It’s not everyday that you get to talk about cryptocurrency regulations with a former NASDAQ Vice-Chairman who also happens to do advisory work in the blockchain industry. And even if such an event happens, you’d expect to get reactions which resemble the press statements of Jamie Dimon or Nouriel Roubini.
However, David Weild IV is surprisingly different: enthusiastic about cryptocurrencies, positive about the impact that the blockchain can have on finance, yet simultaneously cautious about regulations. Throughout his 98-minute interview, Mr. Weild (who insisted to be called David) has talked about the SEC in relation to possible Bitcoin regulations, American politics (mostly in terms of how differently the Democrats and the Republicans approach regulatory policies for new and disruptive technologies), and some of his fascinating professional experiences working with tech companies like nVidia.
In between the formal responses, you will also find an amusing Steve Jobs story, as well as accounts on various meetings with prominent figures in finance and American politics. David Weild IV has proven that there are finance experts who don’t necessarily wear their suit at all times and act in a manner that youngsters would classify or square or uncool. Though his understanding of specific blockchain affairs isn’t very polished yet, he has a clear view on the regulatory processes and his knowledge can certainly be used by those seeking to submit another ETF proposal.
Crypto Insider is excited to present to you this exclusive interview, and by watching it or reading the transcript you’re guaranteed to learn something new and even understand regulation a little better than before.
Full transcript of David Weild IV interview with Crypto Insider’s Vlad Costea:
VLAD COSTEA: Hello, this is Vlad and today I am going to be interviewing David Weild IV, who is a stock market expert and he served as vice chairman of NASDAQ, but he also helps draft legislation in the US Congress, and he is considered to be the father of the JOBs during the Obama administration in 2012, was it?
DAVID WEILD: Yeah, it was April 5th 2012, that it was signed into law and I was in the Rose garden of the White house where the signing was done, it was a lot of fun.
VLAD COSTEA: Okay. So, the first question which I am going to ask you is about Bitcoin and what you think about it or maybe what you thought about it while you were still at NASDAQ.
DAVID WEILD: I think Bitcoin actually came after my time in NASDAQ, and I think my impression of it was actually pretty innovative idea, but I also was more concerned about how Bitcoin would be abused from money laundering purposes and the like. We all know an investment bank called Wield and co in the United States, and I get very concerned because in cyber wallets, you can’t necessarily get a copy of a statement, to monitor what people are actually doing, I think that was one of sort of the advantages, at least to some people on Bitcoin, and obviously I was a little bit concerned about how it would be abused for drug trafficking, financing of terrorism and things like that.
So, I think that governmental entities are starting to catch up, and I think they are on the chase and they’ve developed an increasing array of technologies to be able to sort of track obviously, there are some implications to tax evasion as well. But in the end, I think cybercurrencies have some utilities, they can certainly help with things like micro payments and the like and facilitating payments in a wildly distributed environment. So, I think that they are here to stay.
VLAD COSTEA: I have asked this specific question because until maybe a year or maybe 2 years ago, there was this rhetoric on Wall Street that Bitcoin is a Ponzi scheme, a pyramid scheme… and you still have people like Nouriel Roubini or Stiglitz who is a Nobel Laureate in Economics, and they seem to have these views which… maybe they are not very well informed in the sense that they don’t really understand how blockchain works, they just promote maybe a shallow perspective on what they understand of it.
DAVID WEILD: Yeah, I think that they over-think it a little bit, I think that currency, whether they are cybercurrencies or Fiat currencies, they have value because people believe they have value, right? And you know, if you want to use the US Dollar, and you believe it has value, you are going to hold and store US Dollars, if you believe that Bitcoin has value, you may hold and store Bitcoin. And I think that it served a function, clearly the basic thesis that you couldn’t print more Bitcoin, flood the market with the supply, so consequently, it might become more stable, store value… I mean, if people believe that, then Bitcoin will have value.
There is also this whole issue of custody which hasn’t quite really evolved in United States, which is important for tokens, securities as well, and I think that there is a lot of money on the side line, still it doesn’t participate in things like cryptocurrencies and tokens or securities yet, because they have to figure out, how do you store stuff and avoid the risk of loss, right? You don’t want to lose your… if you have Bitcoin out of computer, and when you lose your computer, you lose your Bitcoin. So, I think that for professional money that really wants to in many instances, and is acting as a fiduciary and representing the interest of other people, I think that’s a non-starter. So, I think as soon as figure out sort of safer forms of custody, and I think you will start to see larger amounts of professional money move into this kind of assay class, I mean, it doesn’t take a lot to cause Bitcoin or tokens or securities to appreciate in value.
I do think that tokens and securities are a completely different thing, and I think people will look at the underlying assets of those particular situations and evaluate them just the way that they would evaluate any kind of security. And the underlying entity and its growth rate, whether or not you do not have a dividend associated with it, revenue strip. I think that people would just start to ask the questions; why should I hold something as a token, versus a traditional security and many times, the answer is going to be either there are a lot of backend processes that are associated, so it is going to facilitate trades transacting, ownership, a variety of things, multi-jurisdiction, inter-jurisdictional compliance in the case of private markets and so on and so forth.
VLAD COSTEA: I have been waiting to ask you this question because I wrote an article about it. But there was this college kid, basically bought cryptocurrencies at a low price in 2017, and by the end of the year, 1 Bitcoin was $20,000 and all the coins were just at the top. His investment was worth I guess $800,000, but he invested $2,000, and he engaged in some trades and he got to that amount.
But he never cashed out, he is still holding the coins, but he received… I am not sure what it is called, like a tax file from IRS, and asked him to pay $400,000, which is half of the maximum amount which his investment was worth, and that’s just because he did some trades and the legislation of the state of California understands that each Cryptocurrency trade is something which should be taxed like a taxable event. And to some, it felt outrageous, because he never took the money out, it is like buying stocks and just trading them, he just held stocks of cryptocurrencies, he never cashed out in US Dollars, but at the same time, he has a huge debt in US Dollars.
DAVID WEILD: Well, I think if he bought it and held it, I don’t think that he’s… I am not a tax attorney, that would be a taxable event, I mean if he bought it and sold it, and realized the gain, then there probably should be… and I don’t think if there is anything I am aware of in US tax code, where you buy something, and you are subject to a tax on it before you actually sell it, and I don’t know what the theory would be under which the IRS would try to impose a tax without him having realized profit on it. But sometimes, governmental entities try and make a point and I hope he has good counsel. But I suspect that if he is a kid though and it goes to court, that most judges would smile kindly on him, and so I think it makes probably better headlines than it is an actual problem in fact.
VLAD COSTEA: He actually posted his story on Reddit, and it made the rounds on… we are already in the cryptocurrency community, just because some people got worried and they said, okay, I am also from California, I have also engaged in cryptocurrency trades, so does it mean that I should expect to get the same kind of invoice to pay to the IRS, a high amount which is evaluated according to the top, not to the actual holdings, or how much they are worth right now, because he was basically saying my life is ruined because I have this huge debt and there is no way I can ever pay it.
DAVID WEILD: Yeah, but again, I don’t know the specifics, I haven’t read that particular article, I don’t know the facts and circumstances, I mean, I thought that the bigger issue with cryptocurrency from a tax standpoint was whether or not you were going to be taxed on individual trades, and which I had fractional cost to it… I don’t know that when you use currency typically, I don’t think you receive it, you buy it, you sell it, you don’t necessary unless you earn it, I don’t know that you get taxed on it.
But this is the bigger broader problem, with this whole area, including initial coin offering, and we in our investment bank, literally 3 months before SEC chair; Jay Clayton came out and said that he hadn’t seen a token, that he didn’t think… or initial coin offering that he didn’t think was a securities offering. We had told everybody in our investment bank that we were going to treat them as securities offering, because it was fairly clear to us, when I was reading white papers that they really didn’t do an adequate, anywhere near an adequate job of disclosing in those white papers what people were buying, I mean, describing what they were buying and what the risks were associated with them, there was no risk factor sections.
And I kind of read a bunch of them and I really didn’t understand them, and I have been doing this for a long time, I was in a top 10 investment bank in the United States many years ago, I ran investment banking, I ran equity capital markets, I priced a thousand public equity offerings, some of the notable ones, I took seulji in public, I did inequity offering when it was a hundred million dollars, now it is a 60 billion dollar company, I worked in Nvidia’s IPO for Jensen Wang, which was the 3-D chip semi-conductor company that is used is gaming, and a wide array of things, some very large energy companies, companies that have done incredibly well, I did an early deal for receptor technology in life sciences that was ultimately bought by Amgen and made Amgen from what I understand.
So, when I was at NASDAQ, I dealt with… I talked with Steve Jobs, I joked with people that I am the reason why the iPhone has email on it, because believe it or not, Steve called me, I used to joke that I was the complaint department for Steve, and he called me up and he said, I have just discovered that NASDAQ is standardized on Dell laptops, Dell computers, and if you don’t move over to Mac immediately, I am moving my listing of Apple over to New York stock exchange, I am leaving NASDAQ, and I said, Steve, I said we love the Mac, it is in the graphics department, but we can’t use it with the sales and service side, because they are out, travelling a lot and it doesn’t integrate with Blackberry and everybody is using e-mail on Blackberries. He didn’t know that, he literally didn’t know that. It just shows you that people that are absolutely brilliant and successful sometimes by sheer force of perseverance, staying with something, they don’t know everything, they hang around, and there is a basketball analogy I like to use, which is, you hang around underneath the basket long enough that even a short person is going to catch a rebound now amongst a field of giants. So, I have seen lots of instances where sort of titans of industry, absolutely brilliant people, completely miss things.
Barret who had his PhD out of Stanford ran Intel and I was in his office, in Intel’s office in Silicon Valley, and he mentioned… this was before Apple took off, that Steve Jobs was really good at figuring out what that 3% of the population that didn’t want to be like anybody else wanted to do, that was his core competency, basically trivializing Steve Jobs and of course, the rest is history, it became market capitalization, ended up dwarfing that of Intel. So, these businesses are made up of human beings, and sometimes we have a moment of brilliance, but a lot of it doesn’t come easy, and you work hard at it, and you work hard at it, and then a little bit of luck comes into play and maybe you built something which is remarkable. But, maybe we get back on the subject of crypto and…
VLAD COSTEA: I guess you presented a larger criticism, which we also have in the crypto space, about Silicon Valley being so eccentric and sometimes out of touch with reality. Because in 2017, they promoted some very ambitious projects which were promising to do very much, but then they ended up being flops, and you had people like Naval I am not sure how you pronounce his last name, but he is one of the biggest investors in the space, and he was basically investing a lot of money in projects and advising them, but most of them just didn’t succeed and I think Ethereum and ZCash are the only ones which are still around going strong.
DAVID WEILD: Look, I think that the Block and Crypto, everybody looks at this stuff as being so revolutionary, but there isn’t much that’s revolutionary… And the plight of startups is that most startups fail, it doesn’t mean that we don’t do them, because ultimately if we get up and swing the bat, get up the bat and eventually we are going to hit the ball out of the park… but it is a lot of trial and error, and you’ve got both business and execution risk, you’ve got financing risk, if you don’t have adequate resources, then you can bankrupt the company and if you have adequate resources, but you don’t know what you are doing, you can bankrupt the company by chewing through those resources, and that’s how companies fail.
But you know, it is sort of interesting, we talked about Intel, Intel went public in 1971, it was only a 9-million dollar IPO, it missed delivery on its first product, so it was pre-revenue, and it lost 70% of its value, and it was a little company, it was teetering, if you will, on the brink, it could have gone bankrupt, and it didn’t. Obviously that company and its technology permeate everything, and when you talk about less evolutionary without the semi-conductor, and the explosion in semi-conductors and Moore’s law of effectively causing greater and greater computational power, year after year, after year. We wouldn’t have the processing power that is required to do something like Crypto, and then if you go and you look at distributed networks, on the internet, going back to dark net, I heard that stuff started in 1961, I believe that was the first connection between two computers, talking to each other, which is the precursor to the internet. I mean it has taken years and years, we now take for granted the fact that the internet is sort of this ubiquitous technology, it is there and we use it.
But without the internet, you wouldn’t have… without storage technology, you wouldn’t have Bitcoin. So I think that the first original paper on Blockchain and distributive ledgers was the sort of the foundation to Bitcoin, I believe happened all the way back in 1991, it was published. And so as consequence, it took many years to get Bitcoin off the ground, it didn’t just sort of suddenly erupt, it did erupt in terms of people’s consciousness, so… The amazing thing about society is that, the more intelligent, educated people there are, the higher the likelihood that we are going to see acceleration and change, right? Because there are more and more people working at these problems and this is an amazing age that we are going into, and it wasn’t only in the 1950s I think that Watson and Crick discovered the double helix.
And if you look at what we are starting to do finally cracking the back of cancer therapies, with cancer immunotherapy, highly targeted, highly efficacious treatments for cancer, starting to understand that genomics underline cancer and the fact that what we up until this point understood to be, for instance one disease actually many times maybe 5 or 6 or more different gene states that are presenting themselves as one disease and in point of fact, there are really 5 or 6 different diseases. And so, we are starting to take the glasses off, we are starting to be able to see clearly, and a lot of it happens to be, because of this kind of convergence of a whole range of different technologies that are coming together and finally creating a tipping point, in terms of what is possible.
It is a very exciting time and history in many respects, I mean artificial intelligence and in quantum computing. One of the concerns we have in Bitcoin is, you get a key, and my understanding is that, whoa… quantum computing is very unstable still at this point in time, that people have been able to crack these so called immutable tokens using quantum computing, so we will have to see how stable some of these systems like Bitcoin turn out to be over the long run, I am not sure if they will necessarily stand the test of time.
VLAD COSTEA: I guess that’s one of the concerns as cryptographers, because right now, Bitcoin has encrypted by SHA 256, which contains 256 bits, which means they have… I don’t know how many possibilities, they just have to multiply all the numbers from 1 to 256, to determine the number of possibilities that you have in order to crack one code, and I guess with quantum computing, you have higher chances of decrypting, and that’s what the worries are, but at the same time, they are very confident at this point that no network of computers can actually decrypt that amount of data, because we don’t have the computing power up to this point.
But for the moment when that happens, I think they have something prepared to change the algorithms and use something which is much more advanced, so they already thought about it and it is a big discussion in the field. But I wanted to ask you about mining, because this is a big issue, it is maybe something which comes up as an environmental problem sometimes, but there is this company from China, which is called Bit Main, and they are known for producing what the call ASICs; they are specialized computers which basically are designed just to mine, they are not good to operate anything else, they just have a high hashing power to mine. And today they are trying to go public, and they are trying to get listed on stock exchange, and some people call it… I don’t know, maybe the critics say we just want to get rid of their assets because they are not as profitable anymore, and they are trying to find some fools to buy stocks in their company so that they can run away with the money, while others think this is the future big investment.
DAVID WEILD: I think that, to the extent that the decentralized distributed application and use of mining effectively to verify and enforce in Blockchain becomes sort of a standard, there is a real need to keep the amount of computing power because of the environmental risk, but also because of the cost, because the notion here in the United States is that people move up to Canada because there is a power arbitrage at some point, if there is not mining, that arbitrage in terms of cost disparity between the two markets is going to disappear. But I think that there is also a lot of, sort of what I will call the Libertarian ethos, underlying much that goes on in the Block, that networks need to be almost anarchist, and not regulated by anybody and highly decentralized, and I know that I have heard that from a little bit when I was the co-founder of Ethereum, and I think that the people, at least in the securities industry with the application of Blockchain don’t believe that that’s the case and in fact, a lot of people are of the mind that, greater centralization or maybe just making something mock multi-node as opposed to sort of almost ubiquitous and everywhere is a better place to go because you can manage the cost of the environmental aspect of it, but also because there are certain types of… for instance, securities applications in the securities industry that really probably benefits from being centralized and were more centralized and also that in the industry where you are applying Blockchain technology, where rules change, which is clearly the securities industry, setting something off on auto-pilot, and just letting it run, it doesn’t work because someone is going to have to change the rule book at some point in time when the regulators change the rules, which they will.
But I haven’t looked at the specific demand, I suspect that people are going to start to move away from mining as the methodology for other application, just because I think it is not particularly efficient, it consumes a lot of energy and the resources and so on and so forth, and my suspicion is that there will be innovations around that verification process that will moves us away. But obviously, something like Bitcoin, which has been sort of set on auto-pilot and exist, you are not going to change that. And when you look at the processing on Bitcoin, I think people… I have heard that you can process 3 transactions per second, and in the world of credit cards, that’s nothing, it is just not enough throughput, and so it would be interesting to see if over the long run, Bitcoin has the utility for a lot of applications or if itself, because of the way it was structured, although highly innovated and really kind of fascinating, doesn’t really meet the needs of a broader market, when you start to apply it broadly.
It is a currency, but it is a technology too as the same time, it has utility to it, in terms of facilitating transactions and if it doesn’t scale, or it can’t be made to scale or it is not efficient in some other things doesn’t mean it is not useful because it can’t be made to made to comply, it may find a market and niche with some of the Libertarians out there, but it may ultimately end up not being the most prevalent cybercurrency in the market place.
VLAD COSTEA: I think this is what they call in the industry, the scalability trilemma? Because you cannot have a system which is simultaneously… or you can, but it is very difficult to have a system which is simultaneously decentralized, which is immutable and scalable. You need to compromise on one aspect to be able to create a system which is functional. And with Bitcoin, they have 2 schools of thoughts, they diverged and they’ve found two paths to go on.
Right now, there is Bitcoin Cash which said that they are going to scale according to Moore’s law and that they are going to increase the size of the blocks, so that they can enable more transactions. Right now I think that they can process up to 100 per second, but the criticism regarding Bitcoin cash is that the more they increase the Block size, the harder it is for normal person to participate in the system. They have this consensus system which says that if you run a node, which means that you store the whole Blockchain on your computer and you validate transactions, if you run a node, then you have something which is like a voting power, because by running it, you accept the protocol, and you don’t want it to change, but if somebody wants to change it, you can just opt out and say, I am not going to update my protocol because I like this one. And with the Bitcoin network that we have right now, they are trying to build what they call “Lightning” and up till this point, it is functional, but it works on a very small, experimental and developer scale, they figured out many aspects of it, but it doesn’t have like a friendly interface, up till this point. And they see that it can handle more transactions than Visa, and they can do any transaction with the cost of one cent.
DAVID WEILD: Alright.
VLAD COSTEA: And I guess that’s why Bitcoin is still valued so highly, and they have high expectations of it, it is because they have a second layer, because they said we are going to keep the main Blockchain, which is going to remain the same, and we are going to build something on top of it, which communicates with the main Blockchain. And that’s our scaling solution… they just said instead of increasing the Blocks, we are going to build a separate network which is going to operate with the main one.
DAVID WEILD: Right. And again, you see those kind of innovations around it, and at the end of the day, the fundamental question is, does it work well enough? And do people have confidence in it? And it is that confidence issue, it is whether people… it has got biggest brand by definition, right? So, I think if people start to become enabled to buy Bitcoin or any of the cybercurrencies as an asset, I think that one of the big cybercurrency is going to be beneficiary, a lot of the in-flows would be Bitcoin, because it’s got the greatest mind share and it is… if you will, it is sort of the Apple of cyber currencies at this point. But I do think that as time goes on and people become more and more accepting of cybercurrencies and understanding of Blockchain, they just try to take some of these stuff for granted, just like this thing we do today to the internet, we don’t talk about how the internet works anymore, it just works.
And I think we are going to get to that same point with crypto, cybercurrencies, with tokens of securities, and so on and so forth. At some point, it just works, this is the solution that we use, and brands are going to matter, I mean they always do. But I do think that along in the way, we are going to have some questions about, what is the integrity of these systems, and if it turns out that all of the mining gets done in one locale, by one business or there is a big concentration, then the question is, is there a power there that is outside that can have a deleterious impact on the underlying cybercurrency or whatever is been traded. And I think those are all legitimate questions, I think we are still in comparative early throes at sort of figuring it out, it is still one great, big experiment, and my guess is that you got another 5 or 6 years to run before a lot of the basic questions are from a technologist’s perspective, sufficiently resolved, so that there is wide-spread acceptance about what the requirements are, but I think you are starting to see major institutions and their technologists get involved in looking at a lot of this stuff, their methodology… because they have to get it right, they are much buttoned down, they are not the first mover, they are going to go in and test, test and test before they adopt, before they put customer funds in these kind of things.
So, when you look at the retail brokerage industry in the United States which is a warehouse if you will, for securities value mostly, I think that the large securities firms and probably large deposit-oriented banks are sort of wondering, okay, what are we going to do with cyber currency because if it starts to become large enough, we don’t want to see a lot of customer asset flow out of these firms, and that would put pressure on them to get involved. My sense from talking to people is they are already deep looking at it, and trying to understand how they can do it in a way which protects the customer, because if they don’t get it right, they will have significant liability, and you can’t have a technology snap and lose a bunch of Bitcoin if you are a custodian and not be held liable by your customer.
If you are a clearing organization, if you are a so-called fiduciary and so, I think that where they will become really, really interesting, from a market value and appreciation perspective is how all of these cyber currencies are affected at the point when the big institutes for money and the big retail money, from the major Wall Street and money center banks really starts to more ubiquitously become involved in enabling those customers to access tokens, cybercurrencies and so on through their traditional interface, that will happen, it is a little bit like manifest destiny, it is going to happen at some point, but they are not going to fully cross their t’s and dotted their i’s and have nothing to blow up on them.
VLAD COSTEA: Let’s talk about regulation, because that’s a big topic. Now, I think there are two types of regulation; On one hand, you have decentralized cryptocurrencies like Bitcoin, which needs a special kind of treatment. And on the other hand you have tokens and maybe securities which were issued through ICOs, and I know that 2017 was this big explosion of ICOs, when people were trying to basically bypass regulations, and try to start a business by getting funding in a way which was not regulated, and they were not complaint to maybe have all the paper work or do all the bureaucratic means, which usually resulted in failure and investors lost their money. So, how would you regulate if you were in charge of doing… what would you change about the way Bitcoin is handled and what would you change about ICOs?
DAVID WEILD: Well, I think first of all, to understand the regulatory process when something new emerges, it is iterative, people take a while in trying to understand really what it is, and so regulators are not the first movers, so they are playing catch-up, but the interesting is when you watch regulators, they don’t really feel compelled to act, they are the regulators and they are responsible for making the rules and the courts are responsible for enforcing the rules and the laws. The regulators are responsible for interpreting the rules that are in the books. So they could sit there for years and then wake up one morning and decide to come out or they wouldn’t wake up, and then just come out and say, you’ve all broken the law and we are going to prosecute you.
So, in a highly regulated industry, which is anything that deals with financial matter. And everything from currencies to the transport of currencies, to the detection of those currency transactions to securities, which the tokens are, it is any kind of cross-border commerce and that includes the United States amongst the states, we call it ‘Inter-State Commerce’ in the United States. It puts a real onus on market participants to be conservative and to anticipate how regulators are going to treat these things.
And I think that what we saw at the very beginning is a lot of cowboy-ism, I mean, people just shop from the hip, shot in the lip and we saw that down and Silicon Valley likes nothing more than to run around and to say, we are going to disrupt everything, well, you don’t just disrupt regulations, that doesn’t end well for people, and that’s exactly what some of these folks were advocating, and so I think you’ve got legions of government and regulators who are thinking about it, I think that they are talking to each other, government to government, and I think that they are very methodically going about developing kinds of a consensus, if you will, and standards, and I think that everybody will ultimate regress towards the me, in other words, there will be a consensus, we are not going to be able to jurisdiction shop, because for example, if something lists in Malta or it lists in Switzerland, you still have to be able to transact as most of the money as outside of Malta and Switzerland, you still have to be able to transact across the border and so the Swiss authority are not going to get a hall pass, they are not going to be able to detach themselves from what the rest of the world is doing, because the bigger markets will assert jurisdiction one way or the other, if you look at what happened with Switzerland and the protection of the private number of Swiss banking account, and there were a lot of US tax evaders that were using Swiss accounts.
And I think that the US government ultimately asserted jurisdiction by threatening to capture Swiss assets that were here in the United States, including things like UBS-owned bought Paine Webber in the United States for instance. There is a multitude of ways that jurisdiction can be asserted over asserts, confiscatory confiscating assets for one, and so I think that you are going to find that over the next 2 to 3 years, that all of these sort of legal standards are going to be pretty well ironed out and there is going to be convergence, and I think that this whole movement towards anarchy is not going to end well for the anarchist… My prediction, you know, the government are not going to allow people to launder money, and either are they going to develop technologies, in the defense intelligence agencies, to track flows of cybercurrencies, or they will figure out another way to get on top of it, but they are not going to let people fund terrorism, fund drug trafficking, fund arms trafficking and kind of things that sort of undermine economies, it is just not going to happen.
Of course, we also have to worry about trade and taxes, the government is not going to allow something to grow and facilitate commerce in a way that buys and sells, and gains and losses can’t ultimately be verified. So, I think it is going to be a lot of catching up that course, we have already seen some, and in the United States, the SEC, I believe served over hundreds subpoenas in the wake of the initial coin offerings and we’ve also seen state jurisdictions like Texas clamped down on cybercurrency fraud, that was perpetrated by a Russian company. And so I think that 3, 4, 5 years from now, I think there is not going to be much discussion about the applications any longer.
VLAD COSTEA: You mentioned funding to anarchism, some organizations, and I personally happen to know people who have tried to fund… they call it humanitarian operations in Palestine, and also in Venezuela, which is another sensitive case, because they are in the middle of a trade embargo. And I know that also North Korea has tried to mine Bitcoin and send Ransomware and ask for Bitcoin in exchange for the data. And I was thinking, do you believe that there is any geo-political struggle involved with these decentralized assets?
DAVID WEILD: I think it is another tool that adversarial governments and entities can leverage. And your point about Korea, there are 200,000 people in China working for the government, that are engaged in industrial espionage, that’s the number. And I know on the US network, the United States, for Tier one Telco, and this is dated because of the bill that accompanied that, then I had done some advisory work for them, that was in the business of securing Tier one Telco network, and they were seeing incursions every day from places like Russia, China, and North Korea.
And there is constant probing, this is a form of intelligence, cyber warfare, if you will, currying favor, we don’t know everything that people are doing, we just know that there is a lot of activity going on and it is organized by governments and clearly the use and misuse of things like cybercurrencies can be levered by governments in a wide variety of ways, and so for every diligent government and defense establishment, I think it has an effort here, to monitor and to create countervailing measures to defend their country against industrial espionage and against theft of assets. But you know, this is sort of the age-old problem, this is not a new problem, this is something that has been going on, it is just that now the way that we do it has changed and evolved. People would steal bearer bonds and bearer bonds could be redeemed to finance something, and that has been going on from probably since the beginning of time.
VLAD COSTEA: That’s also a big issue in Romania right now. With bearer bonds, corrupt politicians would hold them in safes and keep them away in a very un-transparent way.
DAVID WEILD: You know what? It is interesting, I made the observation that most senior members of the Communist party in China, have assets outside of China. When you are dealing with a governmental system, which is what I like to describe as a benevolent autocracy, where things can come off the rails, and there is not a lot of due process, because the government indefinitely exerts full control over everyone. Not a lot of checks and balances and I think that smart people create options for themselves, and I think that the Chinese are no exception, there are very bright people over there in China, doing some very interesting things, and certainly the central government of China is a well-oiled machine, they do things actually incredibly well, and they look at their growth record over the last 20, 30 years. But I do think that they also understand if they are part of that government, the limitation and risk associated with that.
And you see, at least what I would describe as a lot of people, creating edges for their own families, and there are a lot Chinese in the United States getting educated for instance, a large population of people from mainland China here on student visas. So, it is something that that’s with us to stay, Vlad, we will have the same conversation a year from now, 10 years from now, of people that want to avoid taxes, people that want to avoid governments that want to keep money in countries and control money supply, defend the currency, there are people that want to get currency out of the country, to create a hedge, a place to go, in case things deteriorate and this is then particularly for areas where there is high degree of corruption, or there is a non-democratic and a non-stable system, and you start to see more and more of that kind of activity.
VLAD COSTEA: I remember when I was in university and studying in Paris as exchange, that the biggest book that they would discuss was ‘The New Capital’ by Thomas Piketty, and to everyone in Paris, it was such a fascinating idea to have a global system which is fair and transparent in regards to taxes and income, to have this uniform, universal way of approaching financial issues, which is what Thomas Piketty has thought about. But the more I got into financing, the more I understood economics, I realized even with the panama papers and all the reveals that were made, I realized that this is not as controlled as it seems and now with cryptocurrencies, it is getting way more out of hand.
DAVID WEILD: Well, I think you got a new technology, distributed in the market, and there is sort of like the early innovator of wild, west kinds of day, and I think that it starts to kind of stabilize and the winners and losers are searched out, and I think that the regulatory framework is developing, it plays a little bit of catch up, and I don’t find what’s going on to be that surprising, in the aggregate. I think that people are studying and learning about multiple fronts and regulators are playing catch up, the governmental entities are playing catch up and I think a lot of this step is going to become old hag if you look back 3 or 4 years from now.
And already we know, tokens and securities, ICOs, they need to be regulated as securities, and we also know that there’s all this discussion about what the utility is, there is not much about what the utility token is, but there is not much market for it; utility token, and in point of fact, I would argue that utility token have been around for a long time, what do you call those crypto keys that you use to access software license on your computer, that really is effectively a token.
And so I don’t think that there the element of the technology that has been around for a while are really particularly novel, and I think what is novel is the way that we were mining Bitcoin, we were in a highly decentralized fashion, we were dis-intermediating the intermediators of financial transactions, and I think that’s kind of the innovation there and you may actually over time see more and more financial systems move from within a bag into the cloud, but I kind of look at it a little bit and say it is interesting, from a business model standpoint, I am not sure when we look back on this, 20 years from now, we are going to look at it as having been revolutionary, because I think that everyone else will catch up, the regulatory systems will catch up, the tax systems will catch up. And I think 20 years from now, we will look at it again as being evolutionary and interesting development in markets that changed, and maybe more efficient certain kinds of processes, but I don’t think that we are going to say, oh my God! The whole world changed, the whole world is not going to change because of the Block, in my view.
VLAD COSTEA: Do you believe that the SEC will eventually approve the Bitcoin ETF?
DAVID WEILD: It’s a great question, and I don’t have enough knowledge to know… I think what the SEC is worried about is the underlying assets… there’s two questions. For me, there would be, is the underlying assets corruptible? Because if they don’t feel comfortable and this stuff can be warehoused where it can’t be pilfered or stolen, the security aspects of it, then the answer is I would not approve if I was a regulator. I just don’t want to put all the public in harm’s way. I think that the second issue is liquidity, and the ability to transact and in the underlying Bitcoin security, we are buying a bunch of Bitcoin and warehousing it and so if the security element and the liquidity elements are solved for, then I think that there is no reason why they should stand in the way.
But I think that those are two big questions and they are probably going to require quite a bit of deliberateness on the part of the Securities and Exchange Commissions to get comfortable with. The SEC is not going to be rewarded for taking risks, if something blows up, and it’s on their watch, they will receive quite a bit of criticism, the way the US system works is that Congress appropriate the budgets of the Securities and Exchange Commission, and what happens is, because the SEC reports into Congress technically. I think that if something blows up, there will be hearings on Capitol Hill in Congress and they will call the SEC chair to Congress to testify, to defend what the SEC did.
So I think that they tend to be very, very deliberate in how they approach these kinds of questions with a bias to making sure it is done right. I think that’s one of the reasons why people have so much confidence in the US public markets, is because the SEC actually has a very good track record of getting things right, and transparent and the disclosure in the public market, I think is exceedingly well done.
VLAD COSTEA: I agree with you. And I see this divide in the cryptocurrency community because the early Bitcoin people were these anarchists, who didn’t want to have any connection with banks and they wanted to establish their own parallel financial system. But as more investors got in, there is a higher interest for institutional adoption of cryptocurrencies, they want banks to maybe just buy 1% of their assets, to buy Bitcoin with 1% of their asset.
And I think one of the pivotal points in my perception of how cryptocurrencies are viewed, happened during the Milken Institute debate, which happened earlier this year. I couldn’t afford to be there, but I watched it online, and there was this person representing, I think it was the Federal Reserve, I don’t want to say something that is wrong, but I think it was the Federal Reserve, and I think he was appointed by the Republicans, because at the same time he was very libertarian in his speech and he was saying that the best interest of the government is for cryptocurrency companies from United States of America to succeed, and they want to be pioneers in this new field, and that’s what they encourage, instead of having a regulation which can stop innovation.
DAVID WEILD: You know, I think there is that underlying philosophy, I saw the SEC chair, Jay Clayton back on September 19th, in his office, and I think that they are very forward looking, in the sense that they understand the importance of technology, the SEC has a long history of embracing technology to drive down costs and markets, and to make things more efficient, it’s a well-known view that they have embraced for many years, and if you read in his Nashville speech, which is up on the SEC’s website, he will make that point.
So, I don’t see the SEC as being a bunch of luddites by any stretch of imagination, they are looking for how these technologies and the cyber securities, cybercurrencies can be applied to the betterment and advancement of mankind… But I think that they do things with a certain deliberateness and they are very slow if they want to get it right, they are slower than we would like to see them act, and as people are trying to get deals done, and I think what you are seeing right now with the Bitcoin ETF is that it is being held up in the SEC a little bit, so they can make sure they get it right before they do anything, they just don’t want to make a mistake.
VLAD COSTEA: Do you see any difference in terms of how Republicans and Democrats handle the issue of cryptocurrencies? Because I see a lot of people discussing how the Obama administration was more… pro-regulation, but at the same time, as soon as the Trump administration stepped in, they were more hands-off in regards to the entire Blockchain industry. And I see people posting every day, and being Republican, maybe not because they believe too much in the Republican platform, but because they seem to favor cryptocurrencies much more.
DAVID WEILD: I don’t know, I think sometimes, you are bringing the biases of some of the Democrats versus some of the Republicans to bare, there are more people with business backgrounds that are Republicans in Congress and there are people on the Democratic side of the aisle and a lot of them are representing sometimes four constituencies. And so, I have had a very good experience with both Democrats and Republicans, working with both of them, but it is really a… The JOBS Act was amazingly bipartisan, we had overwhelming majority of Democrats and overwhelming majority of Republicans support it, and the way that it got actually through the Senate, because it was a bill that was really largely started in the House of Representative, was because the White House, under President Obama…
Actually, my understanding is that President Obama hired two lobbyists to tell the senate Democrats that he wanted the bill. And so, I think that if you look at what we call JOBs Act 3.0, which includes venture exchange legislation in it that I had a hand on it, made it through the House, we’ll see if it makes it over to the senate, but it passed the House of Representatives 410 to 4… overwhelmingly bipartisan. So I think that what we can do with capital markets and well-crafted legislation that create incentives is we can ultimately change markets and restore upward mobility in this country, which is very important to Democrats and poor people, to try and create a slice of the American dream for people, that they can actually go out and grab, that we can help lift poor communities in the process, using that sort of greed instinct that people have by getting entrepreneurs to focus, by putting jobs into targeted economic development zones, all sorts of things that we can do with sort of pro-capital markets legislation and well crafted, then I think that getting together with Democrats and with Republicans who kind of share this kinds of ideals for a better company, we see politics on TV, but politics is very different one-on-one with politician, and those politicians are not… they sometimes pander to the media, because they are running for office, every time they are on television, like with their Cavanaugh hearings and everything there, they are being seen by their constituencies and their constituencies are voting for them and so, they tend to be coming off as being less-reasonable and work-streamed that I think that when you get with them one-on-one and you are working on policies they actually are.
I used to use the case of a guy that ran… a Democrat that ran a house financial services committee years ago, named Barney Frank, and he was the first openly gay member of Congress, he was actually from Massachusetts, which is a very liberal area of the United States, and sometimes he came off as extremely liberal when he was on TV, but if you met Barney Frank, he was a Harvard Law graduate and Barney, actually one-on-one when you were talking about policy, he was very smart, very gifted and I think that one of the reasons that he was affected within Congress crafting legislation was because he was not this persona that was really projected for the purposes of having to run for office.
So, I think that the one thing that I would say from having spent quite a bit of time in the House and in the senate with staffers and what not, there’s a lot of people behind the scenes that are doing a lot of very button-down work, they are coming together, and I think that when we are looking at things very deliberately, I think we tend to come out with a better legislative product than when all of a sudden we are rushing, because there has been all kind of crisis like we did in the wake of the credit crisis. There’s some sense in my mind that legislation in many instances has become overly broad and overly complicated, so for instance Dodd Frank, I think he was over ended up in the final Federal registry to be over 900 pages and you could argue that Dodd Frank replaced Glass Steagall which was very simple for many years, and separated the kind of the risk businesses from the depository institutions.
And that was only 35 pages, so it got repealed in 2000, it probably created some of these circumstances, like too big to fail, because it wasn’t well thought out legislation in my mind, they did a range of thing, it was actually under the Clinton administration. One of the great misconceptions in the market is that the Republicans were the ones that blew up the economy through the lack of regulation and point of fact, the lack of regulation that they came in to bear was signed into law almost exclusively, unilaterally by President Clinton back in the late 1990s, going into 2000 timeframe, it was Gram Leah Billey which effectively repealed Glass Steagall and the separation between the depository institutions, the risk businesses which created the financial supermarkets and too big to fail. It was liberalizations of the community reinvestment Act that relaxed credit mortgage standards and led to liar loans and all the mortgage credit crisis, it was a Commodity and Futures Monetization Act of 2000, which took the restrictions off of the derivatives and effectively gave us infinite derivatives without any kind of understanding of things like counterparty risk.
So, when you put all of that into a bundle and you say, okay, who was responsible, then I will say in the defensive of President Clinton, most of this legislation was drafted by a Republican, but it had to make it through Congress and it was bipartisan and then it made it up to the President’s desk and he was a Democrat, and he signed it into law and it was not well thought out, it created a series of liberalizations without the requires controls in place, and what do we end up with? We ended up with credit crises on the scale that was such that had it not been for Hank Paulson who was the secretary of the Treasury at the time, wrapping the full faith and credit of the US government behind the money center bags, the financial institutions, we would have been in this world, we would have been in another great depression. As it was, we ended up with a great recession, and so I think that it is one of the reasons I think they are getting legislation right and understanding where things are going. I am a little bit concerned, I have to say that financial markets are so complicated, and the average legislator is an inch deeper and a mile wide and this is not their core competency, they do not come this business, I think that even on Wall Street, very few of us tend to have very broad field vision and understand holistically these large systems and how they work.
Right now, I am concerned that the linkages with computers which occurred create hair-trigger sort of situations with if there is a major event and all the computers say is sell, sell, sell, it is not just stock they are hooked into, into derivatives, in the way that they weren’t, before the explosion of computers, it also debt down, equity down, futures down, hard assets, everything will go down, and just because investors will start out with computer systems, pickering things which are when markets go down a certain amount, it undermines consumer-investor confidence, and investors start taking money out of major institutions which then precipitates a snowball effect.
And I always worry that the regulators don’t understand this holistically well-enough to be ahead of it, and I am more and more of the kinds of investments strategies are devoid of people, because running money with computer-based system is cheaper to do, more efficient to do than it is hiring people to do fundamental research, they have also taken a lot of the buffers out of the system because they collapsed in the interest of making markets more efficient and transaction costs lower, they collapse trading spread, they do this in equity, they are doing it in fixed income, and because of the self-directed movement, we have moved from retail brokers advising on securities transactions to they have all become asset class and nobody is talking stocks or bonds any longer.
And so, that intermediation that created a buffer in the system and somebody to talk to is being taken increasingly out of markets, and so in consequence, I think these markets are more vulnerable to cascade effects than they have been historically. We are trying to do some things with stocks in markets, but I am not sure it is enough, at the end of the day, you really don’t know how these markets are going to react until you get into a really high-stress environment. And as we saw, back during the credit crises, they did not act well, every asset class in the world went down in price, with the exception of major sovereigns like the US Treasury bonds, people would not put their money into the banking system because they were afraid the banking system would fail, and you could see the evidence of that, because when they bought 30-day, 90-day T-bills, they were trading at negative returns, meaning they were paying the US Treasury, they were paying them money, they were willing to take a loss, just to know that, at the end of 30 days or 90 days, that their money would be there. And it was the first time I had ever seen that, I was actually at Blackrock, which is now the largest asset manager in the world. And I was in the office of the guy that ran equity trading, looking at this Bloomberg terminal, and when I saw that the Treasuries were flickering with negative rates of return, I asked the guy who ran equity trading there, I said is that a misprint, he said now he had been watching it all day long and it had been flirting with zero and it is just going negative, and I got chills because he said to me that the world no longer has confidence in the banking system.
So, you know, hats off to Hank Paulson because what he did at that particular point in time probably saved the world’s economy, this is the former secretary of the Treasury, he was actually the former CEO of Goldman Sachs, there is a couple of what I would call really under the gun kind of important moves that people have made in my lifetime, and that was one of them, the other one was when that air traffic controller grounded all the flights on 9/11 in the United States, because there were other planes that were likely to have been hijacked and so the call that he made probably saved lives. You know, it is people under pressure, I think making extraordinarily good calls and Hank probably doesn’t get enough credit, but I think he saved the world from a great depression by what he did there.
VLAD COSTEA: Yeah, and I guess that’s one of the reasons why Bitcoin got so big, because it was launched at the right time and it benefited from the sympathy and the understanding of people who are disillusioned with the banking system. Which is ironic, because now it is trying to blend into the system that it presented in its first days. But I just have one last question because I want you to have breakfast with the rest of your family… Do you have any investments in cryptocurrencies or do you have any projects which you really like or you look forward to seeing how big they can get?
DAVID WEILD: Well… I am active, but not so much into cryptocurrency areas as tokenization of securities because I think that that’s an area that ultimately will explode. Largely because I think that tokens can essentially activate all series of backend processed that take a lot of the operational inertia friction out of the equation, whether it is KYC, your customer, whether it is patriot Act, anti-money laundering, through authentication or you could trade in theory through accredited investors in private markets much more efficiently, private placement securities.
So I think that it has the ability to automate all the paper work that is required by this, is going to make private markets more attractive. But we are looking at tokenizing credit CDOs (Collateralized Debt Obligations) and doing peer-to-peer investing, we have a series of…
I am an advisor to Templum which got the first license or approval from the securities and exchange commission to act as an alternative trading system for tokens and securities, I have been working with Quark and X which is a Canadian company that is doing tokens and securities for private companies. So, we think that it’s going to take a while for this stuff to develop, but we think that it has some significant utility, one of the things that I tell folks is that I’d like to see… If I am an issuer as a public company, ultimately I want to be able to raise capital most efficiently, first and foremost. And for me, that means that if you are investor, I would prefer to be able to give you, if you want a token, to evidence your ownership in my company, if you want a traditional security because that’s the way that you want to hold it, I should be able to do that.
And I think that one of the things that a lot of the people working in this space are missing, is that they want it right now, they want to do an issuance of just nothing but tokens, or just traditional securities and I think that if you want an increase in demand, you should make the two kind of interchangeable. At some point tokens may displace traditional securities if they turn out to be more efficient from a settlement stand point, from a processing stand point, but they are not anywhere near that yet, and what you do by tokenizing securities is actually you limit the market, because there are many traditional institutions that just won’t take a token at this point in time.
VLAD COSTEA: Oh. Thank you. And Mr. Weild, I feel like I learned so much in this hour while we spoke, there is a lot of information which I had no idea about, and I guess this is like an introduction for me to make more research.
DAVID WEILD: Well, I have been doing it for a long time, and hopefully I have learned a few things along the way, call me Dave or David, Mr. Weild makes me feel awfully old.
VLAD COSTEA: I feel the same personally but I am 26 and so people just call me by my last name and I say, no that’s my father, you can call me Vlad.
DAVID WEILD: Terrific, nice to meet you on Zoom and nice to talk to you, we obviously quite a bit about that you have been doing this, you are obviously pretty bright… Look, the nature of markets and businesses and everything is in team’s win, and nobody knows everything, that is one of the things you learn… there is a great expression which is… when I was young, I thought I knew everything and now that I am older, I realize how little I know. The fact of the matter is that I have accumulated quite a bit of knowledge and I know a lot more than most, and probably in some respects some people consider me the foremost expert in the world on how market structure impacts capital formation.
But I would tell you that one of the great things about being born at this point in time is that there is always so much more to learn, and there is so much happening, that you always have this uncomfortable feeling that you can’t possibly know enough. But it makes it interesting, it makes it fun, and I have spent my life in capital markets and helping growth companies access capital, and I would tell you that it was what got me into the business 35 years ago, was what we used to call God’s Work of Investment Banking, which was actually getting capital into the businesses that were going to really make a difference in people’s life and life sciences, finding the cure for cancer, or alternative energy and renewable energy and where baseline innovations that laid the groundwork to be able to do this things, I did a lot of work on a lot of semi-conductor companies, capital raises years ago, I visited a lot of clean rooms in Silicon valley, you know, applied materials was a big listed company, the NASDAQ black market is the largest semi-conductor capital equipment company in the world and I think that people don’t appreciate sometimes the scope of human energy and involvement that has created amazing systems for the improvement of everyday lives, just the fact that we can do this on a call, requires so many different types of technologies to come together so that I can see you in Romania, and you see me here in Westchester County, New York, it is really pretty remarkable and that’s occurred during my lifetime.
When I was a kid, and I remember looking at a black and white television, that was what was looked at, and not that much before that, it was a radio that people listened to, and the world has changed in many ways for the better and people’s quality of lives have improved, but I think that we have so much more that can be done, and I think that’s what makes doing what I have been doing for my whole life to be so incredibly important to do well and I get very frustrated when people misuse the legislated process to create things that would enrich themselves but don’t necessarily contribute something to the society at large, I think it is one of those things that all of us need to get in touch with our developer, sort of a moral and ethical code that helps us do things that are going to be constructive in the society and not disruptive just for the sake of disruptive and enriching one’s self. And I think that there is a lot of people that unfortunately engage in unilateral self-increase as opposed to… and I have no problem with self-increase as long as it is driving through a goal which contributes something positive to the market place, to the society, but there is a lot of people out there that I think need a little bit of an education on ethics when it comes to markets and business and hopefully I think that this next generation, kids your age tend to be a little bit mindful of that stuff. I really do encourage some of the aspirations that I hear coming out of young people and so, maybe it will be better off for the contributions, and I hope I am around long enough to see the contributions of your generation.
VLAD COSTEA: And I think you have had the same kind of generational difference which your parents, I guess. They didn’t agree with credit cards and electronic money as much. Maybe they believe much more in hard money, something that they can touch and perceive as something material, they don’t understand this world of virtual money.
DAVID WEILD: Well, I think that… Let me tell you, my parents who are about 88, 89 years old, they have embraced credit cards, and they didn’t long time ago, so they may not have been the early adopters of it, but they certainly… people do adapt and my guess is that if cybercurrencies starts to become more ubiquitous and there are fewer risk around it, I think what we get concerned with is that, if you take Bitcoin and you put it unto fob and you lose that fob, you are in trouble, and I think there are a lot of us, I have broken computers, I have had computers stolen.
So, the whole safety aspect of it is something that I think is not well understood by a lot of people, unless they have a lot of time to research it. And, when you are young, you have more time to explore, that’s what we do, we send people to college, we send them to a graduate school, they explore, they learn and they are also dealing with other kids who are people of their own peer group, that are involved in the new things in the exploration. And so consequently, I think that is a much more fertile environment for people to do innovative things and to embrace innovative things, I see that with my kids in high school and know the kinds of apps they gravitate to.
My 15-year old, I think he was probably 8 years old when he first jail-break his iPhone, and I think he was probably 11 when he was exploring the dark web, I think he pulled out of it because he was afraid he was going to get into trouble, but I can tell you that those are two things that I have never done. And that’s the nature of the beast. The rest of us, I think through our accumulated knowledge, as we get older and as we’ve seen a lot of this stuff, it is our jobs to make sure that people through sort of their singular interest and innovation don’t do things that they don’t understand that will cause harm broadly in the society and I think that understanding the broader implications is something that tends to come with a little bit more age and wisdom and having lived through a whole series of different man-made newer economic calamities. I could go back to the Resolution Trust Corporation, the crash of 1987.
I could look at the dot-com bubble which I call the bubble rubble, which was the aftermath of the dot-com bubble. And what Alan Greenspan… who is the head of the Fed used to call ‘Irrational exuberance’ so these massive bubbles and then going through obviously up-to-date, the flash crash, the credit crisis… And then, living through crisis, gives you a certain amount of perspective, I had the work on 9/11, on getting the stock market re-opened and I have worked on putting in share repurchase programs before the stock markets re-opened with major corporations to make sure that there was a safety net to stabilize, if you will, investor’s sentiment, because as the stock market was going down more dramatically than it did, it would have had a knock-on effect. The only reason why I understood to do that was because I have the experience of living through the crash of 1987, and understanding that it was the Corporate Share Repurchase Programs that came in after the major sell-off, that started to give institutional investors and traders more confidence that the world was not coming to an end if the corporations were taking a stand.
And so, I think as we say, knowledge is power, and I think experience begets knowledge, so as a consequence, I think there is a bonafide place for people of a certain age, to help maintain order and hopefully set guidelines and rules in ways which are going to not impede the exuberance, but at the same time, not lead to a catastrophic outcome, I think that’s that art. This constant push-pull between technology and innovation and then regulation and we making an enforcement, and the two work together and there is a reason they do, and I think it is important to try and get both of them right, sometimes, that in and of itself is more art than science.
VLAD COSTEA: You know, when we discussed about having this interview and I looked up at your Wikipedia page, and I saw that you worked at NASDAQ, and that you took place in what they call the father of an important piece of legislation, I actually thought that we would have many diverging opinions regarding cryptocurrencies, but what I found is a very moderate and diplomatic approach, which is open to the innovation, but at the same time tries to preserve what we have as a stable system which has proven to work overtime. And for that I feel grateful, and I feel like this father figure who understands where this new generation want to innovate in this financial field, but at the same time, you remind us of the values that we should be keeping just because they maintain… they are like a safety net to the entire system. So, thank you for that, I appreciate it.
DAVID WEILD: Well, I spent most of my career taking and talking with growth companies and innovators and so I think that this generation looks at this innovation and maybe the older generation has been a bunch of…but in point of fact, when Apple went public, when Microsoft went public, when Intel went public in 1971, these were the innovators of their time, and those were massive innovations, they created tectonic plate shifts in terms of how business was done, and if you look at just the insight with Office, where Bill Gates took spreadsheets and integrated them with the word processing application and PowerPoint, you take that for granted right now, but just the spreadsheet was an innovation to financial services, we used to do these things by hand, with a pencil and an eraser. And it totally transformed how much analysis we could do by orders of magnitude, and it probably enabled the private equity businesses and certain types of financial engineering.
At that point in time, that was as innovative and radical as things like Bitcoin and the Blockchain, and as French says; the more things change, the more they stay the same. And so, I think that people of my generation, particularly in important positions like Jay Clayton who is the SEC chair. And by the way, I am very excited about him as the SEC chair, because having known that SEC chair going all the way back to Arthur Levitt and I have a great deal of admiration and fondness for each of them, they have been great public servants, but Jay has real expertise in capital market, that’s really what he did. Mary Jo White came out and she was a state attorney Federal prosecutor, she is a heck of a US patriot, she was the one that the terrorist in jail, but her expertise was not capital market and Mary Schapiro was the arbitration dispute resolution side of the NASD which was the precursor for FINRA.
So, when you look at people’s background, this is the first person in a long while who grew up, and capital market doing equity capital raises and related things, doing financing as a lawyer and I can tell you from my meeting with chairman Clayton, having done the job of pricing and distributing securities in an equity capital market syndicate group, in a major firm, he has really in-depth knowledge of the process, he has a lot of expertise, and I think that that’s going to be very helpful to the SEC over the course of his 6-year term, I hope he sticks there, because I think he is going to bring a lot of value to that institution, we’ll see. And I think that that would bode well for tokens and securities and cryptos and everything else, he is very intelligent, very knowledgeable, and his expertise is closer to being in the areas that we are discussing than not, and that is a bit of an anomaly for an SEC chair in my experience.
VLAD COSTEA: Okay. So, I think we should wrap this up. I will split this in two parts I think, and post it throughout the week, in 2 different parts, so it is easier to digest. Because I guess nobody would watch 1 hour and a half of video… This was illuminating in a way, and relieving knowing that there are people who look at it objectively and not from statements like the one from Nouriel Roubini.
DAVID WEILD: Yeah. he has been a topic on a lot of discussion in groups that I have been at and particularly his senate testimony, I think that a lot of people that know a lot about Crypto and Blockchain in general, we are not overly impressed with Nouriel Roubini, he’s got a big name, I am not sure there is a lot in his background that he is an economist, that really would inform him adequately of what’s going on in this industry. I may be wrong, he is entitled to his opinion obviously, but most of the people that I respect, that usually spend a lot of time in this area… friends of mine like Lou Koerner are not fans. Do you know Lou?
VLAD COSTEA: No.
DAVID WEILD: Lou Koerner is an analyst, he was an internet analyst originally on the South-side, he has moved over into Blockchain related matters, so he was an equity research analyst, venture capitalists for quite a bit of time, and I just saw him out of the crypto invest summit out in Los Angeles maybe last week or 2 weeks ago.
VLAD COSTEA: Okay, I guess I will love to interview him. If you can, send me his contact, I will just send a proposal for an interview.
DAVID WEILD: He is very good. Enjoy.
VLAD COSTEA: Thank you very much, this was really great. And I will send you the end results.
DAVID WEILD: Nice to talk to you, I appreciate.
VLAD COSTEA: Bye, have a nice day.
DAVID WEILD: You too, bye-bye.