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Speaker A: The most bullish thing about ETH right now is the fact that the understanding of tradfi is that it's this crypto asset like bitcoin, because I think when they fully understand it, it's going to blow their brains out. |
Speaker B: Welcome to bankless, where today we're exploring the diaries of an ETH maxi on Wall street. Yeah, Steven and I came up with that title, and I think it's a perfect description, as usual. This is Ryan. Sean Adams. I'm here with David Hoffmande, and we're here to help you become more bankless. Our guest today i... |
Speaker C: Today, Sam's been on Wall street longer than some of you listeners have been alive, probably. Um, and so he's, he's seen a thing or two about Wall street and has just. Is one of those guys that was open enough to crypto to really get pilled on crypto, like, in a very deep way. Uh, and Sam's connected to a lo... |
Speaker B: All right, guys, let's get right to the episode with Sam. But before we do, we want to thank the sponsors that made this episode possible, including Bankless Nation. Today we have an opportunity to pick the brain of someone who I think perfectly straddles both tradfi and ethereum. Sam Jernigan is a macro inv... |
Speaker A: Thank you, guys. So thank you for having me. I am a longtime listener. I rarely miss an episode. I'm a big fan. I think you guys do a public good. |
Speaker C: Appreciate it. |
Speaker B: So let's talk about. We want to get your background in a minute and how you kind of ended up here and, like, what you've been up to, just like the behind the scenes. Cause that's super interesting for bankless listeners, what it's like in the belly of the beast. But I think the context for this episode is we... |
Speaker A: Right. I remember the first time, one of my best friends is a chief economist at one of the largest banks. I remember the first time we were out one night. I remember the first time I said this word tratfied to him. He's like, what is that? What does that mean? That was not long ago, I think. I would say. We... |
Speaker C: So what I want to get out of this episode, Sam, is we are entering the era in which crypto and Tradfi are becoming closer than ever. We now have the bitcoin ETF. We're about to have the Ethereum ETF, and now our conversations are going to go directly into the ears of quote unquote tradfi. I'm trying to learn... |
Speaker A: Right. Well, I mean, I think the ETF's, I mean, there are some hedge funds that probably. Okay, so, I mean, I think, I remember probably a couple of years ago, I actually in a chat I mentioned, you guys, that most major funds are now papered up. That means that they are now papered. They have legal documents... |
Speaker B: Sam, I think you've given us a taste, a preview of the rest of this episode, right, where we're going to be camping on some of those subjects. I guess a few things just to tie off one thing. What is eth's pe ratio right now, just out of curiosity. |
Speaker A: I don't know if I had that. |
Speaker B: It's like in the hundreds, right? I don't know. I saw it 150 something in that range. So maybe a bit more than like two x what? Mastercard and VSR. |
Speaker A: Right. So I think I would have to check. I don't know offhand, to be honest. And so if I don't know the answer, I don't want to make it up. I think you also need to make sure to be clear, issuance is a cost. And I want to set the record straight on this. I just like a lot of people watched your episode with ... |
Speaker B: Sam, there's so many ways we could fork this conversation. We've just brought up a ton of different topics. One is, I'd still like to get your background and how you came from this place of straddling trad five and ethereum. That's important. I feel like we've mostly talked about who Tradfi is and what we me... |
Speaker A: Sure. So I started my career in New York at Bear Stearns in sales and trading. I successfully made the transition over to JPMorgan. And while there, you know, it got the crisis right, the zero eight crisis. Right. Internally I was. They almost fired me actually, because I was trying to tell people that all h... |
Speaker C: And you're like, yeah. |
Speaker A: I was like, but we should be. I was like, but we should be. You know, that was, I think that was the first realization that this was a macro asset. And I think that an important thing I wanted to kind of communicate. I did it recently at Denver, actually, at this panel I spoke to. I think when you think abou... |
Speaker B: Personal account. |
Speaker A: Yeah. |
Speaker B: Okay. |
Speaker A: Yeah, I was hearing this from a lot of my friends who work at these funds. And I was, you know, so. But none of these hedge fund macro billionaires and guys running these funds were doing it in the fund because they didn't want to take the risk of alarming or startling existing investors in their fund, or wh... |
Speaker B: So to finish out your story, Sam, what got you kind of ETH pilled as well, because that's how you've been introduced to me as well. I think maybe three years ago. It was just like, hey, meet Sam, the guy who is popularizing the Ethereum narrative to a bunch of unbelievers in tradfi. He told the story of basi... |
Speaker A: EtH maxi of Wall street. |
Speaker B: Yeah, is that what they say? |
Speaker A: So you mentioned earlier we traded the first option on Ethan did that with a via an ISDA, an OTC trade. I remember ETH was at $100. I'm sorry, 160 and we bought. No, I'm sorry, it was at 120 and we bought 166 month call, six month calls. I remember there was no volume curve for ETH at that time because Darab... |
Speaker C: Yeah, that's the founder of Avidoon for people who don't know. |
Speaker A: Yeah. Anatoly, not as much. Kyle Somali did. But that was not actually a new thing. Kyle told me the day we bought those first call options on Ethereum. It was at 120. I remember I met anatoly during the seed round because Kyle had introduced us. And I remember I wasn't going to tell the story, but I. I reme... |
Speaker C: And I would assume tradfi deals in handshakes and meetings and conversations. And so if they can't have that form factor, they probably just have to sit on their hands. |
Speaker A: Well, I mean, they're certainly not supposed to use messengers as the SEC has enacted these very large fines on messaging apps. I don't know if you've seen these billions of dollars on the banks and now they've been looking at some of the funds. That's why I was not allowed to use messenger apps until I left... |
Speaker C: Well, I feel a lot of resonance with that story. Actually, one of the reasons why Ryan and I started bankless is because there was just a void about the story about Ethereum. Like no one was really telling it. And as a result of that void, that if the Ethereum community wouldn't really fill just, it just did... |
Speaker A: It, and you did it. I consider myself a bankless acolyte, a follower. |
Speaker C: I appreciate that. And also doing our same role inside of the world of Wall street, where there is a void that many of the VC's with ETH killer investments will happily fill the void of the lack of understanding around ETH with their own narrative. I'm wondering, and maybe you can give us the download on wha... |
Speaker A: I once asked someone, a tritified person, what is eth? What is Ethereum? And the answer was, Ethereum is a cryptocurrency like bitcoin, but it has some utility. And I was like, that's actually a very good answer. It's very concise. It's like a very high level and it is descriptive, but it, under the surface ... |
Speaker B: Okay, so Tradfi has very limited understanding of Ethereum. They sort of now have barely wrapped their minds around bitcoin, but by and large, they don't understand Ethereum. Sam, you said something interesting there. You said, once they do understand it, minds will be blown. So why, maybe this gets back to ... |
Speaker A: Well, this is where I, this is where you run a lot of risk doing an hour long podcast for this, because I tried to give you one very simple vertical, one simple utility of Ethereum, say swift messaging of financial money assets, and this simultaneous settlement of those funds, that alone is going to change t... |
Speaker B: Do you think the addressable market for ETH of the asset is bigger than the addressable market for bitcoin? This is a test of your ETH maxiness, Sam. Do you believe in the flippening? Do you think that's going to happen? Do you think these are equivalent assets? Or is just like one destined to always be larg... |
Speaker A: The answer is yes. The market opportunity is definitely larger. I think that the bitcoin community is probably figuring that out. That's why all of a sudden you're seeing efforts like OpcaT and some of these turning on opcodes that previously the religion of bitcoin said was unacceptable. Yes, unquestionably... |
Speaker B: Who are we talking about? So many guests, so many guys. |
Speaker A: But anyways, I think people who want to do more with bitcoin and have been inspired by what Ethereum has done and want to enable some of that capability even in their wildest dreams, I don't think they'll ever really get there. Look, I think even if you were able to get all that, the bitcoin community may no... |
Speaker B: Okay, so the story for tradfi is ethereum as this almost this like unified ledger for global financial settlement, right? So like there's that part, part of the story and then as, as this collateral asset that is like, you know, supranational and exists outside of the nation state control. That's the dual st... |
Speaker A: Tradfi to begin with? People watching, people that spend too much time on Twitter, or just a normal person to spend some on Twitter? Dont worry so much about what happens in the very short term. I remember when bitcoin ETF's launched, people like, oh, it was priced in, fell down, went sideways for a month, a... |
Speaker B: What about the clearing of the regulator. |
Speaker A: By the way, once it starts making new highs, then you have new users and you're entering that cycle where now it's like supply is contracting as more money is flowing in via these ETF's. I think it could be quite dramatic, to be honest. Again, I don't know if it'll take two days to happen. I don't know if it... |
Speaker B: They just fomo. |
Speaker A: I do think the marketing will happen again. I don't know the timing. It is very difficult in markets. I've got a lot of gray hair at this .1 of the things I've learned in markets is that it's hard enough to get the direction and the magnitude correct. Don't try to also get time correct. Leave that one alone.... |
Speaker B: How about this breaking of the regulatory haze? I don't know if that's made a big difference for tradfi, but it's Ethereum because of the lack of action of the SAC or banning about of people like chair, chair Gensler. It's been unclear what its status was. Is it ethereum of security? Is the SEC going to try ... |
Speaker A: I'm not sure. I'm not sure. I have a view on that. One thing I would say that I know from in 22, I think that there were some large, well known hedge fund, hedge funds that were long, some Eth. And I remember I got a message from one of the large bank sales coverage and I remember she basically was like, hey... |
Speaker B: Sam, one general question, I think for a lot of crypto natives, is it a good thing to have tradfi on our side? Right. It feels kind of good right now to hear Larry Fink talk about the bitcoin ETF. And hes also talked about tokenization and with Blackrock getting an Ethereum ETF approved, I know hes going to ... |
Speaker A: I think it's good. I do not think we want the Ethereum ETF's staking. If there were a mass slashing event that would cause, that would cause governance risk. Right. You could imagine if this is actually why we need to limit the percentage of the network that is staked or evolved staking in a way where a port... |
Speaker B: You're painting a world here, Sam, where tradfi doesn't try to choke off crypto and defi at all because it's not in their best interest to do so. Right? The idea of tokenization on this unified global ledger is very appealing to them. Gives them an opportunity to just upgrade their infrastructure, gives them... |
Speaker A: Sure. So the first one, again, I think regulation, I once said this with Matt from Van Eck on a panel. I was like, I never worry about regulation because it takes care of itself. Recommend 95% of the people watching this podcast don't worry about regulation. Since I've been in this space, people have always ... |
Speaker B: When you say agencies, you're talking about the regulators, right? The SEC, the CFTC. These are the agencies. |
Speaker A: Sorry, the regulators. Yeah, yeah, the executive agency. Regulators. Okay, so. And the courts simply have to defer to them over the last there have. The Supreme Court is currently very conservative, as most people know, and has taken a couple of strikes at this. Chevron deference, again, goes back to the ori... |
Speaker B: So this is cool, maybe just to connect the dots and then finish this out. So if Chevron deference is overturned, then it defangs one of the core problems that crypto has had with regulators, which is like regulatory overreach. These unelected officials, Gary genslers of the world, that are basically like hat... |
Speaker A: I say to myself that to myself that EtH is like apple. And Jim Cramer has this line, own it, don't trade it. And that's the way I think about it. You want to own ETH. It is a platform. It is a secular shift with, you know, unbelievable fundamentals underneath it. You want to own it, don't trade it. That's, t... |
Speaker B: There you go. Own it, don't trade it. We will leave it there, of course. Gotta let you know, none of this has been a financial advice. It never is on bank list. Crypto is risky. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us ... |
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