00:00:02
Crypto, crypto, crypto. As cryptocurrency becomes more popular, we're starting to see signs that it
00:00:07
could become part of our financial future. US dollars are the greatest product in human history. But amazingly,
00:00:13
most people around the world who want dollars cannot get them because the legacy financial rails simply prevent
00:00:18
them from doing so. You want to have the world's most realtime global financial market where everyone is synchronizing
00:00:25
using the same open protocol at the speed of light. Ladies and gentlemen, please welcome Multicoin Capitals, Kyle
00:00:34
Sani. Good afternoon everyone. My name is Kyle Sani. I'm a founder and managing partner
00:00:43
at Multicoin Capital. I'm incredibly excited to be here with y'all at the Allen Summit today. Today I'm going to
00:00:49
be talking a little bit about internet and capital markets. But before we get to the future of capital markets, I
00:00:54
think a little history lesson is in order. Before we dive in, do have some small disclosures. You can read all this
00:00:59
in about 4 seconds. Um, please do note that nothing in this presentation should be considered financial advice. All
00:01:05
right, let's jump in. The roots of our modern financial system are about 100 years old.
00:01:11
Uh, the stock market as we know it today was actually born out of crisis. In 1929, the stock market crash, lost a
00:01:19
third of its value in about a week, and over the next three years proceeded to lose about 90% of its value.
00:01:25
At the time, there was no SEC, there were no disclosures, there were no standardized audits.
00:01:32
In response, Congress passed three major pieces of legislation. The first is the
00:01:37
Securities Act of 33 and that uh required disclosures for companies that issue securities.
00:01:44
The second was the Exchange Act of 34, which created the SEC. And the third was the investment company act of 1940 which
00:01:52
created regulations for uh regulating public mutual funds. The government's goal in these regulations was simple.
00:02:00
They needed to create trust, protect investors, and most importantly restore confidence in our capital markets.
00:02:07
Those three laws today still stand as the foundation that our modern capital markets are built on top of. In the 90
00:02:14
years since, we've added a rule after rule, system after system. Typically, that's been predicated on uh these
00:02:21
financial intermediaries whose job it is is to uh they're deputized to process these regulatory functions. We've added
00:02:28
layers of complexity, layers of rent seeeking. And interestingly, most of these rules have come not from Congress,
00:02:35
but from the administrative state. Today's markets are both held together by these intermediaries and made more
00:02:41
inefficient by them. Investors have to go through exchanges. Exchanges go through clearing houses.
00:02:48
Clearing houses go through custodians. On and on. Each of these players takes a cut. They add a fee. They add a delay.
00:02:56
They create complexity. And they also create inertia in the status quo so that it's harder to remove them later. While
00:03:02
the intent of these legal protections are generally pretty good, the their evolutionary path over the last h 100red
00:03:08
years has produced in our modern system of bloat and crust. Markets still close at 4 p.m. Fees are still high. Access is
00:03:15
still limited. Inefficiency is baked into the system by design. It still takes 2 days to settle a stock trade in
00:03:22
2025. If you asked a group of engineers and traders to redesign capital markets infrastructure from first principles in
00:03:31
2025, you wouldn't be recreating all of these intermediaries. You'd be building something based on modern software.
00:03:38
You'd build something that's global and 24/7, that's programmable and permissionless, and that's secured most
00:03:44
importantly by cryptography. You'd build one global ledger that can support internet scale capital markets.
00:03:52
Until recently, these global ledgers, or as we like to call them, blockchains couldn't actually scale to support
00:03:58
internet capital markets. No one in this room is going to wait two minutes to send the transaction and pay $20 in gas
00:04:04
fees on Ethereum. But we blockchains have gotten a lot better, cheaper, and faster. And modern blockchains like
00:04:10
Salana can actually process now more than a billion transactions in a day at an average cost of less than a penny per
00:04:16
transaction. The tech is finally ready. The tech alone though is not enough. We need a regulatory alignment as well to
00:04:23
get there. And in 2025, we're getting it. President Trump kicked off the year by signing a series of executive orders
00:04:31
uh aimed to make America the crypto capital of the world. We also owe a huge shout out to our
00:04:37
favorite bestie David Saxs in his role as cryptos are for helping get these executive orders through. Thank you.
00:04:43
Yeah, David, thank you for working with the president on getting these EOS through and working
00:04:50
with the administration and Congress. In July, Congress passed the Genius Act, which created a foundation on top a
00:04:58
framework for stable coins to proliferate all over the world on permissionless crypto rails. The Genius
00:05:04
Act is not only going to have implications for how capital markets work around the world, but global
00:05:08
geopolitics as the US dollar permeates every corner of the world. And in the next few months, we expect Congress is
00:05:15
going to pass the Clarity Act, which is going to answer a number of open questions about how crypto market
00:05:20
structure should be regulated. But interestingly, the most consequential stuff, consequential
00:05:28
actions are going to be coming uh from the SEC itself. In a speech that he gave about six weeks ago, SEC Chair Paul
00:05:36
Atkins outlined his plans for the future of all of the employees at the SEC. In that speech, he said, quote, I have
00:05:44
directed the commission staff to update antiquated agency rules and regulations to unleash the potential of onchain
00:05:50
software systems in our securities markets. He is preparing the SEC for what he calls, quote, the digital
00:05:57
finance revolution. It just does not get any more clear than this. US securities
00:06:01
markets are coming on chain. In that same speech, Chair Atkins also outlined his vision for what he calls
00:06:09
regulation super super app. And this creates a framework for uh a regulatory framework to allow three distinct kinds
00:06:16
of assets to all trade on one user interface despite different underlying backends. Those three asset types
00:06:22
include non-security crypto assets, tokenized securities, and tra and traditional securities. And while these
00:06:29
assets all have different backends, users should not have to care. You should be able to trade any of these
00:06:33
things all from the same front end. Under this framework, these regulated financial super super apps are going to
00:06:40
be able to offer these services and many others things like staking, lending, trading, or just general access to DeFi,
00:06:48
all from these regulated super app platforms. And they're going to be able to do so without getting 50 state
00:06:53
licenses or even going through multiple federal licenses. The makings of these super apps already
00:07:00
exist today. They look like Robin Hood, Coinbase, Sofi, and many others. Soon, you're going to be able to access
00:07:09
cryptonnative protocols such as GTO, Drift, Commamino, and a lot of others directly from these
00:07:16
regulated financial super apps. In this reggg super app vision, the worlds of regulated financial services
00:07:23
and permissionless crypto protocols are converging and this is going to open up access to capital markets for people all
00:07:28
over the world and it's going to result in an absolute boom in onchain defi activity. Taken together, we are at a
00:07:34
critical inflection point. For the first time in a 100red years, the technology and the regulatory frameworks have come
00:07:41
in into alignment and that's created an opportunity for innovation and ultimately for rebirth of our capital
00:07:46
market structure. This combination is creating the substrate on top of which we can finally
00:07:51
build internet capital markets. At the highest level, internet capital markets should just be thought of as one global
00:07:57
market. A market in which anyone anywhere with just a phone and an internet connection can trade any asset
00:08:04
from any software modality. It's actually a beautifully simple concept. Blockchains are going to be the
00:08:10
infrastructure that powers all of the issuance, access, trading of those assets.
00:08:16
With internet capital markets, finance becomes an internet native primitive for the first time ever. All right, with all
00:08:23
this context, let's now look at some pretty fun examples on how we think internet capital markets are going to
00:08:28
come to life. Reading the journal and think the Fed's going to cut interest rates. Well, with internet capital
00:08:33
markets, you're going to be able to bet on interest rates on using something like Kashi without ever even leaving the
00:08:39
journal. As this kind of a behavior proliferates, we expect that the nature of media
00:08:45
itself is going to change because a lot of media is now going to be derived from
00:08:49
the prediction markets. The kind of analogy to understand would be if you look at most financial media today, it's
00:08:54
de facto about a stock price or an interest rate. We think that prediction markets are going to just change how
00:08:59
media works for all kinds of subject matter. Is the next pass going to be completed? Is Curry going to drain a
00:09:06
three? Is Bryson going to drive the green on Whole 16? Internet capital markets are coming to the TV, too.
00:09:13
Twitter actually attempted the second screen experience about 10 years ago uh by embedding a social feed right next to
00:09:19
the main video content. But it turns out that was kind of the wrong instantiation
00:09:23
of the second screen experience. The right instantiation of it is not social content, it's financial. By betting on a
00:09:30
game, it makes it way more entertaining and engaging. And putting finance as that second screen experience alongside
00:09:35
the sports is going to drive all new engagement in sports TV. Thank you. I haven't done the work, but
00:09:42
I hope others do. One dirty secret is we all know that everyone likes to bring their phone to the throne
00:09:49
and uh soon you're going to be able to swipe to bet while you're taking care of business.
00:09:55
My point in sharing this is that internet capital markets uh are going to be embedded in software everywhere and
00:10:01
you're going to have all new kinds of ways to trade. It might look like swipe to trade as shown here. Could be type to
00:10:08
trade, could be tap to trade. People are going to play with all kinds of fun new
00:10:11
ways to trade. Speaking of text to trade, I think in the pretty near future, our
00:10:18
favorite besties are going to be trading directly in their group chat. In this case, Jason's buying from Robin Hood,
00:10:25
obviously. Uh, and this is all powered by Superstate uh, equities on Drift. Millions of people actually already
00:10:34
trade uh, crypto assets using Telegram bots that are not too dissimilar from this illustrative example I'm showing
00:10:40
here on the screen, but right now that's mostly contained just in crypto circles.
00:10:44
We expect that this kind of experience is going to make its way for trading all kinds of assets and prediction markets.
00:10:50
We think in sports betting in particular, this is going to be super pervasive. Being able to chat with your
00:10:55
friends and make bets on sports in a group chat is going to go viral. Speaking of trading with friends, you
00:11:00
know, Jim Kramer really was entertainment finance 1.0. But as we think about what Entertainment
00:11:06
Finance 2.0 looks like, we think it looks a lot more like Roaring Kitty or Dave Portoi.
00:11:12
There are today tens of thousands of streamers all over the world streaming content and trading with their fans and
00:11:18
their audience members. And this is happening every day on Salana. With Internet Capital Markets, you're going
00:11:23
to be able to have groups of people, anyone, anywhere, all trade the same asset together, all from one live
00:11:29
stream. This is going to be one of the new frontiers in social finance. And lastly, of course, we cannot forget
00:11:35
podcasts. Soon you're going to be able to buy Tumat's newest spack, maybe some Uber
00:11:41
from Jason, maybe buy some Bitcoin or some Salana, or make a bet on a prediction market, all while you're
00:11:47
watching your favorite besties. Internet capital markets are going to have a profound effect on how we view
00:11:53
and think about and understand markets as they become embedded into media. Markets are no longer just going to
00:12:00
exist in some silo in London or Wall Street. Markets are going to become the media
00:12:05
and the media is going to become the channel. Just as software has eaten the world over the last 20 years, internet
00:12:11
capital markets are going to absorb every function of capital formation, trading, settlement, and risk. The
00:12:18
legacy system is not going to adapt. It's going to be consumed. And this shift is not going to happen
00:12:23
alone. It's happening in parallel with AI, one of the most transformative technologies of our lifetimes. If AI is
00:12:30
rewriting how companies are built, then internet capital markets are rewriting how companies are going to be financed,
00:12:35
traded, and owned. It's an incredibly exciting time to be an investor and a builder in the space.
00:12:42
This is truly a generational opportunity um that only presents itself when the conditions are just right. We finally
00:12:48
have the alignment on both the technology side and the regulatory side to get there. When we look back in 20
00:12:54
years, the year 2025 is going to be remembered as the year that the dam broke. It's going to be akin to how the
00:13:00
Telecommunications Act of 1996 unleashed the power of the internet. Everyone here, all of the builders and
00:13:07
entrepreneurs in the room and all the investors here along with everyone who's watching at home online has a chance not
00:13:13
just to witness this shift, but to be an active participant in it because internet capital markets are open to
00:13:18
everybody. Thank you. [Music]