don't like I bitcoin love bitcoin to death um but each project has to bring something that makes the world better or unique you know what is what is bitcoin bringing uh a very unique store of value that's also transportable. You know, it's very hard when you're hoarding gold in your seller uh or in a vault and then your country gets invaded. You're kind of stuck, right? You can't transport that that that value very easily. So, so you know that that's an example of utility. We talked about layer 1 blockchains that

support you know tokenized assets. What is the utility of the tokenized asset? 247 markets, right? And and that's real utility where I can hedge my risk on a on a on a Friday night when Venezuela's invaded. I can hedge my risk and pretty soon the agents are going to be watching for that risk anyway in more real time. So that because that asset has better utility. That's the asset I want to buy. That's the rapper that I want to buy. And where does where do those assets sit? Well, on what layer one, what is the token? How does a value acrew to that token? These are the great thing about crypto is that there is data everywhere and there's some amazing data providers. We use all

of them. But you can also just you know use AI tools and start scraping data off blockchains and you can really distill it to really understand the various metrics that drive you know value into a project whether and it doesn't just have to be financial like you can track financial activity like you know you know supply and demand hey you know as fees are acred this token is getting burned or we're passing on fees to token holders. These are all things that are now very very possible. But it just doesn't have to be financial value. It could be network value like you can derive a lot of value just through an intense intense network. Uh we've seen that in web too that that still applies.

So each project is different but the fundamentals are what you should utility and fundamentals you should focus on and and and the data is everywhere. >> You know one of the weird things about crypto is that the longer you're in it the more accounts you seem to end up with. You buy in one place, trade somewhere else, earn yield somewhere else, and if you actually need capital, you end up having to sell something that you probably wanted to keep. That's why we at Milkroad are partnering with Nexo. These guys keep the whole thing under one account. You can buy, trade crypto, earn interest on what you already hold, and even borrow against your capital without having to sell it. All in one spot, all in one account, all on Nexo.

So, if you need liquidity, but you don't want to give up your position, or you're already holding crypto and you want to be able to do more with it, I think Nexo is worth your time. We love working with them. I think you will, too. Tell Milk Road sent you. Gotcha. Chris, I want to get your thoughts a little bit on the regulatory landscape here because as we just discussed, there's a lot of technology that's being adopted and new financial products, use cases, value drivers that are being created. However, some regulatory changes and and you know, legislative battles have been fought to try to make space for that. I've heard you say uh in a recent interview that uh with even without the bill passing, we might end up in a better position than we would have been with the bill just because of how well

the SEC and the CFTC are collaborating with each other. Talk to me a little bit more about what you're seeing here and why what you're seeing is making you so optimistic about this. >> Yeah, 100%. We have some amazing regulators right now and uh I I I've had the pleasure of working with them over the years. I would argue that in certain cases they're out in front of industry for the very first time. So usually it's like industry is pushing the regulators to but I'm telling you these guys and and their teams and and that these public servants like they are really really focusing um on making particularly in the US us the crypto capital of the world they're very focused on on principles they're really focused on tearing down artificial walls and saying great regula like regulation

is a humongous differentiator and edge if you have transparency predictability uh and clarity you and like that's been our struggle for so many years what is what's a what's a security what's a commodity and for many years they wouldn't tell us and like because I asked them and now they're they're like yeah I had a conversation one time u hey uh can we work together like I'd like to understand what's a security what's a commodity like let's let's come up with a framework and the answer was read the howi test it's like I read the howi test they're like well then you need to get counsel I'm like I have counsel and then I was like oh gosh I see where this is going so what we're going to get for the next couple of years is we're going to clarity. We're going to know what is a

security, what is a commodity, and we have welltrodden path to across all those asset classes to function within our capital markets. That's great. What clarity would have given us is a couple things. It would have given us uh a federal preeemption is one of those most important things because today commodities, which many tokens are commodities, they're regulated by the states. If we had this Clarity Act digital commodity, we would have one law rule of of of law uh which would be a federal type that that's probably the thing that I wish that I had most. But what we're going to get in the absence of clarity is years of precedent. And like you you can't just like regulators just can't like do whatever they feel like. There's the something called the

APA, the administrative procedures act. You have to go through certain rulemaking and comment periods and follow the letter of the law to get you there. and and that's exactly what they're doing. But, you know, I do expect for us to see all those things that I just described. But I think it's even better than that because for many years you have in uh just bureaucratic politics, you have different agencies that would compete. They compete for resources. They compete for jurisdiction. I've never seen two agencies work so more closely together. And that's great because like nobody cares if it's like here or there.

They're just like, "Tell me the like, let's solve for the principles." Like, "We don't want market manipulation. We want clarity. We want investor protections. Like, does it matter which bucket it goes in, guys? Like, it's the principles that matter." That's what I'm seeing. And so, we're getting the taxonomy. We're knowing which is which. We're getting like even nuanced nuance feedback around, hey, can guys, can can we use tokens as collateral? Uh, yeah, of course. Like, why not? Oh, okay. Thanks. like it it's just been very very um the the amount of of transparency that they're giving us proactivity and like they're working their tails off to get this right. It's been awesome.

So, it's a very very strong regulatory setup that opens up institutions because institutions will take market risk. They won't take regulatory risk. >> That's really encouraging to hear that. It's nice to hear something is working in Washington. Uh Chris, you sit on the CFTC's Markets Advisory Committee and so you kind of have a little bit of a front row seat to these these dialogues. Both chairs of the SEC and the CFTC have called for mass tokenization of financial markets. You know, talk to me a little bit about what starts to happen once we get this this clarity in place from the regulators. What what does the other side of that look like in terms of institutional activity and digital assets? And what are you expecting to happen once that dam sort of breaks?

Yeah, look, I talked about the size of these markets. As they tokenize, once there's liquidity, the market has to go fully tokenized because it has to go 24/7. It's just it's just better asset. The one thing people are not talking about is the amount of capital that could be unlocked um and money putting being put back into the system because if we tokenize collateral, we can actually lower risk and lower the collateral. That makes no sense. Why would I even say such a thing? It's impossible. Let me just give you a little history.

So after the global financial crisis, the regulators, they're like came to us like guys, you have to hyper centralize derivatives. We're going to create these clearing houses, put these exchanges. We put all this money into it. Like you got we're going to that's the only thing. We don't have any technology. I mean, it would have been great to send it decentralized and spread it out, but we didn't have the tech. And they said, "Look, for derivatives, we want you to put 5 days of margin into that pot. And if it doesn't go into a cleared framework, more liquid framework, we're going to make you put 10 days into a pot. Both sides are going to have to post it. Sorry. And so you have all these days of collateral. You have to sit. Well, how do you collateralize over a long day weekend? You pray. You look

at some historic data. You put your finger in the air and you say, "Ah, this is three days of risk based on my expected shortfall methodology or whatever." And there's this big pool of capital that you just put there because you know and you have other risks on top of it but you need another three days because you can't access the markets most of the time way too much like just sitting there. It's just it's just not you don't need it. Every now and then there's a real stress and you're under collateralized so you have risk. It's just not good. So how do you lower risk and lower collateral? Well because if you settle it more regularly you're moving with the market. You're moving with the market and that should release some of that stagnant capital back. So, those are the types of things that could

be super interesting, you know, not to mention increased access um to our products. How do we how do we get our American products e more easily in the hands of people all over the world, whether that's stable coins or or or financial products? There's just so much opportunity here and it really comes down to the properties that that we bring to the table. >> Chris, I do want to just drill down on this a little bit more because you're right, not enough people are talking about that. Not enough people understand that. Um, but you know, just for our audience to understand, when Chris is talking about lowering the requirements for collateral, lowering the risk at the same time, there's trillions of dollars of capital that is being basically put in timeout. Um, what does the market look like, Chris, once those collateral requirements come down and those risks

come down? Do you just think we see trillions of dollars of capital come off the sidelines and get more involved in capital markets? What does that actually look like? >> I think trillions is a lot. Uh, I I think in the US, the pool of collateral we're talking about is about a trillion. And so if you take if if you're more efficient with your collateral, you can like like seriously release tens of billions back into into the economy, which is nice. >> Yeah. And that's just that comes for free with tokenization. Chris, I I want to talk about the outlook for the rest of the year here because like we said, there's some macro headwinds that we're facing, but there's this this regulatory tailwind that seems to be accelerating adoption. What do you think the rest of 2026 looks like in digital assets? and and what are some catalysts that you're

watching for towards the end of the year here? >> Look, there's a lot of stuff going on the geopolitical front. I hope that that gets sorted. Uh I'm paying a lot of attention to security. Uh you know, when you have people sounding alarm bell saying, "Hey, public key encryption can be undermined." I'm thinking about the risk, but I'm also thinking about the opportunity. The the risk is far beyond crypto. There's about $500 trillion in global assets. And what's the opportunity? Well, if only there was an industry that had a concentration of world-class cryptographers at a time when the world's facing its biggest challenge to encryption in all of its history. I think it's going to be very good for crypto if and so like that theme is just in my head right now and I'm thinking about how I can partner with projects across the board to, you

know, bring assets into the crypto space, find opportunities for investors, uh, and find opportunities for investments. That that theme is so obvious to me. had published an article on it in Fortune a little while back. Uh so that's something I'm watching very closely. Midterm elections, you can't ignore them. What will that mean? Um it it could mean a few things. Uh you know, these SEC and CFTC are going to continue to blaze forward. You know, obviously numbers will matter. See how things happen. I'm hopeful that crypto becomes less political in time. Uh frankly, it's like the most progressive technology you could ever imagine. Um so it shouldn't be political. It is right now a little bit, but hopefully that that that slows down after the election and people focus

focus on principles. Yeah, just finishing I'm excited to finish this year out strong. Uh I'm not a big believer in the four-year cycle other than that there's a lot of other believers out there and so you can't ignore it. Uh so we should be well positioned through that lens too. Chris, you reminded me of another question I did want to ask you, which is, you know, there was this bunker mode conversation last week in crypto and a lot of hand ringing in general about uh quantum risks and a AI swarms and all these things, but you have been much more positive on this. You think that this is going to be like a a value ad that crypto is going to be able to give to the broader market. Talk to me a little bit more about what you see there.

What's the opportunity that that you think counterbalances the risk? >> Every single like it's a huge risk. It's a huge risk for crypto. It's a huge risk for Trafi. Um the only difference I'd say is that in crypto we're out in the open getting attacked every single day. We live in a very hostile, antagonistic environment. Uh and that hardens us to a large degree. And I'm not saying that traditional markets aren't as nasty, but our space is particularly challenged. If you look at the layer ones right now and all the major ecosystems, they are out in front maniacally focused on solving for like crypto agility enhancing their their cryptography to make sure that

it's PQC uh resist like it's postquantum uh crypto cryptographic uh resistant and they're also like now you have to worry about like AI cryptography, right? Because the AI is getting really good solving math problems everywhere. Uh our cryptography problems next. So, I'm encouraged that from a relative perspective, our industry is very focused and out in front, but it's still a big risk. Uh, but I'm watching that very, very closely. >> Appreciate the thoughts on that, Chris. This is a really great conversation. I know our audience is going to enjoy this a lot. Um, what is one thing that you would tell our audience to pay the most attention to between now and the end of the year? Is it the midterms? Is it regulatory clarity? Is it the macro tailwinds or headwinds, rather? What What's the the the top thing to focus on

right now in digital assets? you're going to see you're going to see a lot of regulatory things happening. You know, I would say focus on liquidity. Um tokenized assets are like 0.1% of global assets right now. You know, look at the um the trajectory of of that. I I believe it's going to increase um if it starts accelerate that increase starts accelerating at certain point there'll be a tipping point. I don't know when that's going to be, but that's what I would watch is I'd watch metrics around the acceleration of adoption, whether that's money market funds, uh, tokenized money market funds, stable coins, just real world assets. That that's the metric to watch. Uh, do I think we're going to hit a tipping point this year?

No. Um, because we're still, remember, we're getting this regulatory framework and then the institutions have have to have time to build. They don't do it overnight. They've got a lot of enterprise checks and controls, but watch those metrics because at a certain point they're going to tip and then then it'll be very interesting. >> I'm looking forward to talking to you again once we reach the tipping point. Chris Perkins, where can we send people to find more of you and your work online? >> Uh just uh Twitter Perkins CR97 or I'm on LinkedIn as well. But good to see you John. >> Good to see you, Chris. I hope we talk again soon.

>> Likewise. Cheers, buddy. >> Thank you all for joining us. I hope you all learned something today. So until next time, stay safe, stay educated, stay bullish, and we will see you all on the next episode of Milk Road Crypto. Thanks for being here everyone. Bye. >> Thanks for listening to Milk Road. If you enjoyed the show, make sure you like and subscribe. And if you're struggling to find winners in the market, that's exactly what Milkro Pro is built for. Our analysts have called some of the biggest winners early and Pro lets you see what they're buying next, every trade they make, and the research behind every position. Check out Milkroad Pro at the link below. Everything you hear on Milkroad is forformational purposes only. These are our personal opinions, not financial advice, and we may own some of the investments we talk about.

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