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