Wall Street Wisdom in Building the Future of Crypto with Galaxy's Chris Rhine

 

And, will the dream of co-owning a vacation home become a nightmare?

Plus, when not to use your emergency fund for family expenses

Ric Edelman: It's Friday, November 8th. On today's show…thinking of buying a house with some friends. Is this a good idea? And there's a lot of activity going on in crypto, and we are going to have a conversation about it with Chris Rhine from Galaxy.

But first we're going to listen to an email from Jeff in Pennsylvania. Here's his question to me.

Jeff: “Hey Ric, I am a longtime listener to your show. I find it to be educational and very informative. You appear to be well versed in mostly all aspects of investing. My question is, I have to withdraw funds for my grandkids’ summer camp.

Would I be better tapping into my six-month emergency account or sell some stock at a loss and use the loss to offset my income for 2024? Or should I tap into another source of money to pay the cost of summer camp?”

Ric Edelman: Well, Jeff, the short answer is I don't know the answer to your question because I don't know what other sources of money you have, you know, this is kind of the challenge. You can't provide limited information and expect an effective, comprehensive answer.

And this is why, you know, just asking a single question to somebody is really very difficult and not nearly as effective as sitting down for an hour or two either face to face or over zoom with a financial advisor to really make sure we get this right. So, I really don't know for sure, what is the best place to take your money from. I will say this just generally speaking. Your six-month emergency fund. Well, this isn't an emergency. Your grandkids going to a summer camp next summer in six-eight months.

So, where's the emergency Jeff? So, no, I don't really think that you should tap into your emergency account. But on the other hand, you seem to suggest your only other alternative is to sell stock at a loss. Well, who on earth wants to do that? And that may be even a worse choice.

And you suggest using the loss to offset your income. Well, there are limits. You can only deduct $3,000 a year of losses against your other income. I don't know how much summer camp is, but I don't know how much stock you have to sell. So I know there's so much going on here.

I need to know how much money do you have? Where's that money invested? Do you have losses on all of your investments? Seriously, I find that hard to believe. If so, you're really bad at this and you should go hire a financial advisor. And what other sources of money might you have? including the kid's parents, quite frankly, or the other set of grandparents? So why are you the one footing this bill? I’ve got all kinds of questions. And you are my friend, a huge, wonderful candidate for meeting quickly with a financial planner.

Let me shift this. Instead of sending the kid to summer camp, what if you send the kid to a beach house? I'm kidding, of course, but it's a great segue into what I really wanted to talk with you about. How would you like to own a beach house or a mountain property? Cool idea, right? But you can't afford it.

These things are really expensive. Six figures, seven figures. So how about this? You go in with some friends or family members. You go in with your siblings, you go in with mom and dad, you go in with the-in laws, you go in with children, you go in with a bunch of college friends, you just all chip in and you figure if we all chip in, we can afford the house and wow, that'll be so much fun. We get to party at the house together. We get to use it individually. When none of us are using it, we can rent it out. Over time, we'll eventually sell it and we'll make a fortune thanks to its increase in value.

All sounds great, right? This happens a lot. According to a data analytics firm in the real estate industry called Atom Data Solutions, they said that last year, 14 percent of all the houses bought in the U.S. were bought by people buying the houses with friends. That's an astonishing number. And I'm willing to bet that the majority of the people who did this are doing it for the first time and haven't thought it through. You know, it's really easy since we're all friends to go pull our money together, two or three or four or five of us and buy this house.

But I got some questions. Which one of you is going to have the lead responsibility for handling the maintenance and repairs? For finding and handling the renters? For dealing with a property management company, if there is going to be such a thing?

And if you are going to be the one out of the five of you to be tasked with this, are you going to get compensated for it? Or are you just doing this for free and letting the others ride on your coattails. And if you are going to do this, someone's going to have to create an LLC or other legal entity to own the property. Who's going to create that? Who's going to pay that legal bill.

And once you do have this in place, who's going to pay the annual property taxes? Where's that money going to come from? Who's going to file the tax return for the entity you've created? Who's going to handle the scheduling of who gets to go and when and for how long? And who's going to pay the money to furnish the place.

And what happens if somebody doesn't, you know, clean up after they've left and they leave dirty dishes or a broken toaster or what have you? What if the bills for maintaining this property are higher than expected, who's gonna pay up and what happens if somebody doesn't pay? What if you do rent it out but there's a lawsuit by a renter who claims they got hurt while on the property?  What if one of you doesn't pay their fair share? What if one of you starts to dominate, they're using the house a whole lot more than others are using it? How are you gonna resolve those conflicts?

What if one of you suddenly decide you want to sell and the others don't? Are the others going to be obligated to buy out the one who wants to sell? And what price are you going to set for that? And even if that doesn't occur, eventually you are going to sell it. So here's a question. When? How are you going to decide the time has come to sell the property? Who's going to hire the real estate agent? And who's going to work with the agent to agree on the sales price and the commission to be paid? And what if one of you disagrees with the sales price that has been, you know, offered by a buyer?

This has got disaster written all over it. And I strongly encourage you to think really seriously about whether you really want to do this. I think it would be a whole lot better to let your friends go do this and you be one of the renters of the property they owned. Write them a check when you come to visit rather than becoming an owner of this thing. If you can't afford the property by yourself, there's a pretty good indication you shouldn't be buying the property. It's pretty much that simple.

Hey, I want you to join me next Wednesday, November 13th, for our webinar, An Innovative Way to Generate Income in a World of Declining Rates. I'm going to be joined by Rene Reyna and John Burrello from Invesco. We're going to talk about a couple of ETFs that are designed to give you new ways to generate investment income to provide you with some growth, consistent monthly returns and lower volatility.

It's free at one CE credit. If you're an advisor, the link to it is all in the show notes. I look forward to seeing you next Wednesday, November 13th.

 

We're going to talk crypto now. There's a lot of conversation going on, a lot of activity. And so I'm very happy to bring on to the podcast, Chris Rhine. He is Managing Director Head of Liquid Active Strategies for Galaxy, one of the top crypto native asset managers in the industry.

Chris, great to be with you again. Good to see you.

Chris Rhine: Hey, good to see you, Ric. Thanks for having me.

Ric Edelman: Chris is one of the rare breed, not so rare anymore, but it was certainly rare when you began this, Chris. You come from TradFi, traditional finance. There aren't very many originally in the crypto community who came from Wall Street. But you've been 20 years on Wall Street. You were Head of Thematic Strategies at Cohen & Steers, before that BlackRock, MBA from NYU, and you made the leap over to crypto. How come?

Chris Rhine: You know, it's quite interesting. I've always been interested in volatile assets. I've managed volatile tech, natural resource portfolios, and crypto, of course, had a lot of volatility.

And my background, even at Drexel University, was more on kind of the computer information programming side. So, I've always had an interest in the programmability and programming of different types of operating systems or software. And crypto was that weird asset that combined what I learned later in investing in finance with programmability and smart contracts.

When I was looking at the space, it seemed like a lot of the funds that were out there were managed by young kids that got very lucky because they were early, but didn't have a lot of credibility. It didn't really work with institutions and understand the due diligence requirements, the risk management requirements, and all of the different I would say characteristics that are important for somebody to manage third party capital for larger institutions.

And I wanted to take that risk and make that jump over and try to fill that gap. And I would say there's only a handful of us out there that really do fit that gap. And that handful are really the ones that survived through that whole volatile period from 2002-2003, and have continued to push forward.

So many of the others that got lucky, unfortunately, they didn't have that risk management kind of framework and capability. And they ended up having to close shop. So it's been a rough ride, but happy I made the jump.

Ric Edelman: And I think you've articulated really nicely the importance here of having adults in the room. I've been involved in crypto since 2012 and far too long, far too often the crypto companies, the participants were just, they're referred to as crypto bros. And these are guys, almost entirely guys, who were either ignorant of, or dismissive of, the realities of regulation, consumer protection, disclosure, transparency.

They got lucky, you used the word correctly, they were lucky more often than smart. And they didn't know what they had. They didn't realize it was a tiger by the tail. And they thought it was just a nice, fluffy cat piece of fur. And that tiger turned around and bit them. And rightly so, deservedly so, many of us would argue, inevitably so.

But the few who made the leap from Wall Street to the crypto community provided that adult supervision in the room and helped to provide the essential guidance necessary to turn these young upstarts into mature, responsible organizations. And like you said, not all of them made that transition and they're gone.

Most famously, or I should say infamously, FTX. And Sam Beckman Fried. So Galaxy is one of those that I do regard as being adults in the room. I've been an investor in Galaxy, some of its funds for years, with always a very high regard because of guys like you that are involved there. So it is fascinating that you say that your career began on Wall Street, but you always had a tech interest. You know, that was the old joke of how do you define crypto was everything you don't know about money combined with everything you don't know about computers. So here you are.

And in fact, Galaxy has produced a report. You had your hand in this, didn't you? The Investable Universe Report. We've got a link to it in the show notes, because this is really worth reading. And I want to just go through a few fundamental questions, Chris, that are of greatest interest, I think, to this audience, who are comprised largely of financial advisors and investors, neither group of which is terribly deep in the crypto space, knowledge-wise or time-wise or interest-wise, but clearly have a level of curiosity. Some are engaging.

So let's start with the elephant in the room, and that's crypto regulation. The argument has been there isn't any. And there's curiosity regarding the future of crypto regulation. So talk about that.

Chris Rhine: Yeah, the argument from crypto companies is there isn't any. The argument from the SEC is the regulations are already in place and you have to abide by them. But it's very clear that those regulations that were developed many decades ago really did not even envision a type of asset like digital assets or crypto.

And I think it's quite interesting when you look at how Congress has evolved over time. Congress had bipartisan support for SAB 121 to repeal it. And the President vetoed it. But what's more interesting is a couple of weeks ago, some of the viewers may have seen that Bank of New York (BONY) just got an exemption to SAB 121 so that they can custody crypto.

Now, why would a large institution like BONY need to get exemption from SAB 121? Because the rules don't work for crypto. And I think Congress understands that and they're trying to repeal that so that we can put the appropriate framework in place. But this White House administration has just been very combative towards crypto and the current SEC chair, Gary Gensler, of course, has had his hand in this as well.

So, we actually think that as we're moving into the next chapter, it's very clear from the feedback we're getting from both of those advisory platforms that they're much more interested in pushing the technology forward by promoting proper regulation. Which is where I think Congress is as well.

I mean, we've heard positive things from Republicans for a while, but Maxine Waters talking about the interest in getting a bipartisan stablecoin bill in. Chuck Schumer talking about the interest in getting crypto regulation in. We're now seeing much more powerful Democrats step into this as well, which is good to hear.

So, I think this gets back to the second biggest question we get asked outside of regulatory is the use case question. But we can't have use cases in the U.S. If institutions can't bring the technology forward. And this has been a huge roadblock for many companies to be able to utilize crypto and blockchain technology and provide that to customers.

We think over the next 24 months as this regulatory hurdle gets solved and we start seeing proper regulations in place that don't just make it easy for crypto companies, they just set proper guidelines and guardrails for crypto companies to operate within, to make sure that investors are still safe and that risks are managed.

That's all we need. And once we have that, we can then build out those types of projects that will be useful for everyday citizens.

Ric Edelman: Yeah, it's kind of like speed limits. You know drivers are saying, look, we don't really care what the speed limit is, 55, 65. Just tell us, we want to make sure we're not going to get pulled over for speeding when we don't know what the speed limit is. So tell us and we'll deal with it then. So, this is kind of where we're at.

I'm assuming that you're familiar with the recent report from two economists at the European Central Bank. So let me elaborate on this because I'm sure most of our listeners and viewers here are not. The European Central Bank just issued a report written by two of its economists that I have read several times, Chris, and I'm still trying to understand the logic behind their point.

There has been a debate for many years as to whether bitcoin is going to be successful or not. Will the price rise or not? Will this prove to be a worthwhile asset to purchase? That debate has raged for years. It's still raging. I guess it always will rage. There's no question that bitcoin from inception to the present, 15 years, is the best performing asset in history. It's up, I think, 60 or 70 million percent in price, having gone from zero to now roughly about $76,000 as we speak.

The question is whether it's going to continue to rise. But along come these two economists from the ECB, the European Central Bank. That's their version of the Fed, who have said that bitcoin is going to go up in value. That was the premise of their piece. They weren't predicting this. They said, “let's assume it does.” Let's assume bitcoin continues to rise in value. Because we are concerned that that might happen, they said, paraphrasing here, ‘We need to ban bitcoin. We need to ban bitcoin because if the price continues to rise, the people who bought it early are going to get really rich and that will be negative for everybody else, either those who never bought it or those who bought it only after the price went up and it will increase wealth disparity in the world. And to prevent wealth disparity, we must ban bitcoin so that nobody gets rich off of bitcoin.”

Is that a fairly accurate summation of what they wrote in the paper from your perspective?

Chris Rhine: It's what they wrote, and it is the most asinine conclusion I have ever heard from who are probably two very smart people.

Ric Edelman: I just couldn't figure out why they said it. What I have to assume is that there's an agenda behind it, that at the end of the day, the European Central Bank, as many central banks, are afraid that bitcoin is going to render these central banks unnecessary. It's going to make them obsolete and they are there for circling the wagons, trying to act as a protectionist, preserve the current power structure that the central banks have on the global economy.

And that they're coming up with this incredibly bizarre warped sense of “Hail Mary” desperation logic to argue for the banning of bitcoin, because they lost that argument five years ago. Bitcoin isn't getting banned. Governments are rather seeking to embrace and control through regulation rather than banning.

So I just found it a fascinating paper.

Chris Rhine: It's hard to ban a technology. It's hard to ban something that is cross-border and anywhere but you can make that same argument for U.S. equities. Like, should we ban people from buying U.S. equities because only wealthy people can buy equities and people that don't have excess capital can't. So, over the last 30 years, there's been so much wealth creation in stock markets. And only those that had money made money and it creates this broadening out of wealth disparity.

But nobody's saying that we should stop people from buying NVIDIA, because it's not fair that the guy who's just trying to struggle and pay for food and rent can't buy NVIDIA. The conclusion's ridiculous.

Also, I think what they're thinking, if it's really going to challenge central bank authority, we're talking about a bitcoin price that would be in the multiples of millions of dollars, where every investor, every entity is trying to crowd into Bitcoin because they're so worried about their currency or their central bank or their politics.

And we've had a lot of deficit spending in both the U.S. and the EU. It doesn't seem to be getting constrained anytime soon. And yes, I think long term bitcoin is going to appreciate from this, but they're talking about a move that gets parabolic where only the owners will participate. The last thing I would say is that this whole period from March until current, we have seen a lot of consolidation of bitcoin and a lot of profit-taking.

So, it's very rare for somebody to buy an asset at a penny and hold it forever. Most investors, most smart investors, will continually harvest their profits and rotate their profits into other investments as they've done well. I think we've seen that in bitcoin, too, where even some of the older wallets are waking up and starting to trim some of their bitcoin exposure because they've had some large gains there.

This is good because it's decentralizing the ownership away from what they were calling a few unique cases of big bag holders we’ll say, but they're not going to hold bitcoin to 10 million. They're going to continue selling into the market and decentralizing that ownership across a broader range of investors and participants.

So, I would love to sit in a room and have a beer and be very conversational with them. I would not be combative because that's not who I am. And just really kind of understand maybe what the motive was. And if they truly do think this is an issue. Is it some cataclysmic issue that would cause bitcoin to surge like this that they're worried about?

And is that problem being caused by a different entity, not by the investors?

Ric Edelman: And I would add to that by saying that if the premise of their paper is valid, that they're fearful the rise in bitcoin is going to create this wealth disparity, “well, here's a great way to solve the wealth disparity problem. Go buy bitcoin.”  If they're basically acknowledging the price is going to rise, then take advantage of it rather than lamenting it. So, the neat thing about Bitcoin is that it is the most financially accessible asset on the planet. You don't need a lot of money.

You can buy a tiny fraction of a bitcoin. They're called Satoshis. It's a 100 millionth of a Bitcoin that you can buy for fractions of a penny. And you can do this without a bank account, without a brokerage account, without any financial intermediary of any kind, which is why of all of the people who own bitcoin in the world, only about 10% of them are Americans. 90% of the Bitcoin owners are elsewhere in the world. Because they do recognize that it's an asset they can afford to buy.

And all they need is a cell phone, not even a smartphone, just an ordinary cell phone. So their argument is simply saying that if you really believe the paper, then quickly go buy bitcoin so that you want to be early buyers of bitcoin, enjoying the wealth that's going to get created.

There's another thing they said, Chris, and you made an allusion to it as well that I want to expand on. They made the argument as part of their complaint as to why bitcoin is pointless. They said there are no real world use cases. You've used the phrase too, you talked about the need for institutional engagement in order to bolster the real world use cases.

A lot of people object to this fact. They say bitcoin's been around for 15 years. What's it good for? Answer that.

Chris Rhine: Yeah, I think blockchain technology and crypto in general has been held back by regulation and where we continue to see the most momentum is in private companies because the public companies, of course, they tend to be higher, more significantly regulated, and they also tend to have to protect a reputation. And there's always a risk that something goes wrong and they don't want to damage the reputation of the firm.

Recently, we just saw Stripe announce that they're paying over a billion dollars for a public blockchain payments technology platform that they plan to integrate onto their platform.

So, there are companies that are starting to push the barriers. Robinhood, you can trade certain spot crypto on their platform. PayPal, they've created their own stablecoin. You can buy and sell crypto on the platform. I think these companies realize that It is inevitable at some point. Where we haven't seen the participation is in the larger banks.

And I think the banks have just so much regulation. But this is where the first use case of blockchain makes so much sense on a payments platform. It's 24/7, it's cheap, you can guarantee settlement, you can guarantee transfer, and it strips out so many middlemen that get involved in certain types of payments and transfers, particularly when they're cross-border. So, the banks, of course, I think they're all doing beta and kind of test beds in their private wall garden. And they're getting ready to release that once the regulation changes.

I would say the other thing is that the tokenization theme is something that I think is just going to be huge. And if I'm speculating, I used to work at BlackRock. For 12 years. They are very smart people. They have a great tech platform in Aladdin and they're forward thinking. Larry Fink is buying all of these private asset managers. He's bolstering their public expertise in private. Eventually I could see them using technology to tokenize these private investments, utilize Aladdin to create a liquidity platform to bring buyers and sellers together to be able to create live real time markets for tokenized liquid private assets.

And once you solve the liquidity problem, what would stop BlackRock from putting tokenized private investments into an ETF wrapper with public equities? And all of a sudden, you've created an investment vehicle that retail has had no ability to get exposure to. Because they can't access the private investments because they don't have accredited investor status or they don't know people to get engaged.

So, I think the tokenization theme, we are literally just on the tip of it. We've done stablecoins, we've tested with money markets, there have been tests in certain fixed income instruments, we're starting to tokenize private funds. I think the opportunity on that is huge and I think longer term it could end up bringing so much more liquidity into that type of a market that could really change how we think about private investing relative to public investing and even the interest in private companies wanting to go public when it costs so much and the regulatory burden is so high.

Ric Edelman: So, from our present state to our future state, how long do you see this taking to go from here to there?

Chris Rhine: You know, my best guess is that the next two years are going to be critical to really start moving forward with proper regulation on the custody, the trading, the safety of crypto. Allowing Goldman and JP Morgan to be able to trade crypto, to keep it on their balance sheet, to custody it with BONY or State Street or whoever they're going to custody it with and then to be able to even potentially allow investors to buy spot crypto on their brokerage platforms. I mean, we don't have ETFs for Apple, but you just go buy Apple. You don't need a wrapper on that.

So, we have to put these wrappers on spot bitcoin right now because these platforms can't offer spot bitcoin right now because of the regulatory gray area. But eventually, I think the single asset spot ETFs will end up fading, and the ETFs that are out there are going to be a little bit more sophisticated. Maybe they're writing calls on them, they're doing call reduction strategies, etc. instead of just offering Ethereum or just offering bitcoin.

So, I think there's a lot more that needs to change in the regulatory side. But what's very clear to me is that once that happens, the opportunity on the use cases is going to really significantly expand and everybody's going to have that light bulb moment and be like, Oh crap. This really does work and I have no exposure to it.

And it's kind of to me, like Apollo and Blackstone, they were in these private investments and some were in private credit and some were in leveraged loans. And then all of a sudden every investor wanted it and they were in the right place at the right time. And those markets exploded and they were able to really grow into those markets.

So, it really makes me excited for our asset management division. Once we finally get there and that light bulb moment happens and we built the track records and we're ready to run..

Ric Edelman: In other words, as an investor, you have a choice. It's not whether to invest in bitcoin. It's a question of when. You can either do it now, before we get to the knee of the curve, before that exponential growth takes off, or you can wait for that to occur and then invest.

In other words, you can buy Amazon now. By the way, if you own a stock fund, you own Amazon because it's inside there, or you could have bought Amazon in 1999. Your choice. It was riskier in ‘99. We didn't know what the outcome would be. But that's why the price was so low. And that's why the profits for those investors are so high.  Or you could wait until it's obvious and it's a mainstream asset to own and your profits are much lower owning it today than it was 15 years ago. So that's kind of the choice you have.

Chris Rhine: Yeah, and funny, I'm just going to bring back just to the ECB, to poke holes in this again. How many investors in Amazon in ‘99 never sold a share and still own it today? And how has that created wealth disparity? My guess is very, very few investors have never sold a share of Amazon that they bought it in 1999.  My guess is that the ownership base has widened out considerably since then.

Ric Edelman: Over the next two years, we're going to get advancement on Capitol Hill, which is what the crypto community has been begging for and what the industry really needs.

And you're prepping this at Galaxy. You already have a wide array of investment products that are available to advisors and investors, and you've got some new products that you've just recently launched, including a new partnership with State Street Global Advisors, one of the largest ETF and mutual fund companies in the world with trillions of dollars in assets. Talk about the new products that you have launched and your new partnership with State Street.

Chris Rhine: Yeah, really exciting new products and happy to be partnered with State Street. We have three different active ETFs that I'm running with my team. And one of them is what we consider a crypto ecosystem, digital asset ecosystem fund, where we're investing in companies that have both direct and indirect or periphery exposure to crypto.

And the reason we did it that way is because crypto can be volatile and the underlying equities are volatile, too. So. As an active manager, it really allows me to throttle up and down my risk profile as I see opportunities and really better manage the overall volatility profile of the fund. The second fund is exactly like that, but we take it one step further by using options to mitigate risk and volatility even more.

So, given the high volatility on some of these different stocks, we'll write out of the money call options and we can write them at strikes for 40% to 50% percent out of the money and still generate annualized yields of over 10% to 12% in some cases. And that leaves plenty of room for upside. And then we can take that premium and buy downside put protection as well.

Now we do this all dynamically and tactically as we see opportunity. It's not a fixed hedge ratio that we're looking for. And we're constantly evaluating where we see opportunities. The third strategy, itt still has a digital asset aspect to it, but we broadened it out to be more of the emerging tech market as well.

So, we're looking at different tech themes from what we're seeing in AI or smart robotics or Internet of Things or anything where we see a significant trend and growth opportunity that will drive earnings at specific companies. But we don't do it just at the tech level. We looked the whole way through the value chain of all of the downstream companies being impacted.

So, we're investing in electrical equipment companies. We're investing in power companies. We even bought the Uranium Trust, the spot Uranium Trust, just thinking that there's an opportunity here for more of a nuclear buildout in the U.S. So, I like this too, because again, as an active manager, I don't want to be married to just owning tech companies because they carry a lot of growth factor risk and they are volatile and they can get very overpriced and they can have pretty significant corrections.

So, this gives me an opportunity to really better manage my factor exposures through different market cycles and again, manage my risk profile over these market cycles as well. And I think these are important from an active perspective, because I don't want to just blame a factor exposure for underperformance.

I don't want to say, “oh, the growth factor was out of favor this year”. There've been other active ETFs that didn't have this capability to balance out this risk. And unfortunately, they get great press on the upside, and then they get slaughtered on the downside.

Ric Edelman: So are these products ETFs, are they managed accounts?

Talk about the structure of these investments.

Chris Rhine: Yeah, so all three of these are active ETFs. The tickers are DECO, HECO, and TEKX. You can find them on your brokerage platform, but State Street, of course, is a distributor. If you're interested in them, reach out to them. And I think on their website, they have fact sheets and all of that information as well.

Ric Edelman: And here's what is, I regard very fascinating. State Street, one of the largest, as I mentioned, asset managers, they're on the scale of BlackRock Fidelity and Vanguard and extraordinarily well known by all financial advisors around the country. And despite their size and their massive ranks of expertise, they acknowledge that they don't have in-house expertise of crypto and rather than trying to pretend they do, we've seen that game played by other asset managers with bad results.

They said we're going to partner with someone who is crypto native, who does have that level of expertise and that's why they turned to Galaxy and said, we need someone who's great at this. Galaxy is, and so here we are. And I think it's a wonderful illustration, not only of smart decision making by State Street to engage in a partnership like this, but also a demonstration that you made earlier of how traditional Wall Street is getting involved in crypto.

Chris Rhine: Yeah, I think it's how State Street really likes to drive their active business. They've partnered with great firms like Blackstone and DoubleLine on different areas of the market where they look at top-tier managers that have expertise and let those managers sub-advise for them. In the digital asset and kind of high-tech ecosystem, we have so much insight into these markets.

We work with a lot of the companies, we compete against them, we are doing this business, we invest in a number of the private companies that we think eventually will get bought by public companies or go public themselves. So, we're just in a very unique position to have incredible insight that a generalist asset management shop just doesn't have.

And I think the other key thing that's worth mentioning, these types of equities are still very unknown. They're not well covered by the sell side. The model disparity across the sell side is very wide. You could drive a truck through different estimates. And when you find these opportunities where there's a lot of idiosyncratic opportunity because of a lack of coverage, a lack of understanding, and a lack of ownership, it's just very ripe for active managers to really be able to extract alpha and then add in the higher volatility where things can get overpriced very quickly and underpriced very quickly.

We can step in and take advantage of that through an active approach and really help to drive alpha for our investors.

Ric Edelman: So, we've got a link in the show notes for you to the State Street website, where you'll find those three tickers and information about those ETFs. If you're a financial advisor, of course, you can talk to your local State Street rep.

And we've also got a link to Galaxy directly and their site, so you can look more deeply at the different investments and products and strategies that Galaxy themselves offers directly. Final question for you, Chris, what's next? Where's crypto going to go from here?

Chris Rhine:I mean, given our view on the regulatory, I think it's just inevitable that we're going to see more and more regulation, which is going to enable more and more adoption and more use cases.

I think about this kind of from different asset classes where a lot of institutional investors, they went from zero to needing to get something because all of their peers were doing it. And I feel like crypto is right on the cusp of that. And as soon as the regulatory picture is a little bit more clear, and we're seeing more use cases, and we're hearing about Citi or J.P. Morgan doing blockchain payment systems, and you're able to then buy spot crypto through your brokerage account. And we're talking about tokenized assets, and we're thinking about how we can really use this decentralized distributed ledger technology and all these other use cases. To me, it's just a fantastic opportunity over the next 10 years and] something I'm truly excited about.

I wouldn't have stayed here or stuck around if I didn't believe it. I'm a pretty smart investor myself, and I wish that many investors could really just see what we see as the opportunity. But you have to be deep in the weeds to be able to do that. And I'm happy that I've landed at a firm like Galaxy that has this platform that enables me to really understand what's happening in the private markets, really talk to these larger banks on what their initiatives and objectives are.

And it just makes me excited for what's to come.

Ric Edelman: That's Chris Rhine, the Managing Director and Head of Liquid Active Strategies for Galaxy, one of the largest, oldest crypto native investment firms. Chris. It's been a pleasure to talk with you. Thanks for joining us today. Really appreciate it.

Chris Rhine: Thanks for having me, Ric. Take care.

Ric Edelman: Veterans Day is coming up on Monday. Remember and honor all who have served or are actively serving. The team and I are taking the weekend off. We'll see you again on Tuesday show.

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Links from today’s show:  

Galaxy's Investable Universe Report   https://hubs.li/Q02V-VnY0

Galaxy: https://www.galaxy.com/

State Street Global Advisors: https://www.ssga.com

SPDR® Galaxy Digital Asset Ecosystem ETF (DECO)  https://www.ssga.com/us/en/intermediary/etfs/spdr-galaxy-digital-asset-ecosystem-etf-deco

SPDR® Galaxy Hedged Digital Asset Ecosystem ETF (HECO)  https://www.ssga.com/us/en/intermediary/etfs/spdr-galaxy-hedged-digital-asset-ecosystem-etf-heco

SPDR® Galaxy Transformative Tech Accelerators ETF (TEKX)  https://www.ssga.com/us/en/intermediary/etfs/spdr-galaxy-transformative-tech-accelerators-etf-tekx

11/13 Webinar - An Innovative Way to Generate Income in a World of Declining Rates: https://www.thetayf.com/pages/november-13-2024-an-innovative-way-to-generate-income

10/9 Webinar Replay- Crypto for RIAs: Yield, Staking, Lending and Custody. What’s beyond the ETFs? https://dacfp.com/events/crypto-for-rias-yield-staking-lending-and-custody-whats-beyond-the-etfs/

Certified in Blockchain and Digital Assets including Crypto Taxation Course/Webinar: https://dacfp.com/certification/

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