You might be familiar with Hester Peirce, commissioner of the Securities & Exchange Commission (SEC). Appointed by then-President Trump to the SEC in 2018… Hester has become known as the “crypto mom.”
Today, Hester joins the show for an in-depth discussion on crypto regulation. She shares what to expect from the SEC in the future… why too much crypto regulation could be a bad thing… and the problems that could result from too little regulation. [21:45]
Speaking of regulation… Daniel and I debate whether regulators should look into stablecoins and “meme” coins like dogecoin. We also explain one stablecoin’s recent plunge to zero… and Daniel lays out why goldbugs and bitcoin bulls hate each other. [46:03]
Wall Street Unplugged | 779
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 out there? It’s June 23rd. I’m Frank Curzio, host of Wall Street Unplugged Podcast, where I break that headlines and tell you what’s really moving these markets. So, today, I want to talk to you about something that’s very personal to me, and it’s the security token industry. It’s called digital tokens, tokenization, all those terms. Probably see it, lots of news out there about them. We start our own security token, encourage you, equity owners, but I want to go back to where this all started because in 2017, that’s when I really started following crypto religiously.
Frank Curzio: A lot of friends were in it and high profile people are in it. And I got infatuated with it. Then, in 2018, mid-2018 is a good time to start a crypto newsletter. That’s what we did at Curzio Research. Crypto Intelligence, we launched when the market really crashed. And I started to analyze hundreds of cryptos. So, remember, I’m a research analyst. So, I really dig deep. You see my videos if you’re a subscriber through all my newsletters and products, I’m actually doing the research, I really dig into. That’s what I’m passionate about.
Frank Curzio: And if they’re getting through the first hundred, I realized the trend, that over 90% of these tokens were complete horseshit. They were frauds. I couldn’t find any information out on them. There’s no financials, no insider ownership, no updated cap table, who’s selling, who’s not selling. Most of these utility tokens they’re called, not security tokens, utility tokens, they have zero utilities. So, you’re not getting an equity stake in them if you bought them.
Frank Curzio: So, the value of these things are only tied to the utility feature or how you can use those tokens to purchase things where you might gain access to certain things whatever. That’s the utility function. For example, if you look at the Binance token, you could use that token to lower your trading fees on the platform. You could book trips. There’s tons of uses. So, there’s value to that token. You’re not getting equity stake, but there is value to that token. It’s a utility.
Frank Curzio: Think Dave & Buster’s, if you have one of those cards, that card is very, very valuable. You put money on it. You play video games. You can use all of Dave & Buster’s, but Dave & Buster’s clothes, you can have a million dollars on that card, and it’s worthless. It’s like a utility. You can’t cash it back in and say, “Hey, it’s 100.” No, too bad. But most of these tokens, they have no utility features.
Frank Curzio: In other words, 90% of these things, again, we talk utility token, it should be worthless where they raise lots of money through ICOs, 17, 16, even 17, 18. The management teams probably took more than 50% of that cash to buy new cars or homes without having to disclose anything. You don’t know where that money went. Nothing. A lot of this stuff is raised overseas. And very few people back then when I started to get in, even today, I mean I don’t realize that most of these utility tokens are absolutely worthless.
Frank Curzio: I know. I talked to them. They’re buying Dogecoin and all this stuff. I’m like, “Man, they have no features.” They’re trying to create features. Company out there saying, “You should use Dogecoin to buy a few products here and there.” But really, it was created as a joke. We all know it now.
Frank Curzio: Now, I love the idea of crypto. Again, thought it was an amazing industry along with blockchain technology. I think a lot of people, a lot of companies agree with blockchain. But what we need here is more regulation. I’m not talking about regulating the whole entire thing where it’s crazy, but it needs to be regular to where investors know their money is safe. It’s not going to be stolen without any consequences. If you have something overseas and you have $100,000 in Bitcoin, it gets stolen. Don’t call the SEC. They’re not doing anything for you. There’s no regulatory. Authorities can’t do anything for you, but I’m sorry. Binance got hacked. I forgot how many millions of dollars, and they paid it back right away. Real company.
Frank Curzio: There is some great companies in this space, but very, very few. So, I looked at this industry and said, “Okay. It has to get regulated.” And that’s when I started to research security tokens. So, way like businesses courtesy of research, small growth companies, it’s a way for them to raise money without having to go to investment banks where they want board seats, and they want special price discounts and warrants that they can sell immediately.
Frank Curzio: Again, they’re not in for the long-term. You could see what SPACs are all about. Let’s look at Chamath. He’s out of these things right away. He’s, “This is the greatest thing ever. Virgin Galactic is the greatest thing.” He’s out of it a couple years later. Made his money. Did what he had to do to promote it. That’s normal. That’s par for the course. I mean you can be pissed at the guy. That’s par for the course for venture capital… They’re not in long-term.
Frank Curzio: Even Peter Thiel wanted to sell on Facebook. Man, if I had a guess at the price, I would say, what is it, $900 billion valuation? He probably sold it around $350 billion valuation, sold it really quick. Got out of it. Made his money over 2 billion. Good for him. He was in very, very, very early which is kind of like security tokens. It gives you an opportunity to get into things early.
Frank Curzio: But the point is you don’t have to go to investment banks, and we can eventually bring our company public which currency research is public right now, just one year later. One year later, now, this time frame is critical for you to understand. And trust me, guys, even if you’re not security tokens, you should understand this industry because it could give you life-changing gains. It gives you an opportunity to invest like a venture capitalist in early stage growth companies not after they IPO’d at 20 billion, 10 billion, $80 billion valuations or even a $100 billion valuation like Coinbase did which has now come down, what, 40%, 50% from its highs.
Frank Curzio: So, that one-year timeframe, it’s critical since if we’re going to raise money for Curzio Research through security token, hey, it’s great for us. We’re raising money. Now, we can use that money to grow our business. It’s also nice paying much lower fees to go public which is a fortune if you go on exchanges, accounting, regulation, all that stuff. It’s crazy, but the kicker to this industry is and someone had studied trends and goes to the extreme electronics show for the last, whatever, eight, nine years always been ahead of trends because they have great, great contacts.
Frank Curzio: The kicker here is early investors, these are the people that believe in your brand that invested even our company, a CEO token enough to invest in it at very, very early stages, but they’re going to be able to trade this token just one year later, and it’s awesome considering the liquidity period when you look at statistics for most private companies that people invest in is seven in 10 years. What does that mean? What’s the liquidity period? It means a time for you to cash out, meaning the wage you cash out or through an IPO getting acquired and for a private company, that takes seven to 10 years. That’s a long time.
Frank Curzio: As you know, most private companies, they never make it to that IPO stage or even get acquired. A lot of these businesses fail. So, what does that mean? You’re investing in a private company. You have your money locked up for seven years. You can’t do anything and say if you see management really, I’m going to curse here, fucking up in year two or three, you’re stuck. You’re probably going to lose your entire investment. You’re in it. There’s no way for you to get out.
Frank Curzio: But being able to trade one year later is huge because say if I mess up with my business or you see declining trends, which we’re reporting every year, and we’re going to have every six months pretty soon that we’re going to be reporting, going to go into that later because we have a big annual meeting coming up that anyone could attend, learn more about our company’s CEO token, our first ever, very, very exciting go over that later, podcast. But being able to trade one year later, it’s such a huge point. And this system allows investors to buy into companies, and I mentioned earlier, at the super early stages of growth because if you see what’s happening today, companies do what? Seed rounds, series A, B, C, D, whatever. Every round that these investors invest in, they get to invest at a huge discount in the next round which is huge.
Frank Curzio: What does that mean? It means when this company eventually goes public, they’re blowing out of it especially most of their position. They’re going to remain long-term holders. No, they want that money to do the same thing, and they want to keep rolling over, roll over, roll over to make money.
Frank Curzio: But they do six rounds of financing. And then, the IPO, they dump this to retail investors during the IPO when it’s a multi-billion dollar valuation. That’s what they do. That’s the retail of it just like SPACs. Without the retail investor, SPACs are shit. That’s why you’ve seen them go to shit because now they’re not going from 10 to 15 without even having a business model or looking at a company to purchase.
Frank Curzio: Now, they’re going to 10, nine and eight. And the companies that they’re purchasing, now, they have to disclose the warrants and the pipe deals. These things like two, $300 million, these holding companies that are looking at SPACs, looking for a company investing, and you’ll notice that they’ll buy a company for a billion or $2 billion. It’s only 300 million. Where did they get the rest of the money from? Now, they go to individual funds, and they do pipe deals.
Frank Curzio: And they say, “Hey, we’ll give this to you.” They don’t care. They’re in a 10 cents. We’ll give to you at three. We’ll give it to you at four. Here’s warrants. You could sell it, and they give away the fourth. As long as the retail investors buying and getting fucked, everything works with SPACs. But now, retail investors are smart enough and saying, “Wow, we’re getting killed on SPACs,” and they’re not doing it anymore. That’s why you in SPACs, you need the retail investor. You need to that sucker at the end.
Frank Curzio: This way, all this stuff works and everybody else gets rich. It’s the way it is. I’m telling it how it is, trying to help you. I mean Coinbase is a great example. I love it. Now, I think it’s cheap, but it came out, what, at three something, went to 425. And where is it? 220 today? It is a holding our newsletter. We recommended it will be down like 5% on it. Recommend a lot lower. I think people don’t realize that company is going to do fantastic even when Bitcoin comes down because the volatility is you’re looking at the volume and the trading volume. A lot of this going through Coinbase is massive. Even on downturn, it’s massive, and that’s how they make their fees.
Frank Curzio: They’re going to blow out the quarter coming, whatever, it was a month away, two months away. A Coinbase is not the only… I give hundreds of examples of this system of how it works. The prime investors get in. They invest in the seed rounds and get discounts for every round that they want to invest in after that. They go IPO. They blow out of this stuff because you’re buying shares that people are selling, and it’s the insiders that are selling. And they make a fortune on these IPOs.
Frank Curzio: And some of these companies work out great, Facebook. A lot of them, they came out public. Work great. Snowflake didn’t really work out too great though. It worked out great for the insiders. Not yet. People think it’s going to go a lot higher, still very expensive. Anyway, my point is this: Security tokens provide something that I haven’t seen in Wall Street or investment banking industry where they provide massive benefits to both the issuer and the investors.
Frank Curzio: And when you have a better solution that benefits everyone involved if you want to disrupt a market, find something that’s easier that brings companies, and their customers closer together, something that’s cheaper, and it’ll get widely adopted and scale almost immediately. That’s how you disrupt markets. And I saw this as a disruption because it’s great for everybody involved. Security tokens. Now, utility tokens.
Frank Curzio: Uber is a great example of how this works. It was great for the company generating tons of money, not huge expenses. People are using their own cars which is really cool. So, you don’t have to worry about that. It’s great for their customers. Customers enjoyed safer experience. I grew up in New York, definitely safer, taking a taxi, lower price, nicer cars, cool people. Could rate them. More interactive. Okay. It’s great for everyone involved. If you look at Uber, it’s a $100 billion company. That’s how it works.
Frank Curzio: But retail investors were only able to get in when IPO’d at, what, was it 85 billion, $90 billion valuation? I mean it’s 50 something. I think an IPO like 45, I think. And this is, what, 2019. But you’re looking at investors buying Uber. You couldn’t participate in that early stage growth at all. At all. Maybe, Uber goes to $200 billion valuation. That’s fine, but imagine being able to see this and invest early which retail investors don’t have access to which sucks. It’s the big money.
Frank Curzio: But security tokens changes this, checks off all the boxes. The amazing solution that I knew would eventually take off like a wildfire. Now, courtesy research, we became one of the first security tokens in the world where we did a Reg D offering which is for credit investors. And then, one year, our CEO token was free trading to retail investors where any retail investor could buy it.
Frank Curzio: But surprisingly to get this kind of access for retail investors, I had to list our CEO token on the merge exchange. MERJ, M-E-R-J, is an awesome company. It’s based in a Seychelles. So, it’s overseas. And it’s an actual exchange. You have to understand, it’s an actual exchange, not an alternative trading platform, an ATS, they’re called which is, what, tZERO is and open finance was, a lot of companies that are coming out trading these things, alternative trading platforms on exchange.
Frank Curzio: So, they have the same rules merged us as the New York Stock Exchange and any other global exchange. So, we went through a tough regulatory process to get listed there. But it’s overseas. The problem is we’re a US-based company, and it would be nice to trade it in the US. There is no alternative trading system in the US that trade security tokens other than tZERO which had three tokens on their site. But they haven’t added another security token in 18 months. And now, it’s looking to sell itself.
Frank Curzio: But there’s really nothing out there, and it’s tough. And there’s nothing out there because a lot of money needs to be put into this system and the SEC is not really regulating us saying what they’re going to do, and no one wants to go out there and spend 20, $30 million or raise money whether you seek to be like, “You know what? We’re not really going to allow this.” They allow utility tokens because they’re deemed not to be securities. But how is Doge not a security? How is anything outside maybe Bitcoin and Ethereum not a security, or maybe Litecoin and a few others?
Frank Curzio: They’re all securities. They’re all securities. They check off every definition of securities. If they’re labeled securities, they have to report. They have to report everything, all these things are done. All these things are done. And you know what? Now that people are getting destroyed in Dogecoin, $70 billion in value lost, Mark Cuban promoting another token. We’ll talk about that later with Daniel, went to zero, got crushed. And now, you see people getting crushed on things that they really can’t get any information.
Frank Curzio: It’s funny. Cuban love Dogecoin and promoting and then promoted this Titan token was called. Iron Finance was the name for the Titan token. Then, it went to zero. And then, it’s like, “Oh, we need more regulations.” But now, you’re going to see when everyone’s making money, everyone’s cool. It’s fine. It’s fine. Everything’s all right. Don’t worry about it. But now, you’re going to see SEC come down this industry. It’s going to open up the door security tokens because this makes sense.
Frank Curzio: And now, something very, very interesting happened this week. It’s major, major news in this industry. So, Morgan Stanley and other venture firms invested $47 million in securitized. That’s one of our partners who basically create our token, still use it, their platform. Great guys. And this is the first investment by Morgan Stanley into blockchain. They chose securitized. Now, securitized is set to launch their alternative trading platform within two months or so, around two months. I think they have everything in place. Just waiting. It’s always a tough process, regulatory process. But I think they’re going to do within two months.
Frank Curzio: But this platform is going to start. It has to start as an institutional trading platform. So, if I listed my token on that platform, only my institutional investors or the guys who came into Reg D would be able to trade it, not to retail investors which defeats the purpose of this industry. It really does. And if you look at Reg A, Reg A has come so far. We’ve got companies. One of the company’s security token has just raised $70 million. But I could tell you something. I was going to tell you in the security token industry, if you do a Reg A offering which is available to retail investors, they can invest in private companies, and you do it through a security token. You can’t trade that security token anywhere.
Frank Curzio: And when you do a Reg A, it’s supposed to go free trading almost immediately. But there’s no exchanges here that allow retail investors yet which is insane. But now, you’re looking at securitized. They’re launching this trading platform again going to start an institutional trading platform, only available to credit investors. Then, securitized plans on launching a retail platform which will probably happen about 12 months from now which could really jumpstart this incredible industry because now you’re going to see it all your security tokens trading on a regulated alternative trading platform, and that’s when you’re going to see the volume. That’s when you’re going to see something like Coinbase. That’s where you’re going to see all these things.
Frank Curzio: But investors are going to get more clarity. They’re going to know what they’re buying. There’s going to be reporting. That’s what’s great about this industry. You’re going to have that opportunity to invest in these companies near the ground floor, not Uber at an $80 billion valuation. Facebook, what was it? 100, whatever it was. I mean that sucks. You’re buying this thing. You’re like, “Yeah.” I have so many friends like, “Oh I’m going to buy the Lyft IPO.” Really? Because there’s tons of insights that are dying to sell it to you, and you knew that thing was going to crash. I mean they faked their numbers and everything. I’m surprised SEC didn’t go after them.
Frank Curzio: They’re saying they captured a certain percentage of industry, and that report was based on someone who was a major shareholder. Their company’s a major shareholder, and they printed reports showing that their stats were a little much better, of course. So, it’s a conflict of interest. Nobody cares. It’s Wall Street. Nobody cares. Nobody’s going to look into it. They don’t have the time.
Frank Curzio: Anyway, you get my point. Now, what am I going all this and why is this so important to you? Today’s guest is Hester Peirce. She’s the commissioner at the Securities and Exchange Commission, SEC. She’s one of five appointed by the president, and Hester knows a lot about the securities industry as a whole, been in insecurities almost her whole life, worked in senior council in the US Senate Committee on Banking, Housing, and Urban Affairs where she advised ranking members of the committee on security issues.
Frank Curzio: She served as counsel to the SEC commissioner, Paul Atkins. Also worked as a staff attorney in SEC’s Division of Investment Management. So, pretty safe to say that she knows her stuff when it comes to securities, and Hester has been dubbed crypto mom because she truly believes in crypto, and she talks about it openly which you’re going to hear in a minute. She talks about in the public which she’s going to state, of course, our own opinion, not that the SEC or the commissioners. But this interview was very, very important to me because I’m looking for answers I want answers. And to find them, you have to go to the top, and that’s why I love how many people listen to this podcast because we’re able to get guests like this.
Frank Curzio: There’s not so many security firms, not that we’re a security firm and financial firm, that are going to talk to us to get SEC on a public platform like this. I want answers though. Hester’s awesome. But to find these answers, you do. You need to go to the top. Why is there a bottleneck to regulate security tokens alternative trading platforms that are going to trade security tokens in the United States while we have utility tokens like Doge, which we know was started as a complete joke, have almost no regulation where anyone can open account on Coinbase or Kraken right now and trade it. It’s amazing.
Frank Curzio: I mean, you’re looking at Saturday Night Live was a top for that at 75 cents. And then, you want to know that it came down to, whatever, 40 cents. And then, Coinbase like, “Hey, we’re trading Dogecoin.” And everyone came out and said they trained Dogecoin. And then, that thing really collapsed which usually happens. We know that’s best in newsletter industry.
Frank Curzio: If you are very, very, very, very, very excited about an idea to get in, chances are it’s at its all-time high, and you’re going to lose money. So, what happens? That’s when you’re most excited. Nobody wanted Uranium five years ago, four years ago, three years ago. Now, a lot of these things are up to 250%. And yes, they pulled back 205. But a lot of people talking Uranium now. That’s the way it goes, almost every single trend. Nobody cares until these things go higher and higher and higher. Then, everyone gets excited because everyone’s talking about around water coolers. That’s something I want to know. How come Doge, anyone can open account of Coinbase and trade something that has no financials, no nothing, but we can’t get more security tokens trading? There’s lots of companies that have reached out to me. There’s lots of companies in the works, hundreds of them, that are going to raise money through this process.
Frank Curzio: But we go even deeper on this interview especially within the industry which I truly believe this is going to be a trillion dollar market inside of seven years. I told you, checks off all the boxes. So, this is an awesome interview. Hester, she’s really cool, really smart, not just saying that because she’s an SEC commissioner. She’s genuine.
Frank Curzio: I truly believe in her opinions where you see a lot of talking heads out there, just shouting out what everybody wants to hear. She’s not like that. She’s an out-of-the-box thinker, someone that could help unleash this incredible industry which Curzio Research is right at the forefront. Without further ado, here’s my interview with Hester Peirce. Hester Peirce, thank you so much for joining us on Wall Street Unplugged.
Hester Peirce: It’s great to be here. Thanks for having me. I have to start with my disclaimer which is that my views are my own views, not necessarily those of the SEC or my fellow commissioners which is usually obvious from what I said.
Frank Curzio: That’s great. Listen, I’m really looking forward to this interview. We are in the crypto world. And I know you get a lot of questions I see you everywhere now. So, I know this kind of excites you. You’ve been dubbed the crypto mom which is cool.
Hester Peirce: There’s a move to strip me of the title this week. So, we’ll see if I retain the title. A Twitter poll trying to get rid of the title.
Frank Curzio: Yeah. Well, one of the things that you said to earn that title is we have to be careful not to over regulate this industry, the crypto industry, because it could stifle innovation. And right now, it seems that there’s little regulation or a big gray area. And you know as well as I do, going back to your background, gray is bad when it comes to institutions. It’s either yes or no would be better than gray because there’s less money coming into the system, and you’re not seeing ETFs approved. But you still have people that want to try because they don’t know yet. How do we eliminate the gray area, and how do you push that because there’s five commissioners? And I know, like you said at the beginning of disclaimer, your views are your own, not necessarily everyone from the sec. But how do we get this pushed forward or, let’s say, we’re not going to regulate it? But I just think either saying yes or no is better than being in that gray area.
Hester Peirce: No. You’re exactly right. Institutions really need the regulatory clarity to come into the space. I mean even individuals are asking for it. But institutions, it’s kind of a basic parameter that they need to have set. They need to know what the rules of the road are. And then, they can operate within those roles. So, I think there are a few things that we can do. But one thing that I’ve been trying to do is just gather from people what the questions are, where are those gray areas. Where are these things that they’re wondering about in terms of what they can do and what they can’t do?
Hester Peirce: And then, I think we just have to tackle each one of those on its own. So, there are a couple things that come to mind easily. One is trying to define the line between what’s the security’s offering, and what’s not. Another is trying to set the ground rules for custody in this space. And another is trying to think through what the ground rules are for an exchange-traded product.
Hester Peirce: Now, obviously, we have provided some clarity in that regard. But I think we may need to revisit that. I am optimistic though we have a new chair who has a lot of experience thinking about these kinds of issues and knows this space quite well. So, I’m optimistic that between that and the growing interests in the crypto world, we’re going to see some clarity coming up soon.
Frank Curzio: Now, that’s great news because we’ve actually launched a security token here, Curzio Equity Owners. And we’ve put this in the process two years ago the whole regulations, and our financials are audited. The reason why I went this route is because when I looked at 2018, I thought that a lot of these are securities. And I thought that there would be more regulation coming down. This would transfer into security tokens.
Frank Curzio: But now to the point that we were talking about with security tokens, it seems like from my end of the industry, it’s more difficult to get this industry going which is this is security-based backed by assets. They’re not just utility tokens. When do you see this? You say you’re optimistic. But when do you see this because I’m excited for this? We base our company on this. We’re excited we’re growing company. But there’s just people out there that want to start alternative trading platforms. They’re afraid to put money into it because again of that gray area. It’s 20, $30 million dollars licenses, everything. There’s lot of money that has to go into something with the signature may not exist. So, when do you see this happening? And I know that’s hard question. Yes. But you’re optimistic by talking to the other commissioners or do you think, “Hey, maybe it’s a year.” How close is that?
Hester Peirce: Well, any new chairman coming in has a lot on his agenda. And so, that’s no different with Chair Gensler. And events have a way of overtaking even the most well thought out and well-designed agenda. So, we’ll see where crypto falls on that agenda. I think people in the crypto space tend to be fairly… They move fast, and they would hope that regulators would follow suit and also move fast. But I think that we will see some progress under this chairman. I think he’s likely to want to work to provide regulatory clarity here. And, maybe, we’ll get some more guidance and more nudging from Capitol Hill, for example.
Hester Peirce: So, it remains to be seen just how quickly. But in the meantime, I really urge everyone who’s involved in this space to proceed with care, to think about the security’s law angles of what you if you’re trying to create something to get the advice and the help that you need to come talk to our FinHub which is our sort of outward-facing point of connection for people in the fintech world.
Hester Peirce: So, come, talk to them. Lay out what your plans are. It’s good to come early. And then, remember, if you’re an investor or someone who’s looking to purchase crypto, you should not assume that anything has a regulatory seal of approval. We don’t do that for any products, and there’s certainly nothing that has the SEC seal of approval.
Frank Curzio: One of the things that you said, and this is from an interview. Someone’s asked you about Dogecoin. And I love what you said. You said, “Listen, I believe in personal responsibility.” That’s a bold statement because, to me, I agree with you. You should have personal responsibility and know what you’re investing in. But sometimes, these people don’t know what they’re investing in.
Frank Curzio: So, is it really difficult to assume that because I could see if I had a guess, I would say about 70% of the people on crypto do not know that they’re not actually getting an equity stake in these things, and they probably believe that their securities? They don’t know if somebody comes in and takes them over for say $50 billion that they’re not going to get anything because they don’t have an equity stake in it. So, how do we get that to the personal responsibility parts to really educate these people? Is that like the crypto job? I mean, is that something you’re looking for because it seems like we’re really close here coming together where we all want the same thing. This is a $1.5 trillion industry now. It’s very, very big, something you can’t ignore, and it seems like we’re pretty close.
Frank Curzio: But I just love that personal responsibility part and how far is that going to be taken because that’s just logical. That just makes sense. And if that’s true, I could see this thing passing or having more regulation a lot quicker.
Hester Peirce: Well, I mean I give the same advice with respect to crypto that I give with respect to anything which is you really need to think about your risk tolerance before you get involved in purchasing anything, and you need to be realistic with yourself about the volatility of an asset class if you’re getting involved in that.
Hester Peirce: And, often, the greatest lessons for investors or just in life come from what you’ve done wrong. So, my guess is that some of the people in this space like in many other spaces will find that they made some wrong assumptions. And maybe, next time, they’ll be more careful. But it’s incumbent upon us as a regulator to try to encourage people to think carefully about financial decisions they make. And I think it’s incumbent upon everyone in society just again to take personal responsibility. It’s the money that you worked for.
Hester Peirce: Now, think carefully about what you want to do with it. My view on personal responsibility and on the real fundamental importance of allowing individuals to make decisions about their own lives, I have a very strong view about that. And some of my regulatory colleagues are more willing to override those decisions than I am. But at least, we can have those conversations. And at least I think as Americans, we can all appreciate that with freedom also comes responsibility.
Frank Curzio: No. Well said. Well said. Now, could you take me through the system of how it works of how an approval will work? There’s five commissioners. You’re one of them. Is it a certain approval? Is it three have to approve and two? Is it kind of like a voting process? Say, if four of you agree and say, “All right. You know what? We’re going to do some kind of regulation in crypto or we’re going to launch ETFs, just say?” What’s the process for that to happen?
Hester Peirce: Well, the process is a little bit different depending on what you’re talking about. So, the chair of the agency actually sets the agenda. That’s part of his responsibility. And so, he then directs the staff to prepare recommendations for the rest of us to vote on. So, with a rule, we’ll get a recommendation from the staff. Here’s a rule that should propose. And then, that rule would go out for public comment. If we vote by majority to put it out for public comment, goes out for public comment. And then, we get comments back.
Hester Peirce: And then, again, we once again look at a recommendation from the staff if the staff is recommending to adopt the rule, and we’ll vote on it again, and it takes a majority vote. Now, some things, like you mentioned, in exchange traded product applications, something like that is a bit more complicated because a lot of those decisions are actually made by something called delegated authority which means the commission has delegated the authority to the staff to make those decisions.
Hester Peirce: So, sometimes, those decisions are just made by the staff without direct involvement from the commission. Now, the commission can pull those decisions up and say, “You know what, staff? We want to make that decision ourselves.” And that can happen at several different stages in the process. And then, enforcement actions are again majority vote. The staff makes the recommendation, and it’s a majority vote to move forward or not.
Frank Curzio: Okay. So, let’s change tunes here because I know everybody loves to pick your mind on crypto, and they’re excited that you’re in favor of crypto. And at least, you have that having that conversation out there. But before becoming an SEC commissioner, you were United States Senate Committee on Banking, Housing, and Urban Affairs. You’re a former staff member there. You were big part of the regulatory reform in the financial crisis during 2008.
Frank Curzio: And in 2012, you wrote a book, and it’s called “Dodd-Frank: What It Does and Why It’s Flawed.” And you talked about or you argued for economic freedom and against the idea that markets could be improved through regulatory micromanagement. So, are banks right now or financial industry, are they being micromanaged right now? It’s on the regulatory front or regulatory micromanaged? And how do we get to a medium where you see the capital on bank’s balance sheets, and they probably want to have that more freedom, but at the same time the credit crisis came out of nowhere, and they need to be regulated? So, how do you find that medium in between because you always see the pendulum spring to each end based on if there’s a crisis, there’s not a crisis? But I guess it’s kind of hard to just get right in the middle and say, “Hey, we want you guys to grow. But you need to behave.”
Hester Peirce: Yeah. I mean this is a long time debate in the financial regulatory world of what exactly the financial regulatory framework should look like, and we do in the United States have a rather complicated and fragmented federal financial regulatory framework, and that can be good because it can allow for some different experimentation about different approaches to things. But it can also be a challenge for anyone trying to innovate in this area or trying any new entrants trying to come in and trying to figure out where would they fit within that framework.
Hester Peirce: Just speaking from the SEC side of things, you asked, “Do we have the balance right? Are we micromanaging too much?” I tend to think that it’s good for us to take a principles-based approach and to leave the method of achieving a particular objective up to the individual market participant. And then, if they achieve that objective, that’s great. If they don’t, then that’s the time that will come in either on an examination level to look at the firm and say, “Hey, you’re not meeting our objectives. You better get your act together,” or if they don’t, then with an enforcement action.
Hester Peirce: So, I tend to be of the view let’s have some broad parameters and allow people pretty broad freedom within those parameters. I think it’s really a good way of ensuring that there’s competition, that there are low barriers to entry. If you have a really complicated rulebook, it’s really difficult for someone to jump into the game because you can’t figure out all the rules. And the incumbents know all the rules. They’ve hired all the pricey lawyers. So, they can they in a complicated field of rules whereas new entrants can’t come into that.
Hester Peirce: So, I worry about innovation if we have too complicated of a rule book. And I worry about competition. So, that’s kind of my view, is we still have work to do, to get our rule book to the right place. But it’s something that I continue to look forward to working on and enjoy working on.
Frank Curzio: That’s great stuff. And just even in crypto, is there a concern that we are falling behind other countries when it comes to… Because we mentioned before about capital especially institutional capital, and their job is to be prudent. So, they have fiduciary responsibility. But when there’s really a gray area in place we talked about before, it’s hard for them to invest. But also you mentioned an innovation front, and that’s big especially in a brand new industry like crypto. And you could even say also in banking on the innovation front. Is there a fear of falling behind where it seems like Japan is figuring out. Singapore is figuring out, and this market gets bigger and bigger.
Frank Curzio: Is there any fear of that? is that a big concern or it’s like, “Hey, we just need to sit down and regulate this,” or is it like, “Hey, we kind of needed to do this kind of quickly because everyone else seems like they’re a little bit ahead of us here and even US businesses within crypto seem like just to be on the safe side, they’re launching businesses outside the US because they’re not too sure the rules are going to happen in the US?”
Hester Peirce: Yeah. I mean certainly, I worry about losing innovation. I worry about losing talent. I want all the best people to come to the US and to do their innovation here in the US and to participate in US markets to deal with US persons and to look forward to having US involvement in their projects.
Hester Peirce: And when you’ve got an unclear regulatory structure, that certainly scares people away. And I think some other countries have been more nimble at trying to adjust their regulatory frameworks to accommodate crypto, and we maybe a bit have rested on our laurels. We have the deepest capital markets in the world, and we have just wonderfully smart talented people here. And so, a lot of innovation happens here just because of that. But when you don’t let the regulatory framework adapt, then you do run the risk of losing some of that talent.
Hester Peirce: Now, look. I understand my colleagues’ concerns too and the reason why some of them are a bit more hesitant to make adjustments just for crypto. I mean they’ve seen a lot of a lot of scams in the ICO space, and they’ve seen a lot of people who have just conducted outright frauds and just called it crypto. And so, that is an unfortunate thing. And it’s made a lot of people deal very cautiously.
Hester Peirce: And I also understand the point of view that our securities laws are meant to be open-ended. They’re meant to work flexibly. And so, why should we make any adjustments for crypto? Now, that point of view is one that I once held. But having seen unique aspects of crypto, I really think we need to make some adjustments because I think there are some unique aspects to this industry that don’t mesh quite right with our existing set of rules.
Frank Curzio: No. Definitely well said. And yes, I have to say that I really appreciate you coming on. I mean just the dialogue is really cool, that we’re opening this up where, sometimes, it’s very silent, and you don’t know what’s coming I see you out there a lot. And I really appreciate coming this podcast and being vocal about it. For me, I don’t feel like you push an agenda for you. I feel like, “Hey, let’s get more information on this. Let’s work together. Let’s get this out.” And we need to have that conversation for you to be doing that right now.
Frank Curzio: I think it’s great for the crypto industry. I think it’s great in general. I really love what you’re doing. So, I really appreciate you coming to this podcast and, yeah. I actually learned a lot today. So, great job.
Hester Peirce: Well, thanks for having me. And my door is always open. It’s a virtual door now. But I really do want people to come talk to me.
Frank Curzio: That’s great stuff. Thank you so much for coming on.
Hester Peirce: Thanks for having me.
Frank Curzio: It’s great stuff from Hester. I really appreciate her doing this interview, and it’s really relevant right now because you’re about to see this industry security tokens boom. So, see, now, we have $70 billion in market cap wiped off of Dogecoin which is heavily promoted by billionaires, prominent social media personalities. Knowing that this was a bullshit token is another one that went bankrupt recently, that went to zero. That was heavily promoted, and it’s funny that this billionaire wants more regulation in industry now which is kind of ironic when you think about it. Isn’t it a little ironic, that you’re promoting something that you don’t know anything about? You can’t see the financials or anything on social media. And then, it goes bust. And now, you’re like, “Wow, we need more regulation.”
Frank Curzio: Anyway, we’ll get to that later on with Daniel. But if you look at the industry, people are starting to get crushed by these shit tokens. And when everyone making money, nobody cares. I said that earlier. Now, the SEC is going to be all over. It’s going to see lots more complaints coming in, people losing their life savings. That’s going to lead to more regulation, the right security tokens. We’re seeing that.
Frank Curzio: I thought it happened already from 2018 till now. I thought we’d see sweeping regulations, get rid of all this garbage and scams, so many utility tokens that would definitely open the door security tokens where, yeah, this is something where you get an actual equity stake. They trade someone through a stock. They’re open to retail investors.
Frank Curzio: Hey, any one of you listening to this right now can invest in an early stage company like ours, the ground floor like Peter Thiel on Facebook. Holy cow. I mean what are you vesting at? Pennies? How great is that? Imagine you becoming that investor when instead of waiting for the IPO to invest, hence all these insiders looking to sell, now you’re on the inside, and you’re the one that’s selling to all these new investors in the IPO at the multi-billion dollar valuation where the chance you could earn 20,000%-plus gains which are life-changing.
Frank Curzio: That’s not open to most of you out there, almost all of you for retail investors. Security tokens changes that. It checks off all those boxes. I have to tell you. With everything going on with regular crypto, a lot of these BS tokens getting crushed, these are securities, guys. I don’t care what anybody says. There’s securities. They trade securities which means they should have to report, and that’s coming. And that’s going to open the door security tokens already has because everything’s coming together right now. It’s in Morgan Stanley, a big investment, 47 million to securitize. A lot of shit tokens getting killed, investors losing their life savings. The SEC has to purse talking about security tokens talking more and more about this industry, likely to see more regulation coming, the right regulation coming.
Frank Curzio: Then, you have the MERJ exchange trying to get even more listings. Security is telling more people raising money for security tokens. Even you guys out there, I’m getting so many calls, “Frank, I’d like to do this. I’d like to follow your lead.” Please get in touch with us, email@example.com, because, man, we’ve been put through the grinder. It’s been a tough road, and it’s expected. It’s new. Technology is changing. Regulation’s changing. But being first means we have to change a lot during those early stages which has been a little tough for early investors.
Frank Curzio: We got great investors. Again, how our company does. That’s what you’re investing in. But still, we want to be able to trade this token, and we want to have liquidity, and we’ve taken the necessary steps to do that, and it’s very, very exciting. The security token, the industry, it’s finally here. I’m excited for our investors. I’m excited for our CEO token which it gives investor’s equity stake at Curzio Research. By the way, we paid a dividend every single quarter since we’ve been public.
Frank Curzio: And for me, I can make that promise we’re going to continue to be at the forefront this incredible industry because it’s something I truly, truly believe in. Checks off all the boxes. It’s good for consumers, good for issues, good for everyone just like Uber except with Uber, you don’t have to buy for the first time at $80 billion valuation. You get the chance to invest alongside venture capitalists.
Frank Curzio: So, anyone looking to tokenize their business, small growth companies, feel free to give us a call. It’s an easy way to raise money. That puts us on par with our larger competitors because we’re able to raise money. Now, a public traded company, we could use those shares as currency to purchase, to acquire, to hire good talent. That’s how you compete with the big boys.
Frank Curzio: Otherwise, you can’t really compete with these guys. You’re just too small, and that’s what we’re looking to do in an industry with publishing alone which we’re becoming a media company, opens up doors so much more and advertising and stuff. But as a publishing company, our competitors generating billions, billions, and billions in sales, and we’re a micro dot.
Frank Curzio: But by doing this, now, it accelerates our growth trend. Now, it’s up to us, and if we mess up, at least, hey, it’s publicly traded. You sell stock which is cool. You had in a private company for seven years with year three year four, management team doesn’t know what they’re doing. They lose their CEO. He leaves. You’re sitting there, “Okay. I guess I lost all my money.” And even if you’re not, you have to wait 17 years before you cash out. This changes that.
Frank Curzio: So, if you want to learn more about our CEO token, good news, we’re holding our first ever annual meeting. We’re going to update you on our financials which are audited now, puts us in a class of our own. I ordered. Why? Because one is we trade on foreign exchange. And, two, having ordered financials is the only way you’re going to get institutions to invest in your company because they want to see the financials. They want to see everything.
Frank Curzio: In fact, we’re audited by a very good New York City firm, puts us in a class that’s different than anyone else in the industry. These are the steps I’ve been taking over the last six to nine months, been incredibly busy to build this to get that liquidity on to MERJ. And now, everything is coming together.
Frank Curzio: So, we’re going to talk about this, the annual meeting, our first ever on July 9th at 11:00 AM eastern, and we’re also going to highlight our growth initiatives, Curzio Research, going forward. Very, very exciting. Any one of you can register. It’s for free. We’re not selling anything. It’s just for you to learn more about our company, and we’re going to talk about security tokens. It’s going to be really, really cool. But it’s an annual meeting just like Berkshire would have, just like Microsoft would have, and it’s our first ever. Again, July 9th at 11:00 AM eastern. If you want to register, just go to curzioequityowners.com. That’s curzioequityowners.com.
Frank Curzio: And, of course, I’ll be sure to update you as that date’s approaching. Again, we’re not selling anything. Should you want to learn more about security tokens and learn more about our business how we’re doing and what we plan to do in the future to grow this possibly, which is my goal, into a billion-dollar company, then tune in. And that’s going to be in July 9th at 11:00 AM.
Frank Curzio: Now, let’s bring in Daniel. So much going on. I mean, crypto, security tokens, a lot of news coming out. I kind of beat that to death. But, man, even outside of that, we just saw one of the biggest collapses in Bitcoin which is crazy. But I don’t even want to start there.
Daniel Creech: Yeah. I got to say something though because I’m all in with you. And I’m excited about this. I know you talked a lot about it in the headlines until we get to the point about this regulation coming down the pike. That is not a good idea, in my opinion, when you have widespread.
Daniel Creech: So, I appreciated the conversation you had with Hester. I thought she did a good job. For just personally, it’s encouraging to know that somebody with, I don’t know her, but just what I perceived from listening to the interview was she’s very down to earth, very personal responsibility. And I can’t tell you how much I respect and how much we need that a lot more in government. And this isn’t a knock on her. But holy hell. When she broke down the process of how shit happens and how regulations come about, if anybody thinks you need more rules and regulations, just look at the process.
Frank Curzio: Yeah. The process. And that’s the reason even in China. In China, if they want something done, they pass. And the government passed in two seconds, not two seconds, you know what I mean. But here, the whole entire process going through legislative-
Daniel Creech: There’s got to be room in the middle there somewhere between back and forth.
Frank Curzio: You know what the process is about though, Dan? I mean we all know the process is about everyone in the middle from going to, “Hey, we need the changes to, okay, we’re going to sign this.” Everyone in the middle has to get a payoff.
Daniel Creech: Yeah.
Frank Curzio: All right. So, that’s what it all is. It’s like who’s going to get… Oh, you want me to approve? Okay. Fine. Why do you think people change their minds when they need another three or four votes? How do they get them? How do you think they get them.
Daniel Creech: Absolutely.
Frank Curzio: I mean, to sit them down and say, “Hey, you know what? Why don’t you just vote for us because you’re really cool, and we’re cool?” No. Here’s what we’re going to do. If you’re going to give me this, this, this, this, and this, okay, cool. Deal. I’ll vote for you. That’s what it is.
Daniel Creech: You just need less. You just need less steps to take. Let’s start with less.
Frank Curzio: And, look, guys. I know for crypto as we have a lot of critical people listen to this podcast, I’m not talking about full-blown regulation. But you have to have regulations where you know your money’s protected just like at e-trade, just like you have insurance on this thing. You’re going to be paying taxes to the IRS if you’re making money. You need this in order for the industry to scale because it’s only going to scale if you get institutions in it. Institutions aren’t going to come in unless you have this common sense regulation.
Frank Curzio: So, we’ll see what happens. I think it’s coming. And a lot of other people think, Morgan Stanley thinks it’s coming because they’re investing big money in this industry, and you’re going to see a lot of more money pour into security tokens.
Daniel Creech: Oh, absolutely. Yeah, absolutely.
Frank Curzio: To Bitcoin, holy cow.
Daniel Creech: Yeah. How about that? Real quick on the billionaire thing, so, did this happen on the 17th? I don’t know what day this. So, IRON Finance has this Titan coin stable coin thing that went from at one point, it was $65-ish to basically zero or fractions of a penny of zero, and it also, at some point, it was around the $2 billion market cap. Now, in today’s world, hell that ain’t nothing. So, $2 billion zero. Nobody cares. It did get some recognition. I don’t know whether I should complement or kind of poke fun at Mark Cuban here because he lost money too. This thing goes to zero. Everybody involved loses it.
Daniel Creech: And real quick, I won’t get into the weeds here because I’ve read a few different blogs in the company blog from IRON Finance is it’s entertaining, and it’s sad because let me give you the in first, Frank. So, this is the blog on IRON Finance after the Titan coin, stablecoin is worthless. Skipping down to the very bottom, you guys can Google this IRON Finance blog or whatever it is. We’ve learned a great deal from this incident. And while nothing could be fixed in the current system, we will continue our journey with more products in the future.
Daniel Creech: Translation, we screwed up this time. But next time, my God, we’re going to figure this out. Now, with stablecoins, sorry to jump ahead on, stablecoins are just backed by a cryptocurrency or a currency. So, if you have a USD, US dollar stable coin, in theory, Frank, if Daniel holds 10 of those, whoever created those or issued those to me has $10 dollars in currency backing that, and it does make sense on stablecoins. That’s why you see a lot of banks using them. That’s why Facebook is getting into the game because you can just send these back and forth easy to track. You can settle up later. It’s faster. It’s efficient. There’s a lot of good behind that.
Daniel Creech: There’s nothing new under the sun here in finance, Frank. A big seller of this caused the whole damn thing to crash. Algos in. But this stable coin was not backed one to one. It was just leveraged. It had 75 to maybe 50% of US dollars. Then, it had a percentage of this other coin, and this coin is minted and destroyed based on blah, blah, blah, blah. The easy solution here is there’s a lot of leverage here. And kudos, here’s where I’ll give. Kudos to Mark Cuban. He did a quick Q&A with the Block Crypto website and just said, “Hey, I didn’t look into it enough. It was greedy. I still like decentralized finance. I’m still a backer of the space in general.”
Daniel Creech: But he said, “I just got greedy.” And how greedy, Frank? I don’t know about Cuban. But this was in Coindesk, article from Coindesk. You are earning two to 5% interest a day. Now, until it collapses, that’s damn good return.
Frank Curzio: Yeah. But now, you’re looking at a lot of companies because I mean you’re looking at tons of companies, tons across the board. Tons. I’ve even interviewed some of these companies that same thing. They tell you how dangerous it is. But they’ll provide 4%, 5%, sometimes 12%, stake your tokens. You earn. That’s all good. Again, when everyone’s making money, it’s fine. But what’s going to happen now, because you’re not going to get that and leverage. Again, we saw that in 2008, which is why the market crashed. It didn’t crash of it’s subprime. It was the leveraging of subprime that crash because subprimare only accounted for 5% of the market or whatever it was, even less than that in the housing loans.
Frank Curzio: But it crashed because everyone was fully leveraged too. So, when you’re leveraging something, and you’re forced to sell, I mean the thing with Cuban, yes, okay, fine. He went on. He explained, “I didn’t do enough research.” But that’s telling, right? I mean when you’re 17-year-old-
Daniel Creech: But that’s okay.
Frank Curzio: And you come home and say, Hey, dad. Buy Dogecoin. It’s great.” Why? It’s just going higher. And then, you’re like, “Wow. My son’s an idiot because he tells me it was going higher at six cents, and it’s 70 cents. And I could have bought three houses.” You know what? Something’s going to blow up. I mean it’s just a matter of time. But the funny thing, and it’s ironic that Mark Cuban is now like, “We need more regulation on this.”
Daniel Creech: Yeah. That’s-
Frank Curzio: You… That’s out there on social media platforms touting something you know nothing about where people are following you in because you’re a billionaire, and they think that you did the homework on it. That’s why people follow us in our recommendations because, yeah, we show the videos. We’re doing the work on it. If we’re wrong, we say we’re wrong. We take our losses. We move on. But you know we’re doing the work on it. He’s admit “I didn’t do the work.” If you didn’t do the work, why the fuck are you promoting it everywhere? Why are you promoting it because these people are so influential?
Daniel Creech: Well, at least he admits it. Yeah.
Frank Curzio: And I know everybody has to make their own decisions. I get it. But people are widely influenced all the time just by the media, by everything. It’s very easy to influence people, and you’re influencing people to buy something you didn’t do the homework on. And to me, that’s sad. I like Cuban. I don’t have anything against them. Again, people have their strong opinions for and against him. But that pissed me off a lot.
Frank Curzio: Now, you want regulation. Now, you want more regulation. And again when you have these people calling it, but I think you’re the last person to say more regulation when you’re the one that on all your social media platforms promoting the hell out of this. A lot of people followed you in. They all stole money.
Daniel Creech: Absolutely. Yeah. And that’s a bummer. Listen, he’s got a lot of winners. We’ll get to Dogecoin in a minute because I know you’re still fired up about that. Yeah. That’s my biggest problem is. I don’t mind that you were late. I don’t mind you didn’t do the homework. I don’t mind you just, “Hey, this is going up. So, let’s play the game and gamble.” You lose everything. Lessons learned. The problem I have is now you want more regulation outside of just simple disclosures.
Daniel Creech: There’s enough disclosures here right away. You know it’s not fully backed by a currency, and you know it’s a blend if you’ve read anything, or you know now maybe they didn’t… Maybe, it wasn’t disclosed. I find a hard time believing that. But that’s really all you need you. And listen, if you follow somebody in blindly, even us, we’re going to be wrong at times. So, there’s nothing wrong about that.
Daniel Creech: And the stream regulation, that bugs me because that is the last thing we need. We don’t need more of any of that. We just need to follow the rules like disclosures that we currently already have and move on. Now, the big difference here is… Was it Ellen that he went on and talked about Dogecoin? I think it was Ellen, Ellen’s talk show.
Frank Curzio: Oh, yeah. Okay. I don’t know.
Daniel Creech: And let’s go back and forth on this because I know this fires you up. So, what I liked about it is he covered his tracks because what he said was essentially I don’t have the direct quote. But he said, “Hey, Dogecoin is better than a lottery ticket.” I think that’s how he framed it, and that’s exactly true. It’s very hard to argue that. Why? Because the lottery ticket has an expiration date. Okay. They’re going to make that drawing on, boom, or you scratch this thing off and boom, you win or lose. Dogecoin which to your point lost, I don’t know how many billions of dollars, the damn thing’s over 20 cents now. It’s up 20% in 24 hours. It still has a $31 billion market.
Daniel Creech: So, in essence, it’s a lottery ticket without an expiration date unless it completely goes to zero which could happen. But I don’t know if it’s going to go to zero. I mean how does it go to zero? Does people just quit creating it and quit using it all of a sudden? If you think about what has to happen for it to go to zero?
Frank Curzio: And maybe that’s to zero. But you have to realize that this… So, if you’re on Microsoft and Microsoft just hit, I believe, a $2 trillion valuation on a few stock. It’s at 52-week high, not one of the few. NASDAQ’s at all-time highs. But Microsoft has a limited amount of shares. But if they constantly keep issuing and diluting this shit they share this unlimited amount of shares, there’s an unlimited amount of tokens of Dogecoins. So, they’re just going to keep printing them and printing them and printing them. It kind of defeats the purpose of crypto. You want to be against printing.
Frank Curzio: That’s why Bitcoin is so popular. There’s only 21 million. So, this is totally different. This is totally, totally different. So, this is something where they just keep printing, printing, and printing. And so, everyone’s like, “Okay.” And you dilute the shit out of it, and it goes lower and lower and lower, and it goes back down. But my biggest thing about Dogecoin isn’t so much like, “Hey, you buy shitty assets and they go higher.” I’ve seen in stocks all the time, and that’s fine.
Frank Curzio: I mean, I saw Plug Power go. I mean somebody just downgraded to a whole based on valuation. And I have access to the report, and people don’t know they lowered their target from like 69 to 30. So, in the meantime, you try to get… I see it. I see people invest in shitty things all the time.
Frank Curzio: The thing for me, Daniel, which pisses me off with Dogecoin is that I’m looking at something that is perfectly fine in today’s world where anyone can go there and trade that. I’ll go open up the account of Coinbase. It’ll take you 10 minutes. Go through all the KYC, AML checks. Buy a token that you know was created as a bullshit token that has just a limited supply, keeps dumping, dumping, dumping more of these on the market. And nobody says anything.
Frank Curzio: And, yet, when we have something where we’re spending a ton of money to order our financials, give people equity stake, pay a dividend, and do the right thing, why is our part of the industry having trouble getting up and going which again that’s changing now and I’m very, very excited? But why has it taken so long. It’s taken so long because everything has gone higher, and nobody cares, whatever. Just like I said with SPACs earlier, I said SPACs, the retail investor, you need someone to basically fuck at the end. And once you do that, that’s fine.
Frank Curzio: Now, retail investors are realizing like, “Okay. I’m not going to buy something that goes up to 15, 16 when they didn’t even tell you or announce who they’re going to buy.” These things are going to 10, nine, eight. And now, they have to disclose all the BS deals that they’re doing these pipe deals. Again, you need someone at the end to screw. And once you screw them, unfortunately, let me give you this example thing.
Frank Curzio: When did the SEC and everybody else go after Madoff? When? When everyone lost money, and they got killed. There was people everywhere warning them. There was people warning them telling us this is a fraud. It’s a fraud. It’s a fraud. We only investigate it when you get destroyed. That’s when they investigate. When you get destroyed. Now, people are getting destroyed a lot of this stuff. Now, you’re going to see more regulation coming again. These are securities trading as they’re not securities. When they come out with this regulation, it’s going to be tough for a lot of these things, not Bitcoin, not Litecoin, not Ethereum, things like that, those definitely deem utilities.
Frank Curzio: But these other things, man, it’s crazy. It is great, they have no utility functions. But that’s why I get so pissed at that, it’s more about the industry where, listen, I hope you all, if you buy Doge, I hope you make a million percent. I hope everybody makes money on it. But that’s my emotion comes in where, how could you let this piece of shit trade where everyone could buy it, and we’re doing the right thing, and we’re having trouble. It’s taking so long for this industry to develop, which again, is changing Morgan Stanley announcement, and all this. And great stuff from Hester. But that’s really pissing me off. But moving forward, I mean it’s collapsing, Bitcoin. You’re laughing right now, right?
Daniel Creech: Well, I just love the Dogecoin thing. I’m sorry.
Frank Curzio: No, no. It always gets me fired up. But that’s how I get fired up. It’s not that, “Hey, I wish I owned it.” But no. I don’t care. Me, it’s about everything putting everything that I know about this industry, my life into this saying, “This is going to be great for everybody.” And then, I’m looking at something that’s not really great for everybody. That’s where the emotion comes in. But you look at Bitcoin come down tremendously, and it’s so funny because there’s so many of the bears.
Frank Curzio: And the Peter Schiffs come out and say, “Oh, I told you so,” and taking a victory lap, yeah, even though he’s been calling for Bitcoin to go to zero since 2017. Again, it sucks when you like to be popular and do videos, and you can bring that shit up and everyone can see it. But yeah. And I think he just forgets. I don’t know if it’s on purpose or you forget. I’ve dealt with a lot of people they know that they’re wrong, and they don’t remember ever being wrong which I guess is really, really cool. I think that might be it. But he’s so wrong on this.
Frank Curzio: So, immediately, it’s almost like a great indicator where, again, he’s out in full force at 29, broke 28. And then, immediately, this thing took off. I mean what’s to make of that? I mean was it 34,000? It’s a 20% move to the upside off its lows.
Daniel Creech: Yeah. And to be very boring for regular listeners, somebody is massively buying out there. We know that. I saw on CNBC this morning that I believe ARK Funds through Cathie Wood bought a lot of shares or they put a lot of money in the grayscale Bitcoin trust. I think she bought a lot more Coinbase. So, that’s interesting. But there’s big players. My guess is its institutional players and/or hedge funds kind of trading this thing around.
Daniel Creech: But what’s hilarious to me about the whole bear thesis and again Bitcoin is just doing a remarkable tremendous job of pissing everybody off. And as somebody who’s entertained by this, I have to say it’s amazing. If you’re the Peter Schiffs of the world or your anti-Bitcoin or anti-cryptocurrency, that’s fine. But it cracks me up how, okay, so, it drops from 60 to 30 which is not new in Bitcoin or cryptos.
Daniel Creech: And trust me, I say that if it sounds easy, that’s because I’m attempting to be professional. It’s not easy watching stuff drop 50% when you hold a little bit of it or a lot of it. So, I don’t mean it to sound like, “Oh, that’s no big deal.” My point is that if it’s done that all the time and it keeps stabilizing and now it’s up to 34, 35, 000, how can you take a victory lap when it gets cut in half? And then, if it rallies 20% 24 hours, not even acknowledge that, that’s what I like. So, to your point, just it’s like an edited version of reality.
Daniel Creech: It’s like, “Oh, no. That didn’t happen.” And that’s fine. But listen, just like Mark Cuban or anybody else whoever you’re following, know why you’re following them and do your own due diligence at least a little bit, or don’t complain if whoever you just blindly follow loses your money. I mean it all comes down to a decision that you make to buy or sell something, and that’s the way it is.
Frank Curzio: Who do you trust. Yeah.
Daniel Creech: Yeah. That’s okay. It just cracks me up how influential it is and how it upsets so many popular opinion, and they’re brilliant for using it as a marketing thing. I mean he’s-
Frank Curzio: He’s just a great marketer.
Daniel Creech: Yeah. Absolutely.
Frank Curzio: He’s a great marketer. He’s a smart guy.
Daniel Creech: Absolutely.
Frank Curzio: He does how to make money off of his thesis, and that’s-
Daniel Creech: Well, he does that by marketing.
Frank Curzio: He knows how to make himself money. He makes himself a fortune. But I would say almost anyone that follows him, I mean his underperforming charges 5% fees prioritizing you. Again, I say this on Twitter. He bashes people on Twitter. So, I open the door and come on my podcast. I went back and forth a few times on Twitter. But again, he’s a great marketer. I’ll give him that. He’s very smart when it comes to marketing, gets a lot of people on there.
Frank Curzio: But it’s funny because all the people who trash Bitcoin, I would say I’m using all. I like to use extreme terms. Actually, mostly, I hate using extreme terms. But it sounds better saying all. But all these people are bashing it a lot. What do they love? Gold. They’re the biggest people who love gold. And I still can’t figure this out, Dan. You got to explain this to me. This isn’t going to be a rant. But just hear me out because I can’t figure out why Bitcoiners and gold bugs each other so much. They both believe the government sucks, and they’re going to continue to print money forever.
Frank Curzio: They both believe these assets are stores of value, most of these people. And most important, they’re both hollers. So, hold forever, which by the way, I always criticize gold bugs for that because I cover all industries. Look, I speak at Vancouver conferences all the time that that’s pretty much the mining capital of the world. I have great contacts and biggest companies.
Frank Curzio: We’ve got great recommendations in there. But I do other things and. But yet, the people I know in Vancouver, that’s all they do. And I always criticize gold bugs for just saying, “Hey, I’m holding on, and gold’s going hot,” not matter what the conditions are. Even if the Fed’s pushing rates to zero, and we had no inflation, which we have for a while from, whatever, 2010, ’11, ’12, ’13, ’14, whatever, which makes stocks extremely attractive than putting your money into gold or real interest rates were positive not at levels they’re so negative that at 1970 levels because inflation is going higher, and they’re keeping interest rates low.
Frank Curzio: But when interest rates are positive to where you can park your money in treasuries and make a higher return, so, gold loses store value. But Bitcoin hobblers, I’ll say the same thing to you as I said to gold bugs, and this is about you making more money for yourselves, making more money for your family, and you have to understand opportunity cost because if you’re looking at gold bugs, they’re all in holding gold from late 2011 through 2019, okay. And where did gold go? 1800 to 1200. So, 33% pullback. Now, it’s 1900, whatever, around 18 today. Yeah. It went down a little bit further.
Frank Curzio: But now, you’re looking at, okay, it came back a little bit. But still, where’s your money from 2011 to today? You basically flat. That’s a very big period. In the meantime, the same time from, S&P 500 surged from 1250 to 2800. That’s 45%, and that’s a massive difference right now. I’m not saying, “Okay. Well, you should have sold at the top.” No. But what I am saying is not so much trading back and forth. But you’re looking at gold. Interest rates were zero. Fed continued to buy bonds, and we had huge corporate tax reform in 2017 which eventually passed 2018.
Frank Curzio: But stocks roared higher in 2017 were all this stuff that was getting improved. And just the conditions for owning stocks was absolutely perfect, and you’re like a lot of these guys just like, “Don’t own stocks. You got to own gold.” And so, they won’t even own gold stocks. But even gold stocks underperformed because, again, gold prices gone down just. So, they basically missed out of massive gains by being stubborn.
Frank Curzio: Now, Bitcoin in December, prices started to surge past their old highs 19,000. I won’t say there wasn’t one because there’s a few. But even the most bullish Bitcoin bugs did not see Bitcoin going from 20,000 even from 18, 19,000 December to 60,000 inside of three months. Okay. You forecast for 50,000 at the end of the year. 100,000 end of the year, 500,000 by the Winkelvoss twins in seven to 10. Most of longer term targets 12 months out of further.
Frank Curzio: Nobody would say, “Hey, in three months, this is going to 60K.” Nobody. So, it went to 60K. And what happened? The haulers were like, “Hey, I’m holding on to it anyway. I’m holding it on. And I get that commitment.” I actually appreciate that dedication. But in reality, it’s just not smart. And there should be always a level where at least you could sell a little bit of your investment, 25, 50% of your position and while letting the rest rise especially if you’re right on your thesis especially with Bitcoin where governments are mostly…
Frank Curzio: Again, we saw what China did, and that pushed the market down 29,000. What happens if the US comes out and doesn’t allow Bitcoin payments through banks all of a sudden? I mean that’s going to destroy this industry. People like, “Whoa, I find ways to buy.” Yeah. The Bitcoin you’ll find ways. You’re basically eliminating any institutions coming into Bitcoin now. Could that happen? I don’t think so.
Frank Curzio: I own Bitcoin. I own gold. But the fact is there should be a price where you should look at it and be like, “Okay. I’m going to take some off the table because I was right.” I mean in order for Bitcoin to go to 100, you need institutions to come in. If you don’t believe that, you’re naïve or just stupid. You don’t understand numbers. You need institutions to come in or for Bitcoin to go higher.
Frank Curzio: So, governments are a big deal. We know governments look at China, going crazy. So, there’s a chance that could happen. But my point is there’s a time to own gold which I do right now. This is time to own Bitcoin which I do right now. But going all-in and hauling, Dan, full position an asset which accounts for most of your net worth forever, it’s just not a smart strategy, and you could point to, “Oh, look at Bill Gates.” And yeah, there’s some examples where most people know. I mean imagine selling 25% of your Bitcoin at 50 grand. So, you missed the 15% move higher. So, you sold it on the way up, not in the way down. Sold in the way up. It goes even higher. You’re like, “Oh, now, it’s what? 34,000.” I mean it was 29, 28.
Frank Curzio: I mean it wouldn’t be great if you take some of that and bought back into it? Add to your Bitcoin position on pull back because that’s what the great investors do. They take big positions and assets that nobody wants or are super distressed, massive positions. And with so many Bitcoins is in 2016 or early 2017 when people making fun of them, now who’s making fun of who which is amazing. Great for them. But when it surges to a price that you never thought it was going to get to, and you don’t take some off the table because you’re just saying, “Hey, I’m a hauler. We’re going to hold this forever.” To me, sell some and maybe you see another crypto DeFi play, NFT play, whatever that you put more money into it. To me, that strategy is just, I don’t know, to hold it on for dear life.
Frank Curzio: For so many Bitcoiners who’ve made so much money, and again, it’s down 50%. Maybe, it retests the highs. But it’s not a smart strategy or something in 25 years. It’s okay to take a little bit off the table especially when you’re right, especially when it’s at a price that you never thought it was going to be at, and that’s what I don’t understand. Maybe, it’s me.
Daniel Creech: That’s your simple question?
Frank Curzio: That’s it. But getting back to the gold bugs and Bitcoins hate each other so much when they have so much in common?
Daniel Creech: Well, ell this is my opinion. So, there’s got to be some jealousy there. And let me use one of the greatest movie series of all-time except the third one, Godfather. Okay. If you’re Fredo and I’m Michael Corleone, the sequence is you’re going to take over the family. Well, what happened? That ain’t how it worked. There’s that great scene where he says, “That’s not how pop wanted it. That’s how I wanted it.” So, that’s great.
Daniel Creech: If you’re gold, you have everything in your favor going for you. You have the longest financial history to record showing you that you are a store of value, you can withstand everything and anything. People view you once you dig you up, hold you, blah, blah, blah. And then, comes Bitcoin. And it would be very difficult to think, “Man, gold should be trading 10 times higher than it is right now.” And it possibly would be. I have no doubt it’d be a lot higher if it weren’t for Bitcoin right now
Daniel Creech: And that would just bug the hell out of you if you were all in on that, and you’re a principal guy saying, “Hey, I get the argument. I don’t think it’s enough to stay away. And I don’t think it’s where the argument ends.” But I get the thing where you’re sewing on gold, and you have so much history and proof behind it and saying, “Hey, I can hold this in my hand.” If the internet goes out, your Bitcoin screwed. Yeah.
Daniel Creech: But if we get to the point where you’re bartering with gold, we’re in a real terrible world, and you’re counting down weeks and months now because you also better have ammo and food and stuff like that to go along with if you’re paying for things in gold. So, there’s got to be some jealousy, in my opinion, on that because it should be king. And Bitcoin is no doubt taking over the limelight. It’s no doubt taking over in the percentage returns. I mean, it’s absolutely gone gangbusters.
Daniel Creech: So, I think that that’s crazy. Having said that, this whole argument and gold bugs and Bitcoin bugs going at each other is just entertaining. The world’s big enough for both. You ought to own both in my opinion. And, yeah, I get the jealousy side though. But big deal. Buy Bitcoin. And I guarantee a lot of gold bugs have Bitcoin. They just would never admit it.
Frank Curzio: I tell you with the gold bugs, they have a big problem because going forward, the next generation will never own gold.
Daniel Creech: Use the word. Don’t say that.
Frank Curzio: But it’s not exciting. Digital is much more exciting.
Daniel Creech: But it could be very quickly. If gold goes to 2000, 2500, 5000, your gold stocks are going to go up 500%. That’s exciting, and that’ll attract more people and all that.
Frank Curzio: I think that you’re not going to see. I mean for gold to go up that high, I would think, maybe not. I mean Bitcoin went a lot higher. But I don’t know if Bitcoin will follow because of what the Fed’s doing, stuff like that, money printing. But just the younger generation, look, what’s happening to that generation? They email a lot. They call a lot. You see them everywhere, social media blogs and stuff. There has to be a level of excitement, and they’re listening right now to the biggest influential people in Bitcoin, and they’re defending themselves against the Peter Schiffs and gold telling them that anyone owns Bitcoin is an idiot.
Frank Curzio: And when you see that, it provides more passion. It’s like a teenager dating a guy you don’t want to date. Don’t ever tell her she can’t date him because he’s going to marry him. I mean you don’t want to say no. The more you say no, the more you want to do it. It’s just the way it is. But that younger generation, yeah. Look, there is a place for gold again. I think the way the market is right now, Daniel, gold’s going to go a lot and lot higher and position myself, also into cryptos.
Frank Curzio: And I have pretty decent sized positions in both. But, yeah, it’s just surprising that everyone just can’t get along. That’s why I like having Frank Holmes on because he’s in both industries, and you could be both. You could be long both, and it’s okay. So, anyway. So, Dan, we say this a lot that this is being broadcasted, and we do videos which are really, really cool, getting very popular with a YouTube channel. But I’m going to tell you something that I did that’s going to make everybody come on and watch this instead of listening to it, not that I want you to because I like iTunes, and it’s awesome. But my daughter, she’s been bugging me since father’s day to do a TikTok video with her dance.
Daniel Creech: Oh nice.
Frank Curzio: So, I agreed. And I did it last night.
Daniel Creech: Oh boy.
Frank Curzio: If you want to laugh.
Daniel Creech: Yeah. You’re going to post that?
Frank Curzio: It will be entertaining. Any of you that have daughters out there-
Daniel Creech: Oldest or youngest? Who’d you do it with?
Frank Curzio: Oldest.
Daniel Creech: Oldest. Okay.
Frank Curzio: Yeah. But any of you have kids out there you understand. You just did that walk of shame just to make them proud and stuff like that, and she was very exciting and made a laugh at my expense, which could be very-
Daniel Creech: So, where is this going?
Frank Curzio: I’m going to put this on our Curzio Research YouTube page. So, this is going to be up there if you’re watching this, and it’s probably about 30 seconds. Thank God. It’s only 30 seconds.
Daniel Creech: It’s a long time though.
Frank Curzio: But, hey, 49 dancing, it doesn’t get better than that. I’m loving life, hanging with my daughter. So, just think of it that way because after you see it, you’re probably going to send me something at my email, firstname.lastname@example.org and make fun of me. But anyone that has kids understands this. But we’ll make that fight.
Frank Curzio: And also, if you’re going to watch, you’re going to get to see… It took me about 47 years. I’m starting to grow a little bit of a beard.
Daniel Creech: Yeah. I noticed that the other the day.
Frank Curzio: The gray comes in. I don’t know. I don’t know. I’m not crazy about it. But I was just like, “Yeah. I didn’t feel like shaving,” next thing I know. But seriously, I could never grow a beard. Now, it’s coming in a little bit. And everyone’s like saying, “Hey, you’re going to grow it.” I’m like, “I don’t know. We’ll see.”
Daniel Creech: Why did you decide to grow a beard? I’m lazy. I didn’t feel like shaving.
Frank Curzio: Yeah. I just didn’t feel like shaving. I’m like, “All right.” Then, a week went by, and it’s week and a half. So, now it’s coming in. So, you get to see my scruffy ugly face if you want. But the last thing here I’m going to mention is the US Open. We had our predictions. Look, day one, I think, both of you guys were on the leaderboard. But what a US Open? Listen, I was like, “Jon Rahm was my guy.” And I got lucky the guy. I just loved-
Daniel Creech: He also took the favorite. Let’s play that out. Took favorite-
Frank Curzio: Yeah. But how often is a favorite win? How often is a favorite win?
Daniel Creech: I’m giving you out.
Frank Curzio: Right. So, seriously, and he never won a major before.
Daniel Creech: That’s true. That was his first. That was great to see, when their first is pretty sweet.
Frank Curzio: I love it. It’s so different golf because he took it. He won it. No questions. He birdie 17, birdie 18, which is awesome to see when I’m watching that game people saying that’s a classic. It’s a classic when you have three baskets in overtime and the last shot’s an air ball. It’s not a classic when you have Kyrie Irving one of the best players on the team injured. It’s not a classic. No, that’s not a classic.
Frank Curzio: So, when I see two teams playing, and they’re playing not to win like both of those teams, it was terrible for me to watch and people like, “Oh, it’s a classic.” That Nets Milwaukee is not a classic. But watching this was classic. Just seeing a guy it’s going out there, nobody, I don’t think birdie 17 and 18. Maybe, a few people. But to do that under that pressure and to win, I mean that was incredible and, yes, the surprises with Chambeau. I love the fact you just like F it and have him lose. And I’m going to go down in flame. I think that people like that. It’s kind of like a John Daly thing.
Daniel Creech: Well, I don’t know.
Frank Curzio: And also Koepka surprised that. I mean he was up there just like the last day. But I think he’s almost there. I think he’s almost there.
Daniel Creech: I hope so. Him and Chambeau, that feud that’s hilarious. It just shows you there’s nothing new under the sun, people. It’s just like-
Frank Curzio: Did you see the latest video on it?
Daniel Creech: No. I didn’t.
Frank Curzio: Oh my god. Koepka is like, “We’re not going to have dinner anytime sooner.”
Daniel Creech: I did see that.
Frank Curzio: I love it. I love it because-
Daniel Creech: Hey, not it’s not like this is a good teachable moment too because I liked how Koepka was very honest. For those of you non-golfers, two rich wonderful professional golfers don’t like each other and the media is playing it up, and they’re having fun with it too. So, that’s good. That’s the background story. The funny thing is that there’s nothing wrong. They’re not being crazy towards one another on camera. They’re not threatening each other. Koepka I just like, “Yeah, we just don’t like each other.” I mean that’s fine.
Daniel Creech: How many billions of people in the world? Not everybody gets alone. Not everybody’s personality meshes well. It’s okay not to care for somebody. You don’t need to be a prick to them. You don’t need to be-
Frank Curzio: Everybody likes you, you’re being fake to yourself.
Daniel Creech: Well, yeah. So, it’s just good to see they don’t need to… I hope it doesn’t get WWE dramatized, and they don’t play it up too much. But I just love the simpleness of, yeah, not everybody gets along. That guy gets on my nerves. I get on his nerves or her nerves or whatever. But it is entertaining. I love golf. That’s really the only professional sport I follow, that hockey, the hockey playoffs.
Frank Curzio: Hockey playoffs.
Daniel Creech: We’re going all along here. But if you’re not watching the hockey playoffs, you ought to because it’s exciting. Those guys are just flying around. It’s hilarious.
Frank Curzio: They’re playing says should be a really good game hopefully on this. I’ll just take this game… And on to game seven. I do. Even though Tampa Bay hasn’t lost a game after losing one game, they haven’t lost two in a row and playoffs. I think they have the all-time record in NHL history. But I think if they come back after that beating and win, it’s going to put a lot of pressure on them in game seven. I think they could take. It should be interesting. Let’s see and Vegas and Montreal on the other side.
Frank Curzio: But, Dan, thanks so much for coming in. Yeah. A lot of things happening. Bitcoin is the main story, security tokens too. Guys very, very excited about the industry. But, Dan, thanks for breaking down the news. Man, I really appreciate it.
Daniel Creech: Yeah. Always fun. Cheers.
Frank Curzio: All right, buddy. So, last thing here, guys. Look, we’re looking for a sponsor for Wall Street Unplugged. We have a very, very great reach. Several companies reach out. We’re using advertising agencies. But some of the companies they were giving us. I’m not going to put any company in front of you. I don’t care how much they pay. For me, I’m only doing that for companies that I believe in. So, there’s a lot of you that own your own companies. A lot have reached out in the past. And I said, “You know what? Let’s just go to our own list and see.”
Frank Curzio: But we are looking for some of the sponsor Wall Street Unplugged. We are getting a lot of names in. But for me, it’s all about having incredible businesses, and those sponsors and companies that you believe in. So, if that’s you, send me an email email@example.com. That’s firstname.lastname@example.org. Other than, that everything else is really great, having fun. After this podcast, I have to leave to drive two hours to Savannah because my daughter has a big competition. She’s doing great in gymnastics, my youngest daughter at eight in the morning on a Thursday.
Frank Curzio: So, I guess nobody works in Georgia either. I don’t get that. 8:00 Thursday. So, I’m leaving after this, going there. And I’m probably going to go back in the afternoon and do some work to my Frankly Speaking podcast which only goes out to anyone who is a paid subscriber to our services. They get that Friday Q&A podcast, get lots of great, great reviews for that. Only goes out for people who paid. It doesn’t matter what product you own. You could own one for $4 a month or the one for $5,000 a year. You get access to that podcast and get to ask me questions personally which is really cool.
Frank Curzio: So, guys, any questions, comments, whatever, feel free to email email@example.com. That’s it for me. Thanks so much for listening. I appreciate all the support as always. And I’ll see you guys in seven days. 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.
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