Wall Street Unplugged
Episode: 875March 31, 2022

A watershed moment for the crypto industry

Ken Falcon Rappaport & Berkman

Ken Falcon, Esq., managing partner at Falcon Rappaport & Berkman PLLC, joins me to discuss digital assets from a lawyer’s perspective—and how his firm serves clients in the space.

He also explains why President Biden’s executive order is a watershed moment for cryptos.

Finally, as the metaverse continues to attract massive capital, Ken explains why digital real estate has his attention.

Inside this episode:
  • How Ken first got involved in crypto [4:05]
  • Why Biden’s crypto EO is a watershed moment [6:10]
  • Where Ken sees crypto regulation heading [9:35]
  • Will cryptos officially be labeled as securities? [12:45]
  • The emerging opportunity in digital real estate [17:00]
  • Why we need regulation around non-fungible tokens (NFTs) [22:05]
  • What the crypto space will look like in 10 years [26:00]
  • Ken’s favorite idea for the metaverse [32:35]
Transcript

Wall Street Unplugged | 875

A watershed moment for the crypto industry

Announcer: Wall Street Unplugged looks beyond the regular headlines heard on mainstream financial media to bring you unscripted interviews and breaking commentary direct from Wall Street right to you on main street.

Frank Curzio: What’s going on out there? It’s Thursday, March 31st. I’m Frank Curzio, host of the Wall Street Unplugged podcast, where I break down the headlines and tell you what’s really moving these markets. Guys, I’ve seen a lot of news taking place in the crypto industry, this includes Biden’s executive order, so that’s the Goldman Sachs. It’s all the past couple weeks, Goldman Sachs getting more into crypto. Ray Dalio invested in a crypto fund. And Bridgewater, largest hedge fund in the world, 150 billion in assets under management. Katie Haun raising 1.5 billion for a crypto fund. She worked at Andreessen Horowitz for a long time. But she left the largest venture capital firm, amicably, to start her new fund, which of course, Andreessen Horowitz does have an investment in. Massive, massive, massive buying of Bitcoin by the operators of stable coins, which is used to back their stable coin. Amazing how they didn’t do that before Biden’s executive, but doing it now.

Frank Curzio: But all this news, which has helped push Bitcoin through 47,000. Again, remember, we were 36,000 not too long ago, a couple weeks ago. It has to do with the regulatory framework that is coming. And that’s going to help regulate cryptos to protect investors, while unleashing innovation America within this industry, which is allowing institutions to get more aggressive, to invest in some of the best crypto projects, because they’ve been given this green light. Now regulation is scary, especially for upcoming plans to overregulate, which they tend to do. And sometimes they under-regulate, like we saw at the credit crisis. I mean, everyone is asleep by the wheel, that nobody even knows how far that exposure went or what happened, until 6, 7, 8 months into that credit crisis. No one knew AIG had exposure, that’s insuring all this. Nobody knew. Regulations were in place. It’s what the government does, they overregulate then, right? There’s got to be a medium, right?

Frank Curzio: So, that’s what we’re hoping in crypto, we’re hoping there’s going to be a medium, where we know investors need to get protected or be protected. And without that kind of regulation, it’s scary. I mean, it opens the door to massive liability for institutions who are putting other people’s… Right? Other people’s money, money that they manage, into this industry. So, there’s lots of questions I’m getting from you, lots of questions I’m getting out there, in terms of what kind of regulations to expect. Even have media companies reaching out. That’s why I’m bringing on Ken Falcon. Ken Falcon’s a lawyer, managing partner of Falcon Rappaport & Berkman. Ken’s been investing in crypto since 2014. He’s also seen his money stolen by hackers in the past.

Frank Curzio: But if you look at his firm, very respectable, you see it covers so many areas. But now, they’re making a major push into crypto, so much so, that Falcon Rappaport & Berkman became the first law firm to purchase land in the metaverse. How cool is that? So if you own crypto, I don’t care if it’s Bitcoin, Ethereum, to the shittiest Altcoin, this is a must-listen interview about regulation. I promise you, we didn’t make it boring. We’re going to go over everything that he expects to happen, what’s going to happen. But definitely give this a listen, especially if you own any crypto, which I know a lot of you do. And let’s get to that interview right now. Ken, thanks so much for joining us on Wall Street Unplugged.

Ken Falcon: Absolutely. Thanks for having me here, Frank. I really appreciate it.

Frank Curzio: So, we met not long ago, through another party, and we spoke maybe one or two times. And with everything going on with Biden’s executive order and more regulation coming into the industry, people are nervous. Been promoting… It’s a good thing. I don’t know where you are in it, but let’s start. Before we even get to that, get into details of NFTs and metaverse and how that’s going to impact everyone in terms of the regulations coming down the road. I looked at your company, Falcon Rappaport & Berkman, right? Your practice. And you do the real estate, healthcare, cannabis, wills, trust, corporate securities. I mean, really great practice, covering lots of areas. What made you get into crypto?

Ken Falcon: So, I’ve been in the crypto space since 2014. I had a small mining operation at the time. Unfortunately, at a certain point, it was like, oh, it’d be cheaper to buy the crypto than to keep the mining equipment running. So we took it offline, but then didn’t actually buy the crypto. If I did, maybe, who knows? Maybe I would, or wouldn’t be sitting here right now. So, I’ve been involved in it since then. I’ve been working with some… At the time, it was a couple of people who were also running mining operations, mining companies. And that was how I kind of got into it. And really, the practice is designed to be able to bring a lot of different practice areas together, to help somebody. And the crypto world, in general, has a lot of interdisciplinary concerns. So, that’s kind of how we’ve now shifted into this practice, is just due to the many needs of people in this space.

Frank Curzio: It’s amazing you say needs of people in this space, because we heard that from Jamie Dimon. We’ve heard that from lots of institutions, which I think, probably with the lobbying dollars, probably led to Biden coming out and saying, “Okay, we got to announce something and keep this in the US.” But there’s clients everywhere that want to be in crypto. I mean, and it’s speculative asset, of course. But just a small percentage, where they’re seeing the innovation that’s taken place in it, and clients are demanding it. And that’s why I want to ask you about Biden’s executive order. I’ve been making a big deal about this. The crypto diehards that follow me, say that it’s not they want total decentralization. Until they get their money stolen, they have nobody to call, right? But for me, when you’re looking at the major institutions that manage money, the biggest, they all came and said there’s a watershed moment. So, what are your thoughts on it? And you can give it to me with the ambulance in the background, because you’re probably in New York, in my hometown, which is awesome.

Ken Falcon: Yep.

Frank Curzio: So, yeah. So, what are your thoughts on that? Is it a watershed moment? Are you seeing more demand come in, immediately? I mean, we’ve seen announcements from Goldman Sachs, and even from Bridgewater, saying they’re going to get into crypto now. What are your thoughts? Is that really a game changer? Or is it something like, hey, you know what? We still need to see what’s going to happen?

Ken Falcon: So, it’s both, I think, right? So on the one hand, I think it’s a game changer because we have the US government taking cryptocurrency seriously, and the existence of the crypto ecosystem, right? Acknowledging it as a thing, and as a thing that they want to promote, to a certain extent, right? Support, not promote. So, that’s huge, because if I go back to 2014, 2016, even ’18, currency was a punchline on Saturday Night Live. It wasn’t worthy of being in an executive order, or really being in the minds of many politicians. Now, it’s too big to ignore. So in that sense, it’s a watershed moment, right? And the thought that a president would actually issue an executive order saying, explore the idea of having a central bank, digital currency, is like, whoa, right?

Ken Falcon: If you had said, even in 2020, to someone, that this is coming on the horizon, I think a lot of people would’ve laughed at you. Certainly in 2014, they would’ve laughed at you. So, just seeing that change and that arc, has been huge. And I think the issue with crypto, has been always one of adoption and familiarity. And that pricing has moved up, and adoption has moved up, as people became more and more familiar with it. At the same time, right? The order really directs a lot of exploration. And I understand a lot of people’s hesitancy, because the first three or four points in the executive order are like, there are a lot of really bad uses of crypto, right?

Ken Falcon: A lot of really bad use cases, a lot of potential for fraud, a lot of bad actors using it. And how do we do consumer protection, and good regulation around this, right? So, I understand why people are concerned. At the same time, I don’t know if it’s preferable to the current climate, where’s there’s just a lot of uncertainty. So, at least this is… The government is studying it, and we’re hopefully on a six- to 12-month timeline, before we have real regulations that are designed for this, being passed, or at least discussed. Rather than right now, which we’re just cobbling together and using old law to try to make it fit into a situation that was just never contemplated.

Frank Curzio: And where do you see the regulation coming from? Is it the FTC? Is it the SCC? They said, all organizations are open to it. I just feel like, when it comes to the government… And it’s common to just talk negatively, right? About the government, about whatever. I’m not saying that.

Ken Falcon: Sure.

Frank Curzio: But they don’t know about crypto currencies, right? They know very little. It’s a huge learning curve. A lot of these guys are lawyers, they don’t even know the market’s too much. Some of them, not all of them. Not guys like you, who invested in Bitcoin. So, do you fear that we may get that overregulation, or not enough regulation? For example, pre-credit crisis, we saw there wasn’t enough regulation we had. I mean, they had no idea what the banks were doing, right? Just leveraging of leveraging subprime loans.

Ken Falcon: Right.

Frank Curzio: And then afterwards, now we have overregulation, where you could have five million in the bank, buying a $2 million house. And if you don’t make a certain amount of income, they’re like… It’s just the red… “No. Sorry. We’re not going to lend it to you.” It’s so much tighter now. So, what do you see? And I know it’s hard to predict, with the government just announcing that they’re going to regulate the industry and get organizations involved. But what are you seeing here? Overregulation, under-regulation? Because what worries me the most, is that we’re talking about groups that really don’t understand the crypto market, and it’s a huge learning curve. It’s not something that easy to learn.

Ken Falcon: Yeah. I think that we’re going to see a combination of things. We’ll start with, right now, the regulatory environment is untenable, right? Right now, every federal agency wants to figure out some way to dip their hand into the regulatory pot. The SCC wants to say everything’s a security, right? The consumer financial protection bureau wants to say, you’re ignoring consumer protection laws. Treasury wants to say, you’re not paying your taxes, right? Or, you’re not paying them correctly. Everyone wants to say something different, and they all want to bring it under their regulatory umbrella. That’s a problem, because there’s just no clear direction right now, right? Because most of it is just, they’re shaking their fingers at certain, either big players or bad actors, and saying, “You violated SEC rule X, so we’re going to be pursuing you for that.” Or, “You didn’t pay your taxes correctly, so we’re going to be pursuing you for that.”

Ken Falcon: But they’re not telling you, this is the way that you avoid doing things incorrectly. So, that is super difficult for anyone who wants to be a legitimate player in the space right now. At the same time, the way that laws get made, the reality is, they paint with a broader brush. So, they can’t be narrowly tailored, and there will be those outlier situations, like the five million liquid net worth guy, who’s got only a little bit of an income and can’t buy a $2 million house, right? Those cases are going to exist, almost no matter what is done. But I’m hopeful that, what is done, will be done in a thoughtful way, in a way that actually promotes development.

Ken Falcon: And to do that, they have to design a system that regular business players are capable of complying with. And that would be an exciting thing, and a huge starting point from here. Tremendous departure from the foundations of cryptocurrency, and the whole idea of decentralized finance and trustless transactions and smart contracts. Huge departure from that. But at the same time, in terms of practical operation in the real world, I’m hopeful that there will be some good that comes out of it. I can’t predict the future, but I’m hopeful.

Frank Curzio: Yeah, it is a huge departure. But at the end of the day, you need to know your money’s safe, at a brokerage firm, right? I mean, these are simple things. You need to have insurance, right? FDIC, or whatever it is. And it is scary. And I see that part, where the tendency is to overregulate. And plus, you don’t know too much about the industry, it’s kind of tough. But one of the things that you said, that I think is the biggest issue, is are these securities or not? And a lot of these things are deemed security. You take Bitcoin, Ethereum out of there, maybe a couple of others, Litecoin. But the other five, six, 7,000, maybe over 10,000 coins now, but a lot of these things are securities. I mean, we got to face the facts, right?

Frank Curzio: They are securities, at least based on the law and what you’re looking at. I don’t know if you’ll agree or not, but I think it’s more of a security, than not. And again, I’m not a lawyer. You could… but is there a chance that they come out and say that these are securities? Because if they do, the market is definitely not ready for this. I mean, Coinbase, almost everything on there is… I mean, they’re going to have to file, right? They’re going to have to report. And a lot of these guys raise money. Yeah.

Ken Falcon: They’re being pursued even right now. I had seen something recently, that Coinbase is being pursued for one of the coins they had listed. I think it’s the Shiba Inu Coin or something, that there’s a claim that, that’s a security. So, they’re being pursued for it. It’s going to happen, right? The problem, is that the Howie test was designed, I don’t even know when, but decades ago, right? Before cryptocurrency was even a glint in security tokens’ eye. But it’s being… It’s square peg, round hole kind of stuff, where they’re like, well, it shares a lot of characteristics with securities. It might be a security under the Howie test. Is it a security in the classic sense? The analysis is coin by coin, token by token. Most of the time, yes, you’re going to fall under the Howie test. For the vast majority of clients, what we’re doing for them, is we are helping them work within the framework of, assume this is a security. How do we still achieve our business purpose, knowing that it’s probably a security? Right? And that’s kind of the framework a lot of people are working with right now.

Frank Curzio: Yeah, because that’s something that is… I don’t know. I don’t know how it’s going to… Because we have our own security token, and we checked off all the boxes of a cap table, raise money, it’s real equity. But when I see a lot of these, and even when I talk to them, they’re like, “Well, we own this and this and this, so our token’s worth that.” I’m like, that has nothing to do with it. Tokens a utility function, right? So, you can own $20 million worth of real estate in the metaverse, but it’s really worthless to anyone who wants to buy a token, because it’s not same thing, right? Unless that token has a utility feature, where that’s how you’re buying that real estate, right? So, it’s just that disconnection, I think that… I don’t know. People need to understand the regulation curve. But it’s going to be interesting to see how hard they come at this. And from a regulatory standpoint, fine, we have a lot of things covered. You said you first thought of… In crypto 2014, was it just Ethereum? Was it Bitcoin? I’m really curious.

Ken Falcon: It was Bitcoin. And then at a certain point, it was more efficient to mine Dogecoin and convert it to Bitcoin, than it was to mine Bitcoin directly. So for a long time, I was… And it’s probably because, at the time, Dogecoin was worth… It was literally nothing. No one knew what it was. It was a joke on the internet. And I have transaction records. Unfortunately, a lot of mine was stolen by an exchange, by a bad exchange, a crypto exchange. At the end of the day, long story short, my friends were all joking about this, as it was taking its ride up. And it eclipsed a penny, which I was like, holy crap, it’s worth a penny. That’s unbelievable. Right? And it made it all the way to about 70 cents. Now it’s, I think something like 15 cents or whatever, which is still astronomically higher than what it was worth. But I did end up pulling out and selling some small amount of it, but yeah, it was… So it was Dogecoin, for the purpose of converting. But it was so kind of worthless, that a lot of it just kind of sat.

Frank Curzio: So, this is interesting. So, you have your license, you’re a lawyer, and then this gets stolen from you. What did you… I think it’s important, it’s relevant to the conversation, but what were you able to do? Absolutely nothing, right? Once it was stolen, I mean-

Ken Falcon: Although there was a class action lawsuit that people can participate in, to get money back, and whatever else. I honestly did not… I didn’t diligently pursue it, because I just didn’t have a lot sitting on the exchange. At the time of my loss, it wasn’t really worth that much. Now in retrospect, a half a million Dogecoin, right? Translates to… It’s a couple hundred thousand dollars, or a hundred thousand dollars now. That’s real money, right? I would’ve definitely gone after it, had I only known. But I mean, I could say that about a lot of investments. My ultimate gamblers fallacy, is when I bought a couple of Bitcoins for $1,000, I should have bought 100 of them.

Frank Curzio: Yeah. No, I know. We all say, we all have those stories. We bought Amazon. I mean, if you did hold onto it, especially those tokens and coins, you’d probably own the building that you’re broadcasting from right now. But let’s get into the metaverse, because I believe you said you bought property in the metaverse. And I also saw, when I was doing the research, as a law firm… And first of all, where did you buy it? Did you buy at Decentraland? Is that where you bought it?

Ken Falcon: Decentraland, yeah.

Frank Curzio: Okay. Decentraland.

Ken Falcon: So we bought-

Frank Curzio: Go ahead.

Ken Falcon: So yeah, so we bought this parcel in Decentraland, and we are… As far as we know, we are the first blockchain based law firm in the metaverse, right? So, it is a… So, we bought the parcel, we hired developers, they built us an office building there. We had a launch party there. A bunch of people came with their avatars, that all wanted FRB NFTs, which we gave out to the attendees. Kind of, just a commemorative NFT. And it’s been a really interesting ride, even before then, but especially since then. There’s just been a huge uptake in activity. And being able to participate in the community, being active participants in the community, which we are, has been really helpful to us.

Frank Curzio: So talk about… Because I saw, when I was reading… And again, I do a lot of research on everyone for an interview.

Ken Falcon: Sure.

Frank Curzio: That it seems like your specialty is in real estate, right? Especially with law and practice and stuff like that. And you’re actually buying up real estate. I think that’s one thing people can identify with, when it comes to the metaverse. There’s so many things going around, selling NFTs, playing game functions, different things that you could do in these worlds. But the real estate aspect, as something people can identify with, is how do you compare buying real estate in the metaverse, which is going to sound funny to some people, but yet buying real estate someplace else, anyplace else in the US? Because you are buying property, it seems like it matters where you purchase it, where it is, where that value could grow tremendously, as more people come online. But talk about that process, and how is it different and how is it not so different from just buying regular real estate? Besides the fact one’s at a digital world, and one’s obviously hard asset.

Ken Falcon: Sure. So, there are a lot of significant differences, the biggest ones being, a lot of the concerns you have around real estate, just aren’t there for digital real estate. Right? I sort of have title concerns, but not really, because everything is on a distributed ledger. So, I know who owned my parcel before I owned it. Or, I don’t know who that person is, but I know what wallet address controlled the parcel, and I can trace it from its genesis, through right now. I have no liability or risk of destruction type concerns. So, there’s a lot that’s different, as far as that goes. The major difference is, right? The thing about real estate that makes it an attractive asset class, to a lot of people at least, is the old maximum, they ain’t make any more of it, right?

Ken Falcon: So, there’s a limited supply. There’s only so much within this really desirable area, right? If I want to buy property on the island of Manhattan, that’s really expensive to do, because there’s only so much property on the island of Manhattan. If I want to buy property in the sandbox, right? Right now, yeah okay, it’s limited to the amount that’s been released. I do not pretend to be a super technical person, but it strikes me as the kind of thing where, if you can create the sandbox, and let’s say that accounts for 100,000 parcels, why couldn’t they just add another million parcels? I don’t think that there’s anything preventing them from doing it, other than the technological side of coding the program to do it.

Frank Curzio: Yeah.

Ken Falcon: And maybe they would have to, right? Maybe it would be sandbox two. It would be a brand new space. But this is the next frontier of digital real estate ownership, is the fact that there will be multiple platforms competing to be the island of Manhattan in the digital real estate world, right? Is it going to be Decentraland? Is it going to be the sandbox? It looks like the Bored Apes are trying to do their own land sale, and they’ve been very successful in the NFT space. Is that going to be the metaverse that people want to be in? Will Meta or some other company be able to create some kind technology that fuses all of these and brings the together, so that you’ll be able to interact multiple metaverses? I mean, the technology is just evolving so rapidly, and I know so little about the computer coding side of things, that it’s hard to speak about. But yeah.

Frank Curzio: So from the metaverse, what you said, even in your metaverse and NFTs, NFTs is the buzzword. NFTs are down a lot, and we’ve seen lots of scams with NFTs, but there’s no doubt that this technology is for real, at least from my opinion. You have ownership of your stuff in a digital world. Where do you see regulation coming, where you do have the blockchain, right? Which helps tremendously, but there still probably needs to be some regulation, considering the tens of millions of dollars that have been stolen.

Frank Curzio: I think it was in January, it was something like an amount of 20, 30 million in NFTs, or whatever it is. But people are just launching these things, there’s campaigns, and people think they could just get in them because it’s exciting. And next thing you know, the people disappear, take all your money. Yeah. Where does this come, in terms of… I mean, this is an industry that has to be regulated. Like every industry when it first starts, you’re going to have your bad actors, but this is something that I think… I don’t know if you agree or not. I certainly do, the more I learn about this, the potential’s incredible, but there’s still a lot of scams going on. How do we stop this, from a regulatory standpoint?

Ken Falcon: Yeah. It’s a humongous challenge, and one that I honestly don’t know whether the government is well suited to solve right now. Because I do think that there’s a lot of misunderstanding about what’s going on, and a lot of difficult… But there’s also a lot of difficulty, just given what the environment is, right? So, anyone can create an entity project, and those people are, by design, anonymous or pseudomonas, right? They’re hidden behind Twitter handles and wallet addresses. And that’s all you know about these people, really, right? They might claim that there’s someone else, they might even be someone else, right? And they may be saying that they are who they are on a website, but people have known who each other are, and scammed one another out of money, since the dawn of time, presumptively.

Ken Falcon: So, there are a lot of scams going on. My partner, Moish, likes to say, “Everything in crypto is a scam until proven otherwise.” And I think that’s a healthy attitude of skepticism to take. And there is always the risk of a rug pull, on any real… Any NFT project, in the nature of the… Especially these community based PFP, the profile picture projects, like the Bored Apes, right? People say, “Okay, I’m making 10,000 NFTs. I’m building this community. And here I am running this community right now, and being really enthusiastic about it, and whatever else. You should mint one.”

Ken Falcon: And then people mint them, and you hope that people take that mint money, and they create a real company out of it. And we’re helping a lot of people do that. They wake up, and suddenly they have a couple of million dollars, and they’re like, oh, wow. I have to hire staff and actually execute now. And it’s a real life company that just exists because of the NFT world. But there are a lot of people who wake up and say, “I have $3 million in my bank account right now, or in my crypto wallet right now. I never have to work again.” Right? That’s more money than I’ve ever even thought about in my life.

Frank Curzio: Yeah.

Ken Falcon: And they run with it. So, you’re fighting against human nature, and you’re fighting against some really powerful forces, when you’re trying to regulate it. So, how do you do that effectively? It’s a super complicated question, that I honestly think is probably beyond the knowledge level of our current regulators, unless they’re going to look for real industry input as they develop this. But the industry is also relatively immature, so I have concerns about what kind of regulation comes down. I’m hopeful it’ll be better than what we have right now. I also am acknowledging that whatever regulation comes out, is version 1.0.

Frank Curzio: Yes.

Ken Falcon: And there has to be… There’s going to have to be a 2.0. And one thing that Congress and regulators are really good at, is moving at the speed of a snail. And we’re in a space that moves at the speed of lightning. And it’s just two different universes.

Frank Curzio: Absolutely. And I interviewed Hester Pierce too, from the SCC. I said earlier, that a lot of them don’t… There are people who do know crypto, right? Within Congress, within some of these organizations. And she’s from the SCC, and she’s pro crypto, right? So, she made it clear that this is her opinion, not the SCC opinion, when I interviewed her. But there are people there that could definitely help, but there is a big learning curve. I guess, let me continue here, with asking you this question. Someone’s been here since 2014, makes you… You’ve been in this for light years, right? I mean, that’s a long time ago, 2014. Now, you come to seeing where crypto’s come. Now, you have your law practice, which is very large, into a lot of different things, and you’re getting into crypto. Where do you see crypto over the next 10, 15, 20 years? And not even talking from a lawyer perspective, but someone who’s been investing in this stuff for a long time.

Ken Falcon: Sure. Well, let’s say, I’ll start with, everyone do your own research. But I personally am very bullish on this space. I think that we’re going to see pricing continue to move up. Historically, I’ve now been through so many cycles of, Bitcoin is amazing, crypto is going to make us all billionaires, everything is great. And then the interest falls off, the price crashes comes down 70%, and everyone’s like, it’s dead. It’s never coming back. It’s gone. But then it does it again, and again. And trajectory is always upwards. So I see… And I see that continuing, and I think that’s driven by market forces related to participation. Bitcoin itself, is an artificially scarce resource, and the more people want it, the higher the price will go, presuming there are no other alternatives that meet the same need. And given that, and given the mining difficulty and the way the algorithm is coded, I see… My personal opinion, is that we’re going to see Bitcoin and Ethereum pricing go up.

Ken Falcon: A lot of proof of work tokens are going to go up, as long as they have real life use cases, or significant enough following. I think we’re going to see some good regulation that needs to happen, especially around exchanges. Maybe I’m just taking this personally, because I got my own money stolen. People in this world are like, “Well, now some kid in his mom’s basement can’t just make a website and say he’s a cryptocurrency exchange. The whole idea was to be decentralized, so anyone can do this.” And my answer to you on that, is who wants that 16-year-old kid in their mother’s basement, to be running their… To be holding onto, and have custody of millions of dollars in assets?

Ken Falcon: Even if they’re not a bad actor, how careful are they? And a lot of concerns. So, I’m happy to see exchanges regulated, to a significant extent. And I think that’s a necessary piece of just cutting off the bad actors at the knee, at least in the US, right? But nothing’s going to stop a bunch of offshore people from just starting exchanges and running away with money. It’s going to keep happening.

Frank Curzio: Absolutely.

Ken Falcon: And that will entrench the big players, which is why, when I look at something like Coinbase, I’m like… Coinbase, Gemini, Kraken, maybe Binance, less so, to a certain extent. They’re going to be here to stay, because people actually trust them. Coinbase could have… I had two choices as to where I was going to keep my Bitcoins that I did not keep in cold storage. It was Coinbase or it was MtGox, M-T-G-O-X, which was the original crypto exchange scam. And I happened to have gotten lucky, and chosen to keep it at Coinbase. Thank God, right?

Ken Falcon: But it could have just as easily gone the other way. And that’s a big risk factor that needs to be taken out, because people aren’t tech savvy enough yet. No one wants to run their own servers. Cold storage is great, but you lose the ability to transact, so it’s important to have an intermediary. And more than that, right? If I screw up a transaction on my wallet, I could burn or lose access to all, or a substantial part of my crypto. I’d love someone to find a work around, where that won’t happen. One digit in a key, just poof, it’s all gone. Yeah.

Frank Curzio: Yeah. And I’m with you, even when you’re buying a stock, say on E-Trade or whatever, Schwab, whatever online platform you use, you don’t know about custody. You don’t know about legends being removed if you’re in private placements. You don’t know shares being… You just buy in the stock, and that’s all people want to do, and be safe with everything else on the outside. And I think that’s what people need to understand, that everything behind the scenes, needs to be really tied together and safe. And that’s going to bring… That’s when you scale, right? Now everyone can get into this and feel comfortable. And just hoping, like you are, that it’s not over-regulated. So, last thing here. So, you said FRB law, which stands for Falcon Rappaport & Berkman, which is your law firm. Why don’t you talk about it a little bit? If people want to learn a little bit more, maybe they have their own crypto place and they’re looking for lawyers, which a lot of people are these days. Why don’t you talk about it, and I can bring that up right here for our YouTube followers.

Ken Falcon: Sure. Yeah. So, we are basically… We’re designed to be an interdisciplinary and cross-disciplinary law firm, right? We have expertise in a lot of different areas. The ones that primarily come into play with crypto, it’s tax, it’s corporate and securities, intellectual property. And we can really handle everything from, you have an NFT project, or an interesting idea that involves crypto, right? Getting the company started up, getting it funded. We have connections to people in this space, who we know to be good actors and legitimate people, and capable people. So, we can make those connections for you. We’ll help you stay compliant with the law. And we’ll bring together a huge team to really address all the aspects of your project, and not look at it from one lens in a bubble, and potentially overlook something really significant.

Ken Falcon: Examples would be, setting something up that’s proper from a securities perspective, but has really bad tax consequences for someone. Or setting something up with a really solid intellectual property background and proper licensing in place, but not having the securities and corporate background to be able to make sure that the structure itself is sound and stands up to regulatory and legal scrutiny. So really, anyone in this space, if you want to talk to us, we’re here to serve as a resource. Allied professionals, right? Accountants, other attorneys, financial advisors, if you have questions about this space, we want to be a resource to you. Happy to share knowledge and experience with anyone who’s interested.

Frank Curzio: And it’s frblaw.com, if anyone wants to reach out to you. I don’t know if it’s emails, right? They could probably find everything right in the site, right?

Ken Falcon: Yeah. I mean, they can email kfalcon@frblaw.com, or just info@frblaw.com. We’re good with that stuff.

Frank Curzio: Okay. Last question here, which I know you’re going to say no, but I’m going to ask you anyway. Is there anything that… I’ll even go out to a sector within this, if it’s D5, security tokens, if it’s things that we talked about, metaverse and NFTs, or is there any individual tokens or anything that have your interest? And I know, in your profession, might be tough to mention, but maybe you can mention personally, things that excite you. And feel free to say no. I’m trying here.

Ken Falcon: No, no. But listen, there are things that excite me. I’ll say this, right? So, I have gotten into my fair share of bad Altcoins. Okay? There’s a not so nice name for those coins, and I’ve gotten into them before. And what I’ve realized, is that on a long-term trajectory, right? The best thing I ever could have done, would’ve been to stick in Ethereum and Bitcoin, and just hold tight and go nowhere. And that’s my current personal strategy, as far as individual cryptos go. There are some really interesting NFT projects going on. I think the Bored Apes, I mean, it’s untouchable from a price point perspective right now, for people to get into. Right? But looking for a community based NFT program, I think is really interesting. I think that the… And as far as the individual cryptocurrencies, the ones that have smart contract capability and something else going for them, are the ones that are likely to survive and to thrive on a going forward basis.

Ken Falcon: Specific ones, my partner is interested in Avalanche. I’m interested in Avalanche. I think it has potential. I think any of the cryptos that underline exchange the same way that Binance Smart Chain, and Binance coin, right? It went from being nothing, to suddenly being worth hundreds of dollars per coin. I don’t even know what the current price is. But similarly, right? If Coinbase comes out with their own internal coin, other than USDC, I would bet that’s going to be a good bet. That’s my own personal thesis. Again, do your own research. Not investment advice.

Frank Curzio: I got a lot. I was surprised. I was surprised you just… Yeah. So, I’m going to have the headline, Ken Falcon says to buy Avalanche, going up 5000%. I’ll have the headline for you. I appreciate it.

Ken Falcon: I think you have… Their mouths are watering right now. They’re just waiting for that.

Frank Curzio: And of course, I’m not going to do that. But yeah, I appreciate it, because all of us… Yeah, I mean, for me, I’ve been involved with crypto for a while too. And people ask me my favorite ideas, and sometimes I share them on the personal basis. But listen, Ken, you gave us a lot. I know people, they’ll see, oh, a lawyer’s coming on and it might be boring. I mean, I think we made this as entertaining as possible, just for the fact that this is significant, right? I mean, you’re going to have more institutions coming in. We need more regulation. How much is it going to be? And someone that actually owns real estate in the metaverse, within your firm, and someone who’s been in this industry for such a long time, I think you were a big help to a lot of my subscribers, and a lot of my followers who are really, really into crypto, thanks to us. But I really appreciate you coming on, man.

Ken Falcon: Absolutely. Thanks very much for having me, Frank. I really appreciate it.

Frank Curzio: Hey guys. Great stuff from Ken there. I know we covered a lot. NFTs, metaverse, how investors need to know their money’s protected. And I think we could all agree with that, it’s just over-regulation is scary. And we saw that at the credit a crisis, we saw it where no one knew the exposure AIG had, until seven, eight months into it. Or how much exposure with the synthetic, of synthetic, of synthetic, leveraging of subprime mortgages. And they were asleep at the wheel, which is under-regulation. And what happened afterwards? You see that overregulation. So, to have something in the middle, is very important for those institutions to come in. I thought Ken did a great job explaining that, while also sharing some really cool stories. “Hey, I was hacked.” Which again, I’ve lost Bitcoin too, back in the day.

Frank Curzio: Again, a lot of these things are much more protected now, especially the ones… Coinbase, and if you buy it on Robinhood and things like that. Those are brokerage companies, right? They have those little licenses in place. My money’s protected. And surprised he also shared the cryptos that he likes, which is really, really cool. So great stuff. I know you guys probably have lots of questions, any comments, whatever, frank@curzioresearch.com. I’m here for you. I always say this, and I mean it, this podcast is about you, not about me. I loved the interview. I think it’s necessary for everyone involved in crypto, of what’s coming down the pipeline, because I could say positive things about Biden’s executive plan and how it’s going to lead to more institutional money, but we want to make sure that regulation is placed, where it’s not over-regulated, it’s not crazy. So, let me know what you thought of that interview, at frank@curzioresearch.com. That’s frank@curzioresearch.com.

Frank Curzio: So, you have two days left. We’ve lowered our price on our Crypto Intelligence newsletter by 50%. And over the next few days, if you sign up, you’re going to get one extra year for free. So as you know, we’re huge believers in this industry, to the fact where I structure my entire company behind launching one of the first ever security tokens, where investors can own an actual equity stake. Not a utility token, you’re going to own an equity stake in Curzio Research. You could do that, by owning our token, which trades on tZERO platform, under the symbol C-U-R-Z, CURZ. And by doing this early on, it’s given us access to so many companies looking to launch their own security tokens. Tokens that you’re going to get a look at first, and that’s coming. And that’s what I’m really, really excited about. Also, utility tokens, where we’re going to be getting into pre-sales based on our contacts.

Frank Curzio: Which by the way, pre-sales are similar to investing in a private placement, where you could buy the stock at a discount. Except in crypto, you don’t have to be an accredited investor to invest in most of these pre-sales, when you’re getting in early. So, this is the access Crypto Intelligence offers you. It’s because we’ve been in this industry for a while, we’ve covered for a while, we have great contacts, institutional contacts, great names. You’re going to see more and more interviews going forward, of some of the great names in this industry, explaining this, the pros, the cons, everything. Okay? We want to be 100% transparent. There’s a lot of risk in this industry. We just saw a hack in this industry. We’re going to see more hacks in this industry, that’s why we need regulation. At least some kind of regulatory framework, where investors feel protected. And institutions, like I said, could check off that box, now that you have Biden saying, okay, here it comes. We’re going to push all into this industry now.

Frank Curzio: Okay? That gives a green light, for instance. Reason why a lot of that news came out in the past few weeks, when you give that green light and saying, okay, we know there’s going to be some kind of regulatory framework. We know the US isn’t going to say no and shut it down. Okay? Because that would be damaging and really crazy for any institution to say, “Hey, let’s start this project. Let’s invest in this, when we really don’t know what’s going on.” Now we have an idea that, hey, we’re going all in. We want to unleash innovation. That’s a very, very big step. It’s the reason why you’ve seen crypto surge over the past few weeks after that. Now, you’ve seen a lot of more money coming to this industry. There’s 250 trillion in assets under management. Of course, not all of it’s going to come into crypto. Not 50%, not 20%, and maybe not 10%.

Frank Curzio: But if 1% or 2% comes in, which the clients are of these firms want, they want to get into these names, they’re requesting to get into these names, you’re talking trillions. Trillions and trillions of dollars flowing into an industry that’s what? Just touched $2 trillion. So, it’s a game changer. So, you’re seeing an industry that makes sense in this environment. People like Bitcoin, countries like Bitcoin, you understand what’s going on with the Fed and how they’re printing money. All these countries printing money. You saw a good test case with China and the Ruble, how if you had your money just sitting there, it’s worth 50% less. Yet, if you put it in Bitcoin, it would be a lot higher. Or, if you put it in someplace else. So, when you look at other currencies… I know you live in the US and you’re like… Maybe you don’t know too much about currencies than you should, and that’s fine.

Frank Curzio: But when you’re looking around the world, when you see those declines in these currencies, which we saw even in Canada, which declined tremendously since 2012. 30%, 35%, right? And you lose that purchasing power, that money. Now, you’re looking at Bitcoin being an option for countries around the world. For the US to say, we might start our own central banking crypto and currency, that’s incredible. So, this industry is still in its infancy. You’re going to see a whole other leg coming up with all this innovation. We have one of the best newsletters in this industry. You’re not going to see that discount often, especially the free year. Where we sometimes discount the price by 20%, 30%, we’ve discounted by 50%, and we’re also giving away a year for free. We don’t usually do that with the offers.

Frank Curzio: We’re doing that, because right now, it’s a very, very good time to get in, and we want you to be in for two years. I want you to be in for two years, as these trends develop. It’s going to be volatile. Yes, it’s going to be volatile. But-long term, this is where I’m putting my money, personally. This industry, I believe in. Of course, I believe in lots of stocks and commodities right now, and banks that I covered in the last podcast. But crypto is a place I’m putting most of my speculative money. I’ve done very, very well in this industry, and I plan to do very well going forward. Just with the new ideas and the access we have, it’s a lot, a lot of fun. So, if you’re interested in taking us up on that offer, just go to curzioresearch.com. If not, no worries. Again, you’ve got two days to get that special offer, before we remove it from our site.

Frank Curzio: So guys, that’s it for me. Questions, comments. Again, I’m here for you, frank@curzioresearch.com. Have a wonderful, wonderful weekend, for those who don’t get our Frankly Speaking podcast, which is coming out tomorrow, which doesn’t come on iTunes. It just goes to paid people, who paid any subscription, any product. No matter how cheap it is, or expensive it is, you automatically have Frankly Speaking emailed to you. That’s a special podcast where I’m answering your questions, Q&A, which is really cool. But I’ll see you guys tomorrow, for Frankly Speaking. Everyone else, I’ll catch you on other side, next weekend. Take care.

Announcer: Wall Street Unplugged is produced by Curzio Research, one of the most respected financial media companies in the industry. The information presented on Wall Street Unplugged is the opinion of its host and guests. You should not base your investment decisions solely on this broadcast. Remember, it’s your money and your responsibility.

Frank Curzio, founder and CEO of Curzio Research, is one of America’s most respected stock experts. His research is regularly featured on media outlets like CNBC’s Kudlow Report, The Call, CNN Radio, ABC News, and Fox Business News. His weekly Wall Street Unplugged podcast—ranked the No. 1 “most listened-to” financial podcast on iTunes—has been downloaded over 9 million times.

Editor’s note:

If you haven’t started building a crypto portfolio, take advantage today of our special offer on Crypto Intelligence.

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