 Hello, I'm here today with Nicholas Carey from blockchain.com. We're very excited to speak to him to learn more about what's going on in the Bitcoin, blockchain, cryptocurrency spaces. Hi Nicholas, how are you doing today? Very well, thank you for having me. Fantastic. Would you like to just introduce yourself briefly, maybe explain the various roles and the various hats that you were? Sure. So, well, my name is Nicholas Carey. I'm one of the co-founders of blockchain.com. I was the author of The Future is Decentralized and I was also one of the founding commissioners of the Blockchain Commission for Sustainable Development. I also help support a non-profit called Sky's The Limit.org that helps first-time entrepreneurs get mentors, advisors, and access to funding. Wow, and when do you sleep? Not much, but I try and get a little bit more than I used to. I was going to say that's a lot on your plate. Okay, fantastic. I mean, we had a really interesting discussion last night about the way in which the world is going and the role that blockchain and crypto is going. But of course you have quite an affinity with the UK. I do. And I was just wondering how would you see the approach of the regulators in the UK right now to the cryptocurrency to the blockchain space? Yeah, it's a good question. Really, the regulatory landscape is a hot and present topic basically in all the key jurisdictions around the world. So, we've seen momentum within the American administration, the Biden administration, seeing consultations across all the key departments to explore the regulatory impacts of cryptocurrency for there. The EU is doing a whole bunch of work right now, and the UK, basically not to be left behind recently as last week, came out with some kind of interesting ideas, which for the first time after years of sort of staying on the sidelines, I think are actually kind of progressive. So, for one, they've taken a keen look and a consultation looking at stable coins and are considering adding those basically into their e-payments regulatory framework, which I think is good for stable coins. The Royal Mint is going to make an NFT. Now, I'm guessing it's got to be... Is it going to look like this? I don't know. I don't think it'll be quite as colorful. The Royal Bear? And I'm wondering, that's a big question mark now. Is it going to be the Queen for the Jubilee? I think you could probably see something in that direction, but who knows? Maybe they'll make NFTs of pints or something else, or Big Ben. Now, they've also going to do some more advanced work actually on the legal status of decentralized autonomous organizations. And that's actually pretty interesting because no one that I've talked to is really thinking that far ahead. They're really still wrapping their heads around, well, how do we deal with sort of the basic consumer protections when it comes to digital assets? Obviously, there's concerns about how funds flow between different entities and KYC and AML and all that. And so, the European Union is basically far along on a path to have a fairly, I would say, restrictive type of overview with their regulation. Now, there's a bit of a negotiation happening, and we're hopeful that more industry consultation will happen. But there's definitely a pro-innovation position, but they also, in the context of everything that's happening in the world today, want to also move quickly. And so, there's a bit of a challenge there because crypto is sort of difficult for many regulators to wrap their heads around. They find it very intimidating. And it's because it really combines a lot of things that are sort of tricky about technology with a lot of things people don't understand about money. And when you marry those two things together, a lot of people don't feel comfortable asking questions that don't make them look like they're on top of what's happening in the world. And then they see an NFT collection dropping on open sea, and they go, well, I don't even know what that means. So, there's still a lot of work to do within the community and basically to educate our policymakers so that all this stuff heads in a proper direction. Proper guardrails for consumer protection, but I think beyond that we really need to create an innovative culture. And I'm hopeful that the EU can do that. I think Germany is doing a good job. I think the UK could be a real dark horse in Europe. Well, that's the thing, right? So, I mean, we've seen the EU ruling regarding KYC in wallets, and that seems to be like heading towards a big no-no from the EU regarding crypto in general. I mean, to what extent does that represent an opportunity for the UK? Particularly as you use the words there, UK and progressive. This is music to my ears. We'll see. So, the direction of travel right now is basically all entities that service crypto users will have to apply basically KYC and AML on all transactions, regardless of their size. Even unhosted wallets, as it's written in today. Now, practically this is very difficult to implement or enforce. My hope is that the carve out for non-custodial wallets can be implemented so that self-hosted wallets and individuals basically taking full control over their own assets. You know, control over their own funds are exempt from these regulatory obligations because enforcing against them would be very weird. It'd be like trying to enforce against someone buying a cup of coffee with five-pound note with their wallet from their back pocket. And that's sort of the mental map that we need to have well-addressed. But the UK, I think, you know, if we were to take sort of a strategic viewpoint, they, you know, pursued the path out of the EU, and Brexit went through, and there's obviously been a lot of people that have strong opinions about that, but it actually happened. And so, now what? And if I were in charge of strategy for the United Kingdom, I would think deeply about how to make the UK the most competitive place in Europe or maybe the world to build companies. And we now see this incredible investment in Web 3, which is really just saying we want to keep building better technology for the internet. Better experiences in entertainment, better ways we interact with our fans and customers, more financial assets, and basically building tool sets that make it possible for more people to do things online and collaborate, exchange information and exchange value. Now, I think there's an incredible opportunity to invite all of that innovation and build a property rights, like a legal property rights mechanism within the UK to support it. And in doing so, they could change the tide overnight in terms of being the home for all of this innovation globally. And so, there is a really big opportunity. I think it takes this sort of change of tone at the top and some leadership to lean into that. But, you know, there's still time for the UK to really come out as a leader in this space. Yeah, absolutely. I mean, it's, I think it's, as you say, an opportunity. And now, for someone that's been in this space, as long as you have, you know, it's over a decade now that you've been in Bitcoin and then crypto and blockchain and, you know, you've written, you seem to have covered all areas of the space. What is it that keeps you going? What is it that keeps you motivated? What is it that keeps you still interested in this space? Yeah, it's a good question. I think if you're honest about it, everybody has motivations over the duration, wax and wane a little bit. But when you start working on something that you care a lot about, it gets a lot easier. And that's why, even though they're really annoying and you hear all those high school graduation speeches about pursuing your passions, when you actually find your passion, it's less work and you can draw on some deep wells of motivation. And so, for me, the thing that really keeps me going is just how interesting the evolution of money really is in the context of the future. We now have tools that make it possible for us to completely reimagine how we interact with each other and trade and exchange wealth. And humans have tried all kinds of different things in terms of different forms of money. We used to trade seashells and feathers and cigarettes and coins and fiat money. And it seems really obvious that money will become digital. But if you really think about what the future of money starts to look like, it's so exciting. And so we were here in Paris yesterday. There was a giant conference all about NFTs with some of the world's most famous artists talking about how they're going to use this new medium to express themselves, to connect with their fans, to share their views with the world. And those types of things have me deeply encouraged about all the potential, the latent human potential that just doesn't have a way to interact with other markets or other communities. And so in the long term, over the next decade, the reason this continues to be so exciting is just there's so much to learn. And there's some 16-year-old kid in Birmingham dreaming something up. And there's a 19-year-old girl in the Bonilla in Paris that has an idea. And now she's got a tool set that enables her to go pursue it. And that wasn't the case five, 10 years ago. If you weren't born in the right jurisdiction with the right social status and the right access in the market in the world, you are never going to get access to credit. You are not going to get a loan. You are never going to get an access to a bank account. And so to me, we still are in the early stages of really democratizing and accessing financial services for the masses. And so that's why this regulation in Europe is so critical to get right. Because if Europe takes a pro-innovation position, they can massively expand the market. They can provide more financial services to more people because it's faster and easier to do this at scale on crypto technologies. And on top of that, it fits neatly with values that are deeply important to Europeans. Open source technology, access to options, fairness, even playing field. And I think we need to lean more into those things, actually, as opposed to thinking about, well, how do we just control it all? And so I'm hopeful that the regulators and members of parliament that deeply study this take that pro-innovation sort of slightly more patient perspective. There's so much opportunity here to build a more even playing field for everybody. And so let's do that. And also reduce the cost of transacting. This is probably the most important one. If you reduce the cost of doing all kinds of payments on the internet in the real world, you will increase economic velocity. And when money flips around faster, yes, it can be taxed more regularly. But also it increases everyone's standard of living, grows the market, provides more opportunities for entrepreneurs. It's a win-win-win for everybody. Absolutely. Much better than a high school speech, by the way. And of course, it's incredibly optimistic, positive, forward-thinking space. But against that, it's a macroeconomic backdrop, which seems to be darkening each day. We're sat here next to a bear. We're not in a bear market. But there's also inflation figures who were released yesterday or this morning that were upwards of 7, 7, 8%. It's a tricky space to operate in. How do you sort of manage the fact that it's becoming increasingly challenging while it's also increasingly optimistic? Yeah, so I think the macro world is basically conspiring, in my view, to actually make crypto more likely to be successful. And here are the reasons why. I like that. So, in some of the wealthiest economies in the world, basically all of Europe, the UK, and North America, you have the highest rates of inflation in 40 years. So from the boardroom to the dinner table, everyone is starting to feel the pain of prices getting more expensive. On everything from commodities to food to fuel. And so there's this question around what's happening and why is that happening and what can I do about it? So people are learning about the consequences of printing enormous amounts of money, partially in response to the original financial crisis of 2008, but more recently in response to the health pandemic. But regardless, if you make a lot of money out of thin air, someone has to pay the price, and today we're all paying the price. It's not going to go away quickly or easily. So real pain will be felt in the pocketbooks of regular individuals. So this starts to beg the question, what can I do about that? Well, maybe I need to find ways to diversify my wealth. I could go buy euros, I could go buy dollars, I could go buy pounds, I could buy equities, or I could buy gold. Maybe I want to buy things like digital gold. They have the same properties as gold, but are built in a way so that you can transact with it over the internet. And that's Bitcoin, there's Ethereum, there's many more other digital assets that are pretty interesting. And I think that's one of the themes that will be explored by households around these markets over the next couple of years. Now you've got that happening. You also have institutions that have pension obligations. The largest asset allocators in the world have to figure out how to get income to pay off those obligations. And they're having the same conversation. And now they're investing in digital currencies and crypto assets. Not just because they see it as some other trinket to trade, because they deeply understand the value. P. Morgan, Goldman Sachs, just yesterday BlackRock invested in Circle alongside Fidelity, $400 million. So the big allocators are also moving in this space in a meaningful way. And also you're seeing a pretty significant attrition of raw talent from those traditional financial institutions to come over into these startups to help build the future of finance. So those are two major ones. And it will bear with me for just one more. There's the third rocket booster and this trifecta of things that are affecting the market. And that is the artists, the creators, the writers, the people that make all the stuff that we entertain our time with and consume are trying to find new mediums to interact with their fans and align incentives that are extraordinarily interesting in ways they were never possible before. So if I'm a musician and I want to make some music, if I'm lucky enough I get a record deal, they own five of my albums, and I get a small percentage of all of that music royalty on that package of content. But what about if I tokenized all of my music and all of my fans basically got to be rewarded for being my fan and for every time one of my songs was streamed, they were compensated for that too. So now you've got a whole other way for musicians to not only crowdfund but also build unique experiences for their fans, mint, digital art, and more. And so everything from music to literature to artwork I think is going to be totally changed. And what most people don't understand yet is that many of us grew up finding little things to collect, whether that was seashells or feathers or... Pokemon cards. Yeah, Pokemon cards or beanie babies or other things. I think it's very likely that younger generations will collect tokens and things they buy on the internet and show those off in a form of a digital gallery on their phone. And this should not be surprising at all to anyone that's paying attention to what's happening. And so you've got the cultural zeitgeist, the institutions, and everybody on the daily basis with their thinking about their paychecks all having conversations about what the implications of digital assets and the future of finance might be for them. And so if any one of those things was happening, I'd be really bullish but they're all happening at the same time. Yeah, what an answer. I just want to deep dive into the second point there about the institutions because we've heard it for years now. The institutions are coming. All of money is coming. Here we are in the old stock exchange. And it does seem to be institutional interests however, the actual investments tend to be, as you mentioned, by proxy. Or they're using the big investment yesterday into circle. They're not buying Bitcoin. Or at least we're not aware that they're buying Bitcoin yet. Why is that? And when will that change or will it change? I do think it will change. So there are a couple of things that need to happen. We're still waiting for that ETF in the United States which has been severely delayed and dozens of applications have been put forward. I think eventually they'll run out of reasons to keep saying no. But they, for the time being, continue to do that. Many of these institutions are getting tangential exposure to crypto. They do that by placing equity investments or they buy up positions in funds but they're not directly taking custody or building their own things. But here's what's changing. The high net worth individuals that all of these wealth managers help provide financial services to are all knocking on the door saying, I want some of this and I want it now. And so it's going to take a little time for them to develop their strategy. I think there's going to be sort of two directions. One is going to be buy something and integrate it into the company and go fast. The other is raise it up and build up the capacity internally independently. That pass a little bit slower and it requires more consensus to form. But I can tell you without exaggeration every single time one of these senior leaders in a financial services firm is asked about what's going on in the world. Someone is also asking what is the role of the firm's view on CRISPO assets? What are we going to do about that? And so they can't ignore it much longer and without a doubt I think they'll probably dabble in more sophisticated things first before just taking maybe a directional view in a specific asset. But you can see them also doing that with proper risk management, doing things with strategies that basically guard against downside and upside. So proper derivatives and options and puts. But I think it's coming and very unlike 2017 where that was certainly a myth the direction of travel now is more serious. Good. I'm glad you acknowledge as well the 2017 myth. Yeah. That was a tricky time. Perhaps as a final question, a bit softer. You know, we've talked a lot about the positives and I mean there are obviously pressing concerns here. What's keeping you up at night? What's your most pressing concern in the space? Oh gosh. Well, I do think we all have this obligation to educate our communities, our friends, our family members and basically be a bit more patient with it. When someone doesn't understand something or attacks our point of view it's not necessarily to be vicious right away. One of the things I can tell you having spoken to many policy makers is that sometimes they just don't know what they don't know yet and so they come out with a statement and then they get brutally attacked on Twitter or across other social channels. I can tell you that is not productive. The other thing is it is so important for us to remember the total mission here is to broaden access to financial services for everybody regardless of the circumstances of where they live. I think the crypto community can be a little too tribal sometimes so one project attacks another and there's all these false profits or whatever. If you wanted to set us back you would divide us all up and make us basically fight each other and so my hope is to remind us all to have some civility with that. One sort of global mission to improve the state of the world that we inherited and if we do those things we'll be okay but if we fight each other if we develop our own adversaries because we're not willing to be patient and explain the rationale for what we're doing I think it will be harder I'm not saying it won't happen I just think it will take more time. Fantastic yeah I think that's very good advice you know be more patient and be more civil. Yeah be a little more civil I know it's hard sometimes but I think it's the right path. Very much great to connect with you guys again and have a wonderful time in Paris. Thanks so much Nicholas. Thank you very much and we'll leave it there. Thank you guys.